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As Of Filer Filing For·On·As Docs:Size Issuer Agent 7/25/07 Coda Octopus Group, Inc. SB-2/A 9:17M Vintage/FA |
Document/Exhibit Description Pages Size 1: SB-2/A Pre-Effective Amendment to Registration of HTML 2.70M Securities by a Small-Business Issuer 2: EX-5.1 Opinion re: Legality HTML 12K 3: EX-10.11 Material Contract HTML 7K 4: EX-10.12 Material Contract HTML 7K 5: EX-10.13 Material Contract HTML 33K 6: EX-10.14 Material Contract HTML 158K 7: EX-23.2 Consent of Experts or Counsel HTML 7K 8: EX-23.3 Consent of Experts or Counsel HTML 7K 9: EX-23.4 Consent of Experts or Counsel HTML 5K
Delaware
|
3812
|
34-200-8348
|
(State
or other jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Classification
Code Number)
|
Identification
No.)
|
Title
of Each Class of Securities to be Registered
|
|
Amount
To Be Registered
|
|
Proposed
Maximum Offering Price Per Share (1)
|
|
Proposed
Maximum Aggregate Offering Price
|
|
Amount
of
Registration
Fee
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Common
Stock, par value $0.001
|
|
|
15,000,000
|
|
$
|
1.52
|
|
$
|
22,800,000
|
|
$
|
2,439.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.001 (2)
|
|
|
17,400,000
|
|
$
|
1.52
|
|
$
|
26,448,000
|
|
$
|
2,829.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock, par value $0.001 (2) (3)
|
|
|
400,000
|
|
$
|
1.58
|
|
$
|
632,000
|
|
$
|
67.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
32,800,000
|
|
|
|
|
$
|
49,880,000
|
|
$
|
5,337.16
|
(4)
|
|
Page
|
|||
|
|
|||
Prospectus
Summary
|
1
|
|||
Risk
Factors
|
3
|
|||
Forward
Looking Statements
|
8
|
|||
Use
of Proceeds
|
8
|
|||
Management's
Discussion and Analysis or Plan of Operation
|
9
|
|||
Business
|
15
|
|||
Description
of Property
|
25
|
|||
Legal
Proceedings
|
26
|
|||
Directors
and Executive Officers
|
27
|
|||
Executive
Compensation
|
30
|
|||
Security
Ownership of Certain Beneficial Owners and Management
|
37
|
|||
Market
for Common Equity and Related Stockholder Matters
|
38
|
|||
Selling
Stockholders
|
39
|
|||
Recent
Financing
|
42
|
|||
Certain
Relationships and Related Transactions
|
43
|
|||
Description
of Securities
|
44
|
|||
Plan
of Distribution
|
46
|
|||
Legal
Matters
|
47
|
|||
Experts
|
47
|
|||
Where
You Can Find More Information
|
48
|
|||
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
|
48
|
|||
Index
to Consolidated Financial Statements
|
F-1
|
|
·
|
marine
geophysical survey (commercial), which focuses around oil and
gas,
construction and oceanographic research and exploration, where
we market
to survey companies, research institutions, salvage companies.
This was
our original focus ,
from founding in 1994, with current products spanning geophysical
data
collection and analysis, through to printers to output geophysical
data
collected by sonar. We believe that our marine geophysical survey
markets
are experiencing rapid growth due to: 1) successful new product
introductions in recent periods; 2) market-proximity benefits
derived from
2004 relocation to the United States; 3) initial market penetration
into
new sub-sectors of the marine geophysical survey markets; 4)
the high
price of oil and gas in the past few years, resulting in unprecedented
exploration and production activity.
|
|
·
|
underwater
defense/security, where we market to ports and harbors, state
and federal
government agencies and defense contractors. We started to focus
on this
market following the acquisition of OmniTech AS, a Norwegian
company, in
December 2002, a company which had developed a prototype system,
the
Echoscope™,
a unique, patented instrument which permits accurate real time
three-dimensional visualization, measurement, data recording
and mapping
of underwater objects. We have recently completed developing
and commenced
marketing this first real time, high resolution, three-dimensional
underwater sonar imaging device which we believe has particularly
important applications in the fields of port security, defense
and
undersea oil and gas
development.
|
|
·
|
First
mover advantage in 3-D sonar markets
based on our patented technology, our research and development
efforts and
extensive and successful testing in this area that date back
almost two
decades as well as broad customer acceptance.
|
|
|
|
|
·
|
Early
recognition of need for 3-D real-time sonar in defense/security
applications.
|
|
|
|
|
·
|
Expansion
into new geographies like North America and Western
Europe.
|
|
|
|
|
·
|
Expansion
into new commercial markets like commercial marine survey with
innovative
products.
|
|
|
|
Shares
offered by Selling Stockholders
|
|
Up
to 32,800,000
shares, including 17,800,000
shares issuable upon exercise of warrants
|
|
|
|
Common
Stock to be outstanding after the offering
|
|
65,909,656*
|
|
|
|
Use
of Proceeds
|
|
We
will not receive any proceeds from the sale of the common stock
hereunder.
See "Use of Proceeds" for a complete description
|
|
|
|
Risk
Factors
|
|
The
purchase of our common stock involves a high degree of risk.
You
should carefully review and consider "Risk Factors" beginning
on page
3
|
· |
approximately
$1,180,000 in cash that
was paid at
closing;
|
· |
approximately
$364,000 in cash one year after closing
(paid on June 26, 2007),
which is accrued as $382,000 as at October 31, 2006, due to exchange
rate
movements;
|
· |
approximately
$286,000 in shares of our common stock due
on October 31, 2007, subject
to certain performance milestones by
Martech;
|
· |
up
to $859,500 in cash and common stock payable within 45 days after
the
three year period ended October 31, 2008, subject to certain performance
milestones by Martech.
|
|
·
|
continued
scientific progress in our research and development
programs;
|
|
·
|
competing
technological and market developments;
|
|
·
|
our
ability to establish additional collaborative relationships;
and
|
|
·
|
the
effect of commercialization activities and facility expansions
if and as
required.
|
|
·
|
potential
inability to successfully integrate acquired operations and products
or to
realize cost savings or other anticipated benefits from
integration;
|
|
·
|
diversion
of management’s attention from on-going business
concerns;
|
|
·
|
loss
of key employees of acquired operations;
|
|
·
|
the
difficulty of assimilating geographically dispersed operations
and
personnel of the acquired companies;
|
|
·
|
the
potential disruption of our ongoing business;
|
|
·
|
unanticipated
expenses related to such integration;
|
|
·
|
the
correct assessment of the relative percentages of in-process
research and
development expense that can be immediately written off as compared
to the
amount which must be amortized over the appropriate life of the
asset;
|
|
·
|
the
impairment of relationships with employees and customers of either
an
acquired company or our own business;
|
|
·
|
the
potential unknown liabilities associated with acquired
business;
|
|
·
|
inability
to recover strategic investments in development stage entities;
and
|
|
·
|
insufficient
revenues to offset increased expenses associated with
acquisitions.
|
|
·
|
Ongoing
development of enhanced technical features and
benefits;
|
|
·
|
Reductions
in the manufacturing cost of competitors’ products;
|
|
·
|
The
ability to maintain and expand distribution channels;
|
|
·
|
Brand
name;
|
|
·
|
The
ability to deliver our products to our customers when
requested;
|
|
·
|
The
timing of introductions of new products and services;
and
|
|
·
|
Financial
resources.
|
|
·
|
technological
innovations or new products and services by us or our
competitors;
|
·
|
additions
or departures of key personnel;
|
|
|
·
|
sales
of our common stock;
|
|
·
|
our
ability to integrate operations, technology, products and
services;
|
|
·
|
our
ability to execute our business plan;
|
|
·
|
operating
results below expectations;
|
|
·
|
loss
of any strategic relationship;
|
|
·
|
industry
developments;
|
|
·
|
economic
and other external factors; and
|
|
·
|
period-to-period
fluctuations in our financial
results.
|
|
·
|
marine
geophysical survey (commercial), which focuses around oil and
gas,
construction and oceanographic research and exploration, where
we market
to survey companies, research institutions, salvage companies.
This was
our original focus, from original founding in 1994, with current
products
spanning geophysical data collection and analysis, through to
printers to
output geophysical data collected by sonar. We believe that our
marine
geophysical survey markets are experiencing rapid growth due
to: 1)
successful new product introductions in recent periods; 2)
market-proximity benefits derived from 2004 relocation to the
United
States; 3) initial market penetration into new sub-sectors of
the marine
geophysical survey markets; 4) the high price of oil and gas
in the past
few years, resulting in unprecedented exploration and production
activity.
|
|
·
|
underwater
defense/ security, where we market to ports and harbors, state
and federal
government agencies and defense contractors. We started to focus
on this
market following the acquisition of OmniTech AS, a Norwegian
Company, in
December 2002, a company which had developed a prototype system,
the
Echoscope™,
a unique, patented instrument which permits accurate three-dimensional
visualization, measurement, data recording and mapping of underwater
objects. We have recently completed developing and commenced
marketing
this first real time, high resolution, three-dimensional underwater
sonar
imaging device which we believe has particularly important applications
in
the fields of port security, defense and undersea oil and gas
development.
|
·
|
First
mover advantage in 3-D sonar markets based on our patented technology,
our
research and development efforts and extensive and successful
testing in
this area that date back almost two decades as well as broad
customer
acceptance.
|
|
|
·
|
Early
recognition of need for 3-D real-time sonar in defense/security
applications.
|
|
·
|
Expansion
into new geographies like North America and Western
Europe.
|
|
·
|
Expansion
into new commercial markets like commercial marine survey with
innovative
products.
|
|
·
|
Recent
sole source classification for one of our products and its derivatives
by
certain government procurement
agencies.
|
·
|
we
are now starting to bid (sometimes in partnership, where areas
of focus
other than underwater sonar and wireless video surveillance capability
are
demanded) for complete port security and other solutions. We
have bid on a
small number of these in the last six months and hope for our
first
successes shortly.
|
|
·
|
we
are currently reviewing the possibility of launching next year,
in
partnership with others, a services business based on our product
set.
This business will be port based and will, for example, provide
ship hull
inspections by way of rental of equipment and provision of a
team to
operate the equipment for any ship entering that particular
port.
|
|
·
|
an
increase in the number of employees from 37 at October 31, 2005
to 77 at
October 31, 2006;
|
|
·
|
a
dditional lease expense associated with Florida operations;
and
|
|
·
|
increased
accounting, legal and related costs associated with the Company's
efforts
to establish and operate as a public company in the
U.S.
|
2006
|
2005
|
%
Increase
(decrease)
|
||||||||
Net
revenue
|
7,291,291
|
4,288,416
|
70
|
%
|
||||||
Cost
of revenue
|
2,611,590
|
2,464,800
|
6
|
%
|
||||||
Gross
profit
|
4,679,701
|
1,823,616
|
157
|
%
|
||||||
Research
and development
|
3,130,821
|
1,044,695
|
200
|
%
|
||||||
Selling,
general and administrative expenses
|
7,453,946
|
4,349,674
|
71
|
%
|
||||||
Other
operating expenses
|
447,750
|
-
|
||||||||
Operating
loss
|
(6,352,816
|
)
|
(3,570,753
|
)
|
78
|
%
|
||||
Other
income (expense):
|
|
|
|
|||||||
Other
income
|
3,012
|
1,319
|
128
|
%
|
||||||
Interest
expense
|
(1,203,690
|
)
|
(219,855
|
)
|
447
|
%
|
||||
Total
other expense
|
(1,200,678
|
)
|
(218,536
|
)
|
449
|
%
|
||||
Loss
before income taxes
|
(7,553,494
|
)
|
(3,789,289
|
)
|
99
|
%
|
||||
Provision
for income taxes
|
(5,676
|
)
|
(17,766
|
)
|
(68
|
%)
|
||||
Net
loss
|
(7,559,170
|
)
|
(3,807,055
|
)
|
99
|
%
|
||||
Preferred
Stock Dividends:
|
|
|
|
|||||||
Series
A
|
(309,914
|
)
|
-
|
|||||||
Series
B
|
(74,130
|
)
|
-
|
|||||||
Beneficial
Conversion Feature
|
(4,152,800
|
)
|
-
|
|||||||
Net
Loss Applicable to Common Shares
|
(12,096,014
|
)
|
(3,807,055
|
)
|
218
|
%
|
· |
Continue
to sell our current range of
products into a mixture of commercial and government markets, increasing
sales of these products over the course of this financial year -
we are
expecting previous growth trends broadly to continue over the course
of
the year;
|
· |
Start
to sell complete turnkey systems based around our leading Echoscope™ 3-D
technology, to open markets in law enforcement and inspection - a
great
deal of our R&D expenditure has been directed towards the launch of
these systems earlier this year, and we expect to sell a small number
of
high-value systems before the end of the current financial
year;
|
· |
Complete
our first government sales in the US;
|
· |
Gain
our first port security solution contracts through the provision
of our
unique 3-D technology and other products and services, enabling us
to
provide complete solutions;
|
· |
Integrate
our latest acquisition, Colmek Systems Engineering, which will add
to
profitability this year through its current order book and
performance;
|
· |
Reduce
costs through the closure of at least one site this year in England,
UK -
this is close to completion;
|
· |
Reorganize
our subsidiary operations to increase efficiency and reduce the need
for
additional staff recruitment through the remainder of the
year;
|
· |
Continue
to review and refocus our cost base where necessary to achieve a
cost base
commensurate with our current level of
activity.
|
Pound
Sterling
|
Norwegian
Kroner
|
|||||||||||||||
Actual
Results
|
Constant
Rates
|
Actual
Results
|
Constant
Rates
|
Total
Effect
|
||||||||||||
Revenues
|
$
|
6,848,340
|
$
|
6,937,481
|
$
|
2,240,098
|
$
|
2,252,370
|
$
|
101,413
|
||||||
Costs
|
$
|
8,752,977
|
$
|
8,837,384
|
$
|
2,185,474
|
$
|
2,197,447
|
$
|
96,380
|
||||||
Profits/(Losses)
|
$ |
(1,904,637
|
)
|
$ |
(1,900,097
|
)
|
$
|
54,624
|
$
|
54,923
|
$
|
5,033
|
||||
Assets
|
$
|
6,500,651
|
$
|
6,122,610
|
$
|
650,871
|
$
|
653,315
|
$ |
(375,597
|
)
|
|||||
Liabilities
|
$
|
4,590,339
|
$
|
4,254,795
|
$
|
373,426
|
$
|
375,548
|
$ |
(333,422
|
)
|
|||||
Net
Assets/(Liabilities)
|
$
|
1,910,312
|
$
|
1,867,815
|
$
|
277,445
|
$
|
277,767
|
$ |
(42,175
|
)
|
|
·
|
marine
geophysical survey (commercial), which focuses around oil and
gas,
construction and oceanographic research and exploration, where
we market
to survey companies, research institutions, salvage companies.
This was
our original focus, from founding in 1994. Our current products
encompass
geophysical data collection and analysis, through to printers
to output
geophysical data collected by sonar. We believe that our marine
geophysical survey markets are experiencing rapid growth due
to: 1)
successful new product introductions in recent periods; 2)
market-proximity benefits derived from 2004 relocation to the
United
States; 3) initial market penetration into new sub-sectors of
the marine
geophysical survey markets; 4) the high price of oil and gas
in the past
few years, resulting in unprecedented exploration and production
activity.
|
|
·
|
underwater
defense/security, where we market to ports and harbors, state
and federal
government agencies and defense contractors. We started to focus
on this
market following the acquisition of OmniTech AS, a Norwegian
company, in
December 2002 (now operating under the name of Coda Omnitech
AS), a
Company which had developed a prototype system, the Echoscope
™ , a
unique, patented instrument which supplies accurate three-dimensional
visualization, measurement, data recording and mapping of underwater
objects. We have recently completed developing and commenced
marketing
this first real time, high resolution, three-dimensional underwater
sonar
imaging device which we believe has particularly important applications
in
the fields of port security, defense and undersea oil and gas
development.
|
|
·
|
First
mover advantage in 3-D sonar markets based on our patented technology,
our
research and development efforts and extensive and successful
testing in
this area that date back almost two decades as well as broad
customer
acceptance.
|
|
·
|
Early
recognition of need for 3-D real-time sonar in defense/security
applications.
|
|
·
|
Expansion
into new geographies like North America and Western
Europe.
|
|
·
|
Expansion
into new commercial markets like commercial marine survey with
innovative
products.
|
·
|
inspection
of harbor walls.
|
|
|
·
|
inspection
of ship hulls,
|
|
·
|
inspection
of bridge pilings;
|
|
·
|
ROV
navigation (obstacle avoidance);
|
·
|
AUV
navigation and target recognition (obstacle avoidance);
|
|
·
|
construction
- pipeline touchdown placement and inspection;
|
|
·
|
obstacle
avoidance navigation;
|
|
·
|
bathymetry
(measurement of water depth to create 3-D terrain
models);
|
|
·
|
monitoring
underwater construction;
|
|
·
|
underwater
intruder detection;
|
|
·
|
dredging
and rock dumping;
|
|
|
·
|
contraband
detection;
|
·
|
locating
and identifying objects undersea, including
mines.
|
|
·
|
Coda
Octopus Products - eight persons distributed between the UK and
Florida,
USA
|
|
|
|
|
·
|
Martech
Systems (Weymouth) - two full time and one part time based in Weymouth,
UK
|
|
|
|
|
·
|
Colmek
Systems Engineering - one full time staff in Salt Lake City and
one in
Washington, DC
|
|
|
|
|
·
|
Innalogic
Inc - one staff member based in New York City, USA
|
|
|
|
|
·
|
Port
Security Group - currently being developed by Group-level
staff
|
|
|
|
|
·
|
Group
level - two members of staff, based in New York City,
USA
|
|
·
|
Product:
The extension of our product line (particularly Echoscope™) through adding
value to produce higher added functionality products (eg. UIS™, the
Company’s Underwater Inspection System).
|
|
|
|
|
·
|
Price:
The maintenance and enhancement of profit margin through value
add (as
described above).
|
|
|
|
|
·
|
Place:
The use of strategic partnerships, at the higher value end of the
market,
particularly to provide solutions rather than product (eg. the
provision,
through partnership, of a complete port security solution to a
major
port), and the use of existing and new sales agents to provide
sales leads
for lower value but very important “pure” product
sales.
|
|
|
|
|
·
|
Promotion:
The attendance and illustration of our capabilities at trade shows,
use of
customer mailing, advertising and trade public
relations.
|
|
·
|
PMA
Group, a lobbying firm based in Washington, DC, assists at a congressional
level and has been employed by the Group for the past 18
months;
|
|
|
|
|
·
|
CJ
Strategies, a lobbying firm based in Washington, DC, is assisting
in
reaching the US Navy and has strong connections with the state
of
California;
|
|
|
|
|
·
|
The
Charles Group, a lobbying firm based in Washington, DC, is assisting
in
reaching the government agencies, such as the FBI, US Secret Service,
DEA,
etc.;
|
|
|
|
|
·
|
The
Johnson Group, a company based in Washington, DC, is assisting
in reaching
individual ports and other end-users, as well as helping with funding
for
these end-users from Homeland
Security.
|
|
·
|
Patent
No. 6,438,071 concerns the “Method for Producing a 3-D Image” and is
recorded in the European Patents Register File #SH-44923; Australia
#55375/99; Norway #307014 and US Patent Office # 6,438,071. This
patent
relates to the method for producing an image of a submerged object
(3),
e.g. a shipwreck or the sea bottom, comprising the steps of emitting
acoustic waves from a first transducer toward a first chosen
volume.
|
|
·
|
Patent
No. 6,532,192 concerns “Subsea Positioning System and Apparatus”, recorded
in the US Patent Office. This patent relates to subsea positioning
system
and apparatus.
|
|
·
|
6
are employed in research and development in our Bergen
facility
|
|
·
|
4
are employed in production, marketing and administration at our
Oxford
facility
|
|
·
|
21
are employed in software development, marketing and administration
at our
Edinburgh office
|
|
·
|
2
are employed in production at our Edinburgh facility
|
|
·
|
8
are employed in management and administration at our New York
City
office
|
|
·
|
6
are employed in product development, sales and support in New
York
City
|
|
·
|
3
are employed in sales and marketing at our Florida
office
|
|
·
|
2
are employed in Government Relations at our Washington
office
|
|
·
|
27
are employed in Martech in Weymouth, of which 24 are full time
employees
and 3 are part time (paid on an hourly basis)
|
|
·
|
19
are employed in Colmek in Salt Lake City, the main categories
of employees
being engineers and
technician.
|
Name
|
|
Age
|
|
Position(s)
|
|
Jason
Reid
|
|
41
|
|
President,
Chief Executive Officer
and Director
|
|
Paul
Nussbaum
|
|
59
|
|
Chairman
of the Board of Directors
|
|
Rodney
Peacock
|
|
61
|
|
Director
|
|
Jody
E. Frank
|
55
|
Chief
Financial Officer
|
|||
Blair
Cunningham
|
|
38
|
|
Chief
Technology Officer
|
|
Anthony
Davis
|
|
41
|
|
Chief
Commercial Officer
|
|
Frank
B. Moore
|
|
72
|
|
Senior
Vice President - Government Relations
|
|
Geoff
Turner
|
|
54
|
|
Senior
Vice President - Mergers and Acquisitions
|
|
Scott
Debo
|
|
37
|
|
President
and Chief Executive Officer,
Colmek
Systems Engineering
|
|
|
·
|
Being
directly responsible for the appointment, compensation and oversight
of
the independent auditor, which shall report directly to the Audit
Committee, including resolution of disagreements between management
and
auditors regarding financial reporting for the purpose of preparing
or
issuing an audit report or related work.
|
|
|
|
|
·
|
oversee
management’s preparation of the Company’s financial statements and
management’s conduct regarding the accounting and financial reporting
processes;
|
|
|
|
|
·
|
oversee
management’s maintenance of internal controls and procedures for financial
reporting;
|
|
|
|
|
·
|
oversee
the Company’s compliance with applicable legal and regulatory
requirements, including without limitation, those requirements
relating to
financial controls and reporting;
|
|
|
|
|
·
|
oversee
the independent auditor’s qualifications and
independence;
|
|
|
|
|
·
|
oversee
the performance of the independent auditors, including the annual
independent audit of the Company’s financial
statements;
|
|
|
|
|
·
|
prepare
the report required by the rules of the SEC to be included in the
Company’s proxy statement; and
|
|
|
|
|
·
|
discharge
such duties and responsibilities as may be required of the Audit
Committee
by the provisions of applicable law or rule or regulation of the
American
Stock Exchange and the Sarbanes-Oxley Act of
2002.
|
Name
and Principal Position
|
|
Year
|
|
Salary
(1)
|
|
Bonus
|
|
Restricted
Stock
Awards
|
|
Option
Awards
|
|
All
Other
Compensation
|
|
Total
|
|
|||||||
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
(2)
|
|
($)
|
|
($)
|
|
|||||||
Jason
Reid
President
and Chief Executive Officer
|
|
|
2006
2005
|
|
|
250,000
215,047
|
|
|
-0-
-0-
|
|
|
$100,000
-0-
|
(8)
|
|
-0-
$107,060
|
(3)
|
|
12,667
-0-
|
|
|
362,667
322,107
|
|
Blair
Cunningham
Chief
Technology Officer
|
|
|
2006
2005
|
|
|
144,072
154,317
|
|
|
-0-
-0-
|
|
|
$43,750
-0-
|
(9)
|
|
-0-
$53,530
|
(4)
|
|
20,249
19,299
|
|
|
208,071
227,146
|
|
Anthony
Davis
Chief
Commercial Officer
|
|
|
2006
2005
|
|
|
163,796
134,836
|
|
|
-0-
-0-
|
|
|
$43,750
-0-
|
(10)
|
|
-0-
$40,148
|
(5)
|
|
10,858
-0-
|
|
|
218,404
174,984
|
|
Geoff
Turner (5)
Senior
Vice President,
M&A
|
|
|
2006
2005
|
|
|
178,000
29,667
|
|
|
-0-
-0-
|
|
|
-0-
-0-
|
|
|
-0-
$58,285
|
(6)
|
|
-0-
-0-
|
|
|
178,000
87,952
|
|
Frank
Moore (5)
Senior
VP
Government Relations
|
|
|
2006
|
|
|
75,000
|
|
|
-0-
|
|
|
$31,250
|
(11)
|
|
$37,001
|
(7)-
|
|
2,500
|
|
|
145,751
|
|
(1)
|
A
portion of these amounts were paid in UK Pounds (the conversion
rate used
in this table for these amounts is $1.8457 per UK
Pound).
|
||
|
(2)
|
Amount
represents the aggregate grant date fair value computed in accordance
with
Statement of Financial Accounting Standards No. 123R, “ Share-Based
Payment”
(“SFAS 123R”). Information regarding the assumptions made in the valuation
reported and material terms of each grant are incorporated herein
by
reference from “Note 4 Capital Stock” to our Consolidated Financial
Statements for the Year Ended October 31, 2006.
|
|
|
(3)
|
Comprising
400,000 options valued based on the date of issue using Black
Scholes
method and booked in our accounts as an expense.
|
|
|
(4)
|
Comprising
200,000 options valued based on the date of issue using Black
Scholes
method and booked in our accounts as an expense.
|
|
|
(5)
|
Comprising
150,000 options valued based on the date of issue using Black
Scholes
method and booked in our accounts as an expense.
|
|
|
(6)
|
Comprising
150,000 options valued based on date of issue using Black Scholes
method
and booked in our accounts as an expense.
|
|
|
(7)
|
Comprising
150,000 options valued based on date of issue using Black Scholes
method
and booked in our accounts as an expense.
|
|
|
(8)
|
Comprising
140,000 shares valued at $100,000
|
|
|
(9)
|
Comprising
50,000 shares, half of which is valued at $0.50 and half at
$1.25
|
|
(10)
|
Comprising
50,000 shares, half of which is valued at $0.50 and half at
$1.25
|
||
(11)
|
Comprising
25,000 shares valued at $1.25
|
Name
(a) |
Number
of Securities Underlying Unexercised Options
(#) Exercisable (b) |
Number
of Securities Underlying Unexercised
Options
(#) Unexercisable (c) |
Option
Exercise
Price
($)
(e) |
Option
Expiration
Date
(f) |
|||||||||
Jason
Reid
President
and Chief Executive Officer
|
268,000
|
132,000
|
** |
$
|
1.00
|
May
2010
|
|||||||
Blair
Cunningham
Chief
Technology Officer
|
134,000
|
66,000
|
** |
$
|
1.00
|
May
2010
|
|||||||
Anthony
Davis
Chief
Commercial Officer
|
100,500
|
49,500
|
** |
$
|
1.00
|
May
2010
|
|||||||
Geoff
Turner
Senior
Vice President M&A
|
100,500
|
49,500
|
*** |
$
|
1.00
|
November
2010
|
|||||||
Frank
Moore
Senior
VP
Government Relations
|
100,500
|
49,500
|
**** |
$
|
1.00
|
May
2011
|
(1)
|
William
Ahearn died on June 15, 2006 and all information is through that
date.
This table reflects his compensation as a director only. Mr.
Ahearn
received compensation in his capacity as SVP Research and
Development.
|
|
|
(2)
|
Consists
of an annual retainer in the amount of $40,000 and $2,500 per
board
meeting attended. Half of these amounts is payable in the Company’s
Stock
|
|
(3)
|
Consists
of an annual retainer in the amount of $20,000 and $2,500 per
board
meeting attended. Half of these amounts is payable in the Company’s
Stock.
|
|
(4)
|
Options
issued in 2006 have an exercise price of $1.50 per
share.
|
|
(5)
|
Consist
of 20,000 shares.
|
|
(6)
|
Consist
of 12,000 shares.
|
|
·
|
assist
management with the analysis and implementation of its business
plan;
|
|
·
|
explore
acquisitions, strategic alliances, partnering opportunities and
other
cooperative ventures within and without its present industry
focus;
|
|
·
|
evaluate
possible acquisition and strategic partnering
candidates;
|
|
·
|
evaluate
merger and acquisition strategies, including the evaluation of
targets and
the structuring of transactions; and
|
|
·
|
advise
and consult with executive officers with respect to any of the
above
described matters.
|
|
·
|
the
unpaid portion of his or her base salary;
|
|
|
|
|
·
|
reimbursement
for out-of-pocket expenses;
|
|
|
|
|
·
|
continued
insurance benefits to the extent required by law;
|
|
|
|
|
·
|
payment
of any vested but unpaid rights as required by any bonus or incentive
pay
or stock plan or any other employee benefit plan; and
|
|
|
|
|
·
|
any
unpaid bonus or incentive compensation that was approved (except
in the
case of termination for cause).
|
|
·
|
a
lump sum payment equal to one times the sum of (x) the Executive’s then
current Base Salary and (y) the greater of (A) the average of the
Executive’s bonuses (taking into account a payment of no bonus or a
payment of a bonus of $0) with respect to the preceding three fiscal
years
(or the period of the Executive’s employment if shorter), (B) the
Executive’s bonus with respect to the preceding fiscal year and (C) in the
event that such termination of employment occurs before the first
anniversary of the Commencement Date, the Executive’s annualized projected
bonus for such year (the “Severance Payment”). The Severance Payment shall
be paid to the Executive within 60 days following the Date of
Termination;
|
|
|
|
|
·
|
continued
payment by Coda Octopus for life, health and disability insurance
coverage
and salary and other benefits for the Executive and the Executive’s spouse
and dependents for one year following the Date of Termination to
the same
extent that Coda Octopus paid for such coverage immediately prior
to the
termination of the Executive’s employment and subject to the eligibility
requirements and other terms and conditions of such insurance coverage,
provided that if any such insurance coverage shall become unavailable
during the one year period, Coda Octopus thereafter shall be obliged
only
to pay to the Executive an amount which, after reduction for income
and
employment taxes, is equal to the employer premiums for such insurance
for
the remainder of such severance period; and
|
|
|
|
|
·
|
vesting
as of the Date of Termination in any unvested portion of any stock
option,
restricted stock and any other long term incentive award previously
issued
to the Executive by Coda Octopus. Each such stock option must be
exercised
by the Executive within 180 days after the Date of Termination
or the date
of the remaining option term, if
earlier.
|
Name
and Address of Beneficial Owner (1)
|
|
Amount
and Nature of
Beneficial
Ownership of
Common
Stock (2)
|
|
Percent
of
Common
Stock
|
|
||
Jason
Reid (3)
|
|
|
23,695,112
|
|
|
49.3
|
%
|
Paul
Nussbaum (4)
|
|
|
497,247
|
|
|
1.0
|
%
|
Rodney
Peacock (5)
|
|
|
459,165
|
|
|
*
|
|
Blair
Cunningham (6)
|
|
|
472,412
|
|
|
*
|
|
Anthony
Davis (7)
|
|
|
370,412
|
|
|
*
|
|
Frank
B. Moore (8)
|
|
|
245,412
|
|
|
*
|
|
Geoff
Turner (9)
|
|
|
170,412
|
|
|
*
|
|
Scott
Debo (10)
|
|
|
139,358
|
|
|
*
|
|
Jody
Frank (11)
|
175,000
|
*
|
|||||
Vision
Opportunity Master Fund Limited (12)
317
Madison Avenue, Suite 1220
|
|
|
4,762,855
|
|
|
9.9
|
%
|
All
Directors and Executive Officers as a Group (eight
persons):
|
|
|
26,224,530
|
|
|
54.3
|
%
|
*
|
Less
than 1%.
|
|
Unless
otherwise indicated, the address of all individual and entities
listed
below is c/o Coda Octopus Group, Inc.,164 West 25 th
Street, 6 th
Floor, New York NY10001.
|
||
|
|
|
(2)
|
The
number of shares indicated includes (i) shares issuable upon
the exercise
of outstanding stock options or warrants held by each individual
or group
to the extent such options and warrants are exercisable within
sixty days
of July
20,
2007 and (ii) shares of restricted stock, including restricted
stock
awards issuable within 60 days of July
20,
2007.
|
|
|
|
|
(3)
|
Includes
the following: (i) 400,000 shares issuable upon exercise of options,
(ii)
19,515,084 shares and 2,746,418 shares issuable upon exercise
of warrants
held by Fairwater Technology Group Ltd., of which Mr. Reid may
be deemed
to be a control person, and (iii) 280,720 shares and 50,000 shares
issuable upon exercise of warrants held by Softworks Business
Systems
Solutions Limited,
of which Mr. Reid may be deemed to be a control person; includes
511,266
shares held by Mr. Jason Reid, and (iv) includes 172,540 held
by Mr.
Reid’s wife and (v) includes 19,084 shares earned during the quarter
ended
April 30, 2007 that have not been issued to date.
|
|
|
|
|
(4)
|
Includes
200,000 shares issuable upon exercise of options.
|
|
|
|
|
(5)
|
Includes
200,000 shares issuable upon exercise of options.
|
|
|
|
|
(6)
|
Includes
200,000 shares issuable upon exercise of options and 50,000 shares
held by
Softworks Limited of which Mr. Cunningham is a director.
|
|
|
|
|
(7)
|
Includes
150,000 shares issuable upon exercise of option.
|
|
|
|
|
(8)
|
Includes
150,000 shares issuable upon exercise of options and includes
11,927
shares earned during the quarter ended April 30, 2007 that have
not been
issued to date.
|
|
|
|
|
(9)
|
Includes
150,000 shares issuable upon exercise of options.
|
|
|
|
|
(10)
|
Includes
80,000 shares issuable upon exercise of options.
|
|
|
|
|
(11)
|
Consist
of shares issuable upon exercise of options. Does not include
350,000
shares issuable upon options, 175,000 of which will vest in March
2008,
and the balance of which will vest in March 2009.
|
|
(12)
|
Includes
397,955
shares issuable upon exercise of warrants.
Does not include 8,802,045 additional shares issuable upon exercise
of
warrants that it is not permitted to exercise under the terms
of the
warrants. The warrants contain a provision
that limits exercise of the warrants to the extent that its ownership
percentage would exceed 9.9% of our issued and outstanding common
stock of
the
Company.
Adam Benowitz, portfolio manager, has investment and dispositive
power of
the shares held by this
entity.
|
Year
Ended October 31, 2005
|
|
HIGH
|
|
LOW
|
|
||
First
Quarter
|
|
|
1.05
|
|
|
0.35
|
|
Second
Quarter
|
|
|
1.01
|
|
|
0.30
|
|
Third
Quarter
|
|
|
1.01
|
|
|
0.35
|
|
Fourth
Quarter
|
|
|
0.75
|
|
|
0.30
|
|
|
|
|
|
|
|
||
Year
Ended October 31, 2006
|
|
HIGH
|
|
LOW
|
|
||
First
Quarter
|
|
|
0.65
|
|
|
0.45
|
|
Second
Quarter
|
|
|
0.75
|
|
|
0.40
|
|
Third
Quarter
|
|
|
1.40
|
|
|
0.65
|
|
Fourth
Quarter
|
|
|
1.50
|
|
|
1.00
|
|
|
|
|
|
|
|
||
Year
Ended October 31, 2007
|
|
HIGH
|
|
LOW
|
|
||
First
Quarter
|
|
|
1.55
|
|
|
0.72
|
|
Second
Quarter
|
|
|
1.70
|
|
|
1.05
|
|
Selling
Stockholder
|
|
Shares
Benficially
Owned
Prior to
Offering*
|
|
Shares
to be
Sold
in
Offering
|
|
Shares
Beneficially
Owned
After
Offering
|
|
Perecentage
Beneficial
Ownership
After
Offering
|
|
||||
JMG
Capital Partners, LP (1)
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
-0-
|
|
|
n/a
|
|
JMG
Triton Offshore Fund, Ltd. (2)
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
-0-
|
|
|
n/a
|
|
MM
& B Holdings, a California general partnership (3)
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
-0-
|
|
|
n/a
|
|
IRA
FBO J. Steven Emerson Rollover II Pershing LLC as Custodian
(4)
|
|
|
1,600,000
|
|
|
1,600,000
|
|
|
-0-
|
|
|
n/a
|
|
IRA
FBO J. Steven Emerson Roth Pershing LLC as Custodian (4)
|
|
|
1,300,000
|
|
|
1,300,000
|
|
|
-0-
|
|
|
n/a
|
|
Emerson
Partners (4)
|
|
|
400,000
|
|
|
400,000
|
|
|
-0-
|
|
|
n/a
|
|
J.
Steven Emerson Investment Account (4)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
JMB
Capital Partners
Master Fund,
L.P. (5)
|
|
|
4,000,000
|
|
|
4,000,000
|
|
|
-0-
|
|
|
n/a
|
|
The
Jay Goldman Master L.P. (6)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
Woodmont
Investments, Ltd. (6)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
John
B. Davies
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Steven
B. Dunn
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
The
Muhl Family Trust, Phillip E. Muhl & Kristin A. Muhl TTEE DTD
10-11-95
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Apex
Investment Fund, Ltd. (7)
|
|
|
1,000,000
|
|
|
1,000,000
|
|
|
-0-
|
|
|
n/a
|
|
G.
Tyler Runnels or Jasmine Niklas Runnels TTEES The Runnels Family
Trust DTD
1-11-2000
|
|
|
300,000
|
|
|
300,000
|
|
|
-0-
|
|
|
n/a
|
|
TRW
Capital Growth Fund, LP (8)
|
|
|
300,000
|
|
|
300,000
|
|
|
-0-
|
|
|
n/a
|
|
Joseph
H. Merback & Tema N. Merback Co-TTEE FBO Merback Family Trust UTD
8-30-89
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
B
& R Richie's (9)
|
|
|
100,000
|
|
|
100,000
|
|
|
-0-
|
|
|
n/a
|
|
Charles
B. Runnels Family Trust DTD 10-14-93 Charles B. Runnels & Amy Jo
Runnels TTEES
|
|
|
50,000
|
|
|
50,000
|
|
|
--0-
|
|
|
n/a
|
|
Karen
Kang
|
|
|
20,000
|
|
|
20,000
|
|
|
-0-
|
|
|
n/a
|
|
Christopher
G. Niklas
|
|
|
20,000
|
|
|
20,000
|
|
|
-0-
|
|
|
n/a
|
|
Newberg
Family Trust UTD 12/18/90
|
|
|
800,000
|
|
|
800,000
|
|
|
-0-
|
|
|
n/a
|
|
John
W. Galuchie, Jr. & Marianne C. Galuchie Trustees Galuchie Living Trust
DTD 9/11/00
|
|
|
20,000
|
|
|
20,000
|
|
|
-0-
|
|
|
n/a
|
|
Rockmore
Investment Master Fund Ltd. (10)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
Bristol
Investment Fund, Ltd. (11)
|
|
|
1,000,000
|
|
|
1,000,000
|
|
|
-0-
|
|
|
n/a
|
|
Whalehaven
Capital Fund Limited (12)
|
|
|
800,000
|
|
|
800,000
|
|
|
-0-
|
|
|
n/a
|
|
Cranshire
Capital, LP (13)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
Scot
Cohen
|
|
|
600,000
|
|
|
600,000
|
|
|
-0-
|
|
|
n/a
|
|
Iroquois
Master Fund, Ltd. (14)
|
|
|
800,000
|
|
|
800,000
|
|
|
-0-
|
|
|
n/a
|
|
David
Sidoo
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Andrew
Lessman
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
-0-
|
|
|
n/a
|
|
Arden
Merback
|
|
|
100,000
|
|
|
100,000
|
|
|
-0-
|
|
|
n/a
|
|
Andrew
C. Sankin
|
|
|
300,000
|
|
|
300,000
|
|
|
-0-
|
|
|
n/a
|
|
Matthew
Weiss and Michele Weiss JT TEN
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Epsom
Investment Services, N.V. (15)
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Asset
Protection Fund Ltd. (16)
|
|
|
500,000
|
|
|
500,000
|
|
|
-0-
|
|
|
n/a
|
|
Lord
Robin Russell
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
W
Robert Ramsdell & Majorie F Ramsdell TTEE Ramsdell Family Trust DTD
77/94
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Core
Fund L.P. (17)
|
|
|
200,000
|
|
|
200,000
|
|
|
-0-
|
|
|
n/a
|
|
Ganesha
Capital LLP (18)
|
|
|
300,000
|
|
|
300,000
|
|
|
-0-
|
|
|
n/a
|
|
Scot
J Cohen
|
|
|
1,400,000
|
|
|
1,400,000
|
|
|
-0-
|
|
|
n/a
|
|
Philip
Mirabelli
|
|
|
100,000
|
|
|
100,000
|
|
|
-0-
|
|
|
n/a
|
|
Andrew
C Sankin
|
|
|
590,000
|
|
|
590,000
|
|
|
-0-
|
|
|
n/a
|
|
Joshua
Silverman
|
|
|
100,000
|
|
|
100,
000
|
|
|
-0-
|
|
|
n/a
|
|
Richard
K Abbe Custodian for Talia Abbe
|
|
|
66,668
|
|
|
66,668
|
|
|
-0-
|
|
|
n/a
|
|
Richard
K Abbe Custodia for Samantha Abbe
|
|
|
66,666
|
|
|
66,666
|
|
|
-0-
|
|
|
n/a
|
|
Richard
K Abbe Custodian for Bennett Abbe
|
|
|
66,666
|
|
|
66,666
|
|
|
-0-
|
|
|
n/a
|
|
T
R
Winston & Company (19)
|
|
|
2,400,000
|
|
|
2,400,000
|
|
|
-0-
|
|
|
n/a
|
|
Equity
Communications, LLC (20)
|
775,000
|
400,000
|
375,000
|
**
|
|||||||||
Centrum
Bank AG (21)
|
500,000
|
500,000
|
|||||||||||
Total
|
|
|
33,175,000
|
|
|
32,800,000
|
|
|
|
|
|
|
|
*
|
The
number and percentage of shares beneficially owned is determined
in
accordance with Rule 13d-3 of the Securities Exchange Act of
1934, and the
information is not necessarily indicative of beneficial ownership
for any
other purpose. Under such rule, beneficial ownership includes
any shares
as to which the selling stockholder has sole or shared voting
power or
investment power and also any shares, which the selling stockholder
has
the right to acquire within 60 days. Nevertheless, for purposes
hereof,
for each selling stockholder does not give effect to the 4.9%
limitation
on the number of shares that may be held by each stockholder
as agreed to
in the warrant held by each selling stockholder which limitation
is
subject to waiver by the holder upon 61 days prior written notice
to us
(subject to a further non-waivable limitation of 9.99%).
Unless otherwise indicated, for
each selling stockholder, the number of shares beneficially owned
prior to
this offering consists of shares of common stock currently owned
by the
selling stockholder as well as an equal number of shares of common
stock
issuable upon the exercise of warrants.
|
**
|
Less
than 1%.
|
JMG
Capital Partners, LP (“JMG Partners”) is a California limited partnership.
Its general partner is JMG Capital Management, LLC (the “Manager”), a
Delaware limited liability company and an investment advisor
that has
voting and dispositive power over JMG Partners’ investments, including the
securities included herein. The equity interests of the Manager
are owned
by JMG Capital Management, Inc., a California corporation and
Asset
Alliance Holding Corp., a Delaware corporation. Jonathan M. Glaser
is the
executive officer and director of JMG Capital and has sole investment
discretion over JMG Partners’ portfolio holdings.
|
|
|
|
(2)
|
JMG
Triton Offshore Fund, Ltd. (the “Fund”) is and international business
company organized under the laws of the British Virgin Islands.
The Fund’s
investment manager is Pacific Assets Management LLC, a Delaware
limited
liability company (the “Manager”) that has voting and dispositive power
over the Fund’s investments, including the securities included herein. The
equity interests of the Manager are owned by Pacific Capital
Management
Inc., a California corporation (“Pacific”) and Asset Alliance Holding
Corp., a Delaware corporation. The equity interests of Pacific
are owned
by Roger Richter, Jonathan Glaser and Daniel David. Messrs. Glaser
and
Richter share investment and voting control over the Fund’s portfolio
holdings.
|
|
|
(3)
|
Bryan
Ezralow as trustee of the Bryan Ezralow 1994 Trust, general partner
of MM
& B Holdings has voting and dispositive power over the shares held
by
that entity.
|
|
|
(4)
|
J
Steven Emerson has voting and dispositive control over the shares
held by
these selling stockholders.
|
|
|
(5)
|
Jon
Brooks has voting and dispositive control over the shares held
by JMB
Capital Partners
Master Fund.
|
|
|
(6)
|
Jay
Goldman has voting and dispositive control over the shares held
by The Jay
Goldman Master L.P.
|
|
|
(7)
|
|
|
|
(8)
|
G.
Tyler Runnels has voting and dispositive power over the shares
held by TRW
Capital Growth Fund, LP.
|
|
|
(9)
|
Bradley
Ross has voting and dispositive control over the shares held
by B&R
Richies.
|
(10)
|
Rockmore
Capital, LLC (“Rockmore Capital”) and Rockmore Partners, LLC (“Rockmore
Partners”), each a limited liability company formed under the laws of
the
State of Delaware, serve as the investment manager and general
partner,
respectively, to Rockmore Investments (US) LP, a Delaware limited
partnership, which invests all of its assets through Rockmore
Investment
Master Fund Ltd., an exempted company formed under the laws of
Bermuda
(“Rockmore Master Fund”). By reason of such relationships, Rockmore
Capital and Rockmore Partners may be deemed to share dispositive
power
over the shares of our common stock owned by Rockrnore Master
Fund.
Rockmore Capital and Rockmore Partners disclaim beneficial ownership
of
such shares of our common stock. Rockmore Partners has delegated
authority
to Rockmore Capital regarding the portfolio management decisions
with
respect to the shares of common stock owned by Rockmore Master
Fund and,
as of September 17
th, 2006
,
Mr. Bruce T. Bernstein and Mr. Brian Daly, as officers of Rockmore
Capital, are responsible for the portfolio management decisions
of the
shares of common stock owned by Rockmore Master Fund. By reason
of such
authority, Messrs. Bernstein and Daly may be deemed to share
dispositive
power over the shares of our common stock owned by Rockmore Master
Fund.
Messrs. Bernstein and Daly disclaim beneficial ownership of such
shares of
our common stock and neither of such persons has any legal right
to
maintain such authority. No other person has sole or shared voting
or
dispositive power with respect to the shares of our common stock
as those
terms are used for purposes under Regulation 13D-G of the Securities
Exchange Act of 1934, as amended. No person or “group” (as that term is
used in Section 13(d) of the Securities Exchange Act of 1934,
as amended,
or the SEC’s Regulation 13D-G) controls Rockmore Master
Fund.
|
|
|
(11)
|
Bristol
Capital Advisers, LLC (“BCA”) is the investment advisor to Bristol
Investment Fund, Ltd. (“Bristol”). Paul Kessler is the manager of BCA and
as such has voting and investment control over the securities
held by
Bristol. Mr. Kessler disclaims beneficial ownership of these
securities.
|
|
|
(12)
|
Michael
Finkelstein (Investment Manager), Arthur Jones, Trevor Williams,
and Marco
Weisfeld (Directors) have voting and dispositive control over
the shares
held by Whalehaven Capital Fund Limited.
|
|
|
(13)
|
Mitchell
P. Kopin, president of Downsview Capital, Inc., the general partner
of
Cranshire Capital, LP has sole voting and investment power of
these
securities.
|
(14)
|
Joshua
Silverman has voting and investment control over the shares held
by
Iroquois Master Fund Ltd. Mr. Silverstein disclaims beneficial
ownership
of these shares.
|
|
|
(15)
|
Steven
Drayton has sole voting and investment power of the securities
held by
Epsom.
|
|
|
(16)
|
Consists
of shares of common stock. David
Dawes and Christoph Langenauer share voting and dispositive control
over
the shares held by Asset Protection Fund Ltd.
|
|
|
(17)
|
Steven
Shum has sole voting and investment power over the securities
held by Core
Fund, L.P.
|
|
|
(18)
|
Simon
John Evans has sole voting and investment power over the securities
held
by Ganesha Capital.
|
|
|
(19)
|
G.
Tyler Runnels, the firm’s Chairman and Chief Executive Officer has voting
and investment power over the shares held by T.R.
Winston.
|
(20)
|
Shares
to be sold herewith consist of shares issuable upon exercise
of warrants.
Other shares held by this entity include shares held by Ira Weingarten,
the firm’s president. Mr. Weingarten has voting and dispositive power
over
the securities held by this entity.
|
(21)
|
Consists
of shares issuable upon exercise of warrants. Dr. Peter Marxer,
Centrum
Bank’s Chairman of the Board, has voting and dispositive power with
respect to securities held by the
bank.
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a part;
|
|
·
|
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
|
|
·
|
a
combination of any such methods of sale; or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
Coda
Octopus Group, Inc.
Consolidated
Financial Statements
|
||||
|
||||
Contents
|
Page
|
|||
Report
of Independent Registered Certified Public Accounting Firm
|
F-1
|
|||
Consolidated
Balance Sheet
|
F-2
|
|||
Consolidated
Statements of Operations and Comprehensive Loss
|
F-3
|
|||
Consolidated
Statements of Stockholders’ Equity
|
F-4
|
|||
Consolidated
Statement of Cash Flows
|
F-5
|
|||
Notes
to Consolidated Financial Statements
|
F-6
|
|||
|
|
Coda
Octopus Group, Inc.
Condensed
Consolidated
Financial Statements
(unaudited)
|
||||
|
|
|||
Condensed
Consolidated
Balance
Sheet
|
F-16
|
|||
Condensed
Consolidated
Statements of Operations and Comprehensive Loss
|
F-17
|
|||
Condensed
Consolidated
Statements of Stockholders’ Equity
|
F-18
|
|||
Condensed
Consolidated
Statement of Cash Flows
|
F-19
|
|||
Notes
to Condensed
Consolidated
Financial Statements
|
F-20
|
|||
|
|
Financial
Statements
|
||||
|
|
|||
Officers
and Advisors
|
F-31
|
|||
Directors’
Report
|
F-32
|
|||
Independent
Auditors’ Report
|
F-33
|
|||
Profit
and Loss Account
|
F-34
|
|||
Cash
Flow Statement
|
F-35
|
|||
Balance
Sheet
|
F-36
|
|||
Notes
to the Financial Statements
|
F-37
|
Condensed
Balance Sheet, April
30,
2005
|
F-40
|
|||
Condensed
Profit and Loss, April 30, 2005
|
F-41
|
|||
Condensed
Balance Sheet, April
30,
2006
|
F-42
|
|||
Condensed
Profit and Loss, April 30, 2006
|
F-43
|
Miller
and Hilton, Inc.
Financial
Statements
|
||||
|
|
|||
Contents
|
F-45
|
|||
Report
of Independent Registered Certified Public Accounting Firm
|
F-46
|
|||
Balance
Sheets
|
F-47
|
|||
Statements
of Operations
|
F-48
|
|||
Statements
of Stockholders’ Equity
|
F-49
|
|||
Statements
of Cash Flows
|
F-50
|
|||
Notes
to Financial Statements
|
F-51
|
|||
|
|
Miller
and Hilton, Inc.
Financial
Statements
(Unaudited)
|
||||
|
|
|||
Condensed
Balance Sheets
|
F-59
|
|||
Condensed
Statements of Operations
|
F-60
|
|||
Condensed
Statements of Stockholders’ Equity
|
F-61
|
|||
Condensed
Statements of Cash Flows
|
F-62
|
|||
Notes
to Condensed Financial Statements
|
F-63
|
|||
|
|
Coda
Octopus Group, Inc.
Condensed
Consolidated Pro Forma Financial Statements
|
||||
|
|
|||
Condensed
Consolidated Pro Forma Balance Sheet, January 31, 2007
|
F-70
|
|||
Condensed
Consolidated Pro Forma Statement of Operations for three months
ended
January 31, 2007
|
F-71
|
|||
Condensed Consolidated Pro Forma Statement of Operations for year ended October 31, 2006 |
F-72
|
|||
Notes
to Condensed
Consolidated
Pro Forma Financial Statements
|
F-73
|
|
/S/
Russell Bedford Stefanou Mirchandani LLP
|
New
York, New York
|
Russell
Bedford Stefanou Mirchandani LLP
|
|
ASSETS
|
|
|
|
||||
|
|
|
|
|
|
||
Current
assets:
|
|
|
|
|
|
||
Cash
and cash equivalents
|
|
$
|
1,377,972
|
|
$
|
142,936
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
1,120,968
|
|
|
1,104,509
|
|
Inventory
|
|
|
1,951,392
|
|
|
1,044,051
|
|
Receivable
on sale of preferred stock
|
|
|
-
|
|
|
2,655,000
|
|
Tax
credit receivable
|
|
|
234,593
|
|
|
463,411
|
|
Due
from MSGI Security Solutions, Inc. (Note 13)
|
|
|
533,147
|
|
|
-
|
|
Due
from related parties
|
|
|
104,720
|
|
|
-
|
|
Other
current assets
|
|
|
103,296
|
|
|
93,837
|
|
Prepaid
expenses
|
|
|
159,969
|
|
|
216,846
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
5,586,057
|
|
|
5,720,590
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net (Note 2)
|
|
|
155,730
|
|
|
32,828
|
|
Rental
equipment, net (Note 2)
|
|
|
120,851
|
|
|
200,730
|
|
Goodwill
and other intangible assets, net (Note 3)
|
|
|
1,071,700
|
|
|
71,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
6,934,338
|
|
$
|
6,025,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable, trade
|
|
$
|
1,997,817
|
|
$
|
403,816
|
|
Accrued
expenses and other current liabilities
|
|
|
2,542,918
|
|
|
1,412,159
|
|
Deferred
payment related to acquisition of Martech Systems Ltd
|
|
|
381,680
|
|
|
-
|
|
Accrued
dividends on Series A & B Preferred Stock
|
|
|
304,394
|
|
|
-
|
|
Due
to related parties (Note 9)
|
|
|
302,877
|
|
|
576,981
|
|
Notes
and Loans payable (Note 8)
|
|
|
1,119,496
|
|
|
3,029,015
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
6,649,182
|
|
|
5,421,971
|
|
|
|
|
|
|
|
|
|
Loans
and notes payable, long term
|
|
|
-
|
|
|
114,990
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
6,649,182
|
|
|
5,536,961
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Preferred
stock, $.001 par value; 5,000,000 shares authorized, 23,641 and
15,000
shares Series A issued and outstanding, as of October 31st, 2006
and 2005
respectively (Note 4)
|
|
|
24
|
|
|
15
|
|
41,000
shares Series B issued and outstanding as of October 31, 2006 (Note
4)
|
|
|
41
|
|
|
-
|
|
Common
stock, $.001 par value; 70,000,000 shares authorized, 24,301,980
and
23,667,656 shares issued and outstanding as of October 31, 2006
and 2005
respectively (Note 4)
|
|
|
24,302
|
|
|
23,668
|
|
Common
Stock subscribed
|
|
|
153,750
|
|
|
-
|
|
Additional
paid-in capital
|
|
|
25,858,307
|
|
|
13,837,534
|
|
Foreign
currency translation adjustment
|
|
|
(292,821
|
)
|
|
(10,117
|
)
|
Accumulated
deficit
|
|
|
(25,458,447
|
)
|
|
(13,362,433
|
)
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
285,156
|
|
|
488,667
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
6,934,338
|
|
$
|
6,025,628
|
|
|
|
|
|
||||
|
|
|
|
|
|
||
Net
revenue
|
|
$
|
7,291,291
|
|
$
|
4,288,416
|
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
2,611,590
|
|
|
2,464,800
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
4,679,701
|
|
|
1,823,616
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
3,130,821
|
|
|
1,044,695
|
|
Selling,
general and administrative expenses
|
|
|
7,453,946
|
|
|
4,349,674
|
|
Other
operating
expenses
(Note 12)
|
|
|
447,750
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(6,352,816
|
)
|
|
(3,570,753
|
)
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
3,012
|
|
|
1,319
|
|
Interest
expense
|
|
|
(1,203,690
|
)
|
|
(219,855
|
)
|
|
|
|
|
|
|
|
|
Total
other expense
|
|
|
(1,200,678
|
)
|
|
(218,536
|
)
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(7,553,494
|
)
|
|
(3,789,289
|
)
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
5,676
|
|
|
17,766
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(7,559,170
|
)
|
|
(3,807,055
|
)
|
|
|
|
|
|
|
|
|
Preferred
Stock Dividends:
|
|
|
|
|
|
|
|
Series
A
|
|
|
(309,914
|
)
|
|
|
|
Series
B
|
|
|
(74,130
|
)
|
|
|
|
Beneficial
Conversion Feature
|
|
|
(4,152,800
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
Loss Applicable to Common Shares
|
|
$
|
(12,096,014
|
)
|
$
|
(3,807,055
|
)
|
|
|
|
|
|
|
|
|
Loss
per share, basic and diluted
|
|
|
(0.50
|
)
|
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
24,030,423
|
|
|
23,103,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(7,559,170
|
)
|
$
|
(3,807,055
|
)
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
(282,704
|
)
|
|
341,390
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
|
(7,841,874
|
)
|
$
|
(3,465,665
|
)
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock Series A
|
|
Preferred
Stock Series B
|
|
Common
Stock
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
|
|
Foreign
Currency
Translation
|
|
Accumulated
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Subscribed
|
|
Capital
|
|
Adjustment
|
|
Deficit
|
|
Total
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance,
October 31, 2004
|
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
22,172,656
|
|
$
|
22,173
|
|
|
-
|
|
$
|
9,682,541
|
|
$
|
(351,507
|
)
|
$
|
(9,555,378
|
)
|
$
|
(202,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of preferred stock
|
|
|
15,000
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,654,985
|
|
|
|
|
|
|
|
|
2,655,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
1,000
|
|
|
|
|
|
799,534
|
|
|
|
|
|
|
|
|
800,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for accrued compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
495,000
|
|
|
495
|
|
|
|
|
|
49,005
|
|
|
|
|
|
|
|
|
49,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
651,469
|
|
|
|
|
|
|
|
|
651,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
341,390
|
|
|
|
|
|
341,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,807,055
|
)
|
|
(3,807,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
October 31, 2005
|
|
|
15,000
|
|
|
15
|
|
|
-
|
|
|
-
|
|
|
23,667,656
|
|
|
23,668
|
|
|
-
|
|
|
13,837,534
|
|
|
(10,117
|
)
|
|
(13,362,433
|
)
|
|
488,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of preferred stock
|
|
|
2,947
|
|
|
3
|
|
|
41,000
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
4,564,056
|
|
|
|
|
|
|
|
|
4,564,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock issued for debt
|
|
|
5,694
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
809,622
|
|
|
|
|
|
|
|
|
809,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares for cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
634,324
|
|
|
634
|
|
|
-
|
|
|
316,528
|
|
|
|
|
|
|
|
|
317,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscribed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,750
|
|
|
|
|
|
|
|
|
|
|
|
153,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation and for
financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,177,767
|
|
|
|
|
|
|
|
|
2,177,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature of preferred stock, Series A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,800
|
|
|
|
|
|
(52,800
|
)
|
|
-
|
|
preferred
stock, Series B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,100,000
|
|
|
|
|
|
(4,100,000
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(309,914
|
)
|
|
(309,914
|
)
|
Series
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(74,130
|
)
|
|
(74,130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(282,704
|
)
|
|
|
|
|
(282,704
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,559,170
|
)
|
|
(7,559,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
October 31, 2006
|
|
|
23,641
|
|
$
|
24
|
|
|
41,000
|
|
$
|
41
|
|
|
24,301,980
|
|
$
|
24,302
|
|
$
|
153,750
|
|
$
|
25,858,307
|
|
$
|
(292,821
|
)
|
$
|
(25,458,447
|
)
|
$
|
285,156
|
|
|
|
|
|
||||
|
|
|
|
|
|
||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net
loss
|
|
$
|
(7,559,170
|
)
|
$
|
(3,807,055
|
)
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
137,189
|
|
|
132,929
|
|
Stock
based compensation
|
|
|
2,005,056
|
|
|
651,469
|
|
Financing
costs
|
|
|
784,873
|
|
|
-
|
|
Bad
debt expense
|
|
|
16,008
|
|
|
37,766
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
491,922
|
|
|
(234,725
|
)
|
Inventory
|
|
|
(482,882
|
)
|
|
447,203
|
|
Prepaid
expenses
|
|
|
89,953
|
|
|
(45,859
|
)
|
Other
receivables
|
|
|
2,260,315
|
|
|
(567,950
|
)
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
1,855,467
|
|
|
(356,046
|
)
|
Due
to related parties
|
|
|
523,076
|
|
|
172,344
|
|
|
|
|
|
|
|
|
|
Net
cash (used)/generated by operating activities
|
|
|
121,807
|
|
|
(3,569,924
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(138,172
|
)
|
|
(272,157
|
)
|
Purchases
of intangible assets
|
|
|
(6,543
|
)
|
|
-
|
|
Acquisition
of Martech Systems Ltd
|
|
|
(1,154,590
|
)
|
|
-
|
|
Cash
acquired from Martech Systems Ltd
|
|
|
195,684
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
cash used by investing activities
|
|
|
(1,103,621
|
)
|
|
(272,157
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from/(repayment of) loans
|
|
|
(2,106,342
|
)
|
|
2,898,126
|
|
Proceeds
from sale of stock
|
|
|
4,564,100
|
|
|
800,534
|
|
Preferred
stock dividend
|
|
|
(79,650
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
2,378,108
|
|
|
3,698,660
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
(161,258
|
)
|
|
244,503
|
|
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
1,235,036
|
|
|
101,082
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of year
|
|
|
142,936
|
|
|
41,854
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of year
|
|
$
|
1,377,972
|
|
$
|
142,936
|
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
418,817
|
|
$
|
144,185
|
|
Income
taxes
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the year ended October 31, 2006, 634,324 shares of common stock
were
issued as payment of $317,162 of compensation that was earned for
the year
to October 31, 2006.
|
|||||||
|
|
|
|
|
|
|
|
During
the year ended October 31, 2006 5,694 shares of series A preferred
stock
were issued as payment for $809,628 of outstanding
debt
|
|||||||
|
|
|
|
|
|
|
|
During
the year ended October 31, 2005, 495,000 shares of common stock
were
issued as payment of $49,500 of compensation that was accrued at
October
31, 2004.
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets acquired
|
|
|
798,133
|
|
|
|
|
Cash
acquired
|
|
|
195,684
|
|
|
|
|
Equipment
acquired
|
|
|
37,126
|
|
|
|
|
Goodwill
and intangible assets
|
|
|
998,591
|
|
|
|
|
Liabilities
assumed
|
|
|
(493,264
|
)
|
|
|
|
Deferred
note payable
|
|
|
(381,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Paid for Acquisition
|
|
|
1,154,590
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
rate movements
|
|
|
25,535
|
|
|
|
|
Total
Paid for Acquisition
|
|
|
1,180,125
|
|
|
|
|
|
|
2006
|
|
2005
|
|
||
Raw
materials
|
|
$
|
1,064,655
|
|
$
|
645,146
|
|
Work
in process
|
|
|
389,042
|
|
|
73,497
|
|
Finished
goods
|
|
|
497,695
|
|
|
325,408
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,951,392
|
|
$
|
1,044,051
|
|
|
2006
|
|
|
2005
|
|||
Machinery
and Equipment
|
$
|
619,432
|
$
|
450,893
|
|||
Accumulated
Depreciation
|
(463,702
|
)
|
(418,065
|
)
|
|||
|
|
|
|||||
|
$
|
155,730
|
$
|
32,828
|
|
2006
|
2005
|
|||||
Rental
Equipment
|
$
|
240,876
|
240,876
|
||||
Accumulated
Depreciation
|
(120,025
|
)
|
(40,146
|
)
|
|||
|
|
|
|||||
|
$
|
120,851
|
$
|
200,730
|
|
2006
|
2005
|
|||||
Goodwill
|
$
|
1,060,906
|
$
|
62,315
|
|||
Patents
|
30,055
|
23,512
|
|||||
|
1,090,961
|
85,827
|
|||||
Accumulated
amortization of patents
|
19,261
|
14,347
|
|||||
|
|
|
|||||
|
$
|
1,071,700
|
$
|
71,480
|
|
|
2006
|
|
2005
|
|
||||||||
|
|
Number
|
|
Weighted
Average Exercise Price
|
|
Number
|
|
Weighted
Average Exercise Price
|
|
||||
Outstanding
at beginning of period
|
|
|
2,350,000
|
|
$
|
1.00
|
|
|
—
|
|
$
|
—
|
|
Granted
during the period
|
|
|
11,060,000
|
|
|
1.35
|
|
|
2,350,000
|
|
|
1.00
|
|
Exercised
during the period
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Terminated
during the period
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.00
|
|
Outstanding
at end of the period
|
|
|
13,410,000
|
|
$
|
1.29
|
|
|
2,350,000
|
|
$
|
1.00
|
|
Exercisable
at end of the period
|
|
|
12,084,000
|
|
$
|
1.31
|
|
|
888,500
|
|
$
|
1.00
|
|
Range
of
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average Contractual
Life
(Yrs)
|
|
Weighted
Average
Exercise
Price
|
0.50
- 0.58
|
|
1,150,000
|
|
4.47
|
|
$
0.53
|
1.00
|
|
3,492,500
|
|
3.76
|
|
$
1.00
|
1.30
|
|
4,260,000
|
|
4.77
|
|
1.30
|
1.50
|
|
247,500
|
|
4.65
|
|
1.50
|
1.70
|
|
4,260,000
|
|
4.77
|
|
1.70
|
Non-Current:
|
Oct
31, 2006
|
Oct
31, 2005
|
|||||
|
|
|
|||||
Net
Operating Loss Carry Forward
|
$
|
2,429,000
|
$
|
2,909,000
|
|||
Valuation
Allowance
|
(2,429,000
|
)
|
(2,909,000
|
)
|
|||
|
|
|
|||||
Net
Deferred Tax Asset
|
$
|
-
|
$
|
-
|
Current
assets
|
$
|
993,817
|
||
Equipment
|
37,126
|
|||
Goodwill
|
998,591
|
|||
Current
liabilities
|
(493,262
|
)
|
||
|
|
|||
Purchase
price
|
$
|
1,536,271
|
|
Oct
31, 2006
|
Oct
31, 2005
|
|||||
|
|
|
|||||
Revenue
|
$
|
8,656,396
|
$
|
6,448,291
|
|||
Net
loss
|
(7,536,584
|
)
|
(3,646,510
|
)
|
|||
Loss
per common share
|
(0.50
|
)
|
(0.16
|
)
|
|
Contracting
|
Product
Sales
|
Corporate
|
Oct
31, 2006
|
|||||||||
|
|
|
|
|
|||||||||
Revenue
|
$
|
661,589
|
$
|
6,629,702
|
-
|
$
|
7,291,291
|
||||||
Segment
operating profit/(loss)
|
(120,532
|
)
|
245,858
|
(6,478,142
|
)
|
(6,352,816
|
)
|
||||||
Identifiable
assets
|
1,899,209
|
2,987,334
|
2,047,795
|
6,934,338
|
|||||||||
Capital
expenditure
|
2,340
|
111,734
|
22,165
|
136,239
|
|||||||||
Selling,
general & administrative
|
366,732
|
3,331,112
|
4,203,852
|
6,535,430
|
|||||||||
Depreciation
and amortization
|
12,037
|
123,844
|
1,307
|
137,188
|
|||||||||
Interest
expense
|
1,680
|
406,638
|
795,372
|
1,203,690
|
|
|
April 30,
|
|
April 30,
|
|
||
|
|
2006
|
|
||||
ASSETS
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Current
assets:
|
|
|
|
|
|
||
Cash
and cash equivalents
|
|
$
|
5,305,846
|
|
$
|
2,782
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
1,517,239
|
|
|
3,176,984
|
|
Inventory
(Note 1)
|
|
|
2,555,767
|
|
|
1,335,682
|
|
Tax
credit receivable
|
|
|
-
|
|
|
466,843
|
|
Due
from MSGI Security Solutions, Inc.
(Note 11)
|
|
|
533,147
|
|
|
-
|
|
Due
from related parties
|
|
|
176,433
|
|
|
622,231
|
|
Other
current assets
|
|
|
440,631
|
|
|
315,860
|
|
Prepaid
expenses
|
|
|
356,519
|
|
|
100,492
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
10,885,582
|
|
|
6,020,874
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
(Note 2)
|
|
|
244,170
|
|
|
33,727
|
|
Rental
equipment, net
(Note 2)
|
|
|
78,616
|
|
|
161,117
|
|
Goodwill
and other intangible assets, net
(Note 3)
|
|
|
3,832,985
|
|
|
75,851
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
15,041,353
|
|
$
|
6,291,569
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable, trade
|
|
$
|
2,037,333
|
|
$
|
4,021,408
|
|
Accrued
expenses and other current liabilities
|
|
|
1,608,424
|
|
|
1,719,506
|
|
Deferred
payment related to acquisitions
(Note 10)
|
|
|
1,163,936
|
|
|
-
|
|
Accrued
dividends on Series A & B Preferred Stock
|
|
|
371,332
|
|
|
79,650
|
|
Due
to related parties
(Note 9)
|
|
|
106,875
|
|
|
523,810
|
|
Loans
payable
|
|
|
32,393
|
|
|
969,935
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
5,320,293
|
|
|
7,314,309
|
|
|
|
|
|
|
|
|
|
Loans
and notes payable, long term
|
|
|
86,104
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
5,406,397
|
|
|
7,314,309
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Preferred
stock, $.001 par value; 5,000,000 shares authorized,
|
|
|
|
|
|
|
|
6,407
and 22,321
shares Series A issued and outstanding, as of
|
|
|
|
|
|
|
|
April
30th,
2007 and 2006 respectively
|
|
|
6
|
|
|
22
|
|
|
|
2
|
|
|
-
|
|
|
Common
stock, $.001 par value; 100,000,000
shares
|
|
|
|
|
|
|
|
authorized,
46,064,668
and 24,053,480
shares issued and outstanding
|
|
|
|
|
|
|
|
|
|
46,065
|
|
|
24,053
|
|
|
Stock
subscribed
|
|
|
114,000
|
|
|
-
|
|
Additional
paid-in capital
|
|
|
46,099,436
|
|
|
15,990,117
|
|
Foreign
currency translation adjustment
|
|
|
(197,572
|
)
|
|
(332,171)
|
|
Accumulated
deficit
|
|
|
(36,426,981
|
)
|
|
(16,704,762
|
)
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
9,634,956
|
|
|
(1,022,740
|
)
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
15,041,353
|
|
$
|
6,291,569
|
|
|
|
April 30,
|
|
April 30,
|
|
||
|
|
|
2006
|
|
|||
|
|
|
|
|
|
||
Net
revenue
|
|
$
|
4,934,714
|
|
$
|
2,452,308
|
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
2,212,373
|
|
|
1,161,766
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
2,722,341
|
|
|
1,290,542
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
1,101,758
|
|
|
1,097,070
|
|
Selling,
general and administrative expenses
|
|
|
5,288,539
|
|
|
3,247,453
|
|
Other
operating
expenses
|
|
|
435,000
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
(4,102,956
|
)
|
|
(3,053,981
|
)
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
(expense)
|
|
|
37,795
|
|
|
504
|
|
Interest
expense
|
|
|
(5,788,596
|
)
|
|
(146,633
|
)
|
|
|
|
|
|
|
|
|
Total
other income (expense)
|
|
|
(5,750,801
|
)
|
|
(146,129
|
)
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(9,853,757
|
)
|
|
(3,200,110
|
)
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(9,853,757
|
)
|
|
(3,200,110
|
)
|
|
|
|
|
|
|
|
|
Preferred
Stock Dividends:
|
|
|
|
|
|
|
|
Series
A
|
|
|
(207,099
|
)
|
|
(79,650
|
)
|
Series
B
|
|
|
(107,679
|
)
|
|
-
|
|
Beneficial
Conversion Feature
|
|
|
(800,000
|
) |
|
-
|
|
|
|
|
|
|
|
|
|
Net
Loss Applicable to Common Shares
|
|
$
|
(10,968,535
|
)
|
$
|
(3,279,760
|
)
|
|
|
|
|
|
|
|
|
Loss
per share, basic and diluted
|
|
|
(0.38
|
)
|
|
(0.14
|
)
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding
|
|
|
29,138,920
|
|
|
23,795,553
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(9,853,757
|
)
|
$
|
(3,200,110
|
)
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
(197,572
|
)
|
|
(421,013
|
)
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
|
(10,051,329
|
)
|
$
|
(3,621,123
|
)
|
|
Preferred
Stock Series A
|
|
Preferred
Stock Series B
|
|
Common
Stock
|
|
Common
Stock
|
|
Additional
Paid-in
|
|
Foreign
Currency Translation
|
|
Accumulated
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Subscribed
|
|
Capital
|
|
Adjustment
|
|
Deficit
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance,
October 31, 2005
|
|
|
15,000
|
|
$
|
15
|
|
|
-
|
|
$
|
-
|
|
|
23,667,656
|
|
$
|
23,668
|
|
$
|
-
|
|
$
|
13,837,534
|
|
$
|
(10,117
|
) |
$
|
(13,362,433
|
)
|
$
|
488,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares for cash
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for compensation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscribed
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation and for
financing
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
147,693
|
|
|
-
|
|
|
-
|
|
|
147,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
36,391
|
|
|
-
|
|
|
36,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,141,580
|
)
|
|
(1,141,580
|
)
|
Balance,
January 31, 2006
|
|
|
15,000
|
|
$
|
15
|
|
|
-
|
|
$
|
-
|
|
|
23,667,656
|
|
$
|
23,668
|
|
$
|
-
|
|
$
|
13,985,227
|
|
$
|
26,274
|
|
$
|
(14,504,013
|
)
|
$
|
(468,829
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for compensaton
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
385,824
|
|
|
386
|
|
|
-
|
|
|
192,526
|
|
|
-
|
|
|
-
|
|
|
192,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of preferred stock for cash (Series A)
|
|
|
7,321
|
|
|
7
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,141,718
|
|
|
-
|
|
|
-
|
|
|
1,141,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation and for
financing
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
670,646
|
|
|
-
|
|
|
-
|
|
|
670,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividend (Series A)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(79,650
|
) |
|
(79,650
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(358,444
|
) |
|
-
|
|
|
(358,444
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,121,100
|
)
|
|
(2,121,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
April 30, 2006
|
|
|
22,321
|
|
$
|
22
|
|
|
-
|
|
$
|
-
|
|
|
24,053,480
|
|
$
|
24,054
|
|
$
|
-
|
|
$
|
15,990,117
|
|
$
|
(332,170
|
) |
$
|
(16,704,763
|
)
|
$
|
(1,022,740
|
)
|
|
Preferred
Stock Series A
|
|
Preferred
Stock Series B
|
|
Common
Stock
|
|
Common
Stock
|
|
Additional
Paid-in
|
|
Foreign
Currency Translation
|
|
Accumulated
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Subscribed
|
|
Capital
|
|
Adjustment
|
|
Deficit
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance,
October 31, 2006
|
|
|
23,641
|
|
$
|
24
|
|
|
41,000
|
|
$
|
41
|
|
|
24,301,980
|
|
$
|
24,302
|
|
$
|
153,750
|
|
$
|
25,858,307
|
|
$
|
(292,821
|
)
|
$
|
(25,458,447
|
)
|
$
|
285,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of preferred stock
|
|
|
-
|
|
|
-
|
|
|
8,000
|
|
|
8
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
799,992
|
|
|
-
|
|
|
-
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of shares for cash
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
650,000
|
|
|
650
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for compensation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,361,000
|
|
|
1,361
|
|
|
-
|
|
|
1,422,659
|
|
|
-
|
|
|
-
|
|
|
1,424,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscribed
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(153,750
|
)
|
|
153,750
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation and for
financing
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
205,194
|
|
|
-
|
|
|
-
|
|
|
205,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
preferred
stock, Series
A
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
preferred
stock, Series B
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
799,350
|
|
|
-
|
|
|
(800,000)
|
|
(650)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency
translation adjustment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(35,488
|
) |
|
-
|
|
|
(35,488
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,530,919
|
)
|
|
(2,530,919
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 31, 2007
|
|
|
23,641
|
|
$
|
24
|
|
|
49,000
|
|
$
|
49
|
|
|
26,312,980
|
|
$
|
26,313
|
|
$
|
-
|
|
$
|
29,239,252
|
|
$
|
(328,309
|
)
|
$
|
(28,789,366
|
)
|
$
|
147,963
|
|
Conversion
of preferred stock:
Series
A
|
|
|
(17,234
|
)
|
|
(17
|
)
|
|
-
|
|
|
-
|
|
|
2,878,418
|
|
|
2,878
|
|
|
-
|
|
|
(2,861
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
Series
B
|
|
|
-
|
|
|
-
|
|
|
(29,000
|
)
|
|
(29
|
)
|
|
2,900,000
|
|
|
2,900
|
|
|
-
|
|
|
(2,871
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
Redemption
of preferred stock
|
|
|
-
|
|
|
-
|
|
|
(18,181
|
)
|
|
(18
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,818,082
|
)
|
|
-
|
|
|
-
|
|
|
(1,818,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of common stock for cash
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13,280,000
|
|
|
13,280
|
|
|
-
|
|
|
12,153,585
|
|
|
-
|
|
|
-
|
|
|
12,166,865
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for compensation
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
161,180
|
|
|
161
|
|
|
-
|
|
186,369
|
|
|
-
|
|
|
-
|
|
|
186,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for acquisition
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
532,090
|
|
|
532
|
|
|
-
|
|
|
792,282
|
|
|
-
|
|
|
-
|
|
|
792,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
subscribed:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
80,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
80,000
|
|
Common
stock
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
34,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
34,000
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of options and warrants issued as compensation and for
financing
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,551,763
|
|
|
-
|
|
-
|
|
5,551,762
|
|||
Preferred
stock dividends:
Series
A
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(207,099
|
) |
(207,099
|
) | |||||||||||||||||||||
Series
B
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(107,678
|
) |
(107,678
|
) | |||||||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
130,737
|
130,737
|
||||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(7,322,838
|
) |
(7,322,838
|
) | |||||||||||||||||||||
Balance,
April 30, 2007
|
6,407
|
|
$
|
6
|
1,819
|
$
|
2
|
46,064,668
|
$
|
46,065
|
$
|
114,000
|
$
|
46,099,436
|
$
|
(197,572
|
) |
$
|
(36,426,981
|
) |
$
|
9,634,956
|
|
|
April 30,
|
|
April 30,
|
|
||
|
|
|
2006
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||
Net
loss
|
|
$
|
(9,853,757
|
)
|
$
|
(3,200,110
|
)
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
used
by operating activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
87,273
|
|
|
71,922
|
|
Stock
based compensation
|
|
|
1,788,541
|
|
|
340,605
|
|
Financing
costs
|
|
|
5,544,445
|
|
|
-
|
|
Bad
debt expense
|
|
|
130,309
|
|
|
79,650
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(263,127
|
)
|
|
(2,073,183
|
)
|
Inventory
|
|
|
(604,375
|
)
|
|
(291,631
|
)
|
Prepaid
expenses
|
|
|
(196,603
|
)
|
|
116,354
|
|
Other
receivables
|
|
|
(112,018
|
)
|
|
(847,686
|
)
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
(1,546,903
|
)
|
|
3,924,939
|
|
Due
to related parties
|
|
|
(119,253
|
)
|
|
(53,171
|
)
|
|
|
|
|
|
|
|
|
Net
cash (used)
by
operating activities
|
|
|
(5,145,468
|
)
|
|
(1,931,603
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(113,582
|
)
|
|
(67,418
|
)
|
Purchases
of intangible assets
|
|
|
(1,000
|
)
|
|
(4,930
|
)
|
Acquisition
of Miller
& Hilton, Inc. d/b/a Colmek
|
|
|
(800,000
|
)
|
|
-
|
|
Cash
acquired from Colmek
|
|
|
35,515
|
|
|
-
|
|
|
|
|
|
|
|
||
Net
cash used by investing activities
|
|
|
(879,067
|
)
|
|
(72,348
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from/(repayment of) loans
|
|
|
(1,066,447
|
)
|
|
(2,174,070
|
)
|
Proceeds
from sale of stock
|
|
|
13,080,865
|
|
|
3,796,725
|
|
Redemption
of preferred stock
|
(1,818,082
|
)
|
-
|
||||
Preferred
stock dividend
|
|
|
(247,841
|
)
|
|
-
|
|
|
|
|
|
|
|
||
Net
cash provided by financing activities
|
|
|
9,948,495
|
|
|
1,622,655
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
3,914
|
|
241,141
|
||
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash
|
|
|
3,927,874
|
|
(140,155
|
)
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
|
1,377,972
|
|
|
142,936
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
$
|
5,305,846
|
|
$
|
2,781
|
|
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
243,600
|
|
$
|
146,633
|
|
Income
taxes
|
|
|
-
|
|
|
-
|
|
Acquisition
of Colmek:
|
|
|
|
|
|
|
|
Current
assets acquired
|
|
|
195,528
|
|
|
|
|
Cash
acquired
|
|
|
35,515
|
|
|
|
|
Equipment
acquired
|
|
|
80,007
|
|
|
|
|
Goodwill
and intangible assets
|
|
|
2,773,613
|
|
|
|
|
Liabilities
assumed
|
|
|
(727,913
|
)
|
|
|
|
Deferred
note payable
|
|
|
(763,936
|
)
|
|
|
|
Amount
paid in common stock
|
(792,814
|
)
|
|||||
|
|
|
|
|
|
|
|
Cash
Paid for Acquisition
|
|
|
800,000
|
|
|
|
|
2007
|
2006
|
||||||
Raw
materials
|
$
|
896,272
|
$
|
912,049
|
|||
Work
in process
|
573,617
|
96,258
|
|||||
Finished
goods
|
1,085,878
|
327,375
|
|||||
|
$
|
2,555,767
|
$
|
1,335,682
|
2007
|
2006
|
||||||
Machinery
and Equipment
|
$
|
739,907
|
$
|
483,083
|
|||
Accumulated
Depreciation
|
(495,737
|
)
|
(449,356
|
)
|
|||
|
$
|
244,170
|
$
|
33,727
|
2007
|
2006
|
||||||
Rental
Equipment
|
$
|
240,140
|
240,140
|
||||
Accumulated
Depreciation
|
(161,524
|
)
|
(79,023
|
)
|
|||
|
$
|
78,616
|
$
|
161,117
|
April
30,2007
|
||||
Customer
relationships (Weighted average life of 10 years)
|
$
|
694,503
|
||
Non-compete
agreements (Weighted average life of 3 years)
|
198,911
|
|||
Patents
|
30,555
|
|||
Total
Amortized identifiable intangible assets-Gross carrying value:
|
923,969
|
|||
Less
Accumulated Amortization
|
(32,090
|
)
|
||
Net:
|
891,879
|
|||
Residual
value:
|
891,879
|
Beginning
goodwill balance at November 1, 2006
|
$
|
1,060,906
|
||
Goodwill
recorded upon acquisition of Colmek
|
1,880,199
|
|||
Balance
at April 30, 2007
|
$
|
2,941,105
|
|
|
2007
|
|
2006
|
|
||||||||
|
|
Number
|
|
Weighted
Average Exercise Price
|
|
Number
|
|
Weighted
Average Exercise Price
|
|
||||
Outstanding
at beginning of period
|
|
|
13,410,000
|
|
$
|
1.29
|
|
|
2,350,000
|
|
$
|
1.00
|
|
Granted
during the period
|
|
|
17,926,418
|
|
|
1.50
|
|
|
1,205,000
|
|
|
0.86
|
|
Exercised
during the period
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Terminated
during the period
|
|
|
210,000
|
|
|
1.24
|
|
|
—
|
|
|
---
|
|
Outstanding
at end of the period
|
|
|
31,126,418
|
|
$
|
1.41
|
|
|
3,555,000
|
|
$
|
0.95
|
|
Exercisable
at end of the period
|
|
|
29,944,918
|
|
$
|
1.42
|
|
|
1,729,500
|
|
$
|
0.90
|
|
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average Contractual
Life
(Yrs)
|
Weighted
Average
Exercise
Price
|
|||||||
0.50
|
750,000
|
4.00
|
$
|
0.50
|
||||||
0.58
|
400,000
|
3.92
|
0.58
|
|||||||
1.00
|
3,545,000
|
3.02
|
1.00
|
|||||||
1.30
|
13,098,209
|
4.70
|
1.30
|
|||||||
1.50
|
235,000
|
4.07
|
1.50
|
|||||||
1.70
|
13,098,209
|
4.70
|
1.70
|
Non-Current:
|
|||||||
Net
Operating Loss Carry Forward
|
$
|
5,386,000
|
$
|
3,518,000
|
|||
Valuation
Allowance
|
(5,386,000
|
)
|
(3,518,000
|
)
|
|||
|
|
|
|||||
Net
Deferred Tax Asset
|
$
|
-
|
$
|
-
|
Current
assets acquired
|
$
|
993,817
|
||
Equipment,
net
|
37,126
|
|||
Goodwill
|
998,591
|
|||
Current
liabilities assumed
|
$
|
(493,262
|
) | |
Purchase
price
|
$
|
1,536,271
|
Current
Assets
|
$
|
231,043
|
||
Equipment
|
80,007
|
|||
Current
Liabilities
|
(727,913
|
)
|
||
Customer
Relationships
|
694,503
|
|||
Non-Compete
Agreements
|
198,911
|
|||
Goodwill
|
1,880,199
|
|||
Total
Purchase Price
|
$
|
2,356,750
|
DIRECTORS
|
B
G BROOKES
C
R PEGRUM
L
L SHORT
|
|
||
|
|
|
|
|
SECRETARY
|
|
|
C
R PEGRUM
|
|
|
|
|
|
|
REGISTERED
OFFICE
|
|
|
14
ALBANY ROAD
GRANBY
INDUSTRIAL ESTATE
WEYMOUTH
DORSET
DT4
9TH
|
|
|
|
|
|
|
REGISTERED
NUMBER
|
|
|
2300406
(ENGLAND
AND WALES)
|
|
|
|
|
|
|
BANKERS
|
|
|
NATIONAL
WESTMINSTER BANK PLC
76
ST THOMAS STREET
WEYMOUTH
DORSET
|
|
|
|
|
|
|
AUDITORS
|
|
|
COYNE,
BUTTERWORTH & CHALMERS
CHARTERED
ACCOUNTANTS
WEYMOUTH
AND DORCHESTER
|
|
|
2005
|
|
2004
|
|
||
"A"
Ordinary shares
|
|
|
|
|
|
||
Mr
C R Pegrum
|
|
|
2500
|
|
|
2500
|
|
|
|
|
|
|
|
|
|
"B"
Ordinary shares
|
|
|
|
|
|
|
|
Mr
B G Brookes
|
|
|
2500
|
|
|
2500
|
|
|
|
|
|
|
|
|
|
"C"
Ordinary shares
|
|
|
|
|
|
|
|
Mr
L L Short
|
|
|
2500
|
|
|
2500
|
|
|
|
|
|
|
|
|
|
"D"
Ordinary shares
|
|
|
|
|
|
|
|
Mr
L L Short
|
|
|
2500
|
|
|
2500
|
|
|
|
|
|
|
|
|
|
"E"
Ordinary shares
|
|
|
|
|
|
|
|
Mr
B G Brookes
|
|
|
2500
|
|
|
2500
|
|
|
|
|
|
|
|
|
|
"F"
Ordinary shares
|
|
|
|
|
|
|
|
Mr
C R Pegrum
|
|
|
2500
|
|
|
2500
|
|
Weymouth
|
COYNE,
BUTTERWORTH & CHALMERS
|
5
December 2006
|
Registered
Auditors
|
|
Chartered
Accountants
|
|
|
|
|
2005
|
|
|
|
2004
|
|
|
|
|||||
|
Note
|
|
£
|
|
£
|
|
£
|
|
£
|
|
||||||
TURNOVER
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fees
|
|
|
|
|
|
|
|
|
1170220
|
|
|
|
|
|
1898763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
|
|
|
|
|
|
111245
|
|
|
|
|
|
274015
|
|
|
|
|
Consultancy
|
|
|
|
|
|
191324
|
|
|
|
|
|
563222
|
|
|
|
|
Production
staff
|
|
|
|
|
|
426825
|
|
|
|
|
|
529686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
729394
|
|
|
|
|
|
1366923
|
|
GROSS
PROFIT
|
|
|
|
|
|
|
|
|
440826
|
|
|
|
|
|
531840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
remuneration
|
|
|
2
|
|
|
115914
|
|
|
|
|
|
119221
|
|
|
|
|
Staff
salaries
|
|
|
|
|
|
47050
|
|
|
|
|
|
63600
|
|
|
|
|
Rent
|
|
|
|
|
|
28360
|
|
|
|
|
|
26947
|
|
|
|
|
Business
rates
|
|
|
|
|
|
6847
|
|
|
|
|
|
6856
|
|
|
|
|
Light
heat and power
|
|
|
|
|
|
2614
|
|
|
|
|
|
2087
|
|
|
|
|
Water
and effluent
|
|
|
|
|
|
458
|
|
|
|
|
|
467
|
|
|
|
|
Insurance
|
|
|
|
|
|
11276
|
|
|
|
|
|
12011
|
|
|
|
|
Repairs
and renewals
|
|
|
|
|
|
7209
|
|
|
|
|
|
5870
|
|
|
|
|
Postage
and stationery
|
|
|
|
|
|
6692
|
|
|
|
|
|
6402
|
|
|
|
|
Telephone
and facsimile
|
|
|
|
|
|
2702
|
|
|
|
|
|
3180
|
|
|
|
|
Computer
consumables
|
|
|
|
|
|
6210
|
|
|
|
|
|
5360
|
|
|
|
|
Travel
and subsistence
|
|
|
|
|
|
8122
|
|
|
|
|
|
9694
|
|
|
|
|
Advertising
|
|
|
|
|
|
152
|
|
|
|
|
|
418
|
|
|
|
|
Entertaining
|
|
|
|
|
|
1564
|
|
|
|
|
|
3296
|
|
|
|
|
Legal
fees
|
|
|
|
|
|
200
|
|
|
|
|
|
2390
|
|
|
|
|
Accountancy
fees
|
|
|
|
|
|
8920
|
|
|
|
|
|
5450
|
|
|
|
|
Other
professional fees
|
|
|
|
|
|
17926
|
|
|
|
|
|
40036
|
|
|
|
|
Equipment
hire
|
|
|
|
|
|
87
|
|
|
|
|
|
346
|
|
|
|
|
Bank
charges
|
|
|
|
|
|
1580
|
|
|
|
|
|
1918
|
|
|
|
|
Cleaning
and laundry
|
|
|
|
|
|
2558
|
|
|
|
|
|
2489
|
|
|
|
|
Staff
amenities
|
|
|
|
|
|
1323
|
|
|
|
|
|
1097
|
|
|
|
|
Staff
training
|
|
|
|
|
|
5807
|
|
|
|
|
|
3559
|
|
|
|
|
Sundry
|
|
|
|
|
|
1517
|
|
|
|
|
|
598
|
|
|
|
|
Lease
amortisation
|
|
|
3
|
|
|
383
|
|
|
|
|
|
383
|
|
|
|
|
Depreciation
|
|
|
3
|
|
|
11559
|
|
|
|
|
|
20911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
297030
|
|
|
|
|
|
344586
|
|
OPERATING
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
carried
forward
|
|
|
|
|
|
|
|
|
143796
|
|
|
|
|
|
187254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
brought
forward
|
|
|
|
|
|
|
|
|
143796
|
|
|
|
|
|
187254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AND
SIMILAR INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation
tax
|
|
|
|
|
|
-
|
|
|
|
|
|
14
|
|
|
|
|
Bank
|
|
|
|
|
|
3892
|
|
|
|
|
|
3603
|
|
|
|
|
Overdrawn
loan accounts
|
|
|
|
|
|
-
|
|
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3892
|
|
|
|
|
|
3665
|
|
PROFIT
ON ORDINARY ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE
TAXATION
|
|
|
|
|
|
|
|
|
147688
|
|
|
|
|
|
190919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORDINARY
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation
tax
|
|
|
|
|
|
|
|
|
29405
|
|
|
|
|
|
43852
|
|
PROFIT
FOR FINANCIAL YEAR
|
|
|
|
|
|
|
|
|
118283
|
|
|
|
|
|
147067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brought
forward
|
|
|
|
|
|
|
|
|
286069
|
|
|
|
|
|
270724
|
|
DISTRIBUTABLE
PROFIT
|
|
|
|
|
|
|
|
|
404352
|
|
|
|
|
|
417791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
|
31300
|
|
|
|
|
|
131722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carried
forward
|
|
|
|
|
|
|
|
|
373052
|
|
|
|
|
|
286069
|
|
Note
|
|
2005
|
|
2004
|
||||||
|
£
|
£
|
||||||||
NET
CASH INFLOW/(OUTLOW)
|
||||||||||
FROM
OPERATING ACTIVITIES
|
11
|
190998
|
128148
|
|||||||
RETURNS
ON INVESTMENTS AND
|
||||||||||
SERVICING
OF FINANCE
|
||||||||||
Interest
Received
|
3892
|
3665
|
||||||||
194890
|
131813
|
|||||||||
TAXATION
|
||||||||||
Corporation
tax paid
|
(43852
|
)
|
(59777
|
)
|
||||||
151038
|
72036
|
|||||||||
CAPITAL
EXPENDITURE AND
|
||||||||||
FINANCIAL
INVESTMENT
|
||||||||||
Payments
to acquire tangible fixed assets
|
(6099
|
)
|
(8714
|
)
|
||||||
EQUITY
DIVIDENDS PAID
|
(31300
|
)
|
(131722
|
)
|
||||||
CASH
INFLOW/(OUTFLOW)
|
113639
|
(68400
|
)
|
|||||||
Debt
due within one year
|
||||||||||
Increase/(Decrease)
in directors loans
|
(31866
|
)
|
36914
|
|||||||
INCREASE/(DECREASE)
IN CASH IN YEAR
|
81773
|
(31486
|
)
|
|||||||
RECONCILIATION
OF NET CASH FLOW TO MOVEMENT IN NET DEBT
|
||||||||||
Increase/(Decrease)
in cash in year
|
81773
|
(31486
|
)
|
|||||||
Cash
outflow/(inflow) from increase in funds/(decrease in debt)
|
31866
|
(36914
|
)
|
|||||||
CHANGE
IN NET FUNDS/(DEBT)
|
113639
|
(68400
|
)
|
|||||||
NET
DEBT AT 1 NOVEMBER 2004
|
92145
|
160545
|
||||||||
NET
DEBT AT 31 OCTOBER 2005
|
12
|
205784
|
92145
|
|
|
|
|
2005
|
|
|
|
2004
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Note
|
|
£
|
|
£
|
|
£
|
|
£
|
|
||||||
FIXED
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tangible
assets
|
|
|
3
|
|
|
|
|
|
24646
|
|
|
|
|
|
30489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work
in progress
|
|
|
|
|
|
50753
|
|
|
|
|
|
37374
|
|
|
|
|
Debtors
|
|
|
4
|
|
|
220313
|
|
|
|
|
|
402638
|
|
|
|
|
Cash
at bank and in hand
|
|
|
5
|
|
|
224156
|
|
|
|
|
|
142383
|
|
|
|
|
|
|
|
|
|
|
495222
|
|
|
|
|
|
582395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CREDITORS:
Amounts falling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
due
within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
18372
|
|
|
|
|
|
50238
|
|
|
|
|
Other
creditors
|
|
|
6
|
|
|
113444
|
|
|
|
|
|
261577
|
|
|
|
|
|
|
|
|
|
|
131816
|
|
|
|
|
|
311815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
363406
|
|
|
|
|
|
270580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS LESS LIABILITIES
|
|
|
|
|
|
|
|
|
388052
|
|
|
|
|
|
301069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called
up share capital
|
|
|
7
|
|
|
|
|
|
15000
|
|
|
|
|
|
15000
|
|
Profit
and loss account
|
|
|
|
|
|
|
|
|
373052
|
|
|
|
|
|
286069
|
|
SHAREHOLDERS
FUNDS
|
|
|
|
|
|
|
|
|
388052
|
|
|
|
|
|
301069
|
|
1.
|
ACCOUNTING
POLICIES
|
The
rates of depreciation are as follows:
|
|
Over
the term of the lease
|
|
Equipment
|
15%
of written down value
|
Computer
equipment
|
3
years straight line
|
|
|
2005
|
|
2004
|
|
||
|
|
£
|
|
£
|
|
||
|
|
|
|
|
|||
Salary
|
|
|
69143
|
|
|
69143
|
|
Social
security costs
|
|
|
6971
|
|
|
7028
|
|
Other
pension costs
|
|
|
39800
|
|
|
43050
|
|
|
|
|
115914
|
|
|
119221
|
|
3.
TANGIBLE FIXED ASSETS
|
|
|
|
|||||||
|
Leasehold
|
|
|
|||||||
|
Improvements
|
Equipment
|
Total
|
|||||||
|
£
|
£
|
£
|
|||||||
Cost:
|
||||||||||
Brought
forward
|
5641
|
128477
|
134118
|
|||||||
Additions
|
-
|
6099
|
6099
|
|||||||
Carried
forward
|
5641
|
134576
|
140217
|
|||||||
|
||||||||||
Depreciation:
|
||||||||||
Brought
forward
|
2193
|
101436
|
103629
|
|||||||
Provision
|
383
|
11559
|
11942
|
|||||||
Carried
forward
|
2576
|
112995
|
115571
|
|||||||
|
||||||||||
Net
book value
|
3065
|
21581
|
24646
|
|
2005
|
2004
|
|||||
4.
DEBTORS:
|
£
|
|
|
£
|
|
||
Amounts
due within one year
|
|||||||
Trade
debtors
|
216784
|
398914
|
|||||
Other
|
1385
|
1257
|
|||||
Prepayments
|
2144
|
2467
|
|||||
|
220313
|
402638
|
|||||
|
|||||||
|
|||||||
5.
CASH AT BANK AND IN HAND
|
|||||||
Business
reserve
|
214385
|
56574
|
|||||
Current
account
|
9655
|
85729
|
|||||
Cash
in hand
|
116
|
80
|
|||||
|
224156
|
142383
|
|||||
|
|||||||
6.
OTHER CREDITORS:
|
|||||||
Amounts
falling due within one year
|
|||||||
Corporation
tax
|
29405
|
43852
|
|||||
Other
taxation and social security
|
59405
|
85682
|
|||||
Trade
creditors
|
11652
|
68744
|
|||||
Accruals
|
12982
|
63299
|
|||||
|
113444
|
261577
|
|||||
|
|||||||
|
2005
|
|
|
2004
|
|
||
|
|
|
£
|
|
|
£
|
|
7.
SHARE CAPITAL:
|
|||||||
Authorised
|
|||||||
1000000
Ordinary "A" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Ordinary "B" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Ordinary "C" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Ordinary "D" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Ordinary "E" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Ordinary "F" shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Redeemable Non Preferred Equity shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Redeemable Non Preferred Voting shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Redeemable Non Preferred Non Voting shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Redeemable Preference shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Convertible Deferred shares of £1 each
|
1000000
|
1000000
|
|||||
1000000
Deferred Founder shares of £1 each
|
1000000
|
1000000
|
|||||
|
12000000
|
12000000
|
|||||
Called
up, allotted and fully paid
|
|||||||
2500
Ordinary "A" shares of £1 each
|
2500
|
2500
|
|||||
2500
Ordinary "B" shares of £1 each
|
2500
|
2500
|
|||||
2500
Ordinary "C" shares of £1 each
|
2500
|
2500
|
|||||
2500
Ordinary "D" shares of £1 each
|
2500
|
2500
|
|||||
2500
Ordinary "E" shares of £1 each
|
2500
|
2500
|
|||||
2500
Ordinary "F" shares of £1 each
|
2500
|
2500
|
|||||
|
15000
|
15000
|
|||||
|
|||||||
8.
LEASING COMMITMENTS
|
|||||||
|
|||||||
At
the year end the Company had annual commitments under non-cancellable
operating leases as detailed below
|
|||||||
Operating
leases which expire:
|
|||||||
After
more than five years
|
26860
|
26131
|
9.
|
CONTINGENT
LIABILITIES
The
ultimate legal and financial liability of the Company is respect
of all
claims, lawsuits and proceedings cannot be estimated with any certainty.
However in the opinion of management, based on examination of these
matters, it’s experience to date and discussions with advisors, the
ultimate outcome of any legal proceedings, net of liabilities already
accrued in the Company’s Balance Sheet, is not expected to have a material
adverse effect on the Company’s financial position, although an unexpected
resolution in any reporting period of one or more of these matters
could
have a significant impact on the Company’s results of operations for that
period.
|
10..
|
RELATED
PARTIES
There
were no transactions with related parties during the
year.
|
2005
|
2004
|
|||||||||
£
|
£
|
|||||||||
11.
|
RECONCILATION
OF OPERTING PROFIT TO NET CASH
|
|||||||||
INFLOW
FROM OPERATING ACTIVITES
|
||||||||||
Operating
Profit
|
143796
|
187254
|
||||||||
Increase/(Decrease)
in lease amortisation provision
|
383
|
383
|
||||||||
Increase/(Decrease)
in depreciation provision
|
11559
|
20911
|
||||||||
155738
|
208548
|
|||||||||
(Increase)/Decrease
in stocks
|
(13379)
|
55740
|
||||||||
(Increase)/Decrease
in trade debtors
|
182325
|
(13336)
|
||||||||
Increase/(Decrease)
in trade creditors
|
(133686)
|
(122804)
|
||||||||
190998
|
128148
|
|||||||||
12
|
ANALYSIS
OF CHANGES IN NET DEBT
|
|||||||||
Cashflows
|
2005
|
2004
|
||||||||
£
|
£
|
£
|
||||||||
Cash
at bank and in hand
|
81773
|
224156
|
142383
|
|||||||
Debt
due to directors
|
31866
|
(18372)
|
(50238)
|
|||||||
113639
|
205784
|
92145
|
||||||||
|
|
2005
|
|
||||
|
|
£
|
|
£
|
|
||
Tangible
fixed assets
|
|
|
|
|
|
24,518
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Work
in progress
|
|
|
45,474
|
|
|
|
|
Trade
debtors
|
|
|
213,152
|
|
|
|
|
Other
debtors
|
|
|
1,257
|
|
|
|
|
Prepayments
|
|
|
2,467
|
|
|
|
|
Cash
at bank
|
|
|
231,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
493,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Directors
|
|
|
1,913
|
|
|
|
|
Corporation
tax
|
|
|
57,882
|
|
|
|
|
Other
taxation and social security
|
|
|
31,489
|
|
|
|
|
Trade
creditors
|
|
|
55,397
|
|
|
|
|
Accruals
|
|
|
10,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
current assets
|
|
|
|
|
|
336,365
|
|
|
|
|
|
|
|
|
|
Total
assets less liabilities
|
|
|
|
|
|
360,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
|
|
15,000
|
|
Profit
and loss account
|
|
|
|
|
|
345,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,883
|
|
|
|
|
|
2005
|
|
||
|
|
|
|
£
|
|
||
Turnover
|
|
|
|
|
|
589,377
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
|
|
|
|
|
Purchases
|
|
|
43,553
|
|
|
|
|
Consultancy
|
|
|
120,083
|
|
|
|
|
Production
staff
|
|
|
215,020
|
|
|
|
|
|
|
|
|
|
|
(378,656
|
)
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
210,721
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
|
|
|
|
|
|
|
Indirect
wages
|
|
|
76,881
|
|
|
|
|
Rent
|
|
|
14,922
|
|
|
|
|
Depreciation
|
|
|
5,971
|
|
|
|
|
Other
expenses
|
|
|
41,127
|
|
|
|
|
|
|
|
|
|
|
(138,901
|
)
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
71,820
|
|
|
|
|
|
|
|
|
|
Interest
receivable
|
|
|
|
|
|
2,024
|
|
|
|
|
|
|
|
|
|
Pre
tax profit
|
|
|
|
|
|
73,844
|
|
|
|
|
|
|
|
|
|
Corporation
tax
|
|
|
|
|
|
(14,030
|
)
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Profit
brought forward
|
|
|
|
|
|
286,069
|
|
|
|
|
|
|
|
|
|
Profit
carried forward
|
|
|
|
|
|
345,883
|
|
|
|
|
|
|
|
||
|
|
2006
|
|
||||
|
|
£
|
|
£
|
|
||
|
|
|
|
|
|
||
Tangible
fixed assets
|
|
|
|
|
|
22,039
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Work
in progress
|
|
|
70,160
|
|
|
|
|
Trade
debtors
|
|
|
189,805
|
|
|
|
|
Other
debtors
|
|
|
1,385
|
|
|
|
|
Prepayments
|
|
|
2,145
|
|
|
|
|
Cash
at bank
|
|
|
242,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
506,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Directors
|
|
|
3,978
|
|
|
|
|
Corporation
tax
|
|
|
33,759
|
|
|
|
|
Other
taxation and social security
|
|
|
46,560
|
|
|
|
|
Trade
creditors
|
|
|
53,562
|
|
|
|
|
Accruals
|
|
|
12,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
current assets
|
|
|
|
|
|
355,493
|
|
|
|
|
|
|
|
|
|
Total
assets less liabilities
|
|
|
|
|
|
377,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
and reserves
|
|
|
|
|
|
|
|
Share
capital
|
|
|
|
|
|
15,000
|
|
Profit
and loss account
|
|
|
|
|
|
362,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,532
|
|
|
|
|
|
|
|
||
|
|
|
|
2006
|
|
||
|
|
|
|
£
|
|
||
Turnover
|
|
|
|
|
|
484,005
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
|
|
|
|
|
Purchases
|
|
|
58,146
|
|
|
|
|
Consultancy
|
|
|
49,642
|
|
|
|
|
Production
staff
|
|
|
222,836
|
|
|
|
|
|
|
|
|
|
|
(330,624
|
)
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
|
|
|
153,381
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
|
|
|
|
|
|
|
Indirect
wages
|
|
|
80,961
|
|
|
|
|
Rent
|
|
|
14,718
|
|
|
|
|
Depreciation
|
|
|
2,607
|
|
|
|
|
Other
expenses
|
|
|
34,735
|
|
|
|
|
|
|
|
|
|
|
(133,021
|
)
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
20,360
|
|
|
|
|
|
|
|
|
|
Interest
receivable
|
|
|
|
|
|
2,554
|
|
|
|
|
|
|
|
|
|
Pre
tax profit
|
|
|
|
|
|
22,914
|
|
|
|
|
|
|
|
|
|
Corporation
tax
|
|
|
|
|
|
(4,354
|
)
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Profit
brought forward
|
|
|
|
|
|
343,972
|
|
|
|
|
|
|
|
|
|
Profit
carried forward
|
|
|
|
|
|
362,532
|
|
CONTENTS
|
PAGES
|
|||
Report
of Independent Registered Certified Public Accounting
Firm
|
F-46
|
|||
|
||||
Financial
Statements
|
||||
|
||||
Balance
Sheets
|
F-47
|
|||
Statement
of Operations
|
F-48
|
|||
Statement
of Changes in Stockholders’ Equity
|
F-49
|
|||
Statement
of Cash Flows
|
F-50
|
|||
Notes
to the Financial Statements
|
F-51
|
|
/S/
Russell Bedford Stefanou Mirchandani LLP
|
New
York, New York
|
Russell
Bedford Stefanou Mirchandani LLP
|
|
2006
|
2005
|
|||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
23,161
|
$
|
210,311
|
|||
Accounts
receivable, Net (Note 2)
|
448,356
|
301,045
|
|||||
Unbilled
receivables (Note 3)
|
26,372
|
211,163
|
|||||
Other
current assets
|
-
|
53
|
|||||
|
|||||||
Total
current assets
|
497,889
|
722,572
|
|||||
|
|||||||
Property
and equipment, net (Note 4)
|
86,635
|
58,305
|
|||||
|
|||||||
|
|||||||
Total
assets
|
$
|
584,524
|
$
|
780,877
|
|||
|
|||||||
|
|||||||
LIABILITIES
AND DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|||||||
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
336,242
|
$
|
89,497
|
|||
Deferred
revenue (Note 3)
|
110,145
|
535,135
|
|||||
Accrued
expenses (Note 7)
|
150,702
|
192,838
|
|||||
Line
of credit (Note 8)
|
34,375
|
45,411
|
|||||
Notes
payable -related party-short term (Note 9)
|
44,129
|
44,130
|
|||||
Notes
payable-autos-short term (Note 11)
|
12,797
|
11,190
|
|||||
Deferred
compensation-short term (Note 10)
|
21,850
|
21,850
|
|||||
|
|||||||
Total
current liabilities
|
710,240
|
940,051
|
|||||
|
|||||||
NON-CURRENT
LIABILITIES
|
|||||||
Notes
payable -related party-long
term
|
44,130
|
88,259
|
|||||
Notes
payable-autos-long
term
|
42,075
|
26,899
|
|||||
Deferred
compensation-long
term
|
69,191
|
91,041
|
|||||
|
|||||||
Total
liabilities
|
865,636
|
1,146,250
|
|||||
|
|||||||
|
|||||||
|
|||||||
Deficiency
in Stockholders' equity: (Notes 12, and 13)
|
|||||||
Common
stock- $1 par value, 1000 shares authorized; 402 shares issued
at as of
October 31, 2006 and 2005
|
402
|
402
|
|||||
Retained
earnings
|
138,091
|
133,165
|
|||||
Additional
paid-in capital
|
67,500
|
-
|
|||||
Less:
Cost of treasury stock
|
(244,611
|
)
|
(284,604
|
)
|
|||
Less:
Cost of stock subscribed
|
(147,994
|
)
|
(214,336
|
)
|
|||
Less:
Stock subscription receivable (Note 5)
|
(94,500
|
)
|
-
|
||||
|
|||||||
Total
deficiency in stockholders' equity
|
(281,112
|
)
|
(365,373
|
)
|
|||
|
|||||||
Total
liabilities and deficiency in stockholders' equity
|
$
|
584,524
|
$
|
780,877
|
|
2006
|
2005
|
|||||
Net
revenue
|
$
|
2,969,164
|
$
|
1,595,468
|
|||
|
|||||||
Cost
of revenue
|
1,515,785
|
773,065
|
|||||
|
|||||||
Gross
profit
|
1,453,379
|
822,403
|
|||||
|
|||||||
Selling,
general and administrative expenses
|
1,345,408
|
1,005,235
|
|||||
|
|||||||
Operating
income ( loss)
|
107,971
|
(182,832
|
)
|
||||
|
|||||||
Other
income (expense)
|
16,790
|
(11,744
|
)
|
||||
|
|||||||
Net
income (loss) before income taxes
|
124,761
|
(194,576
|
)
|
||||
|
|||||||
Provision
for income taxes
|
-
|
-
|
|||||
|
|||||||
New
income (loss)
|
$
|
124,761
|
$
|
(194,576
|
)
|
|
|
|
|
|
Common
|
Stock
|
Additional
|
|
|
|||||||||||||||||||
|
Common
Stock
|
Treasury
Stock
|
Stock
|
Subscription
|
Paid-in
|
Retained
|
|
|||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscribed
|
Receivable
|
Capital
|
Earnings
|
Total
|
|||||||||||||||||||
Balance,
October 31, 2004
|
402
|
$
|
402.00
|
(25
|
)
|
$
|
(110,262
|
)
|
$
|
(280,678
|
)
|
$
|
-
|
$
|
-
|
$
|
327,741
|
$
|
(62,797
|
)
|
||||||||
|
||||||||||||||||||||||||||||
Stock
buy-back from the Hilton Estate
|
(13
|
)
|
(66,342
|
)
|
66,342
|
$
|
-
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock
buy-back from Brent Miller
|
(24
|
)
|
(108,000
|
)
|
$
|
(108,000
|
)
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net
loss
|
(194,576
|
)
|
$
|
(194,576
|
)
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance,
October 31, 2005
|
402
|
402
|
(62
|
)
|
(284,604
|
)
|
(214,336
|
)
|
-
|
-
|
133,165
|
(365,373
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||||||
Stock
buy-back from the Hilton Estate
|
(13
|
)
|
(66,342
|
)
|
66,342
|
-
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock
buy-back from Brent Miller
|
(20
|
)
|
(108,000
|
)
|
(108,000
|
)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Fair
value of options issued to employees and and officers as
compensation
|
67,500
|
67,500
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Treasury
stock issued to officers in exchange for note receivables
|
42
|
214,335
|
(94,500
|
)
|
(119,835
|
)
|
-
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net
income
|
124,761
|
124,761
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance,
October 31, 2006
|
402
|
$
|
402
|
(53
|
)
|
$
|
(244,611
|
)
|
$
|
(147,994
|
)
|
$
|
(94,500
|
)
|
$
|
67,500
|
$
|
138,091
|
$
|
(281,112
|
)
|
|
2006
|
|
|
2005
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Income
(loss) from operations
|
$
|
124,761
|
$
|
(194,576
|
)
|
||
|
|||||||
Adjustments
to reconcile income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
15,295
|
15,885
|
|||||
Stock
compensation
|
67,500
|
-
|
|||||
Gain
on sale of asset
|
(17,534
|
)
|
-
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(147,311
|
)
|
(52,104
|
)
|
|||
Unbilled
receivables
|
184,791
|
(149,232
|
)
|
||||
Inventories
|
-
|
46,934
|
|||||
Other
current assets
|
53
|
47
|
|||||
Accounts
payable
|
246,745
|
17,568
|
|||||
Accrued
expenses
|
(424,990
|
)
|
55,106
|
||||
Deferred
compensation
|
(21,850
|
)
|
(21,350
|
)
|
|||
Deferred
revenue
|
(42,136
|
)
|
531,066
|
||||
Net
cash provided by operating activities
|
(14,676
|
)
|
249,344
|
||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property, plant and equipment
|
-
|
(11,105
|
)
|
||||
Proceeds
from sale of equipment
|
17,000
|
-
|
|||||
Net
cash provided by (used in) investing activities
|
17,000
|
(11,105
|
)
|
||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
(Payments
to) proceeds from line of credit
|
(11,036
|
)
|
29,821
|
||||
Payments
on note payable - related party
|
(44,130
|
)
|
(44,129
|
)
|
|||
Payments
for repurchase of treasury stock
|
(108,000
|
)
|
(108,000
|
)
|
|||
Note
payable - autos
|
(26,308
|
)
|
(11,448
|
)
|
|||
Net
cash (used in) provided by financing activities
|
(189,474
|
)
|
(133,756
|
)
|
|||
|
|||||||
Net
(decrease) increase in cash and cash equivalents
|
(187,150
|
)
|
104,483
|
||||
|
|||||||
Cash
and cash equivalents, beginning of year
|
210,311
|
105,828
|
|||||
|
|||||||
Cash
and cash equivalents, end of year
|
$
|
23,161
|
$
|
210,311
|
|||
|
|||||||
Cash
paid during the year for:
|
|||||||
Income
taxes
|
$
|
100
|
$
|
2,900
|
|||
Interest
|
$
|
9,566
|
$
|
6,190
|
|
At
October 31,
|
||||||
|
2005
|
||||||
Buildings
and improvements
|
$
|
44,966
|
$
|
44,966
|
|||
Trucks
and Autos
|
80,718
|
76,647
|
|||||
Machinery
and equipment
|
210,760
|
247,440
|
|||||
|
336,444
|
369,053
|
|||||
Less:
Accumulated depreciation
|
249,809
|
310,748
|
|||||
|
$
|
86,635
|
$
|
58,305
|
|
Shares
|
Note
Receivable
|
|||||
Scott
DeBo
|
32
|
$
|
72,000
|
||||
Craig
Adamson
|
5
|
$
|
11,250
|
||||
James
Adamson
|
5
|
$
|
11,250
|
||||
|
$
|
94,500
|
Non-current:
|
2006
|
2005
|
|||||
Net
operating loss carry forward
|
$
|
445,863
|
$
|
-
|
|||
Valuation
allowance
|
(
445,863
|
)
|
-
|
||||
Net
deferred tax asset
|
$
|
-
|
$
|
-
|
|
At
October 31,
|
||||||
|
2005
|
||||||
Accrued
wages and payroll taxes
|
$
|
66,445
|
$
|
83,532
|
|||
Accrued
vacation
|
50,644
|
47,022
|
|||||
State
income tax payable
|
100
|
2,678
|
|||||
Retirement
plan contributions
|
33,513
|
59,606
|
|||||
|
$
|
150,702
|
$
|
192,838
|
|
At
October 31,
|
||||||
|
2005
|
||||||
Note
payable- related party
|
$
|
88,259
|
$
|
132,389
|
|||
Less:
short term portion
|
44,129
|
44,130
|
|||||
Long
term note payable - related party
|
$
|
44,130
|
$
|
88,259
|
|
At
October 31,
|
||||||
|
2005
|
||||||
Deferred
compensation
|
$
|
91,041
|
$
|
112,891
|
|||
Less:
short term portion
|
21,850
|
21,850
|
|||||
Long
term deferred compensation
|
$
|
69,191
|
$
|
91,041
|
|
At
October 31,
|
||||||
|
2005
|
||||||
Note
payable of $ 31,520 for the financing of a truck for
60
monthly payments of $525.33. As of October 31, 2006
the
truck was sold to an officer of the Company and the
related
debt settled
|
$
|
-
|
$
|
18,379
|
|||
|
|||||||
Note
payable of $ 30,127 for the financing of a truck for 66
monthly
payments of $4,782.69 and annual interest of 5.34%
|
14,814
|
19,710
|
|||||
|
|||||||
Note
payable of $ 41,091.09 for the financing of a truck
of
10.99%
|
$
|
40,058
|
$
|
-
|
|||
|
|||||||
Note
payable - autos
|
54,872
|
38,089
|
|||||
Less:
short term portion
|
12,797
|
11,190
|
|||||
Long
term note payable-autos
|
$
|
42,075
|
$
|
26,899
|
|
|
2006
|
|
2005
|
|
||||||||
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
||||
|
|
|
|
Average
|
|
|
|
Average
|
|
||||
|
|
Number
|
|
Exercise
|
|
Number
|
|
Exercise
|
|
||||
|
|
|
|
Price
|
|
|
|
Price
|
|
||||
Outstanding
at beginning of year
|
|
|
-
|
|
$
|
-
|
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
during the period
|
|
|
30
|
|
|
500
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
during the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated
during the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of the year
|
|
|
30
|
|
|
500
|
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at end of the year
|
|
|
30
|
|
|
50
|
|
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Contractual
Life (Yrs)
|
Weighted
Average
Exercise
Price
|
500
|
30
|
9.00
|
500
|
ASSETS
|
2007
|
2006
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
276,359
|
$
|
259,963
|
|||
Accounts
receivable, Net (Note 2)
|
75,278
|
65,378
|
|||||
Unbilled
receivables (Note 3)
|
105,456
|
310,127
|
|||||
Other
current assets
|
-
|
8,305
|
|||||
|
|||||||
Total
current assets
|
457,093
|
643,773
|
|||||
|
|||||||
Property
and equipment, net (Note 4)
|
83,455
|
56,510
|
|||||
|
|||||||
|
|||||||
Total
assets
|
$
|
540,548
|
$
|
700,283
|
|||
|
|||||||
|
|||||||
LIABILITIES
AND DEFICIENCY IN STOCKHOLDERS' EQUITY
|
|||||||
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
346,837
|
$
|
263,089
|
|||
Deferred
revenue (Note 3)
|
4,733
|
249,286
|
|||||
Accrued
expenses (Note 7)
|
115,154
|
137,201
|
|||||
Line
of credit (Note 8)
|
33,393
|
37,912
|
|||||
Notes
payable -related party-short term (Note 9)
|
44,130
|
44,130
|
|||||
Notes
payable-autos-short term (Note 11)
|
11,990
|
11,795
|
|||||
Deferred
compensation-short term (Note 10)
|
21,850
|
21,850
|
|||||
|
|||||||
Total
current liabilities
|
578,087
|
765,263
|
|||||
|
|||||||
NON-CURRENT
LIABILITIES
|
|||||||
Notes
payable -related party-long term
|
44,129
|
88,259
|
|||||
Notes
payable-autos-long term
|
37,518
|
23,389
|
|||||
Deferred
compensation-long term
|
64,913
|
85,579
|
|||||
|
|||||||
Total
liabilities
|
724,647
|
962,490
|
|||||
|
|||||||
|
|||||||
|
|||||||
Deficiency
in Stockholders' equity: (Notes 12, and 13)
|
|||||||
Common
stock- $1 par value, 1000 shares authorized; 402 shares issued
at as of
January 31, 2007 and 2006
|
402
|
402
|
|||||
Retained
earnings
|
140,603
|
244,379
|
|||||
Additional
paid-in capital
|
67,500
|
16,875
|
|||||
Less:
Cost of treasury stock
|
(244,611
|
)
|
(309,527
|
)
|
|||
Less:
Cost of stock subscribed
|
(147,994
|
)
|
(214,336
|
)
|
|||
Less:
Stock subscription receivable (Note 5)
|
-
|
-
|
|||||
|
|||||||
Total
deficiency in stockholders' equity
|
(184,100
|
)
|
(262,207
|
)
|
|||
|
|||||||
Total
liabilities and deficiency in stockholders' equity
|
$
|
540,548
|
$
|
700,283
|
|
2007
|
2006
|
|||||
Net
revenue
|
$
|
672,688
|
$
|
897,180
|
|||
|
|||||||
Cost
of revenue
|
132,420
|
490,374
|
|||||
|
|||||||
Gross
profit
|
540,268
|
406,806
|
|||||
|
|||||||
Selling,
general and administrative expenses
|
539,527
|
296,742
|
|||||
|
|||||||
Operating
income
|
741
|
110,064
|
|||||
|
|||||||
Other
income (expense)
|
1,871
|
1,150
|
|||||
|
|||||||
Net
income before income taxes
|
2,612
|
111,214
|
|||||
|
|||||||
Provision
for income taxes
|
(100
|
)
|
-
|
||||
|
|||||||
Net
income
|
$
|
2,512
|
$
|
111,214
|
|
|
|
|
|
Common
|
Stock
|
Additional
|
|
|
|||||||||||||||||||
|
Common
Stock
|
Treasury
Stock
|
Stock
|
Subscription
|
Paid-in
|
Retained
|
|
|||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscribed
|
Receivable
|
Capital
|
Earnings
|
Total
|
|||||||||||||||||||
Balance,
October 31, 2005
|
402
|
402
|
(62
|
)
|
(284,604
|
)
|
(214,336
|
)
|
-
|
-
|
133,165
|
(365,373
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||||||
Stock
buy-back from Brent Miller
|
(5
|
)
|
(24,923
|
)
|
(24,923
|
)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Fair
value of options issued to employees and and officers as
compensation
|
16,875
|
16,875
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Treasury
stock issued to officers in exchange for note receivables
|
42
|
214,335
|
(94,500
|
)
|
(119,835
|
)
|
-
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net
income
|
111,214
|
111,214
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance,
January 31, 2006
|
402
|
$
|
402
|
(25
|
)
|
$
|
(95,192
|
)
|
$
|
(214,336
|
)
|
$
|
(94,500
|
)
|
$
|
16,875
|
$
|
124,544
|
$
|
(262,207
|
)
|
|||||||
Balance,
October 31, 2006
|
402
|
$
|
402
|
(53
|
)
|
$
|
(244,611
|
)
|
$
|
(147,994
|
)
|
$
|
(94,500
|
)
|
$
|
67,500
|
$
|
138,091
|
$
|
(281,112
|
)
|
|||||||
Stock
subscription
receivable
forgiven
|
94,500
|
94,500
|
||||||||||||||||||||||||||
Net
Income
|
2,512
|
2,512
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance,
January 31, 2007
|
402
|
$
|
402
|
(53
|
)
|
$
|
(244,611
|
)
|
$
|
(147,994
|
)
|
$
|
67,500
|
$
|
140,603
|
$
|
(184,100
|
)
|
January
31,
|
|||||||
|
2006
|
||||||
|
|
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Income
from operations
|
$
|
2,512
|
$
|
111,214
|
|||
|
|||||||
Adjustments
to reconcile income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
3,180
|
1,795
|
|||||
Stock
compensation
|
-
|
16,875
|
|||||
Debt
forgiveness
|
94,500
|
||||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
373,079
|
235,667
|
|||||
Unbilled
receivables
|
(79,084
|
)
|
(98,964
|
)
|
|||
Inventories
|
-
|
-
|
|||||
Other
current assets
|
-
|
(8,252
|
)
|
||||
Accounts
payable
|
10,595
|
173,592
|
|||||
Accrued
expenses
|
(35,548
|
)
|
(55,637
|
)
|
|||
Deferred
compensation
|
-
|
-
|
|||||
Deferred
revenue
|
(105,412
|
)
|
(285,849
|
)
|
|||
Net
cash provided by operating activities
|
263,822
|
90,441
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property, plant and equipment
|
-
|
-
|
|||||
Proceeds
from sale of equipment
|
-
|
-
|
|||||
Net
cash provided by (used in) investing activities
|
-
|
-
|
|||||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Payments
for line of credit
|
(982
|
)
|
(7,499
|
)
|
|||
Payments
on notes payable
|
(9,642
|
)
|
(8,367
|
)
|
|||
Payments
for repurchase of treasury stock
|
-
|
(24,923
|
)
|
||||
Net
cash (used in) provided by financing activities
|
(10,624
|
)
|
(40,789
|
)
|
|||
|
|||||||
Net
(decrease) increase in cash and cash equivalents
|
253,198
|
49,652
|
|||||
|
|||||||
Cash
and cash equivalents, beginning of period
|
23,161
|
210,311
|
|||||
|
|||||||
Cash
and cash equivalents, end of period
|
$
|
276,359
|
$
|
259,963
|
|||
|
|||||||
Cash
paid during the period for:
|
|||||||
Income
taxes
|
$
|
100
|
$
|
-
|
|||
Interest
|
$
|
1,871
|
$
|
1,150
|
|
At
January 31,
|
||||||
|
2006
|
||||||
Buildings
and improvements
|
$
|
44,966
|
$ | 44,966 | |||
Trucks
and Autos
|
80,718 | 76,647 | |||||
Machinery
and equipment
|
210,579
|
207,619 | |||||
336,263 | 329,232 | ||||||
Less:
Accumulated depreciation
|
252,808
|
272,722 | |||||
$
|
83,455
|
$ | 56,510 |
Non-current:
|
2007
|
|
|
2006
|
|||
Net
operating loss carry forward
|
$
|
445,863
|
$
|
-
|
|||
Valuation
allowance
|
(445,863
|
)
|
-
|
||||
Net
deferred tax asset
|
$
|
-
|
$
|
-
|
|
At
January 31,
|
||||||
|
2006
|
||||||
Accrued
wages and payroll taxes
|
$
|
50,436
|
$
|
82,809
|
|||
Accrued
vacation
|
58,384
|
49,236
|
|||||
State
income tax payable
|
100
|
2,678
|
|||||
Retirement
plan contributions
|
6,234
|
2,478
|
|||||
$
|
115,154
|
$
|
137,201
|
|
At
January 31,
|
||||||
|
2006
|
||||||
Note
payable- related party
|
$
|
88,259
|
$
|
132,389
|
|||
Less:
short term portion
|
44,130
|
44,130
|
|||||
Long
term note payable - related party
|
$
|
44,129
|
$
|
88,259
|
|
At
January 31,
|
||||||
|
2006
|
||||||
Deferred
compensation
|
$
|
86,763
|
$
|
107,429
|
|||
Less:
short term portion
|
21,850
|
21,850
|
|||||
Long
term deferred compensation
|
$
|
64,913
|
$
|
85,579
|
At
January 31,
|
2006
|
||||||
Note
payable of $31,520 for the financing of a truck for 60 monthly
payments of
$525.33. As of October 31, 2006 the truck was sold to an officer
of the
Company and the related debt settled
|
$
|
-
|
$
|
16,803
|
|||
Note
payable of $ 30,127 for the financing of a truck for 66 monthly
payments
of $528.34 and annual interest of 5.34%
|
13,228
|
18,381
|
|||||
Note
payable of $ 41,091 for the financing of a truck for 60 monthly
payments
of $897.18 and annual interest of 10.99%
|
$
|
-
|
$
|
36,280
|
|||
Note
payable - autos
|
49,508
|
35,184
|
|||||
Less:
short term portion
|
11,990
|
11,795
|
|||||
Long
term note payable-autos
|
$
|
37,518
|
$
|
23,389
|
2007 | 2006 | ||||||||||||
Number
|
Weighted
Average Exercise
Price
|
Number
|
Weighted
Average
Exercise
Price
|
||||||||||
Outstanding
at beginning of period
|
30
|
$
|
500
|
-
|
$
|
-
|
|||||||
Granted
during the period
|
-
|
-
|
30
|
500
|
|||||||||
Exercised
during the period
|
-
|
-
|
-
|
-
|
|||||||||
Terminated
during the period
|
-
|
-
|
-
|
-
|
|||||||||
Outstanding
at end of the period
|
30
|
$
|
500
|
30
|
$
|
500
|
|||||||
Exercisable
at end of the period
|
30
|
$
|
500
|
8
|
$
|
500
|
Range
of
|
|
Weighted
Average
|
Weighted
Average
|
Exercise
Prices
|
Number
Outstanding
|
Contractual
Life (Yrs)
|
Exercise
Price
|
500
|
30
|
8.75
|
500
|
F-70
|
||||
Condensed
Consolidated Pro Forma Unaudited Statement of Operations for the
Three
Months Ended January 31, 2007
|
F-71
|
|||
Condensed
Consolidated Pro Forma Unaudited Statement of Operations
for
the Year Ended October 31, 2006
|
F-72
|
|||
Notes
to Condensed Consolidated Pro Forma Unaudited Financial
Statements
|
F-73
|
Current
assets
|
$
|
993,817
|
||
Equipment
|
37,126
|
|||
Goodwill
|
998,591
|
|||
Current
liabilities
|
(493,262
|
)
|
||
Purchase
price
|
$
|
1,536,271
|
Cash
|
$
|
800,000
|
||
Deferred
promissory note
|
700,000
|
|||
Common
stock issued
|
792,814
|
|||
Deferred
common stock
|
63,936
|
|||
Purchase
Price
|
$
|
2,356,750
|
||
Allocation:
|
||||
Customer
relationships
|
694,503
|
|||
Non-compete
agreements
|
198,911
|
|||
Goodwill
|
1,880,199
|
|||
Net
liabilities
|
(416,863
|
)
|
||
Total
|
$
|
2,356,750
|
|
|
COGI
|
|
Colmek
|
|
|
|
Other
|
|
Pro
Forma
|
|||||||
ASSETS
|
|
|
Pro
Forma Adjustments
|
|
Security
Transactions
|
Reference
|
|
Balances
(Unaudited)
|
|||||||||
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash
and cash equivalents
|
|
$
|
22,802
|
|
$
|
276,359
|
|
$
|
(1,892,220
|
)
|
$
|
11,772,355
|
Note
2, 3
|
|
$
|
10,179,296
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
1,066,672
|
|
|
75,278
|
|
|
(24,777
|
)
|
|
Note
2
|
|
|
1,117,173
|
||
Unbilled
receivables
|
|
|
|
|
|
105,456
|
|
|
|
|
|
|
|
|
105,456
|
||
Inventory
|
|
|
2,345,010
|
|
|
|
|
|
|
|
|
|
|
|
2,345,010
|
||
Due
from MSGI Security Solutions, Inc.
|
|
|
533,147
|
|
|
|
|
|
|
|
|
|
|
|
533,147
|
||
Due
from related parties
|
|
|
144,134
|
|
|
|
|
|
|
|
|
|
|
|
144,134
|
||
Other
current assets
|
|
|
479,973
|
|
|
|
|
|
|
|
|
|
|
|
479,973
|
||
Prepaid
expenses
|
|
|
197,189
|
|
|
|
|
|
|
|
|
|
|
|
197,189
|
||
Total
current assets
|
|
|
4,788,928
|
|
|
457,093
|
|
|
(1,916,997
|
)
|
|
11,772,355
|
|
|
15,101,378
|
||
Property
and equipment, net
|
|
|
143,308
|
|
|
83,455
|
|
|
|
|
|
|
|
|
226,763
|
||
Rental
equipment, net
|
|
|
102,330
|
|
|
|
|
|
|
|
|
|
|
|
102,330
|
||
Goodwill
and other intangible assets, net
|
|
|
1,071,201
|
|
|
|
|
|
2,540,849
|
|
|
Note
2
|
|
|
3,612,050
|
||
Total
assets
|
$
|
6,105,767
|
$
|
540,548
|
$
|
623,852
|
$
|
11,772,355
|
$
|
19,042,521
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Accounts
payable, trade
|
|
$
|
2,623,987
|
|
$
|
346,837
|
|
$
|
(24,777)
|
|
Note
2
|
|
$
|
2,946,047
|
|||
Deferred
revenue
|
|
|
-
|
|
|
4,733
|
|
|
-
|
|
|
|
|
|
4,733
|
||
Accrued
expenses/other current liabilities
|
|
|
1,569,601
|
|
|
115,154
|
|
|
-
|
|
|
|
|
|
1,684,755
|
||
Deferred
payment acquisition of Martech
|
|
|
392,220
|
|
|
-
|
|
$
|
(392,220)
|
|
|
|
Note
2
|
|
|
-
|
|
Accrued
dividends preferred stock
|
|
|
241,023
|
|
|
-
|
|
|
-
|
|
|
|
|
|
241,023
|
||
Notes
payable - short-term
|
|
|
-
|
|
|
33,840
|
|
|
-
|
|
|
|
33,840
|
||||
Due
to related parties
|
|
|
328,690
|
|
|
44,130
|
|
|
-
|
|
|
|
|
|
372,820
|
||
Loans
payable/line of credit
|
|
|
802,253
|
|
|
33,393
|
|
|
-
|
|
|
|
|
|
835,646
|
||
Total
current liabilities
|
|
|
5,957,774
|
|
|
578,087
|
|
|
(416,997)
|
|
|
-
|
|
|
6,118,864
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loans
and notes payable, long term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Notes
payable - related party - short term
|
|
|
|
|
|
44,129
|
|
|
|
|
|
|
|
|
44,129
|
||
Notes
Payable - Autos - Short Term
|
|
|
|
|
|
37,518
|
|
|
|
|
|
|
|
|
37,518
|
||
Deferred
Compensation - Short Term
|
|
|
|
|
|
64,913
|
|
|
|
|
|
|
|
|
64,913
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total
liabilities
|
|
$
|
5,957,774
|
|
$
|
724,647
|
|
$
|
(416,997
|
)
|
|
-
|
|
$
|
6,265,424
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Preferred
stock, $.001 par value; 5,000,000 shares authorized, 23,641 shares
series
A issued and outstanding, as of January 31, 2007
|
|
|
24
|
|
|
|
|
|
|
|
|
(17
|
)
)
|
Note
3
|
|
6
|
|
49,000
shares series B issued and outstanding as of January 31,
2007
|
|
|
49
|
|
|
|
|
|
|
|
|
(49
|
)
|
Note
3
|
|
-
|
|
Common
stock, $.001 par value; 70,000,000 shares authorized, 26,312,980
issued
and outstanding as of January 31, 2007
|
|
|
26,313
|
|
|
|
575
|
|
|
20,985
|
Note
3
|
|
|
47,873
|
|||
Common
stock - 402 shares
|
|
|
|
|
|
402
|
|
|
(402
|
)
|
|
Note
2
|
|
|
-
|
||
Additional
paid-in capital
|
|
|
29,239,252
|
|
|
67,500
|
|
|
788,675
|
|
17,477,691
|
Note
2, 3
|
|
|
47,573,118
|
||
Foreign
currency translation adjustment
|
|
|
(328,280
|
)
|
|
|
|
|
|
|
|
|
|
|
(328,280)
|
||
Retained
earnings /(deficit)
|
|
|
(28,789,365
|
)
|
|
140,603
|
|
|
(140,603
|
)
|
|
(5,726,255
|
)
|
Note
2, 3
|
|
(34,515,620)
|
|
Less:
cost of treasury stock
|
|
|
|
|
|
(244,610
|
)
|
|
244,610
|
|
|
Note
2
|
|
|
-
|
||
Less:
cost of stock subscribed
|
|
|
|
|
|
(147,994
|
)
|
|
147,994
|
|
|
Note
2
|
|
|
-
|
||
Total
stockholders' equity
|
|
|
147,993
|
|
|
(184,099
|
)
|
|
1,040,849
|
|
|
11,772,355
|
|
|
12,777,097
|
||
Total
liabilities and stockholders' equity
|
|
$
|
6,105,767
|
|
$
|
540,548
|
|
$
|
623,852
|
|
$
|
11,772,355
|
|
$
|
19,042,521
|
COGI
|
Colmek
|
Pro
Forma Adjustments
|
Other
Security
Transactions
|
Reference
|
Pro
Forma Consolidated (Unaudited)
|
||||||||||||||
Net
revenue
|
$
|
2,701,275
|
$
|
672,688
|
$
|
(24,777
|
)
|
-
|
Note
2
|
$
|
3,349,186
|
||||||||
Cost
of revenue
|
941,029
|
132,040
|
(24,777
|
)
|
-
|
Note
2
|
1,048,672
|
||||||||||||
Gross
profit
|
1,760,246
|
540,268
|
-
|
-
|
|
2,300,514
|
|||||||||||||
Research
and development
|
518,393
|
-
|
-
|
-
|
|
518,393
|
|||||||||||||
Selling,
general and administrative expenses
|
3,224,659
|
539,527
|
-
|
-
|
|
3,764,186
|
|||||||||||||
Other
operating expenses
|
435,000
|
-
|
-
|
-
|
|
435,000
|
|||||||||||||
Operating
income
|
(2,417,806
|
)
|
741
|
-
|
-
|
|
(2,417,065
|
)
|
|||||||||||
Other
income/(expense):
|
|
||||||||||||||||||
Other
income
|
2,098
|
1,871
|
-
|
-
|
|
3,969
|
|||||||||||||
Interest
expense
|
(115,211
|
)
|
-
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
(5,725,614
|
)
|
|||||||||
Total
other income (expense)
|
(113,113
|
)
|
1,871
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
(5,721,645
|
)
|
|||||||||
Income/(loss)
before income taxes
|
$
|
(2,530,919
|
)
|
$
|
2,612
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
$
|
(8,138,710
|
)
|
||||||
Provision
for income taxes
|
-
|
(100
|
)
|
-
|
-
|
|
|
(100
|
)
|
||||||||||
Net
income/(loss)
|
(2,530,919
|
)
|
2,512
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
(8,138,810
|
)
|
|||||||||
Preferred
stock dividends:
|
|
||||||||||||||||||
Series
B
|
-
|
-
|
-
|
(181,810
|
)
|
Note
3
|
(181,810
|
)
|
|||||||||||
Beneficial
conversion feature
|
(800,000
|
)
|
-
|
-
|
-
|
|
(800,000
|
)
|
|||||||||||
Net
income/(loss) applied to common shares
|
$
|
(3,330,919
|
)
|
$
|
2,512
|
$
|
(65,958
|
)
|
$
|
(5,726,255
|
)
|
|
$
|
(9,120,620
|
)
|
||||
Loss
per share, basic and diluted
|
(0.13
|
)
|
|
(0.20
|
)
|
||||||||||||||
Weighted
average shares outstanding
|
25,526,067
|
-
|
575,000
|
20,985,318
|
Note
2, 3
|
47,086,385
|
|||||||||||||
Comprehensive
loss:
|
|
||||||||||||||||||
Net
income/(loss)
|
$
|
(2,530,919
|
)
|
$
|
2,512
|
$
|
(65,958
|
)
|
$
|
(5,544,445
|
)
|
Note
2, 3
|
$
|
(8,138,810
|
)
|
||||
Foreign
currency translation adjustment
|
(328,280
|
)
|
-
|
-
|
-
|
|
(328,280
|
)
|
|||||||||||
Comprehensive
loss
|
$
|
(2,859,199
|
)
|
$
|
2,512
|
$
|
(65,958
|
)
|
$
|
(5,544,445
|
)
|
|
$
|
(8,467,090
|
)
|
COGI
Year
Ended October 31,
|
Martech
Nov
1,
2005
to Jun
25,
2006
|
Colmek
Year
Ended October 31,
|
Pro
Forma Adjustmnts
|
Other
Security
Transactions
|
Reference
|
Pro
Forma Consolidated (Unaudited)
|
||||||||||||||||
Net
revenue
|
$
|
7,291,291
|
$
|
1,327,068
|
$
|
2,969,164
|
$
|
(24,777
|
)
|
-
|
Note
2
|
$
|
11,562,746
|
|||||||||
Cost
of revenue
|
2,611,590
|
957,647
|
1,515,785
|
(24,777
|
)
|
-
|
Note
2
|
5,060,245
|
||||||||||||||
Gross
profit
|
4,679,701
|
369,421
|
1,453,379
|
-
|
-
|
6,502,501
|
||||||||||||||||
Research
and development
|
3,130,821
|
-
|
-
|
-
|
-
|
3,130,821
|
||||||||||||||||
Selling,
general and administrative exp
|
7,453,946
|
349,177
|
1,345,408
|
-
|
-
|
9,148,531
|
||||||||||||||||
Other
operating expenses
|
447,750
|
-
|
-
|
-
|
-
|
447,750
|
||||||||||||||||
Operating
income/(loss)
|
(6,352,816
|
)
|
20,244
|
107,971
|
-
|
-
|
(6,224,601
|
)
|
||||||||||||||
Other
income/(expense):
|
||||||||||||||||||||||
Other
income/(expense)
|
3,012
|
11,520
|
16,790
|
-
|
-
|
31,322
|
||||||||||||||||
Interest
expense
|
(1,203,690
|
)
|
(4,731
|
)
|
-
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
(6,818,824,
|
)
|
||||||||||
Total
other income/(expense)
|
(1,200,678
|
)
|
6,789
|
16,790
|
(65,958
|
)
|
(5,544,445
|
)
|
Note
2, 3
|
(6,787,502
|
)
|
|||||||||||
Income/(loss)
before income taxes
|
$
|
(7,553,494
|
)
|
$
|
27,032
|
$
|
124,761
|
(65,958
|
)
|
$
|
(5,544,445
|
)
|
$
|
(13,012,104
|
)
|
|||||||
Provision
for income taxes
|
5,676
|
(5,676
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
income/(loss)
|
(7,559,170
|
)
|
32,708
|
124,761
|
(65,958
|
)
|
(5,544,445
|
)
|
(13,012,104
|
)
|
||||||||||||
Preferred
stock dividends:
|
||||||||||||||||||||||
Series
A
|
(309,914
|
)
|
-
|
-
|
-
|
-
|
(309,914
|
)
|
||||||||||||||
Series
B
|
(74,130
|
)
|
-
|
-
|
-
|
(181,810
|
)
|
Note
3
|
(255,940
|
)
|
||||||||||||
Beneficial
conversion feature
|
(4,152,800
|
)
|
-
|
-
|
-
|
-
|
(4,152,800
|
)
|
||||||||||||||
Net
(loss) applied to common shares
|
$
|
(12,096,014
|
)
|
$
|
32,708
|
$
|
124,761
|
$
|
(65,958
|
)
|
$
|
(5,726,255
|
)
|
$
|
(17,730,758
|
)
|
||||||
Loss
per share, basic and diluted
|
(0.50
|
)
|
(0.39
|
)
|
||||||||||||||||||
Weighted
average shares outstanding
|
24,030,423
|
-
|
-
|
575,000
|
20,985,318
|
Note
2, 3
|
45,590,741
|
|||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||
Net
Income (loss)
|
$
|
(7,559,170
|
)
|
$
|
32,708
|
$
|
124,761
|
$
|
(65,958
|
)
|
$
|
(5,544,445
|
)
|
Note
2, 3
|
$
|
(13,012,104
|
)
|
|||||
Foreign
currency translation adjustment
|
(282,704
|
)
|
(421
|
)
|
-
|
-
|
-
|
(283,125
|
)
|
|||||||||||||
Comprehensive
loss
|
$
|
(7,841,874
|
)
|
$
|
32,287
|
$
|
124,761
|
$
|
(65,958
|
)
|
$
|
(5,544,445
|
)
|
$
|
(13,295,229
|
)
|
Cash
|
$
|
800,000
|
||
Deferred
promissory note
|
700,000
|
|||
Common
stock issued
|
792,814
|
|||
Deferred
common stock
|
63,936
|
|||
Purchase
price
|
$ | 2,356,750 | ||
Allocation:
|
||||
Customer
relationships
|
694,503 | |||
Non-compete
agreements
|
198,911
|
|||
Goodwill
|
1,880,199
|
|||
Net
Liabilities
|
416,863 | |||
Total
|
$ | 2,356,750 |
ii.
|
An
adjustment to notes payable for $700,000 for the deferred promissory
note,
with this amount taken as cash paid, rather than a deferred
liability.
|
iii.
|
There
was an adjustment to stockholders’ equity for common stock issued of $575
and additional paid in capital of $856,175, representing the total
value
of shares payable including both the amount due on acquisition
and the
deferred share payment.
|
iv.
|
Net
liabilities were $184,099 on January 31, 2007 instead of $416,863
showing
at April 6, 2007, a difference of $232,764. Goodwill was adjusted
for this
difference in net
liabilities.
|
v.
|
For
the year ended October 31, 2006, there was intercompany trading
between
Coda
Octopus Group, Inc. and Colmek totaling $24,777. This has been
removed
from sales, direct purchases, accounts payable, and accounts
receivable.
|
vi.
|
Interest
has been calculated on the loan note based on being outstanding
for a full
12 months, with a charge of $43,607 made to the statement of operations
for both the year to October 31, 2006 and the three months to January
31,
2007, ie. there is no additional charge made to the statement of
operations for January 31,
2007.
|
vii.
|
Adjustments
to Colmek’s stockholders’ equity for combination with Coda’s financial
statements were as follows:
|
Balance
Sheet
|
Amount
|
|||
Cash
|
$
|
11,772,355
|
||
Preferred
stock account
|
(66
|
)
|
||
Common
stock account
|
20,985
|
|||
Additional
paid-in capital
|
17,477,691
|
|||
Statement
of Operations
|
||||
Financing
charges
|
$
|
5,544,445
|
||
Preferred
stock dividend (premium on redemption)
|
181,810
|
|
$
|
5,270
|
|
|
Accounting
Fees and Expenses
|
|
$
|
25,000
|
*
|
Legal
Fees and Expenses
|
|
$
|
75,000
|
*
|
Total
|
|
$
|
105,270
|
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
Plan
and Agreement of Merger dated July 12, 2004 by and between Panda
and Coda
Octopus*
|
|
|
|
2.2
|
Share
Purchase Agreement dated June 26, 2006 between Colin Richard, Coda
Octopus
(UK) Holdings Limited and Coda Octopus, Inc.
|
|
2.3
|
|
Stock
Purchase Agreement dated April 6, 2007, between Miller & Hilton d/b/a
Colmek Systems Engineering, its shareholders and Coda Octopus (US)
Holdings Inc.*
|
|
|
|
3.1
|
|
Certificate
of Incorporation*
|
|
|
|
|
||
|
|
|
3.1(a)
|
|
Certificate
of Designation Series A Preferred Stock*
|
|
|
|
3.1(b)
|
|
Certificate
of Amendment to Certificate
of Designation Series A
Preferred Stock*
|
|
|
|
3.1(c)
|
|
Certificate
of Designation Series B
Preferred Stock*
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
Form
of Warrant*
|
|
|
|
5.1
|
|
Legal
Opinion of Sichenzia Ross Friedman Ference LLP
|
|
|
|
|
||
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
Employment
Agreement dated April 6, 2007, between Miller and Hilton d/b/a
Colmek
Systems Engineering and Scott Debo*
|
|
|
|
10.6
|
|
Director’s
Agreement dated January 26, 2005 between the Company and Paul
Nussbaum*
|
10.7
|
|
Director’s
Agreement dated January 26, 2005 between the Company and Rodney
Peacock*
|
|
|
|
10.8
|
|
Form
of Securities Purchase Agreement dated April 4, 2007*
|
|
|
|
10.9
|
|
Sale
of Accounts and Security Agreement dated August 17, 2005 between
the
Company and Faunus Group International, Inc.*
|
|
|
|
10.10
|
|
Standard
Form of Office Lease dated June 1, 2007 between the Company and
Nelco
Inc.*
|
|
|
|
10.11
|
Collaboration
Agreement dated July 1, 2006 between Oxford Technical Solutions
Ltd. and
Codaoctopus
|
|
10.12
|
Amendment
to Securities Purchase Agreements dated March 21, 2007 between
Vision
Opportunity Master Fund Ltd. and Codaoctopus
|
|
10.13
|
Securities
Repurchase Agreement dated April 10, 2007 between Codaoctopus and
Vision
Opportunity Master Fund
|
|
10.14
|
Employment
Agreement dated as of July 16, 2007 between the Company and Jody
Frank
|
|
23.1
|
|
Consent
of Sichenzia Ross Friedman Ference LLP (included in exhibit
5.1)
|
|
|
|
23.2
|
|
Consent
of Russell Bedford Stefanou Mirchandani LLP
|
|
|
|
23.3
|
|
Consent
of Russell
Bedford Stefanou Mirchandani LLP (Miller & Hilton,
Inc.)
|
|
|
|
23.4
|
|
Consent
of Coyne, Butterworth &
Chalmers
|
|
|
|
|
CODA
OCTOPUS GROUP, INC.
|
|
|
|
|
By:
|
/s/
Jason
Lee Reid
|
|
|
Jason
Lee Reid
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Jason Lee Reid
|
|
Director
and Chief Executive Officer
|
|
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Jody Frank
|
Chief
Financial Officer
|
|||
(Principal
Financial Officer)
|
||||
/s/
Paul Nussbaum
|
|
Chairman
|
|
|
|
|
|
|
|
/s/
Rodney Peacock
|
|
Director
|
|
This ‘SB-2/A’ Filing | Date | Other Filings | ||
---|---|---|---|---|
9/30/13 | ||||
5/31/12 | ||||
1/31/12 | ||||
11/15/10 | ||||
3/31/10 | ||||
10/31/08 | 10-K, 10-K/A, NT 10-K | |||
7/1/08 | DEF 14A | |||
5/1/08 | ||||
4/6/08 | ||||
3/31/08 | ||||
11/30/07 | ||||
11/1/07 | ||||
10/31/07 | 10KSB, NT 10-K | |||
7/31/07 | 10QSB | |||
Filed on: | 7/25/07 | |||
7/24/07 | ||||
7/20/07 | ||||
7/17/07 | ||||
7/16/07 | ||||
6/26/07 | ||||
6/1/07 | ||||
5/22/07 | SB-2 | |||
5/17/07 | ||||
5/1/07 | ||||
4/30/07 | ||||
4/23/07 | ||||
4/10/07 | ||||
4/9/07 | ||||
4/6/07 | ||||
4/4/07 | ||||
4/3/07 | ||||
3/21/07 | ||||
3/20/07 | ||||
3/13/07 | ||||
3/6/07 | ||||
2/2/07 | ||||
1/31/07 | ||||
11/1/06 | ||||
10/31/06 | ||||
7/1/06 | ||||
6/27/06 | ||||
6/26/06 | ||||
6/15/06 | ||||
5/31/06 | ||||
5/1/06 | ||||
4/30/06 | ||||
3/2/06 | ||||
1/31/06 | ||||
1/1/06 | ||||
11/22/05 | ||||
11/16/05 | ||||
11/1/05 | ||||
10/31/05 | ||||
8/17/05 | ||||
7/28/05 | ||||
7/1/05 | ||||
4/30/05 | ||||
4/14/05 | ||||
4/1/05 | ||||
1/26/05 | ||||
12/16/04 | ||||
11/1/04 | ||||
10/31/04 | ||||
10/19/04 | ||||
8/13/04 | ||||
7/13/04 | ||||
7/12/04 | ||||
6/15/03 | ||||
List all Filings |