Delaware |
22-1896032 |
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(State or Other
Jurisdiction of Incorporation or organization) |
(I.R.S. Employer Identification Number) |
Large accelerated
filer [ ] |
Accelerated filer [ ] |
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Non-accelerated
filer [ ] (Do not check if a smaller reporting company) |
Smaller reporting company [X] |
Page Number |
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PART I. FINANCIAL INFORMATION |
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Item
1. |
Consolidated Financial Statements: |
||||||||||
Condensed Consolidated Balance Sheets September 30, 2009 (unaudited) and March 31, 2009 |
3 | ||||||||||
Condensed Consolidated Statements of Operations For the three and six months ended September 30, 2009 and 2008 (unaudited) |
4 | ||||||||||
Condensed Consolidated Statements of Cash Flows For the six months ended September 30, 2009 and 2008(unaudited) |
5 | ||||||||||
Notes
to Condensed Consolidated Financial Statements (unaudited) |
6 | ||||||||||
ITEM
2. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
13 | |||||||||
ITEM
3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
17 | |||||||||
ITEM
4. |
CONTROLS AND PROCEDURES |
17 | |||||||||
PART II. OTHER INFORMATION |
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ITEM
1. |
LEGAL
PROCEEDINGS |
18 | |||||||||
ITEM
1A. |
RISK
FACTORS |
18 | |||||||||
ITEM
2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
18 | |||||||||
ITEM
3. |
DEFAULTS UPON SENIOR SECURITIES |
18 | |||||||||
ITEM
4. |
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
18 | |||||||||
ITEM
5. |
OTHER
INFORMATION |
18 | |||||||||
ITEM
6. |
EXHIBITS |
18 |
September 30, 2009 |
March 31, 2009 |
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(Unaudited) | ||||||||||
ASSETS |
||||||||||
Current assets:
|
||||||||||
Cash and cash
equivalents |
$ | 958,973 | $ | 1,155,786 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $3,726 and $2,500, respectively |
109,722 | 105,134 | ||||||||
Due from
affiliates |
8,276 | 6,977 | ||||||||
Inventories |
346,536 | 302,810 | ||||||||
Prepaid
expenses and other current assets |
25,616 | 23,412 | ||||||||
Restricted
cash |
227,711 | 226,580 | ||||||||
Total current
assets |
1,676,834 | 1,820,699 | ||||||||
Property and
equipment, net of accumulated depreciation of $34,586 and $28,082, respectively |
63,464 | 59,968 | ||||||||
Inventory
long term portion |
43,354 | 43,798 | ||||||||
Investment in
Ivivi at Fair Market Value |
| 715,000 | ||||||||
Secured
convertible note |
31,440 | | ||||||||
Advances to
related parties |
48,142 | 47,999 | ||||||||
Intangible
assets, net of accumulated amortization of $102,732 and $80,055, respectively |
216,973 | 194,204 | ||||||||
Other
assets |
18,763 | 18,763 | ||||||||
Total
assets |
$ | 2,098,970 | $ | 2,900,431 | ||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
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Current
liabilities: |
||||||||||
Accounts
payable |
$ | 188,968 | $ | 116,137 | ||||||
Note payable
bank |
190,000 | 197,000 | ||||||||
Note payable
other |
17,400 | | ||||||||
Accrued
expenses and other current liabilities |
34,827 | 38,970 | ||||||||
Customer
deposits Ivivi |
109,586 | 101,025 | ||||||||
Due to
affiliates |
2,964 | | ||||||||
Total current
liabilities |
543,745 | 453,132 | ||||||||
Note payable
other, net of current maturities |
19,700 | | ||||||||
Total
liabilities |
563,445 | 453,132 | ||||||||
Stockholders equity: |
||||||||||
Preferred
stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding |
||||||||||
Common stock,
$.0005 par value; 150,000,000 shares authorized, 53,939,537 shares issued and outstanding at |
||||||||||
September 30,
2009 and March 31, 2009 |
26,970 | 26,970 | ||||||||
Additional
paid-in capital |
32,153,597 | 32,153,597 | ||||||||
Accumulated
deficit |
(30,645,042 | ) | (29,733,268 | ) | ||||||
Total
stockholders equity |
1,535,525 | 2,447,299 | ||||||||
Total
liabilities and stockholders equity |
$ | 2,098,970 | $ | 2,900,431 |
Three Months Ended September 30 |
Six Months Ended September 30 |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2009 |
2008 |
2009 |
2008 |
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Revenues |
$ | 263,263 | $ | 389,589 | $ | 599,187 | $ | 990,530 | |||||||||||
Costs and
expenses: |
|||||||||||||||||||
Cost of
sales |
162,927 | 258,269 | 331,175 | 657,480 | |||||||||||||||
Research and
development |
11,249 | | 16,356 | | |||||||||||||||
Selling,
general and administrative |
208,257 | 311,913 | 452,305 | 600,581 | |||||||||||||||
Total
operating expenses |
382,433 | 570,182 | 799,836 | 1,258,061 | |||||||||||||||
Operating
loss |
(119,170 | ) | (180,593 | ) | (200,649 | ) | (267,531 | ) | |||||||||||
Interest
income, net |
2,036 | 13,307 | 3,875 | 28,641 | |||||||||||||||
Change in
fair value of investment in Ivivi |
| (4,517,500 | ) | (715,000 | ) | (9,815,000 | ) | ||||||||||||
Income tax
benefit |
| (277,612 | ) | | (2,425,188 | ) | |||||||||||||
Net
loss |
($117,134 | ) | (4,407,174 | ) | ($911,774 | ) | ($7,628,702 | ) | |||||||||||
Net loss per
share, basic and diluted |
($0.00 | ) | ($0.08 | ) | ($0.02 | ) | ($0.14 | ) | |||||||||||
Weighted
average shares outstanding, basic and diluted |
53,939,537 | 53,939,537 | 53,939,537 | 53,939,537 |
2009 |
2008 |
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---|---|---|---|---|---|---|---|---|---|---|
Cash flows from
operating activities: |
||||||||||
Net
Loss |
($911,774 | ) | ($7,628,702 | ) | ||||||
Adjustments to
reconcile net loss to net cash used in operating activities: |
||||||||||
Depreciation
and amortization |
29,181 | 8,535 | ||||||||
Interest
income |
(326 | ) | | |||||||
Net change in
fair market value on investment in Ivivi |
715,000 | 9,815,000 | ||||||||
Deferred tax
benefit |
| (2,425,188 | ) | |||||||
Changes in
operating assets and liabilities: |
||||||||||
(Increase)
decrease in: |
||||||||||
Inventory |
(31,808 | ) | 97,531 | |||||||
Accounts
receivable |
(4,588 | ) | 17,523 | |||||||
Prepaid
expenses |
(11,876 | ) | 75,139 | |||||||
Due from
affiliate |
(1,299 | ) | | |||||||
Increase
(decrease) in: |
||||||||||
Accounts
payable and accrued expenses |
78,360 | (137,255 | ) | |||||||
Due to
affiliate |
2,964 | | ||||||||
Customer
deposit Ivivi |
8,561 | (133,131 | ) | |||||||
Net cash used in
operating activities |
(127,605 | ) | (310,548 | ) | ||||||
Cash flows from
investing activities: |
||||||||||
Advances to
related party |
(143 | ) | | |||||||
Collections
of advances to related parties |
| 8,644 | ||||||||
Payment and
services rendered for secured convertible note |
(31,114 | ) | | |||||||
Payment for
asset acquisition |
(29,820 | ) | (212,491 | ) | ||||||
Deposit
restricted cash |
(1,131 | ) | (225,000 | ) | ||||||
Purchases of
property and equipment |
| (14,888 | ) | |||||||
Net cash used
in investing activities |
(62,208 | ) | (443,735 | ) | ||||||
Cash flows from
financing activities: |
||||||||||
Proceeds from
note payable Bank |
| 200,000 | ||||||||
Repayments on
note payable Bank |
(7,000 | ) | | |||||||
Net cash (used in)/provided by
financing activities |
(7,000 | ) | 200,000 | |||||||
Net decrease in
cash |
(196,813 | ) | (554,283 | ) | ||||||
Cash at
beginning of period |
1,155,786 | 2,072,325 | ||||||||
Cash at end of
period |
$ | 958,973 | $ | 1,518,042 | ||||||
Cash paid for:
|
||||||||||
Interest |
$ | 3,394 | 667 | |||||||
Income
taxes |
$ | 5,421 | | |||||||
Non-cash
disclosure: |
||||||||||
The Company
financed insurance premiums during the period. |
||||||||||
Increase in
prepaid insurance and accounts payable |
$ | 9,672 | | |||||||
See Note 2
for a summary of non-cash investing activities. |
Asset
Acquisition of Antistatic Industries of Delaware, Inc.: |
||||||
Fair Value of
assets acquired |
$ | 66,920 | ||||
Cash paid to
Seller |
$ | (26,920 | ) | |||
Cash paid to
Seller under Note Payable |
(2,900 | ) | ||||
Note payable
outstanding at September 30, 2009 |
(37,100 | ) | ||||
$ | (66,920 | ) | ||||
Six-months
ended September 30, 2009 Asset Acquisitions |
||||||
Details of
Acquisition |
||||||
Fair Value of
assets acquired |
$ | 66,920 | ||||
Note Payable
balance at September 30, 2009 |
(37,100 | ) | ||||
Total cash
paid for acquisition |
$ | 29,820 |
Current |
Long Term |
Total |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Raw
materials |
$ | 273,484 | $ | 32,664 | $ | 306,148 | ||||||||
Finished
goods |
73,052 | 10,690 | 83,742 | |||||||||||
$ | 346,536 | $ | 43,354 | $ | 389,890 |
Current |
Long Term |
Total |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Raw materials
|
$ | 232,851 | $ | 33,109 | $ | 265,960 | ||||||||
Finished
goods |
69,959 | 10,689 | 80,648 | |||||||||||
$ | 302,810 | $ | 43,798 | $ | 346,608 |
Level
1 |
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities. |
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Level
2 |
Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full
term of the asset or liability. |
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Level
3 |
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. |
Level 1 |
Level 2 |
Level 3 |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment in
Ivivi |
$ | 715,000 | $ | | $ | |
Level 1 |
Level 2 |
Level 3 |
Total |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment in
Ivivi |
$ | 715,000 | $ | (715,000 | ) | $ | | $ | |
September 30, 2009 |
March 31, 2009 |
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cost |
Accumulated Amortization |
Net Carrying Amount |
Cost |
Accumulated Amortization |
Net Carrying Amount |
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Patents &
Trademarks |
$ | 71,768 | $ | (56,952 | ) | $ | 14,816 | $ | 61,768 | $ | (56,142 | ) | $ | 5,626 | |||||||||||||
Formulas |
25,446 | | 25,446 | | | | |||||||||||||||||||||
Non-Compete
Agreement |
50,000 | (7,738 | ) | 42,262 | 50,000 | (4,167 | ) | 45,833 | |||||||||||||||||||
Controller
Design |
100,000 | (15,476 | ) | 84,524 | 100,000 | (8,332 | ) | 91,668 | |||||||||||||||||||
Customer
List |
72,491 | (22,566 | ) | 49,925 | 62,491 | (11,414 | ) | 51,077 | |||||||||||||||||||
$ | 319,705 | $ | (102,732 | ) | $ | 216,973 | $ | 274,259 | $ | (80,055 | ) | $ | 194,204 |
2010 |
25,347 | |||||
2011 |
49,246 | |||||
2012 |
36,849 | |||||
2013 |
25,728 | |||||
2014 |
24,385 | |||||
Thereafter |
55,418 | |||||
216,973 |
Chemical |
Electronics |
Total |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three months
ended September 30, 2009 |
||||||||||||||
Revenues from
external customers |
$ | 196,904 | $ | 66,359 | $ | 263,263 | ||||||||
Segment
operating loss |
$ | (12,254 | ) | $ | (106,916 | ) | $ | (119,170 | ) | |||||
Three months
ended September 30, 2008 |
||||||||||||||
Revenues from
external customers |
$ | 181,025 | $ | 208,504 | $ | 389,589 | ||||||||
Segment
operating loss |
$ | (58,665 | ) | $ | (121,928 | ) | $ | (180,593 | ) | |||||
Six months
ended September 30, 2009 |
||||||||||||||
Revenues from
external customers |
$ | 444,718 | $ | 154,469 | $ | 599,187 | ||||||||
Segment
operating loss |
$ | (17,670 | ) | $ | (182,979 | ) | $ | (200,649 | ) | |||||
Six months
ended September 30, 2008 |
||||||||||||||
Revenues from
external customers |
$ | 421,349 | $ | 569,181 | $ | 990,530 | ||||||||
Segment
operating loss |
$ | (116,600 | ) | $ | (150,931 | ) | $ | (267,531 | ) | |||||
Total assets
at September 30, 2009 |
$ | 1,305,142 | $ | 793,828 | $ | 2,098,970 | ||||||||
Total assets
at March 31, 2009 |
$ | 1,459,121 | $ | 1,441,310 | $ | 2,900,431 |
|
we will provide Ivivi with engineering services, including quality control and quality assurance services along with regulatory compliance services warehouse fulfillment services and network administration services including hardware and software services; |
|
we will be paid at the rate of $26,000 per month by Ivivi for these services; and the four full time engineers and three part time engineers currently employed by Ivivi will be terminated. |
|
the services agreement may be cancelled by either party upon sixty days notice. |
2010 |
2009 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance,
beginning of period |
$ | (104,320 | ) | $ | (241,828 | ) | ||||
Advances from
Ivivi |
(8,460 | ) | (159,449 | ) | ||||||
Ivivi purchases
from ADM |
44,873 | 514,927 | ||||||||
Charges from
Ivivi |
(7,214 | ) | | |||||||
Charges to
Ivivi |
67,485 | 40,894 | ||||||||
Payments from
Ivivi |
(104,183 | ) | (263,241 | ) | ||||||
Payments to
Ivivi |
7,546 | | ||||||||
Due (to) Ivivi,
end of period |
$ | (104,273 | ) | $ | (108,697 | ) |
Inventory |
$ | 11,474 | ||||
Equipment |
10,000 | |||||
Patents and
trademarks |
10,000 | |||||
Formulas |
25,446 | |||||
Customer
list |
10,000 | |||||
Total |
$ | 66,920 |
(a) |
Exhibit No. |
31.1 |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
By: /s/ Andre DiMino Andre DiMino, Chief Executive Officer and Chief Financial Officer |
Dated: |
Northvale, New Jersey November 17, 2009 |