NEVADA
|
|
38-3378963
|
(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
2236
Rutherford Rd., Suite 107
|
|
|
Carlsbad,
California
|
|
92008
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Page
|
||||
|
||||
PART
I
|
||||
|
||||
ITEM
1.
|
Description
of Business
|
3
|
||
ITEM
2.
|
Description
of Property
|
7
|
||
ITEM
3.
|
Legal
Proceedings
|
7
|
||
ITEM
4.
|
Submission
of Matters to a Vote of Security Holders
|
7
|
||
|
||||
PART
II
|
||||
ITEM
5.
|
Market
for Common Equity, Related Stockholder Matters and Small
|
|||
Business
Issuer Purchases of Equity Securities
|
7
|
|||
ITEM
6.
|
Management's
Discussion and Analysis or Plan of Operation
|
8
|
||
ITEM
7.
|
Financial
Statements
|
17
|
||
ITEM
8.
|
Changes
in and Disagreements with Accountants on
|
|||
Accounting
and Financial Disclosure
|
17
|
|||
ITEM
8A.
|
Controls
and Procedures
|
18
|
||
ITEM
8B.
|
Other
Information
|
18
|
||
PART
III
|
||||
ITEM
9.
|
Directors,
Executive Officers, Promoters and Control Persons;
|
|
||
|
Compliance
with Section 16(a) of the Exchange Act
|
19
|
||
ITEM
10.
|
Executive
Compensation
|
21
|
||
ITEM
11.
|
Security
Ownership of Certain Beneficial Owners and Management
|
|||
and
Related Stockholder Matters
|
23
|
|||
ITEM
12.
|
Certain
Relationships and Related Transactions
|
24
|
||
ITEM
13.
|
Exhibits
|
25
|
||
ITEM
14.
|
Principal
Accountant Fees and Services
|
28
|
Closing
Price
|
|||||||
High
|
Low
|
||||||
Fiscal
Year Ended June 30, 2006
|
|||||||
First
Quarter
|
$
|
1.85
|
$
|
1.36
|
|||
Second
Quarter
|
$
|
1.75
|
$
|
1.10
|
|||
Third
Quarter
|
$
|
1.20
|
$
|
0.60
|
|||
Fourth
Quarter
|
$
|
0.68
|
$
|
0.25
|
|||
Fiscal
Year Ended June 30, 2005
|
|||||||
First
Quarter
|
$
|
2.00
|
$
|
1.01
|
|||
Second
Quarter
|
$
|
2.35
|
$
|
1.11
|
|||
Third
Quarter
|
$
|
2.33
|
$
|
1.30
|
|||
Fourth
Quarter
|
$
|
1.75
|
$
|
0.91
|
Year
Ended
June
30, 2006
|
Six
Months Ended
June
30, 2005
|
Increase
(Decrease)
|
%
|
||||||||||
Statements
of Operations
|
|||||||||||||
Revenues
|
$
|
681,337
|
$
|
419,526
|
$
|
261,811
|
62.4
|
%
|
|||||
Selling
expenses
|
103,190
|
65,173
|
38,017
|
58.3
|
%
|
||||||||
General
and administrative
|
|||||||||||||
expenses
|
1,215,966
|
352,614
|
863,352
|
244.8
|
%
|
||||||||
Interest expense | 207,574 | 166,511 | 41,063 |
-24.7
|
%
|
||||||||
Total
expenses
|
1,526,730
|
584,298
|
942,432
|
-161.3
|
%
|
||||||||
Net
(loss)
|
$
|
(845,393
|
)
|
$
|
(164,772
|
)
|
$
|
(680,621
|
)
|
413.1
|
%
|
||
Net
(loss) per basic and
|
|||||||||||||
diluted
share
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
$
|
(0.02
|
)
|
50.0
|
%
|
As
of
|
Increase
|
|||||||||
June
30, 2006
|
June
30, 2005
|
(Decrease)
|
||||||||
Working
Capital
|
||||||||||
Current
assets
|
$
|
205,920
|
$
|
104,967
|
$
|
100,953
|
||||
Current liabilities | 1,765,729 | 4,326,255 | (2,560,526 | ) | ||||||
Working
capital deficit
|
$
|
(1,559,809
|
)
|
$
|
(4,221,288
|
)
|
$
|
2,661,479
|
||
Long-term
debt
|
$
|
117,650
|
$
|
9,836
|
$
|
107,814
|
||||
Stockholders'
deficit
|
$
|
(1,596,529
|
)
|
$
|
(4,210,955
|
)
|
$
|
2,614,426
|
Year
Ended
|
Six
Months Ended
|
Increase
|
||||||||
June
30, 2006
|
June
30, 2005
|
(Decrease)
|
||||||||
Statements
of Cash Flows Select Information
|
||||||||||
Net
cash provided (used) by:
|
||||||||||
Operating
activities
|
$
|
(637,191
|
)
|
$
|
(13,854
|
)
|
$
|
(623,337
|
)
|
|
Investing
activities
|
$
|
(67,039
|
)
|
$
|
(312
|
)
|
$
|
(66,727
|
)
|
|
Financing
activities
|
$
|
821,238
|
$
|
25,000
|
$
|
796,238
|
As
of
|
Increase
|
|||||||||
June
30, 2006
|
June
30, 2005
|
(Decrease)
|
||||||||
Balance
Sheet Select Information
|
||||||||||
Cash
and cash equivalents
|
$
|
149,512
|
$
|
32,504
|
$
|
117,008
|
||||
Accounts
receivable
|
$
|
56,107
|
$
|
71,751
|
$
|
(15,644
|
)
|
|||
|
||||||||||
Accounts
payable and accrued expenses
|
$
|
1,348,419
|
$
|
1,380,208
|
$
|
(31,789
|
)
|
·
|
The
lack of readily available price quotations;
|
·
|
The
absence of consistent administrative supervision of “bid” and “ask”
quotations;
|
·
|
Lower
trading volume; and
|
·
|
Market
conditions.
|
|
·
|
A
standardized risk disclosure document identifying the risks inherent
in
investment in penny stocks;
|
|
·
|
All
compensation received by the broker-dealer in connection with the
transaction;
|
|
·
|
Current
quotation prices and other relevant market data; and
|
|
·
|
Monthly
account statements reflecting the fair market value of the securities.
In
addition, these rules require that a broker-dealer obtain financial
and
other information from a customer, determine that transactions in
penny
stocks are suitable for such customer and deliver a written statement
to
such customer setting forth the basis for this determination.
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
John
R. Dunn II
|
|
55
|
|
Chairman,
Chief Executive Officer, President, and Director
|
George
Dunn
|
|
49
|
|
Secretary,
Chief Operating Officer
|
Lowell
W. Giffhorn
|
|
59
|
|
Chief
Financial Officer and Director
|
Theo
Vermaelen
|
|
52
|
|
Director
|
Stephen
Eisold
|
|
59
|
|
Director
|
Jason
Booth
|
40
|
Director
|
Annual
Cash Compensation
|
Long-Term
Compensation
|
|||||||||||||||
Name
and
|
Fiscal
|
All
Other
|
||||||||||||||
Principal
Position
|
Year
|
Salary
|
Bonus
|
(#
of Shares)
|
Compensation
|
|||||||||||
John
Dunn
|
2006
|
|
$
|
108,000
|
Nil
|
100,000
|
None
|
|||||||||
President
and CEO
|
2005
|
$
|
108,000
|
Nil
|
None
|
None
|
||||||||||
2004
|
$
|
108,000
|
Nil
|
None
|
None
|
|||||||||||
|
||||||||||||||||
George
Dunn
|
2006
|
$
|
102,000
|
Nil
|
60,000
|
None
|
||||||||||
VP
and COO
|
Number
of Unexercised
|
Value
of Unexercised
|
||||||||||||||||||
Shares
|
Options
Held At
|
In-The-Money
Options At
|
|||||||||||||||||
Acquired
on
|
Value
|
June
30, 2006
|
June
30, 2006
|
||||||||||||||||
Name
|
Exercise
(#)
|
Realized
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||
John
R. Dunn II
|
-
|
-
|
70,000
|
30,000
|
$
|
-
|
$
|
-
|
|||||||||||
George
Dunn
|
-
|
-
|
830,000
|
30,000
|
$
|
148,000
|
$
|
-
|
Shares
of Common
|
Percentage
|
|||||||||
Stock
Beneficially
|
of
Outstanding
|
|||||||||
Name
|
Postion
with the Company
|
Owned
(1) (2)
|
Shares
|
|||||||
Executive
Officers and
|
||||||||||
Directors
|
||||||||||
John
R. Dunn II (3)
|
Chairman
of the Board,
|
4,950,000
|
19.4
|
%
|
||||||
|
Chief
Executive Officer,
|
|||||||||
|
Chief
Technical Officer and
|
|||||||||
|
Director
|
|||||||||
George
Dunn (4)
|
Vice
President, Secretary
|
2,246,000
|
8.5
|
%
|
||||||
|
and
Chief Operating Officer
|
|||||||||
Lowell
W. Giffhorn (5)
|
Vice
President, Chief
|
370,000
|
1.4
|
%
|
||||||
|
Financial
Officer and Director
|
|||||||||
Theo
Vermaelen (6)
|
Director
|
844,359
|
3.3
|
%
|
||||||
Steven
Eisold (7)
|
Director
|
669,494
|
2.6
|
%
|
||||||
Jason
Booth (8)
|
Director
|
25,000
|
*
|
|||||||
All
Exective Officers and
|
9,104,853
|
35.3
|
% | |||||||
Directors
as a Group
|
||||||||||
(6
persons) (9)
|
|
|
||||||||
Greater
than 5% Owners
|
||||||||||
Potawatomi
Business
|
6,000,000
|
Note
10
|
||||||||
Development
Corp.
|
|
|
||||||||
Robert
Tabor
|
4,730,589
|
18.6
|
%
|
|||||||
Robert
Kirk (11)
|
1,849,658
|
7.3
|
%
|
|||||||
Massoud
Kharrazian
|
1,487,136
|
5.8
|
%
|
(1) |
Reflects
amounts as to which the beneficial owner has sole voting power and
sole
investment power.
|
(2) |
Includes
stock options and common stock purchase warrants exercisable within
60
days from the date hereof.
|
(3) |
Comprised
of 4,880,000 shares and 70,000 stock options.
|
(4) |
Comprised
of 1,416,000 shares and 830,000 stock options.
|
(5) |
Comprised
of 70,000 stock options, 200,000 common stock purchase warrants
and
100,000 shares issuable on the conversion of a debenture.
|
(6) |
Comprised
of 654,359 shares, 70,000 stock options, 80,000 common stock purchase
warrants and 40,000 shares issuable on the conversion of a debenture.
|
(7) |
Comprised
of 599,494 shares and 70,000 stock
options.
|
(8) |
Comprised
of 25,000 stock options.
|
(9) |
Comprised
of 7,549,853 shares, 1,1355,000 stock options, 280,000 common stock
purchase warrants and 140,000
shares issuable on the conversion of a debenture.
|
10) |
The
shares issuable to Potawatomi Business Development Corp. (PBDC) on
the
conversion of debentures or the exercise of warrants would not be
deemed
beneficially owned (due to exercise restrictions within the debentures
and
warrants) within the meaning of Sections 13(d) and 13(g) of the Exchange
Act to the extent that their acquisition in a debenture conversion
or a
warrant exercise by PBDC would cause PBDC to own in excess of 4.99%
of our
outstanding common stock immediately following such conversion or
exercise. By the terms of the debentures and warrants, the 4.99%
limitation may be increased to a maximum of 9.99% if the Company
accepts a
tender offer and a change in control takes place. Therefore, it is
expected that PBDC will not beneficially own more than 9.99% of our
outstanding common stock at any time. Carol Leese has ultimate voting
and/or investment control over the securities owned by
PBDC.
|
11) |
Comprised
of 56,458 shares issued as a result of a private placement by Mr.
Kirk and
1,793,200 shares related to an agreement in 1999 in which an investment
banking firm, of which Mr. Kirk was a principal, was obligated to
use its
best efforts to secure private placement financings and underwrite
an
initial public offering for the Company. Although outstanding on
the
records of the Company, Mr. Kirk is not entitled to the 1,793,200
shares
and the Company has not issued, and does not presently intend to
issue,
these shares to Mr. Kirk.
|
Plan
Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
(a)
|
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
(b)
|
Number
of securities
remaining
available
for
issuance under
equity
compensaton
plans
(excluding
securities
reflected in
column
(a))
(c)
|
|||||||
Equity
compensation plans approved by security holders
|
4,622,334
|
$
|
0.55
|
2,877,666
|
||||||
Equity
compensation plans not approved by security holders
|
720,667
|
$
|
2.00
|
-
|
||||||
Total
|
5,343,001
|
$
|
0.75
|
2,877,666
|
Exhibit
No.
|
Document
|
|||
3.0
|
Articles
of Incorporation and Bylaws
|
|||
3.1
|
Amended
and Restated Articles of the Company, as amended November
|
(1)
|
||
30,
1994, incorporated by reference to Exhibit 3.1 to Amendment No. 1
to
|
||||
Registration
Statement on Form SB-2 dated December 22, 1994
|
||||
|
||||
3.2
|
Certificate
of Designation of Series A Redeemable Convertible
Preferred
|
(1)
|
||
Stock
incorporated by reference to Exhibit 3.2 to Registration Statement
on
|
||||
Form
SB-2 dated October 12, 1994
|
||||
3.3
|
Certificate
of Designation of Series B Redeemable Convertible
Preferred
|
(1)
|
||
Stock
incorporated by reference to Exhibit 3.2 to Registration Statement
on
|
||||
Form
SB-2 dated October 12, 1994
|
||||
3.4
|
Bylaws
of the Company incorporated by reference to Exhibit 3.4 to
|
(1)
|
||
Registration
Statement on Form SB-2 dated October 12, 1994
|
||||
3.5
|
Certificate
of Amendment of Articles of Incorporation dated May 16,
2006
|
(2)
|
||
4.0
|
Instruments
Defining the Rights of Security Holders, Including
Debentures
|
|||
4.1
|
Agreement
and Plan of Merger among Omni U.S.A., Inc., Omni Merger Sub, Inc.,
|
(1)
|
||
Edward
Daniel, Jeffrey Daniel and Brendan Technologies, Inc. dated as of
|
||||
December
29, 2005 incorporated by reference to Exhibit 4.1 to Current Report
|
||||
on
Form 8-K dated January 5, 2006
|
||||
4.2
|
Stock
Purchase Agreement by and among Jeffrey K. Daniel, Craig L. Daniel,
and
|
(1)
|
||
Edward
Daniel, as the Purchases, and Omni U.S.A., Inc., as the Seller, dated
as
|
||||
of
December 29, 2005 incorporated by reference to Exhibit 4.2 to Current
Report
|
||||
on
Form 8-K dated January 5, 2006
|
||||
4.3
|
Amendment
to Loan and Related Agreements and Waiver of Default
(PACCAR)
|
(1)
|
||
incorporated
by reference to Exhibit 4.3 to Current Report on Form 8-K
dated
|
||||
January
5, 2006
|
||||
4.4
|
Amendment
to Loan and Related Agreements and Waiver of Default
(Textron)
|
(1)
|
||
incorporated
by reference to Exhibit 4.4 to Current Report on Form 8-K
dated
|
||||
January
5, 2006
|
||||
4.5
|
Promissory
Note between Jeffrey K. Daniel, Craig L. Daniel, and Edward
Daniel,
|
(1)
|
||
collectively
the Borrowers, and Omni U.S.A., Inc. with a maturity date of
|
||||
December
29, 2008 incorporated by reference to Exhibit 4.5 to Current
Report
|
||||
on
Form 8-K dated January 5, 2006
|
||||
4.6
|
2006
Equity Incentive Plan incorporated by reference to Exhibit 4.1
to
|
(1)
|
||
Registration
Statement on Form S-8 dated June 15, 2006
|
||||
4.7
|
Form
of Securities Purchase Agreement incorporated by reference to Exhibit
4.7
|
(1)
|
||
to
Current Report on Form 8-K dated July 18, 2006
|
||||
4.8
|
Form
of 8% Convertible Debenture incorporated by reference to Exhibit
4.8
|
(1)
|
||
to
Current Report on Form 8-K dated July 18, 2006
|
Exhibit
No.
|
Document
|
|||
4.9
|
Form
of Registration Rights Agreement incorporated by referecne to Exhibit
4.9
|
(1)
|
||
to
Current Report on Form 8-K dated July 18, 2006
|
||||
4.10
|
Form
of Warrant incorporated by reference to Exhibit 4.10 to Current Report
on
|
(1)
|
||
Form
8-K dated July 18, 2006
|
||||
10.0
|
Material
Contracts
|
|||
10.1
|
John
R. Dunn II Employment Contract dated November 1, 2004 incorporated
by
|
(1)
|
||
reference
to Exhibit 10.1 to Current Report on Form 8-K dated January 5,
2006
|
||||
10.2
|
George
Dunn Employment Contract dated November 1, 2004 incorporated
by
|
(1)
|
||
reference
to Exhibit 10.1 to Current Report on Form 8-K dated January 5,
2006
|
||||
14.0
|
Code
of Ethics
|
|||
14.1
|
Code
of Ethics
|
(2)
|
||
21.0
|
Subsidiaries
of the small business issuer
|
|||
21.1
|
Subsidiaries
of the small business issuer
|
(2)
|
||
31.0
|
Rule
13a-14(a)/15d-14(a) Certifications
|
|||
31.1
|
302
Certification of John R. Dunn II
|
(2)
|
||
31.2
|
302
Certification of Lowell W. Giffhorn
|
(2)
|
||
32.0
|
Section
1350 Certifications
|
|||
32.1
|
906
Certification of John R. Dunn II
|
(2)
|
||
32.2
|
906
Certification of Lowell W. Giffhorn
|
(2)
|
||
(1)
Previously filed in indicated registration statement or
report
|
||||
(2)
Exhibit filed herewith
|
Farber
Hass Hurley & McEwen LLP
|
|||||||
Fee
category
|
2006
|
2005
|
|||||
Audit
fees
|
$
|
16,250
|
$
|
5,975
|
|||
Audit-related
fees
|
$
|
-
|
$
|
-
|
|||
Tax
fees
|
$
|
-
|
$
|
-
|
|||
All
other fees
|
$
|
-
|
$
|
-
|
|||
Total
fees
|
$
|
16,250
|
$
|
5,975
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated
Balance Sheets, June 30, 2006 and 2005
|
F-3
|
Consolidated
Statements of Operation, for the year ended June 30, 2006 and the
six
months ended June 20, 2005 (transition period)
|
F-4
|
Consolidated
Statement of Stockholders' Equity, for the year ended June 30,
2006 and
the six months ended June 30, 2005 (transition period)
|
F-5
|
Consolidated
Statements of Cash Flows, for the year ended June 30, 2006 and
the six
months ended June 30, 2005 (transition period)
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7-F-22
|
June
30,
|
2006
|
2005
|
|||||
|
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
149,512
|
$
|
32,504
|
|||
Accounts
receivable, net
|
56,107
|
71,751
|
|||||
Prepaid
expenses
|
301 | 712 | |||||
Total
current assets
|
205,920
|
104,967
|
|||||
Property
and equipment, net
|
72,740
|
12,361
|
|||||
Deposits
|
8,190
|
7,808
|
|||||
$
|
286,850
|
$
|
125,136
|
||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|||||||
Current
liabilities:
|
|||||||
Convertible
notes payable in default
|
$
|
255,000
|
$
|
1,947,972
|
|||
Accrued
interest in default
|
78,217
|
932,914
|
|||||
Accounts
payable
|
161,430
|
147,657
|
|||||
Accrued
wages
|
772,030
|
900,729
|
|||||
Accrued
interest
|
414,959
|
331,822
|
|||||
Deferred
revenue
|
77,651
|
62,997
|
|||||
Current
portion of lease obligations
|
6,442 | 2,164 | |||||
Total
current liabilities
|
1,765,729
|
4,326,255
|
|||||
Long
term portion of lease obligations
|
10,996
|
9,836
|
|||||
8%
Convertible debentures net of debt discount
|
23,002
|
-
|
|||||
8%
Convertible debentures net of debt discount - related
parties
|
83,652
|
-
|
|||||
Stockholders'
deficit
|
|||||||
Preferred
stock, $.004995 par value; 5,000,000 shares
|
|||||||
authorized:
none outstanding
|
-
|
-
|
|||||
Common
stock, $.004995 par value; 50,000,000 shares
|
|||||||
authorized:
25,498,794 and 4,687,209 issued and
|
|||||||
outstanding
at June 30, 2006 and 2005, respectively
|
127,366
|
23,413
|
|||||
Additional
paid in capital
|
4,517,814
|
1,161,948
|
|||||
Accumulated
deficit
|
(6,241,709 | ) | (5,396,316 | ) | |||
Total
stockholders' deficit
|
(1,596,529 | ) | (4,210,955 | ) | |||
$
|
286,850
|
$
|
125,136
|
Year
Ended
|
|
Six
Months Ended
|
|
||||
Periods
Ended June 30,
|
|
2006
|
|
2005
|
|||
Revenue
|
$
|
681,337
|
$
|
419,526
|
|||
Selling
expenses
|
103,190
|
65,173
|
|||||
General
and administrative expenses
|
1,215,966
|
352,614
|
|||||
1,319,156
|
417,787
|
||||||
Income
(loss) from operations
|
(637,819
|
)
|
1,739
|
||||
Other
expense
|
|||||||
Interest
expense
|
(207,574
|
)
|
(166,511
|
)
|
|||
Loss
before provision for income taxes
|
(845,393
|
)
|
(164,772
|
)
|
|||
Provision
for income taxes
|
-
|
-
|
|||||
Net
loss
|
$
|
(845,393
|
)
|
$
|
(164,772
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
|
Basic
and diluted weighted average common shares outstanding
|
15,146,106
|
4,686,951
|
Additional
|
Retained
|
Stockholders'
|
||||||||||||||
Common
Stock
|
|
Paid
|
|
Earnings
|
|
Equity
|
|
|||||||||
Periods
Ended June 30, 2006 and 2005
|
|
Shares
|
|
Amount
|
|
in
Capital
|
|
(Deficit)
|
|
(Deficit)
|
||||||
Balance,
January 1, 2005
|
4,678,876
|
$
|
23,371
|
$
|
1,136,990
|
$
|
(5,231,544
|
)
|
$
|
(4,071,183
|
)
|
|||||
Issuance
of common stock at $3.00
|
||||||||||||||||
per
share
|
8,333
|
42
|
24,958
|
-
|
25,000
|
|||||||||||
Net
(loss) for the six months ended
|
||||||||||||||||
June
30, 2005
|
-
|
-
|
-
|
(164,772
|
)
|
(164,772
|
)
|
|||||||||
Balance,
June 30, 2005
|
4,687,209
|
$
|
23,413
|
$
|
1,161,948
|
$
|
(5,396,316
|
)
|
$
|
(4,210,955
|
)
|
|||||
Issuance
of common stock at $3.00
|
||||||||||||||||
per
share
|
67,500
|
337
|
202,163
|
-
|
202,500
|
|||||||||||
Offering
costs paid in cash
|
(31,875
|
)
|
-
|
(31,875
|
)
|
|||||||||||
Brendan
shares converted to Omni at 4 to 1
|
14,264,127
|
71,248
|
(71,248
|
)
|
-
|
-
|
||||||||||
Brendan
notes payable and accrued interest
|
||||||||||||||||
converted
to Omni stock
|
4,352,879
|
21,743
|
2,632,455
|
-
|
2,654,198
|
|||||||||||
Omni
common shares issued in payment of
|
||||||||||||||||
Brendan
accounts payable related to merger
|
100,000
|
500
|
34,500
|
-
|
35,000
|
|||||||||||
Omni
common shares issued to an
|
||||||||||||||||
individual
as costs of the merger
|
800,000
|
3,996
|
(3,996
|
)
|
-
|
-
|
||||||||||
Omni
shares previously outstanding
|
||||||||||||||||
recapitalized
due to the merger
|
1,227,079
|
6,129
|
(6,129
|
)
|
-
|
-
|
||||||||||
Sale
of previous Omni operating subsidiaries
|
||||||||||||||||
treated
as contributed capital
|
-
|
-
|
498,000
|
-
|
498,000
|
|||||||||||
Value
of warrants and stock options issued
|
-
|
-
|
101,996
|
-
|
101,996
|
|||||||||||
Net
(loss) for the year ended
|
||||||||||||||||
June
30, 2006
|
-
|
-
|
-
|
(845,393
|
)
|
(845,393
|
)
|
|||||||||
Balance,
June 30, 2006
|
25,498,794
|
$
|
127,366
|
$
|
4,517,814
|
$
|
(6,241,709
|
)
|
$
|
(1,596,529
|
)
|
Year
Ended
|
Six
Months Ended
|
||||||
Periods
Ended June 30,
|
2006
|
2005
|
|||||
Operating
activities:
|
|||||||
Net
loss
|
$
|
(845,393
|
)
|
$
|
(164,772
|
)
|
|
Adjustments
to reconcile net loss
|
|||||||
to
cash provided by operating activities:
|
|||||||
Amortization
and depreciation
|
14,858
|
2,384
|
|||||
Non
cash expense related to warrants
|
|||||||
and
stock options
|
83,650
|
-
|
|||||
Non
cash reduction in accounts payable
|
98,000
|
-
|
|||||
Changes
in assets and liabilities:
|
|||||||
(Increase)
decrease in accounts receivable
|
15,644
|
(62,808
|
)
|
||||
(Increase)
decrease in prepaid expense and other assets
|
29
|
-
|
|||||
Increase
(decrease) in accounts payable
|
48,773
|
(1,915
|
)
|
||||
Increase
(decrease) in accrued liabilities
|
60,967
|
234,790
|
|||||
Increase
(decrease) in deferred revenue
|
14,654
|
(21,533
|
)
|
||||
Net
cash (used in) operating activities
|
(508,818
|
)
|
(13,854
|
)
|
|||
Investing
activities:
|
|||||||
Purchase
of property and equipment
|
(67,351
|
)
|
-
|
||||
Net
cash used in investing activities
|
(67,351
|
)
|
-
|
||||
Financing
activities:
|
|||||||
Principal
payments of lease obligations
|
(2,448
|
)
|
(312
|
)
|
|||
Proceeds
from notes receivable on sale of Omni divisions
|
400,000
|
-
|
|||||
Proceeds
from issuance of 8% convertible debentures
|
125,000
|
-
|
|||||
Proceeds
from issuance of common stock, net of cash
|
|||||||
paid
for costs
|
170,625
|
25,000
|
|||||
Net
cash provided by financing activities
|
693,177
|
24,688
|
|||||
Net
increase (decrease) in cash
|
117,008
|
10,834
|
|||||
Cash
and cash equivalents,
beginning of year
|
32,504
|
21,670
|
|||||
Cash
and cash equivalents,
end of year
|
$
|
149,512
|
$
|
32,504
|
|||
Supplemental
Disclosure of Cash Flow Information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
17,708
|
$
|
7,500
|
|||
Income
taxes
|
$
|
-
|
$
|
-
|
|||
Non
Cash Investing and Financing Activities:
|
|||||||
Property
and equipment acquired through lease
|
$
|
7,886
|
$
|
12,312
|
|||
Conversion
of Brendan notes payable into common stock
|
$
|
1,692,972
|
$
|
-
|
|||
Conversion
of Brendan accrued interest into common stock
|
$
|
961,226
|
$
|
-
|
|||
Issuance
of common stock in payment of accounts payable
|
$
|
35,000
|
$
|
-
|
|||
Debt
discount on 8% convertible debentures
|
$
|
18,346
|
$
|
-
|
· |
Obtain
additional equity or debt financing from investors. Subsequent to
June 30,
2006, the Company received net proceeds of $900,000 from the issuance
of
an 8% convertible debenture.
|
· |
Increase
revenue from the sale of its software. The Company is anticipating
to
release an upgraded version of its software during the next twelve
months
that will address customer enterprise level
requirements.
|
· |
If
necessary, the Company will initiate cost cutting programs that would
reduce cash requirements.
|
Period
Ended June 30,
|
|||||||
2006
|
2005
|
||||||
Net
income (loss), as reported
|
$
|
(845,393
|
)
|
$
|
(164,772
|
)
|
|
Stock-based
employee compensation,
|
|||||||
net
of tax effects
|
(57,078
|
)
|
(27,354
|
)
|
|||
Proforma
net income (loss)
|
$
|
(902,471
|
)
|
$
|
(192,126
|
)
|
|
Net
income (loss) per share:
|
|||||||
Basic
and diluted- as reported
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
|
Basic
and diluted- proforma
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
June
30,
|
|||||||
2006
|
2005
|
||||||
(Post-merger)
|
|||||||
Options
|
4,622,334
|
3,840,000
|
|||||
Warrants
|
720,667
|
358,400
|
|||||
Total
|
5,343,001
|
4,198,400
|
June
30,
|
|
||||||
|
|
2006
|
|
2005
|
|||
Accounts
receivable - trade
|
$
|
61,107
|
$
|
76,751
|
|||
Allowance
for doubtful accounts
|
(5,000
|
)
|
(5,000
|
)
|
|||
|
|||||||
Accounts
receivable, net
|
$
|
56,107
|
$
|
71,751
|
June
30,
|
|||||||
|
2006
|
2005
|
|||||
Computer
equipment
|
$
|
95,047
|
$
|
29,022
|
|||
Furniture
and fixtures
|
104,261
|
98,444
|
|||||
199,308
|
127,466
|
||||||
Less
accumulated depreciation
|
126,568
|
115,105
|
|||||
|
$
|
72,740
|
$
|
12,361
|
June
30,
|
June
30,
|
||||||
2006
|
2005
|
||||||
Forty-six
convertible, unsecured, senior subordinated
|
|||||||
notes
payable, due on various dates on or before
|
|||||||
September
2004, bearing interest at 8% per annum.
|
|||||||
Forty-four
of the notes were converted into 2,062,300
|
|||||||
shares
of the Company's common stock on December 29,
|
|||||||
2005
the result of a reverse acquisition.
|
$
|
130,000
|
$
|
1,387,500
|
|||
Six
convertible, unsecured, bridge notes payable, due
|
|||||||
various
dates on or before December 2004, bearing
|
|||||||
interest
at 12% per annum. The notes were converted
|
|||||||
into
714,174 shares of the Company's common stock
|
|||||||
on
December 29, 2005 as the result of a reverse
|
|||||||
acquisition.
|
-
|
435,472
|
|||||
Unsecured,
convertible note payable for $125,000,
|
|||||||
which
bears interest at a rate of 12% per annum.
|
125,000 | 125,000 | |||||
$
|
255,000
|
$
|
1,947,972
|
As
of
|
|
||||||
|
|
June
30, 2006
|
|
June
30, 2005
|
|||
Convertible
debentures issued
|