Delaware
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76-0307819
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(State
or Other Jurisdiction of
Incorporation
or Organization)
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(I.R.S
Employer Identification No.)
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Page
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||
PART
I.
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FINANCIAL
INFORMATION
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Item
1.
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Financial
Statements (Unaudited)
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|
Condensed
Consolidated Balance Sheets
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1
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Condensed
Consolidated Statements of Operations
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2
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Condensed
Consolidated Statements of Cash Flows
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3
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Notes
to Interim Condensed Consolidated Financial Statements
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4
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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8
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Item
4.
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Controls
and Procedures
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13
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PART
II.
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OTHER
INFORMATION
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13
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Item
1.
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Legal
Proceedings
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13
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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13
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Item
3.
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Defaults
Upon Senior Securities
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13
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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14
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Item
5.
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Other
Information
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14
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Item
6.
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Exhibits
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14
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Signatures
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15
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June
30, 2008
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DECEMBER
31,
2007
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|||||||
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(Unaudited)
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(See
Note)
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||||||
ASSETS
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||||||||
CURRENT
ASSETS:
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||||||||
Cash
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$ | 35,722 | $ | 15,224 | ||||
Trade
accounts receivable, net
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2,723,612 | 1,758,821 | ||||||
Prepaid
expenses and other current assets
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193,549 | 34,012 | ||||||
Total
current assets
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2,952,883 | 1,808,057 | ||||||
Property
and equipment, net
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154,808 | 206,329 | ||||||
Goodwill
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5,704,000 | 5,704,000 | ||||||
Other
intangibles, net
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549,680 | 659,687 | ||||||
Other
assets
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22,921 | 22,929 | ||||||
TOTAL
ASSETS
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$ | 9,384,292 | $ | 8,401,002 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
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||||||||
Private
Placement, net of unamortized discount
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$ | 150,000 | $ | 150,000 | ||||
Short
term borrowings
|
750,000 | 970,000 | ||||||
Accounts
payable and accrued liabilities
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4,209,964 | 3,976,771 | ||||||
Accrued
compensation
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535,616 | 554,880 | ||||||
Deferred
revenues and customer advances
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769,964 | 112,000 | ||||||
Convertible
note, net of unamortized discount
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1,191,320 | |||||||
Revolving
note, net of unamortized discount
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1,322,643 | 981,555 | ||||||
Total
current liabilities
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8,929,507 | 6,745,206 | ||||||
Convertible
note, net of unamortized discount
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940,232 | |||||||
Total
liabilities
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8,929,507 | 7,685,438 | ||||||
COMMITMENTS
AND CONTINGENCIES
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||||||||
STOCKHOLDERS'
EQUITY :
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||||||||
Common
Stock, $.001 par value, authorized shares 200,000,000,
97,053,044 and 96,053,044 shares issued and outstanding,
respectively
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97,053 | 96,053 | ||||||
Additional
paid-in capital
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37,946,088 | 37,802,940 | ||||||
Accumulated
deficit
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(37,588,356 | ) | (37,183,429 | ) | ||||
Total
stockholders' equity
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454,785 | 715,564 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 9,384,292 | $ | 8,401,002 | ||||
The
accompanying notes should be read in conjunction with the condensed
consolidated financial statements.
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Three
Months
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Three
Months
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Six
Months
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Six
Months
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|||||||||||||
Ended
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Ended
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Ended
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Ended
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|||||||||||||
June
30, 2008
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June
30, 2007
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June
30, 2008
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June
30, 2007
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|||||||||||||
Revenues
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$ | 6,331,072 | $ | 4,109,276 | $ | 11,348,314 | $ | 8,379,464 | ||||||||
OPERATING
EXPENSES:
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||||||||||||||||
Direct
employee compensation and consultant expenses (includes share based
compensation of $5,842,
$11,396,$19,580 and $22,792)
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5,000,901 | 3,123,798 | 8,891,971 | 6,483,479 | ||||||||||||
Selling,
general and administrative expenses (includes share based
compensation of $25,232, $83,236, $84,568 and
$253,839)
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944,485 | 1,348,686 | 1,895,632 | 2,908,916 | ||||||||||||
Impairment
of goodwill
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3,397,451 | 3,397,451 | ||||||||||||||
Depreciation
and amortization
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73,172 | 108,529 | 156,045 | 197,763 | ||||||||||||
Total
operating expenses
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6,018,558 | 7,978,464 | 10,943,648 | 12,987,609 | ||||||||||||
Income
(loss) from operations
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312,514 | (3,869,188 | ) | 404,666 | (4,608,145 | ) | ||||||||||
OTHER
INCOME / (EXPENSE):
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||||||||||||||||
Amortization
of debt discounts
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(186,895 | ) | (193,678 | ) | (368,261 | ) | (369,473 | ) | ||||||||
Amortization
of debt issuance costs
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(121,000 | ) | (253,373 | ) | ||||||||||||
Interest
and bank charges
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(75,935 | ) | (82,961 | ) | (187,959 | ) | (161,843 | ) | ||||||||
Total
other income / (expense)
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(383,830 | ) | (276,639 | ) | (809,593 | ) | (531,316 | ) | ||||||||
Loss
before provision for income taxes
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(71,316 | ) | (4,145,827 | ) | (404,927 | ) | (5,139,461 | ) | ||||||||
Provision
for income taxes
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- | - | - | - | ||||||||||||
LOSS
FROM CONTINUING OPERATIONS
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(71,316 | ) | (4,145,827 | ) | (404,927 | ) | (5,139,461 | ) | ||||||||
DISCONTINUED
OPERATIONS
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||||||||||||||||
Loss
from discontinued operations
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(53,398 | ) | (53,398 | ) | ||||||||||||
NET
LOSS
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$ | (71,316 | ) | $ | (4,199,225 | ) | $ | (404,927 | ) | $ | (5,192,859 | ) | ||||
Net
loss from continuing operations per common share, basic and
diluted
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$ | (0.00 | ) | $ | (0.06 | ) | $ | (0.00 | ) | $ | (0.07 | ) | ||||
Net
loss from discontinued operations per common share, basic and
diluted
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- | - | - | - | ||||||||||||
Net
loss per common share, basic and diluted
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$ | (0.00 | ) | $ | (0.06 | ) | $ | (0.00 | ) | $ | (0.07 | ) | ||||
Weighted
average number of shares outstanding, basic and diluted
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97,053,044 | 75,663,883 | 96,618,978 | 75,484,435 | ||||||||||||
The
accompanying notes should be read in conjunction with the condensed
consolidated financial
statements.
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Six
Months
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Six
Months
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|||||||
Ended
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Ended
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|||||||
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June
30, 2008
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June
30, 2007
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||||||
OPERATING ACTIVITIES | ||||||||
Net
loss
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$ | (404,927 | ) | $ | (5,192,859 | ) | ||
Loss
from discontinued operations
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53,398 | |||||||
Adjustments
to reconcile net loss to net cash provided by operating
activities:
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||||||||
Common
stock issued for services
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77,600 | |||||||
Non-cash
charge for employee share based compensation
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104,148 | 199,031 | ||||||
Non-cash
financing fees
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40,000 | |||||||
Amortization
of debt discounts
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368,261 | 369,473 | ||||||
Amortization
of debt issuance costs
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253,373 | |||||||
Impairment
of goodwill
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3,397,451 | |||||||
Depreciation
and amortization
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156,045 | 197,763 | ||||||
Loss
on disposal of property and equipment
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5,287 | |||||||
Changes
in operating assets and liabilities:
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||||||||
Trade
accounts receivable
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(964,791 | ) | (9,330 | ) | ||||
Prepaid
expenses and other current assets
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(159,537 | ) | (14,035 | ) | ||||
Other
assets
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4,593 | |||||||
Accounts
payable and accrued liabilities
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231,525 | 224,358 | ||||||
Accrued
compensation
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(19,364 | ) | (18,233 | ) | ||||
Deferred
revenues and advances
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657,964 | 785,223 | ||||||
Net
cash provided by continuing operations
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267,984 | 74,433 | ||||||
Net
cash used in discontinued operations
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(53,398 | ) | ||||||
Net
cash provided by operating activities
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267,984 | 21,035 | ||||||
INVESTING
ACTIVITIES
|
||||||||
Proceeds
from disposal of property and equipment
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5,981 | |||||||
Purchases
of property and equipment
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(4,009 | ) | (85,108 | ) | ||||
Net
cash provided by (used in) investing activities
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1,972 | (85,108 | ) | |||||
FINANCING
ACTIVITIES
|
||||||||
Subscription
received
|
400,000 | |||||||
Short
term borrowings
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400,000 | 300,000 | ||||||
Repayment
of short term borrowings
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(620,000 | ) | (100,000 | ) | ||||
Repayment
of convertible debenture
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(500,000 | ) | ||||||
Proceeds
from issuance (repayment) of revolving note, net
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223,915 | (198 | ) | |||||
Debt
issuance costs
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(253,373 | ) | (35,000 | ) | ||||
Net
cash (used in) provided by financing activities
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(249,458 | ) | 64,802 | |||||
Net
increase in cash
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20,498 | 729 | ||||||
Cash
at beginning of period
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15,224 | 13,437 | ||||||
Cash
at end of period
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$ | 35,722 | $ | 14,166 | ||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for interest
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$ | 216,000 | $ | 175,000 | ||||
2008
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||||||||||||
Unamortized
|
||||||||||||
Principal
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debt
discount
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Net
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||||||||||
Laurus
Revolving Note Due in March 2009
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$
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1,500,863
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$
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(178,220
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)
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$
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1,322,643
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|||||
Laurus
Convertible Note Due in March 2009
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1,500,000
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(308,680
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)
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1,191,320
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||||||||
2006
Convertible Debentures
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150,000
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150,000
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||||||||||
Short
term borrowings
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750,000
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750,000
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||||||||||
$
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3,900,863
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$
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(486,900
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)
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$
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3,413,963
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Exercise
|
|||||||||
Price
|
Expiration
|
||||||||
Laurus
Warrants
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554,282
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$
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0.001
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See
(1)
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|||||
2006
Private Placement
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1,350,000
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$
|
0.01
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April
to November 2009
|
|||||
2007
Short Term Financing
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890,000
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$
|
0.01
|
April
to November 2010
|
|||||
Others
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3,526,137
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$
|
$0.15
to $.082
|
July
2008 to June 2011
|
|||||
6,320,149
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(1)
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No
expiration .
|
31.1
Rule 13a-14(a)/15d-14(a) Certification (CEO)
31.2
Rule 13a-14(a)/15d-14(a) Certification (CFO)
32.1
Section 1350 Certification (CEO)
32.2
Section 1350 Certification (CFO)
|
Date: February
19, 2010
|
By:
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/s/ Fahad
Syed
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Name: Fahad Syed | ||
Title:
Chairman and Chief Executive Officer
|
||
By:
|
/s/ Vasan
Thatham
|
|
Name: Vasan Thatham | ||
Title:
Principal Financial Officer and Vice
President
|
February
19, 2010
|
By:
|
/s/ Fahad
Syed
|
Name:
Fahad Syed
Title:
Chairman and Chief Executive
Officer
|
February
19, 2010
|
By:
|
/s/ Vasan
Thatham
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Name:
Vasan Thatham
Title:
Chief Financial Officer
|
February
19, 2009
|
By:
|
/s/ Fahad
Syed
|
Name:
Fahad Syed
Title:
Chairman and Chief Executive
Officer
|
February
19, 2009
|
By:
|
/s/ Vasan
Thatham
|
Name:
Vasan Thatham
Title:
Chief Financial Officer
|