Edgar Filing: BRENDAN TECHNOLOGIES INC

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x Quarterly Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For quarterly period ended December 31, 2007

¨ Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER 0-17493

BRENDAN TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

NEVADA		88-0237223
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2236 Rutherford Road, Suite 107

Carlsbad, California 92008

(Address of principal executive offices)

Issuer's telephone number (760) 929-7500

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x No o

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:

Common Stock, $.004995 par value		25,550,594

(Class)		Outstanding at February 14, 2008

Transitional Small Business Disclosure Format (Check one): Yes ¨ No x

Brendan Technologies, Inc.

INDEX

		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed consolidated Balance Sheets as of December 31, 2007 (unaudited) and June 30, 2007	3

	Condensed consolidated Statements of Operations for the three and six months ended December 31, 2007 and 2006(unaudited)	4

	Condensed consolidated Statements of Cash Flows for the six months ended December 31, 2007 and 2006 (unaudited)	5

	Notes to Condensed Unaudited Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis or Plan of Operation	12

Item 3.	Controls and Procedures	16

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	*
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	*
Item 3.	Defaults upon Senior Securities	*
Item 4.	Submission of Matters to a Vote of Security Holders	*
Item 5.	Other Information	*
Item 6.	Exhibits	17

SIGNATURES		17

* No information provided due to inapplicability of the item.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Brendan Technologies, Inc.
Condensed Consolidated Balance Sheets

	December 31,			June 30,
	2007			2007
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	32,353		$	85,016
Accounts receivable, net		118,068			75,283
Prepaid expenses		109,537			89,919
Total current assets		259,958			250,218

Property and equipment, net		130,062			157,356
Other assets		19,585			27,951
	$	409,605		$	435,525

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable in default	$	130,000		$	130,000
Accrued interest in default		104,398			95,382
Note payable		-			100,000
Secured bridge loan payable		600,000			-
Accounts payable		61,366			12,916
Accrued wages and vacation		850,272			842,525
Accrued interest		599,980			527,434
Deferred revenue		114,067			98,394
Current portion of lease obligations		5,765			7,388
Current portion 8% convertible debentures net of debt discount		1,082,374			24,010
Current portion 8% convertible debentures net of debt discount-related parties		129,929			91,812
Total current liabilities		3,678,151			1,929,861

Long term portion of lease obligations		1,529			3,607
8% Convertible debentures net of debt discount		428,879			1,343,868
8% Convertible debentures net of debt discount - related parties		7,881			34,154
Total liabilities		4,116,440			3,311,490

Stockholders' deficit
Preferred stock, $.004995 par value; 5,000,000 shares authorized: none outstanding		-			-
Common stock, $.004995 par value; 50,000,000 shares authorized: xx,xxx,xxx and 23,705,594 issued and outstanding at December 31, 2007 and June 30, 2007		127,625			118,409
Additional paid in capital		5,930,858			5,358,033
Accumulated deficit		(9,765,318	)		(8,352,407	)
Total stockholders' deficit		(3,706,835	)		(2,875,965	)
	$	409,605		$	435,525

See accompanying summary of accounting policies and notes to unaudtied condensed consolidated financial statements.

Brendan Technologies, Inc.

Condensed Consolidated Statements of Operation

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31			December 31,			December 31			December 31,
	2007			2006			2007			2006

Revenue	$	206,981		$	135,253		$	366,807		$	222,648

Selling expenses		35,734			24,756			78,422			47,961
Research and development		126,961			115,309			245,729			198,444
General and administrative expenses		477,841			449,916			945,096			767,840
		640,536			589,981			1,269,247			1,014,245

Loss from operations		(433,555	)		(454,728	)		(902,440	)		(791,597	)

Other expense
Interest expense		(271,904	)		(104,101	)		(510,470	)		(173,104	)

Loss before provision for income taxes		(705,459	)		(558,829	)		(1,412,910	)		(964,701	)

Provision for income taxes		-			-			-			-

Net loss	$	(705,459	)	$	(558,829	)	$	(1,412,910	)	$	(964,701	)

Basic and diluted loss per share	$	(0.03	)	$	(0.02	)	$	(0.06	)	$	(0.04	)

Basic and diluted weighted average common shares outstanding		24,975,431			23,705,594			24,340,512			23,705,594

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

Brendan Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended December 31,
	2007			2006
Operating activities:
Net loss	$	(1,412,910	)	$	(964,701	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation		37,250			17,650
Stock option compensation		20,816			46,278
Intrinsic value of warrant exercises		22,800			-
Amortization of warrants		77,175			50,191
Amortization of debt discount		155,219			27,421
Provision for uncollectible receivables		8,000			1,000
Changes in assets and liabilities:
Accounts receivable		(50,785	)		(7,183	)
Prepaid expense and other assets		(11,252	)		(1,056	)
Accounts payable		48,449			(108,546	)
Accrued liabilities		89,309			113,182
Deferred revenue		15,673			21,467
Net cash used in operating activities		(1,000,256	)		(804,297	)
Investing activities:
Purchase of property and equipment		(9,956	)		(26,830	)
Net cash used in investing activities		(9,956	)		(26,830	)
Financing activities:
Principal payments of lease obligations		(3,701	)		(3,072	)
Principal payments on notes payable in default		-			(125,000	)
Principal payments on notes payable		(100,000	)		-
Proceeds from issuance of secured bridge loan		600,000			-
Proceeds from exercise of warrants		461,250			-
Proceeds from issuance of 8% convertible debentures, net of costs		-			1,125,000
Net cash provided by financing activities		957,549			996,928
Net increase in cash and cash equivalents		(52,663	)		165,801
Cash and cash equivalents, beginning of year		85,016			149,512
Cash and cash equivalents, end of period	$	32,353		$	315,313

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	96,213		$	95,492
Income taxes	$	-		$	-
Non Cash Investing and Financing Activities:
Cancellation of stock	$	-		$	8,957
Debt discount on 8% convertible debentures	$	-		$	333,176

See accompanying summary of accounting polices and notes to unaudited condensed consolidated financial statements.

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1 - Business

Nature of Business

Brendan Technologies, Inc., a Nevada corporation (the “Company”, “we” or“Brendan”) provides software solutions to improve the accuracy, quality control, workflow, and regulatory compliance of immunoassay testing in laboratories in the biopharmaceutical, clinical, research, veterinarian and agricultural industries.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and the Company’s wholly owned subsidiary. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. All material inter-company accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Operating results for the three and six month periods ended December 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2008. For further information, refer to the financial statements and notes thereto included in the Brendan Technologies, Inc. Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, which for us will be the fiscal year beginning April 1, 2008. We are currently assessing the impact of SFAS No. 159 on our financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measures”. This Statement defines fair value, establishes a framework for measuring fair value in generally GAAP, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for us will be the fiscal year beginning April 1, 2008. We are currently evaluating the impact of SFAS No. 157 but do not expect that it will have a material impact on our financial statements.

Reclassifications

Certain reclassifications have been made to the December 31, 2006 financial statements in order for them to conform to the December 31, 2007 presentation. Such reclassifications have no impact on our financial position or results of operations.

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

Note 2- Going Concern

Going Concern

These financial statements have been prepared on a going concern basis. However, during the six months ended December 31, 2007 and the year ended June 30, 2007, the Company incurred net losses of $1,412,910 and $2,110,698, respectively, and had an accumulated deficit of $9,765,318 and $8,352,407, at December 31 and June 30, 2007, respectively. In addition, as of December 31, 2007, the Company had a working capital deficit of $3,418,193 and is in default on $234,398 of debt and interest. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and as such raise substantial doubt as to the Company’s ability to continue as a going concern. Since inception, the Company has satisfied its capital needs through debt and equity financings and expects to fund the Company from these sources until profitability is achieved. There can be no assurance that funds will be available at terms favorable to the Company or that future profitability can be achieved. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management’s Plans

Management's plans to eliminate the going concern situation include, but are not limited to, the following:

· Obtain additional equity or debt financing from investors.

· Increase revenue from the sale of its software. The Company is anticipating to release an upgraded version of its software during the next twelve months that will address customer enterprise level requirements.

· If necessary, the Company will initiate cost cutting programs that would reduce cash requirements.

Note 3 - Loss Per Share

The Company utilizes SFAS No. 128, “Earnings per Share.” Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

For the six months ended December 31, 2007 and 2006, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

	December 31,
	2007		2006

Convertible debentures		4,055,000		2,250,000
Options		5,435,000		4,722,334
Warrants		5,505,667		4,920,667
Total		14,995,667		11,893,001

Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Note 4- Notes Payable and Secured Bridge Loan

Notes payable in default consisted of the following:

	December 31, 2007		June 30, 2007

Two unsecured, senior subordinated notes payable, due on various dates on or before September 2004, bearing interest at 8% per annum.	$	130,000	$	130,000

The above notes which were not converted as part of the reverse merger remain in default.

In July 2007, we issued secured bridge loans with a face value of $600,000 ($555,000 net of costs) to a group of five investors. The loans are due nine months from the date of issuance and interest is paid monthly in cash at the rate of 15% per annum. The bridge loans are secured by all of our assets. In addition, we issued 690,000 common stock purchase warrants to the investors and individuals who assisted in the transaction.

Note 5- 8% Convertible Debentures

Overview. From June 2006 through June 2007, we sold an aggregate of $2,027,500 of 8% convertible debentures to a group of 23 individual investors, two of which are affiliates of the Company, and one institutional investor. The convertible debentures entitle the debenture holder to convert the principal into our common stock for two years from the date of closing. Interest on the debentures is payable, at the option of the warrant holder, either quarterly in cash or at the earlier of maturity or conversion in common stock of the Company.

Number of Shares Debentures May Be Converted Into. The debentures can be converted into a number of our common shares at a conversion price equal to $0.50 per share.

Warrants. Concurrent with the issuance of the convertible debentures, we issued to the debenture holders warrants to purchase shares of our common stock. These warrants are exercisable for one to five years from the date of issuance at exercise prices ranging from $0.60 to $1.00 per share.

Right of First Refusal. The debenture holders have a right of first refusal to purchase or participate in any equity securities offered by us in any private transaction which closes on or prior to the date that is two years after the issue date of each debenture.

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

Registration Rights. We are responsible for registering the resale of the shares of our common stock which will be issued on the conversion of the debentures.

Restrictions on Use of Funds. We may not pay any cash dividends without the debenture holders prior written approval.

The following table presents the status, as of December 31 and June 30, 2007, of our convertible debentures:

	As of
	December 31, 2007			June 30, 2007

Convertible debentures issued	$	2,027,500		$	2,027,500
Less debt discount		(378,437	)		(533,656	)

		1,649,063			1,493,844
Less current portion		(1,212,303	)		(115,822	)

Long term portion	$	436,760		$	1,378,022

Current issued to related parties	$	129,929		$	91,812
Long term issued to related parties	$	7,881		$	34,154

Maturity dates of outstanding convertible debentures

December 2008	$	1,350,000		$	125,000
December 2009		677,500			1,902,500
	$	2,027,500		$	2,027,500

Note 6- Equity Transactions

In October 2007, we extended a rights offering to our existing warrant holders, whereby, through November 10, 2007, at the sole election of the warrant holder, any outstanding warrant could be exercised at $0.25 per share. For any warrants not exercised, the terms of the warrant remained unchanged. As a result of this rights offering, warrants with original exercise prices ranging from $.60 to $1.00 per share were exercised at $0.25 per share for the purchase of 1,845,000 shares of our common stock resulting in proceeds of $461,250. The difference between the closing price of our common stock on the date of exercise and $0.25, $22,800, is being reflected as additional non-cash interest during the quarter ending December 31, 2007.

We recorded additional paid in capital and non-cash compensation expense for stock options issued to employees and consultants of $20,816 for the six months ended December 31, 2007. Also, we recorded additional paid in capital of $77,175 related to warrants issued as a result of receiving secured bridge loans during the six months ended December 31, 2007.

The significant assumptions used in the Black-Scholes model to estimate the compensation and interest expense for the issuance of stock options and warrants during the current fiscal quarter are as follows:

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

Expected term of options and warrants	5 years

Expected volatility	42% - 43%

Expected dividends	None

Risk-free interest rate	4.24% - 5.03%

Forfeitures	0%

A summary of the options outstanding follows:

	For the Six Months Ended December 31, 2007
Options	Shares			Weighted Average Exercise Price
Outstanding at beginning of year		4,975,000		$	0.41
Granted		500,000			0.65
Cancelled		(40,000	)		0.65
Exercised		-			-
Outstanding at end of the period		5,435,000			0.43

Exercisable at end of the the period		4,829,000		$	0.36

Weighted average fair value of options granted during the period		500,000		$	0.06

As of December 31, 2007, the unamortized portion of stock compensation expense on all existing stock options was $62,025.

A summary of warrants outstanding follows:

	For the Six Months Ended December 31, 2007
Warrants	Shares			Weighted Average Exercise Price
Outstanding at beginning of year		8,660,667		$	0.88
Granted		690,000			0.60
Cancelled		(2,000,000	)		1.00
Exercised		(1,845,000	)		0.25
Outstanding at end of the period		5,505,667			0.80

Exercisable at end of the the period		5,505,667		$	0.80

Note 7- Income Taxes

We or one of our subsidiaries file income tax returns in the U.S. federal jurisdiction and the state of California. With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2004.

BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on July 1, 2007. As a result of the implementation of Interpretation 48, we did not recognize an increase in the liability for unrecognized tax benefits. No unrecognized tax benefits are being reported for the three or six months ended December 31, 2007.

Included in the balance at July 1, 2007, are no tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

Our policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

At June 30, 2007, we had federal net operating loss carryforwards of approximately $7,251,000 that expire from 2017 through 2025 and are subject to certain limitations under the Internal Revenue Code of 1986, as amended, and state net operating loss carryforwards of approximately $6,800,000 that expire from 2010 through 2015.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "RISK FACTORS." SEE ALSO OUR ANNUAL REPORT ON FORM 10-KSB FOR OUR FISCAL YEAR ENDED JUNE 30, 2007.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to our product returns, bad debts, intangible assets, long-lived assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have identified two accounting policies that we believe are key to an understanding of our financial statements. These important accounting policies require management's most difficult, subjective judgments.

1. Revenue Recognition

The Company recognizes revenues related to software licenses and software maintenance in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statements of Position (“SOP”) No. 97-2, “Software Revenue Recognition,” as amended by SOP No. 94-4 and SOP No. 98-9. We follow the guidance established by the SEC in Staff Accounting Bulletin No. 104, as well as generally accepted criteria for revenue recognition, which require that, before revenue is recorded, there is persuasive evidence of an arrangement, the fee is fixed or determinable, collection is reasonably assured, and delivery to our customer has occurred. In addition, our invoices may include multiple elements that identify vendor specific objective evidence of fair value for each of those elements. The Company recognizes revenue as follows:

Software- our software is sold with an indefinite license period, and as such, product revenue is recorded at the time of the customer’s acceptance (generally 30 days after shipment which allows for a 30 day return guarantee if the customer is not satisfied with the product), net of estimated allowances and returns.

Post-contract customer support- (“PCS”) obligations are generally for annual services and are recognized over the period of service. Revenues for which payment has been received are treated as deferred revenue until services are provided and revenues have been earned.

Training and service calls- recognized at the time training or service calls are provided.

Royalties- we recognize revenue from royalties only after the cash has been collected (typically 30 days after the end of the quarter on which the royalty payment is based.)

Licensing- we also derive license revenue from fees for the transfer of proven and reusable intellectual property components. Generally, these payments will include a nonrefundable technology license fee, which will be payable upon the transfer of intellectual property. License fees will be recognized upon the execution of the license agreement and transfer of intellectual property provided no further significant performance obligations exist and collectibility is deemed probable.

Customization revenue- fees related to software service contracts to aid customers in adapting such intellectual property to their particular instruments, which will be performed on a best efforts basis and for which we will receive periodic milestone payments, will be recognized as revenue over the estimated development period, using a cost-based percentage of completion method.

2. Going Concern

Results of Operations

Three Months Ended December 31, 2007 Compared to Three Months Ended December 31, 2006

Selected Financial Information

	Three Months Ended December 31,						Increase
	2007			2006			(Decrease)		%

Statements of Operations
Revenues	$	206,981		$	135,253		$	71,728		53.0	%

Selling expenses		35,734			24,756			10,978		44.3	%
Research and development		126,961			115,309			11,652		10.1	%
General and administrative expenses		477,841			449,916			27,925		6.2	%
Interest expense		271,904			104,101			167,803		161.2	%
Total expenses		912,440			694,082			218,358		31.5	%

Net (loss)	$	(705,459	)	$	(558,829	)	$	146,630		26.2	%

Net (loss) per basic and diluted share	$	(0.03	)	$	(0.02	)	$	0.01		50.0	%

Revenues

Revenues for the quarter ended December 31, 2007 increased $71,728, 53.0%, to $206,981 compared to $135,253 for the quarter ended December 31, 2006. The primary reason for the revenue increase was an approximate $54,000 increase in the sale of our existing StatLIA software plus an approximate $20,000 increase in training, maintenance and support related to our software. We anticipate that revenue will decline for the next quarter as our customers are anticipating the release of our upgraded version of the StatLIA software to an enterprise level during the first half of calendar year 2008.

Selling Expenses

Selling expenses increased by $10,978, 44.3%, to $35,734 for the three months ended December 31, 2007 from $24,756 for the three months ended December 31, 2006. This increase was primarily due to an increase in selling commission expense as a result of the increased revenue during the current fiscal quarter.

Research and Development Expenses

Research and development expenses increased by $11,652, 10.1%, to $126,961 for the three months ended December 31, 2007 from $115,309 for the three months ended December 31, 2006. This increase was primarily due to an increase in software engineers to complete the upgrade of our StatLIA software to an enterprise version.

General and Administrative Expenses

General and administrative expenses increased by $27,925, 6.2%, to $477,841 for the quarter ended December 31, 2007 from $449,916 for the quarter ended December 31, 2006. The primary reasons for the increase were approximately $18,000 increase in personnel to ramp up for the anticipated release of our StatLIA software to an enterprise version during the first half of calendar year 2008 and approximately $21,000 related to travel and trade show presentations offset by a reduction in legal and accounting costs.

Interest Expense

Interest expense increased by $167,803, 161.2% increase, to $271,904 for the quarter ended December 31, 2007 from $104,101 for the quarter ended December 31, 2006. The primary reason for the increase in interest was a result of the issuance of 8% convertible debentures and the issuance of secured bridge loans.

Six Months Ended December 31, 2007 Compared to Six Months Ended December 31, 2006

Selected Financial Information

	Six Months Ended December 31,						Increase
	2007			2006			(Decrease)		%

Statements of Operations
Revenues	$	366,807		$	222,648		$	144,159		64.7	%

Selling expenses		78,422			47,961			30,461		63.5	%
Research and development		245,729			198,444			47,285		23.8	%
General and administrative expenses		945,096			767,840			177,256		23.1	%
Interest expense		510,470			173,104			337,366		194.9	%
Total expenses		1,779,717			1,187,349			592,368		49.9	%

Net (loss)	$	(1,412,910	)	$	(964,701	)	$	448,209		46.5	%

Net (loss) per basic and diluted share	$	(0.06	)	$	(0.04	)	$	0.02		50.0	%

Revenues

Revenues for the six months ended December 31, 2007 increased $144,159, 64.7%, to $366,807 compared to $222,648 for the six months ended December 31, 2006. The primary reason for the revenue increase was an approximate $84,000 increase in the sale of our existing StatLIA software, an approximate $41,000 increase in sales of packages used to validate our software plus an approximate $28,000 increase in training, maintenance and support related to our software. We anticipate that revenue will decline for the next quarter as our customers are anticipating the release of our upgraded version of the StatLIA software to an enterprise level during the first half of calendar year 2008.

Selling Expenses

Selling expenses increased by $30,461, 63.5%, to $78,422 for the six months ended December 31, 2007 from $47,961 for the six months ended December 31, 2006. This increase was primarily due to the increase in our sales force and an increase in selling commission expense as a result of the increased revenue during the current fiscal year.

Research and Development Expenses

Research and development expenses increased by $47,285, 23.8%, to $245,729 for the six months ended December 31, 2007 from $198,444 for the six months ended December 31, 2006. This increase was primarily due to an increase in software engineers to complete the upgrade of our StatLIA software to an enterprise version.

General and Administrative Expenses

General and administrative expenses increased by $177,256, 23.1%, to $945,096 for the six months ended December 31, 2007 from $767,840 for the six months ended December 31, 2006. The primary reasons for the increase were approximately $140,000 increase in personnel to ramp up for the anticipated release of our StatLIA software to an enterprise version during the first half of calendar year 2008 and approximately $33,000 related to travel and trade show presentations.

Interest Expense

Interest expense increased by $337,366, 194.9% increase, to $510,470 for the six months ended December 31, 2007 from $173,104 for the six months ended December 31, 2006. The primary reason for the increase in interest was a result of the issuance of 8% convertible debentures and the issuance of secured bridge loans.

Capital Resources

	As of						Increase
	December 31, 2007			June 30, 2007			(Decrease)
Working Capital

Current assets	$	259,958		$	250,218		$	9,740
Current liabilities		3,678,151			1,929,861			1,748,290
Working capital deficit	$	(3,418,193	)	$	(1,679,643	)	$	1,738,550

Long-term debt	$	438,289		$	1,381,629		$	(943,340	)

Stockholders' deficit	$	(3,706,835	)	$	(2,875,965	)	$	830,870

	Six Months Ended December 31,							Increase
		2007			2006			(Decrease)
Statements of Cash Flows Select Information

Net cash provided (used) by:
Operating activities	$	(1,000,256	)	$	(804,297	)	$	195,959
Investing activities	$	(9,956	)	$	(26,830	)	$	(16,874	)
Financing activities	$	957,549		$	996,928		$	(39,379	)

		As of						Increase
		December 31, 2007			June 30, 2007			(Decrease)
Balance Sheet Select Information

Cash and cash equivalents	$	32,353		$	85,016		$	(52,663	)

Accounts receivable	$	118,068		$	75,283		$	42,785

Accounts payable and accrued expenses	$	1,511,618		$	1,382,875		$	128,743

Liquidity

Brendan has historically financed its operations through debt and equity financings. At December 31, 2007, we had cash holdings of $32,353, a decrease of $52,663 compared to June 30, 2007. Our net working capital deficit at December 31, 2007, was $3,418,193 compared to $1,679,643 as of June 30, 2007.

Management plans to continue to provide for its capital needs during the twelve months ending December 31, 2008, by increasing sales through the continued development of its products and by debt and/or equity financings. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

Recent Accounting Pronouncements

ITEM 3. CONTROLS AND PROCEDURES.

(a)

Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-QSB (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b)	Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS.

(a)

Exhibits –

Exhibit No.		Title

31.1		302 Certification of John R. Dunn II, Chief Executive Officer

31.2		302 Certification of Lowell W. Giffhorn, Chief Financial Officer

32.1		906 Certification of John R. Dunn II, Chief Executive Officer

32.2		906 Certification of Lowell W. Giffhorn, Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRENDAN TECHNOLOGIES, INC.

a Nevada corporation

Date: February 14, 2008	By:	/s/ JOHN R. DUNN II
		John R. Dunn II
		Chief Executive Officer

		(Principal Executive and duly authorized
		to sign on behalf of the Registrant)