| • INTEGRAL TECHNOLOGIES, INC 10-Q 3-31-2012 • EXHIBIT 31.1 • EXHIBIT 31.2 • EXHIBIT 32.1 • INSTANCE DOCUMENT • XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT • XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT • XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT • XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT • XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2012.
OR
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION FROM _______ TO ________.
COMMISSION FILE NUMBER 0-28353
INTEGRAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
805 W. Orchard Drive, Suite 7, Bellingham, Washington 98225
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (360) 752-1982
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No T
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes T No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of March 31, 2012, there were 61,926,066 outstanding shares of the Registrant's Common Stock, $0.001 par value.
INTEGRAL TECHNOLOGIES, INC.
March 31, 2012 QUARTERLY REPORT ON FORM 10-Q
PART I
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Balance Sheet
(US Dollars)
Going Concern (note 2)
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
(US Dollars)
See notes to interim consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
(Unaudited)
(US Dollars)
See notes to interim consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
(US Dollars)
Supplemental Disclosure of Cash Flow Information (note 5)
See notes to interim consolidated financial statements.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information. These financial statements are condensed and do not include all disclosures required for annual financial statements. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company’s audited consolidated financial statements for the year ended June 30, 2011 filed as part of the Company’s June 30, 2011 Form 10-K.
In the opinion of the Company’s management, these unaudited consolidated financial statements reflect all adjustments necessary to present fairly the Company’s consolidated financial position at March 31, 2012 and June 30, 2011, the consolidated results of operations for the three and nine months ended March 31, 2012 and 2011 and the consolidated cash flows for the nine months ended March 31, 2012 and 2011. The results of operations for the three and nine months ended March 31, 2012 and 2011 are not necessarily indicative of the results to be expected for the entire fiscal year.
These unaudited interim consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the ordinary course of business. The Company’s operations have resulted in a net loss of $935,701 for the three months ended March 31, 2012 (2011 - $776,115), and an accumulated deficit of $39,252,751 (June 30, 2011 - $36,898,272) and a working capital deficiency of $1,692,983 as at March 31, 2012 (June 30, 2011 - $714,382). The Company has not yet commenced revenue-producing operations and has significant expenditure requirements to continue to advance research, developing and commercializing new antenna technologies. The Company estimates that, without further funding, it will deplete its cash resources in approximately three months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
These consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate because management believes that the actions already taken or planned will mitigate the adverse conditions and events that raise doubts about the validity of the going concern assumption used in preparing these consolidated financial statements. Management intends to raise additional capital through stock issuances to finance operations. If none of these events occur, there is a risk that the business will fail.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
Cumulative dividends on preferred stock are accrued at a rate of 5% per annum, payable at the option of the Company. Each holder has the right to convert preferred shares into common stock at the average trading price ten days prior to conversion. The Company has the right to redeem the preferred shares from the date of issue as follows:
During the nine-month period ended March 31, 2012, the Company completed five private placements. The first private placement amounted to $23,000 for the issuance of 41,819 units consisting of common stock at $0.55 per share and warrants at $0.001 per warrant to purchase 41,819 shares of common stock on or before December 31, 2013 at an exercise price of $1.00 per share.
The second private placement amounted to $179,000 for the issuance of 511,428 units consisting of common stock at $0.35 per share and warrants at $0.001 per warrant to purchase 511,428 shares of common stock on or before November 29, 2016 at an exercise price of $0.70 per share.
The third private placement amounted to $200,000 for the issuance of 571,128 units consisting of common stock at $0.35 per share and warrants at $0.001 per warrant to purchase 856,692 shares of common stock on or before January 3, 2014 at an exercise price of $0.70 per share.
The fourth private placement amounted to $200,000 for the issuance of 666,666 units consisting of common stock at $0.30 per share and warrants at $0.001 per warrant to purchase 1,000,000 shares of common stock on or before March 31, 2014 at an exercise price of $0.57 per share.
The fifth private placement amounted to $550,774 for the issuance of 1,573,939 units consisting of common stock at $0.35 per share and warrants at $0.001 per warrant to purchase 2,360,459 shares of common stock on or before January 14, 2014 at an exercise price of $0.70 per share. Share issue costs of $12,875 were incurred.
Asher Enterprise, Inc., holder of a convertible debenture, converted $53,000 of principal to 222,571 shares of the Company’s common stock.
The Company determined that the warrants did not contain any provisions that would preclude equity treatment.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
During the nine-month period ended March 31, 2012, the Company recorded stock-based compensation expense with respect to vested stock options of $321,128 (nine months ended March 31, 2011 - $382,250), which has been included as consulting fees.
During the nine-month period ended March 31, 2012, 300,000 consulting warrants with expiry dates of February 28, 2012, were extended to February 28, 2014. The Company recorded stock-based compensation expense with respect to the amended terms of $35,131 (nine months ended March 31, 2011 - $nil), which has been included as consulting fees.
Stock-based compensation not yet recognized at March 31, 2012 relating to non-vested stock options was $207,037, which will be recognized over a weighted average period of 1.12 years.
The following summarizes information about the Company’s options outstanding:
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
The following summarizes the options outstanding and exercisable:
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
The weighted average remaining contractual lives for options outstanding and exercisable at March 31, 2012 are 2.25 and 1.58 years, respectively.
The weighted average measurement date fair value of options modified during the nine months ended March 31, 2012 was $nil (nine months ended March 31, 2011 - $0.44), granted during the nine months ended March 31, 2012 was $nil (nine months ended March 31, 2011 - $0.57) and vested during the nine months ended March 31, 2012 was $nil (six months ended March 31, 2011 - $0.42).
No options were exercised during the nine months ended March 31, 2012 and 2011.
The aggregate intrinsic value of options outstanding and exercisable as at March 31, 2012 was $652,500. The aggregate intrinsic values exclude options having a negative aggregate intrinsic value due to awards with exercise prices greater than market value. The intrinsic value is the difference between the market value of the shares and the exercise price of the award as of the measurement date.
The following summarizes information about the Company’s stock purchase warrants outstanding:
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
There are no current or deferred tax expenses for the nine months ended March 31, 2012 due to the Company's loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company's ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
Common share equivalents consisting of convertible preferred stock, stock options and warrants are not considered in the computation of diluted loss per share because their effect would be anti-dilutive.
As the Company is considered to be in the development stage, all research and development costs are expensed as incurred.
During the nine months ended March 31, 2012, the Company sold sample products totalling $2,640 (nine months ended March 31, 2011 - $3,630). This amount has been credited against research and development expenses.
The Company operates primarily in one business segment with operations located in the United States.
INTEGRAL TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to Interim Consolidated Financial Statements
Nine Months Ended March 31, 2012
(Unaudited)
(US Dollars)
During the nine-month period ended March 31, 2012, the Company entered into a convertible debenture purchase agreement with Asher Enterprises Inc. The agreement involved three separate tranches of convertible debentures. Each tranche is due nine months after its issuance. The three debentures were issued as follows:
The convertible debentures pay interest of 8% per annum and can be converted into common stock at the option of the issuer at any time after 180 days following the date of issuance. Each debenture has a variable conversion price equal to 58% of the market price. Market price is defined as the average of the lowest three trading prices for the Company’s common stock during the ten trading day period ending one trading day prior to the date of conversion notice with a limitation of 4.99% of the issued and outstanding common stock at the time of conversion.
The note may be prepaid by the Company as follows:
After the expiration of the 180 days following the date of the note, the Company will have no right of prepayment.
The liability component of the convertible debentures were measured at the present value with the embedded conversion feature being treated as a derivative liability with fair value measured at each reporting period.
During the period ending March 31, 2012, the debenture in the amount of $53,000 was settled by issuing 222,571 of the common stock of the Company. $89,038 representing the fair value of the derivative liability and the amortized cost of convertible debenture settled was included as additional paid in capital. A fair value loss on the derivative liability of $23,826 was recognized in the consolidated statement of operations.
The Company incurred $8,500 in transactions costs in connection with the issuance of the convertible debenture, which has been recorded as a reduction of the convertible debenture.
The Company entered into a promissory note agreement with Jasper Rubber Products, Inc. for $235,129 which bears interest at 18% annually. Any unpaid principal and unpaid accrued interest is due December 30, 2012, the maturity date. Any payments made during the year shall be first applied to unpaid accrued interest, then to the reduction of principal and finally to any other accounts payable balances owing at the time of payment.
During the period ending March 31, 2012, $63,113 was repaid by the Company and applied towards accrued interest and principle. Interest expense accrued was $9,156.
During the nine-month period ended March 31, 2012, the shares to be issued in conjunction with the Company’s Piedmont Consulting contract were cancelled thereby resulting in a recovery of paid-in capital and consulting expenses in the amount of $290,750, which had been recognized in prior periods.
The Company has evaluated subsequent events for the period after March 31, 2012 to the date these financial statements were authorized for issuance and determined that there were no material subsequent events to be disclosed in these consolidated interim financial statements.
Forward Looking Statements
Statements contained herein that are not historical facts are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. We caution investors that any forward-looking statements made by us are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: well-established competitors who have substantially greater financial resources and longer operating histories, regulatory delays or denials, our ability to compete as a start-up company in a highly competitive market, our access to sources of capital, and other risks and uncertainties described in our annual report on Form 10-K for the fiscal year ended June 30, 2011 as filed with the Securities and Exchange Commission on September 28, 2011, and available at www.sec.gov.
This discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Form 10-Q. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results could differ materially from those discussed here. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q.
Overview
Integral Technologies, Inc. (the “Company” or “we”) focuses the majority of our resources on researching, developing and commercializing our ElectriPlast™ technologies. Our business strategy focuses on leveraging our intellectual property rights and our strengths in product design and material innovation. We are focusing our marketing efforts on securing licensing agreements for applications of our ElectriPlast™ technologies with manufacturers of products which would benefit from the incorporation of any of the ElectriPlast™ applications.
ElectriPlast™ is an innovative, electrically-conductive resin-based material. The ElectriPlast™ polymer is a compounded formulation of resin-based materials, which are conductively loaded, or doped, with a proprietary-controlled, balanced concentration of micron conductive materials, then pelletized. The conductive loading or doping within this pellet is then homogenized using conventional molding techniques and conventional molding equipment. The end result is a product that can be molded into any of the infinite shapes and sizes associated with plastics and rubbers, and is non-corrosive, but which is as electrically conductive as if it were metal.
Various examples of applications for ElectriPlast™ are shielding, lighting circuitry, switch actuators, resistors, medical devices, thermal management and cable connector bodies, to name just a few. We have been working to introduce these new applications and the ElectriPlast™ technology to the global marketplace.
Patents/Trademarks on Technologies
Our intellectual property portfolio consists of over eleven years of accumulated research and design knowledge and trade secrets. We have sought United States (“US”) patent protection for many of our ideas related to our ElectriPlast™ technologies. Currently, we have filed 106 non-provisional US patent applications, 53 of which have been issued, with 49 of those issued still alive. No assurances can be given that all patent applications will be approved; however, to the extent that patents are not granted, we will continue to attempt to commercialize these technologies without the protection of patents. As patents are issued, we will have the exclusive right to use and license the design(s) described in each issued patent for the life of the patent in the US.
Of the 106 non-provisional applications filed that have not issued as patents, 10 are currently pending, and 43 are no longer pending. Integral continues to pursue intellectual property protection through its patent and trademark portfolio while constantly evaluating its filings to judiciously apply resources to our most critical technologies.
Integral has two pending US trademark applications for ELECTRIPLASTTM and a registered US trademark for INTEGRAL (with design)®. In addition, Integral has pending trademark applications in China, Japan, Korea and Taiwan for ELECTRIPLASTTM. These applications and registration establish rights for the use of these marks in commerce.
Financial Condition
To date we have recorded nominal revenues. We are still considered a development stage company for accounting purposes. From the Company’s incorporation on February 12, 1996 through March 31, 2012, we have accrued an accumulated deficit of approximately $39.2 million.
At March 31, 2012, our current assets totaled $284,342, which wholly consisted of cash equal to $284,342. All of our property and equipment has been fully depreciated.
At March 31, 2012 our current liabilities totaled $1,977,325, consisting of accounts payable and accruals of $1,679,764, convertible debentures of $70,254, derivative financing of $46,135 and a promissory note payable of $181,172. Of the accounts payable and accruals total, payables for legal fees (including associated filing fees) related to patent filings accounted for approximately $535,000 of the total. The convertible debentures were measured at the present value with the embedded conversion feature being treated as a derivative liability with fair value measured at each reporting period. At March 31, 2012, a portion of the convertible debt was settled by issuing 222,571 of the common stock of the Company. $89,038 representing the fair value of the derivative liability and the amortized cost of convertible debenture settled was included as additional paid in capital. During the quarter, interest expense of $15,998 was accrued on the convertible debenture and fair value loss on the derivative liability of $23,826 was put through the consolidated statement of operations. $63,113 was paid towards the outstanding principle and accrued interest on the $235,129 promissory note with $9,156 in interest recorded to the statement of operations.
At March 31, 2011, our total stockholder’s deficit was $1,692,983.
Results of Operations for the Three Months Ended March 31, 2012 compared to the Three Months Ended March 31, 2011
Our net loss for the quarter ended March 31, 2012 was $935,701, compared to a net loss of $776,115 for the corresponding period of the prior fiscal year. The increase of $159,586 was primarily a result of an increase of general and administrative expenses of $68,493 from the establishment of the Philadelphia sales office, an increase in legal and accounting of $40,589, an increase in interest expense of $25,343 due to interest on the promissory note and accretion expense being recorded on the convertible debenture and an increase of $23,826 resulting from a fair value change on the derivative liability.
Total expenses for the quarter ended March 31, 2012 was $935,737, compared to a expenses of $776,122 for the corresponding period of the prior fiscal year. The increase of $159,615 is described in the above paragraph.
Consulting expenses during the quarter ended March 31, 2012 were $499,518, which included issuances of shares in consideration for consulting services in the amount of $22,250 and $158,285 for non-cash stock based compensation charges. In the corresponding period of the prior fiscal year, consulting expenses were $505,526 which included issuances of shares in consideration for consulting services in the amount of $102,516, and $173,394 for non-cash stock based compensation charges for the vesting and modifications of options previously issued. The remaining decrease relates to additional fees incurred in the comparative period with respect to the consulting agreements entered into by the Company.
Salaries and benefits expenses during the quarter ended March 31, 2012, were $110,000. In the corresponding period of the prior fiscal year, salaries and benefits expenses were $110,000.
Research and development costs of $36,469 during the quarter ended March 31, 2012, are attributable to refining the manufacturing process of our ElectriPlast™ material. In the corresponding period of the prior fiscal year, research and development costs totaled $50,489 for a decrease of $14,020.
Results of Operations for the Nine Months Ended March, 2012 compared to the Nine Months Ended March 31, 2011
Our net loss for the nine months ended March 31 2012, was $2,342,884, compared to a net loss of $2,299,986 for the corresponding period of the prior fiscal year for a modest increase of $42,898.
Total expenses for the nine months ended March 31, 2012, were $2,342,920 compared to total expenses of $2,300,778 for the corresponding period of the prior fiscal year for a modest increase of $42,142.
Total miscellaneous income for the nine months ended March 31, 2012, was comprised of “other income” of $36 compared to “other income” of $792 for the corresponding period of the prior fiscal year, a decrease of $756. The category of “other income” consists of interest income.
Consulting expenses during the nine months ended March 31, 2012, were $1,158,541 which included non-cash, issuance of shares in consideration for consulting services in the amount of $22,250, $158,285 for non-cash stock based compensation charges and a $290,750 recovery from the reversal of fair value costs in relation to a cancelled consulting contract. In the corresponding period of the prior fiscal year, consulting expenses were $1,403,487 which included non-cash, issuance of shares in consideration for consulting services in the amount of $575,102 and $382,250 for non-cash stock based compensation charges.
Salaries and benefits expenses during the nine months ended March 31, 2012, were $330,000 which included non-cash, stock based compensation charges of $0. In the corresponding period of the prior fiscal year, salaries and benefits expenses were $330,000 which included non-cash, stock based compensation charges of $0.
Research and development costs of $159,118 during the nine months ended March 31, 2012, are attributable to refining the manufacturing process of our ElectriPlast™ material. In the corresponding period of the prior fiscal year, the amount expensed under this category was $197,036.
For the nine months ended March 31, 2012, our cash used in operating activities was $1,099,142 compared to $1,414,762 used in the corresponding period of the prior fiscal year for a decrease of $315,620.
For the nine months ended March 31, 2012, our cash provided by financing activities was $1,322,119 compared to $1,483,135 provided in the corresponding period of the prior fiscal year. The difference of $161,016 was due to decreased issuances of common stock during the nine months ended March 31, 2012.
Critical Accounting Policies and Estimates
The details of the critical accounting policies relevant to the Company are set out in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2011, filed with the Securities and Exchange Commission on September 28, 2011. There have been no material changes to our critical accounting policies as described in Item 7 of our most recent annual report on Form 10-K for the year ended June 30, 2011.
Management does not believe that any new accounting pronouncements not yet effective will have any material effect on the Company’s financial statements if adopted.
Liquidity and Capital Resources
Since inception we have funded our operations through capital fundraising and loans from management. As of March 31, 2012, we had $284,342 in cash on hand.
Management believes that there is adequate cash on hand to fund operations over the next month and that further equity funding will be required thereafter. There can be no assurance that additional equity financing will be available on terms satisfactory to us, or at all, and if funds are raised in the future through issuance of preferred stock, these securities could have rights, privileges or preference senior to those of our common stock. Further, any sale of newly issued equity securities could result in additional dilution to our current shareholders.
We are not in the manufacturing business and do not expect to make any capital purchases of a manufacturing plant or significant equipment in the next twelve months.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities, nor entered into any options or non-financed assets.
Not applicable to smaller reporting companies.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, our management, including our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2012.
Changes in Internal Control over Financial Reporting
During our most recent fiscal quarter, no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved, nor has a material interest, in a legal proceeding adverse to our business.
Not applicable for smaller reporting companies.
On November 29, 2011, the Company completed a private placement sale to several individuals, pursuant to the exemption from registration provided by Section 4(2) under the Securities Act of 1933. The sale consisted of 511,428 units of common stock at $0.35 per share and warrants to purchase 511,428 shares of common stock on or before November 29, 2016 at an exercise price of $0.70 per share. Exercise of all the investment warrants may be required in the event that the market price for the common stock exceeds $1.50 per share. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
On November 30, 2011, the Company issued 17,755 shares of common stock to an individual as consideration of $6,214 for computer consulting services. We relied upon the exemption from registration as set forth in Section 4(2) of the Securities Act for the issuance of these securities. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
On January 5, 2012, the Company completed a private placement sale to one individual, pursuant to the exemption from registration provided by Section 4(2) under the Securities Act of 1933. The sale consisted of 571,128 units of common stock at $0.35 per share and warrants to purchase 856,692 shares of common stock on or before January 3, 2014 at an exercise price of $0.70 per share. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
On February 17, 2012, 2012, the Company completed a private placement sale to two individual, pursuant to the exemption from registration provided by Section 4(2) under the Securities Act of 1933. The sale consisted of 666,666 units of common stock at $0.30 per share and warrants to purchase 1,000,000 shares of common stock on or before March 31, 2014 at an exercise price of $0.57 per share. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
On March 23, 2012, the Company completed a private placement sale to several individuals, pursuant to the exemption from registration provided by Section 4(2) under the Securities Act of 1933. The sale consisted of 1,573,939 units of common stock at $0.35 per share and warrants to purchase 2,360,459 shares of common stock on or before January 14, 2014 at an exercise price of $0.70 per share. The recipient took its securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the acquisition of these securities.
None.
None.
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
EXHIBIT INDEX
7
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