Nevada
|
7372
|
38-3378963
|
(State
or jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
I.D.
Number)
|
Title
of Each Class of
Securities
to be Registered
|
|
Amount
To Be
Registered
|
|
Proposed
Maximum
Offering
Price Per Share
|
|
Proposed
Maximum
Aggregate
Offering Price (4)
|
|
Amount
of
Registration
Fee (5)
|
|||||
Common
Stock, $0.004995 par value (1)
|
4,183,800
|
$
|
0.27
|
$
|
1,129,626
|
$
|
34.68
|
||||||
Common
Stock, $0.004995 par value (2)
|
1,745,000
|
$
|
0.27
|
$
|
471,150
|
$
|
14.46
|
||||||
Common
Stock, $0.004995 par value (3)
|
1,270,000
|
$
|
0.27
|
$
|
342,900
|
$
|
10.53
|
||||||
TOTAL
|
7,198,800
|
$
|
1,943,676
|
1)
|
Shares
of the Registrant's common stock, $0.004995 par value per share,
are being
registered for resale on behalf of certain selling security holders.
The
common stock being registered is issuable to the selling security
holders
on their conversion of our 8% Convertible Debentures issued on
June 20,
2006 through June 11, 2007 (the “Debentures”). The terms of the Debentures
fix the number of common shares that may be issuable upon conversion
of
the principal portion of the Debentures. The debentureholders have
elected
to receive interest either quarterly in cash or at the earlier
of
conversion or maturity in common stock. For those debentureholders
electing to receive common stock, the maximum number of common
shares so
issuable have been included in this registration.
|
2) | Shares of the Registrant's common stock, $0.004995 par value per share, are being registered for resale on behalf of certain selling security holders. The common stock being registered was issued to the selling security holders on their exercise of common stock purchase warrants pursuant to a rights offering. |
(3)
|
Shares
of the Registrant's common stock, $0.004995 par value per share,
are being
registered for resale on behalf of certain selling security holders.
The
common stock
being registered is issuable to the selling security holders on
their
exercise of warrants which were issued either for services or related
to
short term financings.
|
(4) |
Estimated
solely for purposes of calculating the registration fee in accordance
with
Rule 457(c) under the Securities Act of 1933, as amended (the "Act"),
based on the average of the closing bid and asked prices for the
Registrant's Common Stock (the "Common Stock") as reported on the
OTC
Bulletin Board on January 18,
2008.
|
(5) |
Paid
with the initial filing of this registration statement on Form
SB2,
Registration No. 333-147638.
|
Page
|
|
PROSPECTUS
SUMMARY
|
1
|
SUMMARY
FINANCIAL DATA
|
4
|
RISK
FACTORS
|
4
|
PLAN
OF DISTRIBUTION
|
10
|
SELLING
SHAREHOLDERS
|
10
|
THE
COMPANY
|
|
General
|
12
|
Background
|
13
|
Business
|
13
|
Marketing
and distribution
|
17
|
Dependence
upon single customers
|
17
|
Facilities
|
17
|
Employees
|
18
|
Government
regulation
|
18
|
USE
OF PROCEEDS
|
18
|
LITIGATION
|
18
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
18
|
CHANGES
IN ACCOUNTANTS
|
24
|
MANAGEMENT
|
25
|
PRINCIPAL
SHAREHOLDERS
|
29
|
CERTAIN
TRANSACTIONS
|
31
|
TRADING
MARKET AND RELATED MATTERS
|
31
|
DESCRIPTION
OF SECURITIES
|
32
|
LEGAL
MATTERS
|
33
|
EXPERTS
|
34
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE F-1
|
Shares
being offered for resale to the public
|
7,198,800
(28% of our shares currently outstanding,
73% of our shares currently
held
by non-affiliates)
|
Total
shares outstanding prior to the offering
|
25,450,594
as of January 24, 2008
|
Total
shares held by non-affiliates prior to the offering
|
9,918,016
as of January 24, 2008
|
Total
shares outstanding assuming conversion of
the debentures, including shares issuable as
interest
payments under the debentures, and exercise
of the warrants
|
30,904,394
|
Total
shares that would be outstanding assuming conversion
of the debentures, including shares
issuable
as interest payments under the debentures, and
exercise of all outstanding options and
warrants
|
41,396,261
|
Total
proceeds raised by offering
|
None.
However we may receive proceeds of
up to $762,000 on the exercise of
warrants
|
Convertible
debentures
|
A
form of our convertible debenture was included
as Exhibit 4.8 to our Current Report
on Form 8K filed as of July 18, 2006
|
||
Dividend
policy
|
We
have never paid a dividend and do not anticipate
paying a dividend in the foreseeable
future
|
Payments
to selling shareholders
|
We
have made or anticipate to make payments
to the selling shareholders as follows:
|
Convertible
debentures
|
||||
Finders
fees
|
$
|
120,000
|
||
Interest
payments
|
324,400
|
|||
Short-term
financings
|
||||
Finders
fees
|
$
|
90,000
|
||
Interest
payments
|
68,914 | |||
Convertible
debentures
|
||||
Gross
proceeds
|
$
|
2,027,500
|
||
Less
finders fee
|
120,000 | |||
Less
first year interest
|
162,200 | |||
Net
proceeds
|
$
|
1,745,300
|
||
Short-term
financings
|
||||
Gross
proceeds
|
$
|
700,000
|
||
Less
finders fee
|
90,000 | |||
Less
first year interest
|
68,914 | |||
Net
proceeds
|
$
|
541,086
|
Three
Months Ended September 30,
|
|
Year
Ended June 30,
|
|
||||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Net
sales
|
$
|
159,826
|
$
|
87,395
|
$
|
521,330
|
$
|
681,337
|
|||||
Net
(loss)
|
$
|
(707,451
|
)
|
$
|
(405,872
|
)
|
$
|
(2,110,698
|
)
|
$
|
(845,393
|
)
|
|
Net
(loss) per basic share
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
$
|
(0.09
|
)
|
$
|
(0.06
|
)
|
September
30, 2007
|
June
30, 2007
|
||||||
Working
capital deficit
|
$
|
(3,129,340
|
)
|
$
|
(1,679,643
|
)
|
|
Total
assets
|
$
|
522,062
|
$
|
435,525
|
|||
Total
liabilities
|
$
|
4,020,517
|
$
|
3,311,490
|
|||
Stockholders'
deficit
|
$
|
(3,498,455
|
)
|
$
|
(2,875,965
|
)
|
·
|
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.
|
|
|
Amount
and Percentage of
|
|
|||||||||||||
|
|
Beneficial
Ownership
|
|
Maximum
Number of
|
|
Common
Stock After the Sale
|
|
|||||||||
Name
|
|
of
Common Stock as
of
November 27, 2007
|
|
Shares
of Common
Stock
Offered for Sale
|
|
Number
|
%
|
|||||||||
Aladray,
Adnan
|
120,000
|
(1
|
)
|
120,000
|
-
|
*
|
||||||||||
Aladray,
Nazeah
|
60,000
|
(1
|
)
|
60,000
|
-
|
*
|
||||||||||
Belz,
Bruce Trustee
|
100,000
|
(1
|
)
|
100,000
|
-
|
*
|
||||||||||
Carter,
Shanon
|
21,600
|
(2
|
)
|
21,600
|
-
|
*
|
||||||||||
Chrobak,
Jerome
|
200,000
|
(1
|
)
|
200,000
|
-
|
*
|
||||||||||
Ciner,
Eugene and Natalie
|
10,000
|
(3
|
)
|
10,000
|
*
|
|||||||||||
Daniels,
Richard
|
150,000
|
(1
|
)
|
150,000
|
-
|
*
|
||||||||||
Duchein,
Derek IRA
|
388,800
|
(2
|
)
|
388,800
|
-
|
*
|
||||||||||
Duchein,
Julie IRA
|
259,200
|
(2
|
)
|
259,200
|
-
|
*
|
||||||||||
Flannery,
Todd
|
100,000
|
(9
|
)
|
100,000
|
-
|
*
|
||||||||||
Flowers,
Tim
|
43,200
|
(2
|
)
|
43,200
|
-
|
*
|
||||||||||
Holland,
Bryan
|
58,000
|
(10
|
)
|
58,000
|
-
|
*
|
||||||||||
Garbourel,
Victor
|
800,000
|
(1
|
)
|
800,000
|
-
|
*
|
||||||||||
Giffhorn,
Jesse
|
113,500
|
(2
|
)
|
112,000
|
1,500
|
*
|
||||||||||
Giffhorn,
Lowell
|
577,000
|
(4
|
)
|
532,000
|
45,000
|
*
|
||||||||||
Griesel,
Dian
|
240,000
|
(5
|
)
|
240,000
|
-
|
*
|
||||||||||
Iroquois
Master Fund Ltd.
|
250,000
|
(3)
(11
|
)
|
250,000
|
*
|
|||||||||||
Kybartai
Trust
|
100,000
|
(3)
(12
|
)
|
100,000
|
*
|
|||||||||||
Kincaid,
Doug
|
150,000
|
(9
|
)
|
150,000
|
-
|
*
|
||||||||||
Little
Bear Investments LLC
|
100,000
|
(3)
(13
|
)
|
100,000
|
*
|
|||||||||||
Luedloff,
Mitchell
|
43,200
|
(2
|
)
|
43,200
|
-
|
*
|
||||||||||
Midtown
Partners LLC
|
60,000
|
(5)
(14
|
)
|
60,000
|
*
|
|||||||||||
Morrisett,
Michael
|
470,000
|
(5
|
)
|
270,000
|
200,000
|
*
|
||||||||||
Neilitz,
Jason
|
150,000
|
(9
|
)
|
150,000
|
-
|
*
|
||||||||||
Opperman,
Anthony Wayne
|
200,000
|
(1
|
)
|
200,000
|
-
|
*
|
||||||||||
Opperman,
Donald
|
43,200
|
(2
|
)
|
43,200
|
-
|
*
|
||||||||||
Pensky,
Zachary
|
140,000
|
(3
|
)
|
140,000
|
*
|
|||||||||||
Potawatomi
Business Devel Corp
|
2,000,000
|
(8
|
)
|
2,000,000
|
-
|
*
|
||||||||||
Pratt,
Steven
|
23,200
|
(10
|
)
|
23,200
|
-
|
*
|
||||||||||
Shady
Beach Trust
|
108,000
|
(2)
(15
|
)
|
108,000
|
-
|
*
|
||||||||||
Vermaelen,
Theo
|
740,759
|
(6
|
)
|
86,400
|
654,359
|
2.7
|
%
|
|||||||||
Zolin,
James and Josephine
|
280,000
|
(7
|
)
|
280,000
|
-
|
*
|
(1)
|
Includes
shares of common stock issuable upon the conversion of 8% convertible
debenture(s) plus shares of common stock currently outstanding
issued on
the exercise of the rights
offering.
|
(2)
|
Includes
shares of common stock issuable upon the conversion of 8% convertible
debenture(s) plus the payment of interest in common stock plus
shares of
common stock currently outstanding issued on the exercise of the
rights
offering.
|
(3)
|
Includes
shares of common stock issuable upon the exercise of common stock
purchase
warrants issued to investors who participated in a short term bridge
loan.
|
(4)
|
Mr.
Giffhorn, an affiliate, is a director and Chief Financial Officer
of the
Company. The number of shares includes 345,000 shares of common
stock and
232,000 shares of common stock issuable upon the conversion of
8%
convertible debentures, including
interest.
|
(5)
|
Includes
shares of common stock issuable upon the exercise of common stock
purchase
warrants issued to individuals for services they
provided.
|
(6)
|
Dr.
Vermaelen, an affiliate, is a director of the Company. The number
of
shares includes 694,359 shares of common stock and 46,400 shares
of common
stock issuable upon the conversion of an 8% convertible debenture,
including interest.
|
(7)
|
Includes
90,000 shares of common stock issuable upon the conversion of 8%
convertible debentures, including interest, 100,000 shares of common
stock
issuable upon the exercise of a common stock purchase warrant issued
for
their participation in a short term loan and 90,000 shares of common
stock
currently outstanding issued on the exercise of the rights
offering.
|
(8)
|
Includes
2,000,000 shares of common stock issuable upon the conversion of
an 8%
convertible debenture. The shares issuable to the 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 debenture 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
the PBDC
would cause the PBDC to own in excess of 4.99% of our outstanding
common
stock immediately following such exercise. By the terms of the
debenture
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 the PBDC will not beneficially own
more
than 9.99% of our outstanding common stock at any time. Carol Lease
has
the sole voting and/or dispositive powers with respect to the securities
owned by the PBDC.
|
(9)
|
Includes
shares of common stock issuable upon the conversion of 8% convertible
debenture(s).
|
(10)
|
Includes
shares of common stock issuable upon the conversion of 8% convertible
debenture(s) plus the payment of interest in common
stock.
|
(11) |
Iroquois
Capital Management, LLC is the trading manager of Iroquois Master
Fund
Ltd. and has voting and investment discretion over the securities
held by
Iroquois Master Fund Ltd. Joshua Silverman has control over Iroquois
Capital Management, LLC and, in turn, has voting and investment
discretion
over the securities held by Iroquois Master Fund, Ltd. Both Iroquois
Capital Management, LLC and Joshua Silverman disclaim beneficial
ownership
of the securities held by Iroquois Master Fund.
|
(12) | Wolf Prensky has the sole voting and/or dispostive powers with respect to the securities owned by The K ybartai Trust. |
(13) | Jeffrey Mann and Zachary Prensky share the voting and/or dispositive powers with respect to the shares owned by Little Bear Investments LLC. |
(14) | Bruce Jordan has the sole voting and/or dispostive powers with respect to the securities owned by Midtown Partners LLC. |
(15) | Nancy Hughes has the sole voting and/or dispostive powers with respect to the securities owned by Shady Beach Trust. |
2007
|
|
2006
|
|||||
Domestic
sales
|
96.5
|
%
|
90.4
|
%
|
|||
Foreign
sales
|
|||||||
Europe
|
2.8
|
%
|
6.6
|
%
|
|||
Other
|
.7
|
%
|
3.0
|
%
|
|||
Total
sales
|
100.0
|
%
|
100.0
|
%
|
|
2007
|
|
2006
|
||||
$
|
125,000
|
$
|
289,000
|
||||
Amgen
|
61,900
|
-
|
Three
Months Ended September 30,
|
Increase
|
||||||||||||
2007
|
|
2006
|
(Decrease)
|
%
|
|||||||||
Statements
of Operations
|
|||||||||||||
Revenues
|
$
|
159,826
|
$
|
87,395
|
$
|
72,431
|
82.9 | % | |||||
Selling
expenses
|
42,688
|
23,205
|
19,483
|
84.0 | % | ||||||||
Research
and development
|
118,768
|
83,136
|
35,632
|
42.9 | % | ||||||||
General
and administrative
|
|||||||||||||
expenses
|
467,255
|
317,923
|
149,332
|
47.0 | % | ||||||||
Interest
expense
|
238,566
|
69,003
|
169,563
|
245.7 | % | ||||||||
Total
expenses
|
867,277
|
493,267
|
374,010
|
75.8 | % | ||||||||
Net
(loss)
|
$
|
(707,451
|
)
|
$
|
(405,872
|
)
|
$
|
301,579
|
74.3 | % | |||
Net
(loss) per basic and
|
|||||||||||||
diluted
share
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
$
|
0.01
|
50.0 | % |
Year
Ended
|
Year
Ended
|
Increase
|
|||||||||||
June
30, 2007
|
June
30, 2006
|
(Decrease)
|
%
|
||||||||||
Statements
of Operations
|
|||||||||||||
Revenues
|
$
|
521,330
|
$
|
681,337
|
$
|
(160,007
|
)
|
-23.5
|
%
|
||||
Selling
expenses
|
101,296
|
103,190
|
(1,894
|
)
|
-1.8
|
%
|
|||||||
General
and administrative
|
|||||||||||||
expenses
|
2,115,310
|
1,215,966
|
899,344
|
74.0
|
%
|
||||||||
Other
income
|
(38,121
|
)
|
-
|
(38,121
|
)
|
NM
|
|||||||
Interest
expense
|
453,543
|
207,574
|
245,969
|
118.5
|
%
|
||||||||
Total
expenses
|
2,632,028
|
1,526,730
|
1,105,298
|
72.4
|
%
|
||||||||
Net
(loss)
|
$
|
(2,110,698
|
)
|
$
|
(845,393
|
)
|
$
|
(1,265,305
|
)
|
149.7
|
%
|
||
Net
(loss) per basic and
|
|||||||||||||
diluted
share
|
$
|
(0.09
|
)
|
$
|
(0.06
|
)
|
$
|
(0.03
|
)
|
50.0
|
%
|
As
of
|
Increase
|
|||||||||
September
30, 2007
|
June
30, 2007
|
(Decrease)
|
||||||||
Working
Capital
|
||||||||||
Current
assets
|
$
|
349,991
|
$
|
250,218
|
$
|
99,773
|
||||
Current
liabilities
|
3,479,331
|
1,929,861
|
1,549,470
|
|||||||
Working
capital deficit
|
$
|
(3,129,340
|
)
|
$
|
(1,679,643
|
)
|
$
|
1,449,697
|
||
Long-term
debt
|
$
|
541,186
|
$
|
1,381,629
|
$
|
(840,443
|
)
|
|||
Stockholders'
deficit
|
$
|
(3,498,455
|
)
|
$
|
(2,875,965
|
)
|
$
|
622,490
|
||
|
Quarter
Ended September 30,
|
Increase
|
||||||||
2007
|
|
|
2006
|
(Decrease)
|
|
|||||
Statements
of Cash Flows Select Information
|
||||||||||
Net
cash provided (used) by:
|
||||||||||
Operating
activities
|
$
|
(562,052
|
)
|
$
|
(354,694
|
)
|
$
|
207,358
|
||
Investing
activities
|
$
|
(9,956
|
)
|
$
|
(15,414
|
)
|
$
|
(5,458
|
)
|
|
Financing
activities
|
$
|
498,192
|
$
|
773,500
|
$
|
(275,308
|
)
|
|
As
of
|
Increase
|
||||||||
|
September
30, 2007
|
June
30, 2007
|
(Decrease)
|
|||||||
Balance
Sheet Select Information
|
||||||||||
Cash
and cash equivalents
|
$
|
11,200
|
$
|
85,016
|
$
|
(73,816
|
)
|
|||
Accounts
receivable
|
$
|
148,842
|
$
|
75,283
|
$
|
73,559
|
||||
|
||||||||||
Accounts
payable and accrued expenses
|
$
|
1,574,193
|
$
|
1,478,257
|
$
|
95,936
|
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
John
R. Dunn II
|
|
56
|
|
Chairman,
Chief Executive Officer, President, and Director
|
George
Dunn
|
|
50
|
|
Secretary,
Chief Operating Officer
|
Lowell
W. Giffhorn
|
|
60
|
|
Chief
Financial Officer and Director
|
Theo
Vermaelen
|
|
53
|
|
Director
|
Stephen
Eisold
|
|
60
|
|
Director
|
Jason
Booth
|
41
|
Director
|
·
|
A
breach of the director’s duty of loyalty to our company or our
stockholders;
|
·
|
Acts
or omissions by the director not in good faith or which involve
intentional misconduct or a knowing violation of law;
|
·
|
Willful
or negligent declaration of an unlawful dividend, stock purchase
or
redemption; or
|
·
|
Transactions
from which the director derived an improper personal benefit.
|
Name
and
|
Fiscal
|
Option
|
|||||||||||
Principal
Position
|
Year
|
Salary
($)
|
Awards
($)
|
Total
($)
|
|||||||||
[a]
|
[b]
|
[c]
|
[f]
|
[j]
|
|||||||||
John
R. Dunn II
|
2007
|
$
|
108,000
|
$
|
5,071
|
$
|
113,071
|
||||||
President,
CEO and
|
2006
|
$
|
108,000
|
$
|
27,427
|
$
|
135,427
|
||||||
Director
|
|||||||||||||
George
Dunn
|
2007
|
$
|
108,000
|
$
|
5,071
|
$
|
113,071
|
||||||
VP,
Secretary and
|
2006
|
$
|
102,000
|
$
|
24,565
|
$
|
126,565
|
||||||
COO
|
June
30, 2007
|
|
June
30, 2006
|
|||||
Dividend
yield
|
0
|
%
|
0
|
%
|
|||
Volatility
|
42
|
%
|
1%-30
|
%
|
|||
5.10
|
%
|
2.76%-4.84
|
%
|
||||
Expected
life
|
5
years
|
5
years
|
|
Number
|
|
|
|||||||
of
|
|
|
||||||||
Securities
|
|
|
||||||||
Underlying
|
|
|||||||||
Unexercised
|
Option
|
|||||||||
Options
|
Exercise
|
Option
|
||||||||
(#)
|
Price
|
Expiration
|
||||||||
Name
|
Exercisable
|
($)
|
Date
|
|||||||
[a]
|
[b]
|
|
[e]
|
|
[f]
|
|||||
John
R. Dunn II
|
40,000
|
$
|
0.75
|
April
6, 2011
|
||||||
President,
CEO and
|
60,000
|
$
|
0.64
|
April
6, 2011
|
||||||
Director
|
50,000
|
$
|
0.64
|
June
15, 2012
|
||||||
George
Dunn
|
400,000
|
$
|
0.125
|
April
6, 2011
|
||||||
VP,
Secretary and
|
400,000
|
$
|
0.025
|
April
6, 2011
|
||||||
COO
|
60,000
|
$
|
0.64
|
April
6, 2011
|
||||||
50,000
|
$
|
0.64
|
June
15, 2012
|
|
Fees
|
|
|
|
|||||||||
Earned
|
|
|
|
||||||||||
or
|
|
|
|||||||||||
Paid
In
|
Option
|
All
Other
|
|||||||||||
Cash
|
Awards
|
Compensation
|
Total
|
||||||||||
Name
|
($)
|
($)
|
($)
|
($)
|
|||||||||
[a]
|
[b]
|
[d]
|
[g]
|
[h]
|
|||||||||
Lowell
W. Giffhorn
|
-
|
$
|
5,071
|
$
|
75,000
|
$
|
80,071
|
||||||
Theo
Vermaelen
|
-
|
$
|
5,071
|
-
|
$
|
5,071
|
|||||||
Stephen
Eisold
|
-
|
$
|
5,071
|
-
|
$
|
5,071
|
|||||||
Jason
Booth
|
-
|
$
|
9,043
|
-
|
$
|
9,043
|
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,
|
5,005,000
|
21.0
|
%
|
||||||
|
Chief
Executive Officer,
|
|||||||||
|
Chief
Technical Officer and
|
|||||||||
|
Director
|
|||||||||
George
Dunn (4)
|
Vice
President, Secretary
|
2,301,000
|
9.4
|
%
|
||||||
|
and
Chief Operating Officer
|
|||||||||
Lowell
W. Giffhorn (5)
|
Vice
President, Chief
|
645,000
|
2.7
|
%
|
||||||
|
Financial
Officer and Director
|
|||||||||
Theo
Vermaelen (6)
|
Director
|
859,359
|
3.6
|
%
|
||||||
Steven
Eisold (7)
|
Director
|
724,494
|
3.0
|
%
|
||||||
Jason
Booth (8)
|
Director
|
75,000
|
*
|
|||||||
All
Exective Officers and
|
||||||||||
Directors
as a Group
|
||||||||||
(6
persons) (9)
|
9,609,853
|
37.3
|
%
|
|||||||
Greater
than 5% Owners
|
||||||||||
Potawatomi
Business
|
||||||||||
Development
Corp.
|
4,000,000
|
Note
10
|
||||||||
Robert
Tabor
|
4,730,589
|
20.0
|
%
|
|||||||
Massoud
Kharrazian
|
1,487,136
|
6.3
|
%
|
|||||||
*
Less than 1%
|
(1) |
Reflects
amounts as to which the beneficial owner has sole voting power and
sole
investment power.
|
(2) |
Includes
stock options, common stock purchase warrants and convertible debentures
exercisable within 60 days
from the date hereof.
|
(3) |
Comprised
of 4,880,000 shares and 125,000 stock options.
|
(4) |
Comprised
of 1,416,000 shares and 885,000 stock options.
|
(5) |
Comprised
of 345,000 shares, 125,000 stock options, and 200,000 shares issuable
on
the conversion of a debenture.
|
(6) |
Comprised
of 694,359 shares, 125,000 stock options and 40,000 shares issuable
on the
conversion of a debenture.
|
(7) |
Comprised
of 599,494 shares and 125,000 stock
options.
|
(8) |
Comprised
of 75,000 stock options.
|
(9) |
Comprised
of 7,889,853 shares, 1,460,000 stock options and 240,000 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 we accept
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.
|
Closing
Price
|
|||||||
High
|
Low
|
||||||
Fiscal
Year Ended June 30, 2008
|
|||||||
First
Quarter
|
$
|
0.44
|
$
|
0.29
|
|||
Second
Quarter
|
$
|
0.33
|
$
|
0.20
|
|||
Third
Quarter (through January 18, 2008)
|
$
|
0.35
|
$
|
0.30
|
|||
Fiscal
Year Ended June 30, 2007
|
|||||||
First
Quarter
|
$
|
0.50
|
$
|
0.21
|
|||
Second
Quarter
|
$
|
1.01
|
$
|
0.40
|
|||
Third
Quarter
|
$
|
0.60
|
$
|
0.35
|
|||
Fourth
Quarter
|
$
|
0.51
|
$
|
0.37
|
|||
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
|
|||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
|
|
Consolidated
Balance Sheets, June 30, 2007 and 2006
|
F-3
|
|
|
||
Consolidated
Statements of Operation, for the years ended June 30, 2007 and
2006
|
F-4
|
|
|
||
Consolidated
Statement of Stockholders' Deficit, for the years ended June 30,
2007 and
2006
|
F-5
|
|
|
||
Consolidated
Statements of Cash Flows, for the years ended June 30, 2007 and
2006
|
F-6
|
|
|
||
Notes
to Consolidated Financial Statements
|
F-7-F-22
|
|
|
||
Condensed
Consolidated Balance Sheets as of September 30, 2007 (unaudited)
and June
30, 2007
|
F-23
|
|
|
||
Condensed
Consolidated Statements of Operations for the three months ended
September
30, 2007 and 2006 (unaudited)
|
F-24
|
|
|
||
Condensed
Consolidated Statements of Cash Flows for the three months ended
September
30, 2007 and 2006 (unaudited)
|
F-25
|
|
|
||
Notes
to Condensed Unaudited Consolidated Financial Statements
|
F-26-F-31
|
Brendan
Technologies, Inc.
|
|
Consolidated
Balance Sheets
|
June
30,
|
2007
|
|
2006
|
||||
|
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
85,016
|
$
|
149,512
|
|||
Accounts
receivable, net
|
75,283
|
56,107
|
|||||
Prepaid
expenses
|
89,919
|
301
|
|||||
Total
current assets
|
250,218
|
205,920
|
|||||
Property
and equipment, net
|
157,356
|
72,740
|
|||||
Other
assests
|
27,951
|
8,190
|
|||||
$
|
435,525
|
$
|
286,850
|
||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|||||||
Current
liabilities:
|
|||||||
Convertible
notes payable in default
|
$
|
130,000
|
$
|
255,000
|
|||
Accrued
interest in default
|
95,382
|
78,217
|
|||||
Note
payable
|
100,000
|
-
|
|||||
Accounts
payable
|
12,916
|
161,430
|
|||||
Accrued
wages and vacation
|
842,525
|
772,030
|
|||||
Accrued
interest
|
527,434
|
414,959
|
|||||
Deferred
revenue
|
98,394
|
77,651
|
|||||
Current
portion of lease obligations
|
7,388
|
6,442
|
|||||
Current
portion 8% convertible debentures net of debt discount
|
24,010
|
-
|
|||||
Current
portion 8% convertible debentures net of debt discount-
|
|||||||
related
parties
|
91,812
|
-
|
|||||
Total
current liabilities
|
1,929,861
|
1,765,729
|
|||||
Long
term portion of lease obligations
|
3,607
|
10,996
|
|||||
8%
Convertible debentures net of debt discount
|
1,343,868
|
23,002
|
|||||
8%
Convertible debentures net of debt discount - related
parties
|
34,154
|
83,652
|
|||||
Total
liabilities
|
3,311,490
|
1,883,379
|
|||||
Stockholders'
deficit
|
|||||||
Preferred
stock, $.004995 par value; 5,000,000 shares
|
|||||||
authorized:
none outstanding
|
-
|
-
|
|||||
Common
stock, $.004995 par value; 50,000,000 shares
|
|||||||
authorized:
23,705,594 and 25,498,794 issued and
|
|||||||
outstanding
at June 30, 2007 and 2006, respectively
|
118,409
|
127,366
|
|||||
Additional
paid in capital
|
5,358,033
|
4,517,814
|
|||||
Accumulated
deficit
|
(8,352,407
|
)
|
(6,241,709
|
)
|
|||
Total
stockholders' deficit
|
(2,875,965
|
)
|
(1,596,529
|
)
|
|||
$
|
435,525
|
$
|
286,850
|
See
accompanying report of independent registered public accounting
firm,
summary of accounting policies and
notes to consolidated financial statements.
|
Brendan
Technologies, Inc.
|
|
Consolidated
Statements of Operation
|
Year
Ended June 30,
|
2007
|
|
2006
|
||||
Revenue
|
$
|
521,330
|
$
|
681,337
|
|||
Selling
expenses
|
101,296
|
103,190
|
|||||
General
and administrative expenses
|
2,115,310
|
1,215,966
|
|||||
2,216,606
|
1,319,156
|
||||||
Income
(loss) from operations
|
(1,695,276
|
)
|
(637,819
|
)
|
|||
Other
income (expense)
|
|||||||
Other
income
|
38,121
|
-
|
|||||
Interest
expense
|
(453,543
|
)
|
(207,574
|
)
|
|||
Loss
before provision for income taxes
|
(2,110,698
|
)
|
(845,393
|
)
|
|||
Provision
for income taxes
|
-
|
-
|
|||||
Net
loss
|
$
|
(2,110,698
|
)
|
$
|
(845,393
|
)
|
|
Basic
and diluted loss per share
|
$
|
(0.09
|
)
|
$
|
(0.06
|
)
|
|
Basic
and diluted weighted average
|
|||||||
common
shares outstanding
|
23,710,507
|
15,146,106
|
|||||
See
accompanying report of independent registered public accounting
firm,
summary of accounting policies and notes to consolidated financial
statements.
|
Brendan
Technologies, Inc.
|
|
Consolidated
Statements of Stockholders' Deficit
|
|
|
Common
Stock
|
|
Additional
Paid
|
|
Retained
Earnings
|
Stockholders'
|
|||||||||
Years
Ended June 30, 2007 and 2006
|
Shares
|
|
Amount
|
in
Capital
|
(Deficit)
|
(Deficit)
|
||||||||||
Balance,
July 1, 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
|
-
|