Net cash used in operating expenses
for Fiscal 2007 was $710,598 as compared to $316,343 for Fiscal 2006. We used cash in Fiscal 2007 to fund our operating loss of
$3,174,967 as well as for increases in inventory, other assets, and accrued expenses. These increases were offset by decreases in
accounts receivable and accounts payable, as well as an add-back of $2,228,125 for non-cash items. Those non-cash items were
primarily composed of depreciation and amortization of $43,037 and the beneficial conversion feature of $2,146,972 related to the
convertible debenture.
We used cash in Fiscal 2006 to fund our operating loss of $6,955,365 as well as for increases in our accounts receivable, accounts payable and accrued expenses. These increases were offset by decreases in our inventory and other assets, as well as an add-back of non-cash items totaling $6,717,785. These non-cash items were primarily attributable to the value of common stock issued for services ($893,236) and the beneficial conversion feature associated with the short-term note ($5,791,637).
Net cash used in operating activities in each of Fiscal 2007 and Fiscal 2006 were also impacted by our revenue recognition policy which provides that we record revenues from long term construction projects on a percentage of completion basis. Accordingly, net costs and estimated in excess of billings increased $19,067 and $27,836 for Fiscal 2007 and Fiscal 2006, respectively, and billings in excess of costs and estimated earning increased $149,407 and $198,552, respectively.
Net cash used in investing activities was $493,232 in Fiscal 2007 as compared to $8,712 in Fiscal 2006. This increase is primarily attributable to our purchase of real property on which we are constructing our new facility together with deferred financing costs.
Net cash provided by financing
activities for Fiscal 2007 was $2,494,010 as compared to $304,066 in Fiscal 2006. In Fiscal 2007 we received proceeds of $3,000,000
from the sale of the debentures. In addition to a reduction in the amounts owed our CEO for working capital advances, we used a
portion of those proceeds to satisfy amounts outstanding under our factoring line ($137,162), principal payments on the debentures
($169,219) and repayments of other notes payable ($9,609).
In Fiscal 2006 we received $50,000 from the sale of securities and $322,412 from advances from our CEO. We used a portion of those funds to reduce the amount due under our factoring line ($64,159) and for repayments of other notes payable ($4,187).
From time to time Mr. Marmion, our CEO and principal stockholder, advances us funds for working capital purposes. These advances are unsecured, bear interest at 6% per annum and are due on demand. At December 31, 2006 we owed him $524,056. During Fiscal 2007 Mr. Marmion advances us an additional $60,000 and we repaid Mr. Marmion $250,000 of these advances using a portion of the proceeds from the debentures. At December 31, 2007 we owed him $334,056.
Our capital commitments for 2008 are approximately $1,100,000 which is related to the costs associated with completing our new facility. We will also require additional capital to fund anticipated increases in our accounts receivables as a result of increases in our revenues, any expansion of our labor force and other costs associated with the anticipated growth of our company. In addition, while the amounts due under the amortizing payments for the debentures are presently being made through the conversion of those amounts into shares of our common stock, should the debenture holder elect not to make such a conversion we will require funds to meet the debt service on those liabilities.
Our ability to raise additional capital, however, is hindered by the terms of the debentures, including:
• we agreed that for the period ended on the earlier of 180 days following the registration of all shares underlying the debentures or the payment of all principal and interest due under the debentures that we would not sell any additional securities or file any registration statements without the prior consent of the debenture holder,
17
• the debentures and the warrants contain ratchet provisions if we do enter into new financing transactions at prices less than the conversion terms of the debentures,
• we have granted the debenture holders a lien on all of our assets, and
• we are required to make monthly amortizing payments of approximately $224,000 on the debentures which are being made through the issuance of shares of our common stock. These issuances are continuing to dilute our existing stockholders and may have the effect of adversely impacting the market price of our common stock.
If we are unable to raise capital as needed to fund our operating expenses and pay our obligations as they become due, our ability to continue as a going concern is in jeopardy. In that event, our growth plans would be scaled back and we could be forced to cease some or all of our existing operations. If we were forced to cease operations, you would lose your entire investment in our company.
Critical Accounting Policies
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments.
Allowance For Doubtful Accounts
Earnings are charged with a provision for doubtful accounts based on a current review of collectability of accounts receivable. Accounts deemed uncollectible are applied against the allowance for doubtful accounts. The allowance for doubtful accounts at December 31, 2007 and 2006 was $84,818 and $88,463, respectively. Management considers this allowance adequate to cover probable future losses due to uncollectible trade receivables.
Revenue Recognition
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is probable. These criteria are generally met at the time product is shipped or services are performed. Shipping and handling costs are included in cost of goods sold.
From time to time we may enter into a long term construction project, which such services may be performed over a few months. We record such revenues from long term contracts on a percentage of completion basis. At each report date an evaluation is made to determine if there is a loss contingency to record for such long term contracts. At December 31, 2007, there were three long term contracts outstanding. We recorded $46,903 in costs and estimated earnings in excess of billings, and $49,145 of billings in excess of costs and estimated earnings, respectively, at December 31, 2007 in regard to these contracts.
Stock-Based Compensation
The computation of the expense associated with stock-based compensation requires the use of a valuation model. SFAS 123(R) is a complex accounting standard, the application of which requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility, expected option lives, and expected option forfeiture rates, to value equity-based compensation. We currently use a Black-Scholes option pricing model to calculate the fair value of our stock options. We primarily use historical data to determine the assumptions to be used in the Black-Scholes model and have no reason to believe that future data is likely to differ materially from historical data. However, changes in the assumptions to reflect future stock price
18
volatility and future stock award exercise experience could result in a change in the assumptions used to value awards in the future and may result in a material change to the fair value calculation of stock-based awards. SFAS 123(R) requires the recognition of the fair value of stock compensation in net income. Although every effort is made to ensure the accuracy of our estimates and assumptions, significant unanticipated changes in those estimates, interpretations and assumptions may result in recording stock option expense that may materially impact our financial statements for each respective reporting period.
Accounting For Income Taxes
As part of the process of preparing our financial statements we are required to estimate our income taxes. Management judgment is required in determining a provision of our deferred tax asset. We recorded a valuation for the full-deferred tax asset from our net operating losses carried forward due to our company not demonstrating any consistent profitable operations. In the event that the actual results differ from these estimates or we adjust these estimates in future periods we may need to adjust such valuation recorded.
Going Concern
Our financial statements have been prepared assuming that we will continue as a going concern. We have suffered recurring losses from operations, including a net loss of approximately $3,175,000 for the year ended December 31, 2007, and we had a substantial working capital deficiency as of December 31, 2007. Those conditions raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
Recent Accounting Pronouncements
In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations. This Statement replaces FASB Statement No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This Statement’s scope is broader than that of Statement 141, which applied only to business combinations in which control was obtained by transferring consideration. By applying the same method of accounting—the acquisition method—to all
transactions and other events in which one entity obtains control over one or more other businesses, this Statement improves the comparability of the information about business combinations provided in financial reports.
This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. That replaces Statement 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values.
This Statement applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquirer), including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. This Statement applies to all business entities, including mutual entities that previously used the pooling-of-interests method of accounting for some business combinations. It does not apply to: (a) The formation of a joint venture, (b) The acquisition of an asset or a group of assets that does not constitute a business, (c) A combination between entities or businesses under common control, (d) A combination between not-for-profit organizations or the acquisition of a for-profit business by a
not-for-profit organization.
This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. Management believes this Statement will have no impact on our financial statements once adopted.
19
In December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51. This Statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations should continue to apply the guidance in Accounting Research Bulletin No. 51, Consolidated Financial Statements, before the amendments made by this Statement, and any other applicable standards, until the Board issues interpretative guidance.
This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity.
A noncontrolling interest, sometimes called a minority interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require: (a) The ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity, (b) The amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, (c) Changes in a parent’s ownership
interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. A parent’s ownership interest in a subsidiary changes if the parent purchases additional ownership interests in its subsidiary or if the parent sells some of its ownership interests in its subsidiary. It also changes if the subsidiary reacquires some of its ownership interests or the subsidiary issues additional ownership interests. All of those transactions are economically similar, and this Statement requires that they be accounted for similarly, as equity transactions, (d) When a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment rather than the carrying amount of that retained investment, (e) Entities provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Management believes this Statement will have no impact on our financial statements once adopted.
Capital raising activities during fiscal 2007
On March 22, 2007, we entered into a subscription agreement with Dutchess Private Equities Fund, Ltd., an accredited investor, pursuant to which sold a $3,000,000 of principal amount debentures and issued the investor common stock purchase warrants to purchase 100,000,000 shares of our common stock. At closing a $750,000 principal amount debenture was issued and paid for and the balance was of a $2,250,000 principal amount debenture was issued and paid for in April 2007 following the effectiveness of a registration statement we filed with the Securities and Exchange Commission covering shares of our common stock issuable as interest payment on the debenture. We received proceeds of $3,000,000 from the sale of the debentures.
20
The debentures have a five year term and bear interest at 12% per annum, compounded daily. The interest is payable monthly, in advance. Beginning in October 2007 we were required to make amortizing payments of principal plus interest in the amount equal to $224,375.41. As the aforedescribed registration statement is effective, this amount can be satisfied by conversion of the debenture. During 2007 approximately $259,161.82 of these amortizing payments were made through the payment of approximately $169,000 in cash and the issuance of an aggregate of 14,846,497 shares of our common stock with an average price of $.006 per share. The debentures are convertible into shares of our common stock pursuant to a “variable conversion price” equal to the lesser of:
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|
•
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75% of the lowest closing bid price for our common stock during the 20 trading day period prior to conversion.
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Upon an event of default as defined in the debenture this conversion price will be reduced to the lesser of:
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|
•
|
the then current conversion price, or
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|
•
|
50% of the lowest closing bid price for the 15 trading days prior to conversion.
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The conversion price has a floor of $0.001 per share.
In addition, upon an event of default the holder can exercise its right to increase the face amount of the debenture by 10% for the first default and by 10% for each subsequent event of default. In addition, the Holder may else to increase the face amount by 2.5% per month paid as liquidated damages. The maximum amount that the face amount of the debenture can be increased by holder for all defaults thereunder and any other transaction document is 30%.
The debentures are secured by a first lien on our assets, a guaranty by our subsidiary and a pledge by Mr. Marmion of 4,000,000 shares of his Series B Preferred Stock.
The warrants are exercisable at $0.015 per share, subject to adjustment. To the extent that the shares of common stock underlying the warrant of not registered for resale, the warrant holder may designate a “cashless exercise option.” This option entitles the warrant holders to elect to receive fewer shares of common stock without paying the cash exercise price. The number of shares to be determined by a formula based on the total number of shares to which the warrant holder is entitled, the current market value of the common stock and the applicable exercise price of the warrant.
Under the terms of the debentures and the related warrants, the debentures and the warrants are convertible/exercisable by any holder only to the extent that the number of shares of common stock issuable pursuant to such securities, together with the number of shares of common stock owned by such holder and its affiliates (but not including shares of common stock underlying unconverted shares of the debenture or unexercised portions of the warrants) would not exceed 4.99% of our then outstanding common stock as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934.
We agreed to register the shares of common stock underlying the debentures and warrants and issuable as interest payment so as to permit the public resale thereof. Following the closing of the transaction we filed a registration statement with the SEC covering 15,900,000 shares of our common stock issuable upon conversion of the debentures which was declared effective in August 2007.
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ITEM 7.
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FINANCIAL STATEMENTS.
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Our financial statements are contained in pages F-1
through F-15, which appear at the end of this annual report.
21
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ITEM 8.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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None.
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ITEM 8A(T).
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CONTROLS AND PROCEDURES.
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Evaluation of Disclosure Controls and Procedures
. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future conditions.
Our management, including our Chief Executive Officer and our Treasurer who serves as our principal financial and accounting officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-KSB. Based on such evaluation, and as discussed in greater detail below, our Chief Executive Officer and Treasurer have concluded that, as of the end of the period covered by this Annual Report on Form 10-KSB, our disclosure controls and procedures were not effective:
• to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and
• to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our CEO and our Treasurer, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our internal control system was designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements. Our internal control over financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets,
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors, and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
22
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on the assessment using those criteria, our management concluded that the internal control over financial reporting was not effective at December 31, 2007.
While we have designed a system of internal controls to supplement our existing controls during our implementation of Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), we have been unable to complete testing of these controls and accordingly lack the documented evidence that we believe is necessary to support an assessment that our internal control over financial reporting is effective. Without such testing, we cannot conclude that there are any significant deficiencies or material weaknesses, nor can we appropriately remediate any such deficiencies that might have been detected. In addition, during the analysis of our internal controls in connection with our implementation of SOX 404, we did identify a number of controls, the adoption of which are material to our internal control environment and critical to providing reasonable assurance that any potential errors could be
detected. Those identified controls include:
• Inventory - we did not maintain adequate procedures to properly record and reconcile inventory and to properly create inventory reserves,
• Accounts payable - we did not maintain adequate procedures to properly record payables with regards to vendor invoices received post the balance sheet date,
• Notes payable / debentures - we did not maintain adequate procedures to properly classify the balance due under certain notes payable between current and non-current liabilities, record the associated amortization of debt discounts timely and any associated penalties.
• Prepaid expenses - we did not maintain adequate procedures to properly amortize prepaid expenses, and
• Unique or one time or first time transactions – we did not maintain adequate procedures to properly address the proper recording of an unencountered transaction type.
We have an inadequate number personnel with the requisite expertise in generally accepted accounting principles to ensure the proper application thereof. Due to the nature of these material weaknesses in our internal control over financial reporting, there is more than a remote likelihood that misstatements which could be material to our annual or interim financial statements could occur that would not be prevented or detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting.
There have been no changes in our internal control over financial reporting during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 8B.
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OTHER INFORMATION.
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None.
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PART III
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ITEM 9.
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.
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Directors and Executive Officers
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Name
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Age
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Positions
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William H. Marmion, III
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50
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President, Chief Executive Officer and director
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Ellen Raidl
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41
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Secretary, Treasurer and director
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Wilbert H. Marmion.
Mr. Marmion has served as our President , Chief Executive Officer and as a director since January 2004. Mr. Marmion founded Marmion Air Service, our wholly owned subsidiary in 1998 and has served as its president since that time. Mr. Marmion also serves as Vice President of Mar-Len Distributing, a privately held corporation owned by Mr. Marmion and Ms. Raidl. Mr. Marmion is married to Ms. Raidl, an executive officer and director of our company.
Ellen Raidl
. Ms. Raidl
has served as our Secretary, Treasurer and director since January 2004. Previously, Ms. Raidl worked in multi family property management, most recently with Hanover Company in Houston, Texas. Ms. Raidl currently serves as the President of Mar-Len Distributing, a privately held corporation owned by Ms. Raidl and Mr. Marmion. Ms. Raidl is married to Mr. Marmion, an executive officer and director of our company.
Our officers are elected annually at the first board of directors meeting following the annual meeting of stockholders, and hold office until their respective successors are duly elected and qualified, unless sooner displaced.
Compliance With Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3
and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934 during the fiscal year ended
December 31, 2007 and Forms 5 and amendments thereto furnished to us with respect to the fiscal year ended December 31, 2007, as
well as any written representation from a reporting person that no Form 5 is required, we are not aware that any officer, director
or 10% or greater stockholder failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required by
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year ended December 31, 2007.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that provides standards that are reasonably designed to deter wrongdoing and to promote the following:
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•
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honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
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•
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full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submits to, the Securities and Exchange Commission;
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•
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compliance with applicable governmental laws, rules and regulations;
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•
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the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons; and
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•
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accountability for adherence to the Code of Business Conduct and Ethics.
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Our Code of Business Conduct and is filed as an exhibit to this annual report. We will provide a copy of our Code of Business Conduct and Ethics by mail to any person without charge upon written request to us at 9103 Emmott Road, Building 6, Suite A, Houston, Texas 77040.
24
We have also adopted a Code of Ethics for Senior Executive Officer and Senior Financial Officer which guiding principles to these officers. A copy of our Code of Ethics for Senior Executive Officer and Senior Financial Officer has been filed with the Securities and Exchange Commission as an exhibit to our annual report. We will provide a copy, without charge, to any person desiring a copy of the Code of Ethics for Senior Executive Officer and Senior Financial Officer, by written request to us at 9103 Emmott Road, Building 6, Suite A, Houston, Texas 77040, Attention: Corporate Secretary.
Committees of the Board of Directors
Our Board of Directors has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Because we do not have any independent directors, our Board of Directors believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates which may be recommended by our shareholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our shareholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our shareholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event
such a proposal is made, all members of our Board will participate in the consideration of director nominees.
None of our directors is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-B. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
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•
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understands generally accepted accounting principles and financial statements,
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•
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is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
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•
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has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
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•
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understands internal controls over financial reporting, and
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•
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understands audit committee functions.
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Our Board of Directors is comprised of individuals who were integral to our formation and who are involved in our day to day operations. While we would prefer that one or more of our directors be an audit committee financial expert, the individuals whom we have been able to attract to our Board do not have the requisite professional backgrounds. As with most small companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors and officers insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our Board of Directors to include one or more independent directors, we intend to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee
financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
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ITEM 10.
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EXECUTIVE COMPENSATION.
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The following table summarizes all compensation recorded by us in the last completed fiscal year for:
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•
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our principal executive officer or other individual serving in a similar capacity,
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•
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our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2007 as that term is defined under Rule 3b-7 of the Securities Exchange Act of 1934, and
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•
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up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2007.
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For definitional purposes in this annual report these individuals are sometimes referred to as the “named executive officers.”
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SUMMARY COMPENSATION TABLE
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Name and
principal
position
(a)
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Year
(b)
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Salary
($)
(c)
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Bonus
($)
(d)
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Stock
Awards
($)
(e)
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Option
Awards
($)
(f)
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Non-Equity
Incentive
Plan
Compensation
($)
(g)
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Nonqualified
Deferred
Compensation
Earnings ($)
(h)
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All
Other
Compensation
($)
(i)
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Total
($)
(j)
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William H.
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2007
|
|
120,000
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0
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0
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0
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0
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0
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6,600
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|
126,600
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Marmion, III (1)
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2006
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120,000
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0
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0
|
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0
|
|
0
|
|
0
|
|
6,600
|
|
126,600
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|
(1) All
other compensation for 2007 includes the value of a company provided vehicle. Mr. Marmion’s fiscal 2007 compensation excludes
approximately $42,834 of accrued interest recorded in fiscal 2007 which due him for unsecured advances made to the company from time
to time. At December 31, 2007 we owned Mr. Marmion $132,412. All other compensation for 2006 includes the value of a company
provided vehicle.
How Mr. Marmion’s compensation is determined
Mr. Marmion, who as served as
our CEO since January 2004, is not a party to an employment agreement with our company. His compensation is determined by our Board
of Directors. Mr. Marmion, together with his wife Ms. Raidl, are the sole members of our Board of Directors. Accordingly,
while the Board of Directors considered a number of factors in determining Mr. Marmion’s compensation including the scope
of his duties and responsibilities to our company and the time he devotes to our business, such deliberations are not arms-length.
The Board of Directors did not consult with any experts or other third parties in fixing the amount of Mr. Marmion’s
compensation. During fiscal 2007 Mr. Marmion’s compensation package included a base salary of $120,000 and the use of a
company supplied vehicle. The amount of compensation payable to Mr. Marmion can be increased at any time upon the determination
of the Board of Directors.
26
Outstanding Equity Awards at Fiscal Year End
The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2007:
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
|
Name
(a)
|
|
Number of securities underlying unexercised options
(#)
exercisable
(b)
|
|
Number of securities underlying unexercised options
(#)
unexercisable
(c)
|
|
Equity incentive plan awards: Number of securities underlying unexercised unearned options
(#)
(d)
|
|
Option exercise price
($)
(e)
|
|
Option expiration date
(f)
|
|
Number of shares or units of stock that have not vested (#)
(g)
|
|
Market value of shares or units of stock that have not vested ($)
(h)
|
|
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
(i)
|
|
Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested (#)
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William H. Marmion, III
|
|
0
|
|
0
|
|
0
|
|
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Director Compensation
Our Board of Directors is comprised of Mr. Marmion and Ms. Raidl, who are also executive officers of our company, do not receive any compensation for their Board services.
|
ITEM 11.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
At March 26, 2008 we had 90,741,190
shares of common stock, 9,500,000 shares of our Class A Preferred Stock and 30,000,000 shares of our Series B Preferred Stock issued
and outstanding. The Class A Preferred Stock is convertible into shares of our common stock at the option of the holder on the basis
of 40 shares of common stock for each shares of Class A Preferred Stock so converted. The Series B Preferred Stock is convertible
into shares of our common stock at the option of the holder on the basis of 100 shares of common stock for each shares of Series B
Preferred Stock so converted. Each share of common stock entitles the holder to one vote, each share Class A Preferred Stock
entitles the holder to 40 votes and each shares of Series B Preferred Stock entitled the holder to 100 votes at any meeting of our
stockholders and the shares of common stock, the Class A Preferred Stock and the Series B Preferred Stock vote together on all
matters submitted to a vote of our stockholders.
The following table sets forth information known to us as of March 26, 2008 relating to the beneficial ownership of shares of our common stock by:
|
|
▪
|
each person who is known by us to be the beneficial owner of more than 5% of our outstanding voting stock;
|
|
|
▪
|
each named executive officer; and
|
|
|
▪
|
all named executive officers and directors as a group.
|
The information in this table is based upon a record list of our stockholders. Unless otherwise indicated, the business address of each person listed is in care of 9103 Emmott Road, Building 6, Suite A, Houston, Texas 77040. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
27
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
|
|
Common Stock
|
|
Class A
Preferred Stock
|
|
Series B
Preferred Stock
|
|
|
|
|
Name
|
|
#
of
Shares
|
|
%
of
Class
|
|
#
of
Shares
|
|
%
of
Class
|
|
#
of
Shares
|
|
%
of
Class
|
|
%
of
Vote
|
|
William M.
Marmion, III(1)
|
|
10,000,000
|
|
11.0%
|
|
9,500,000
|
|
100%
|
|
30,000,000
|
|
100%
|
|
97.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ellen Raidl
|
|
0
|
|
n/a
|
|
0
|
|
n/a
|
|
0
|
|
n/a
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All named executive
officers and directors as
a group (two persons) (1)
|
|
10,000,000
|
|
11.0%
|
|
9,500,000
|
|
100%
|
|
30,000,000
|
|
100%
|
|
97.7%
|
|
(1) Mr. Marmion has agreed to limit the number of shares of common stock issuable upon
conversion of the Class A Preferred Stock and/or Series B Preferred Stock to an amount which does not exceed the greater of our then
authorized but unissued common stock less any shares we have reserved for issuance. This conversion limitation does not effect the
voting rights of these securities. In addition, Mr. Marmion has pledged 4,000,000 shares of Series B Preferred Stock owned by him
pursuant to the terms of the agreement entered into in March 2007with Dutchess Private Equities Fund Ltd. for the sale of the
$3,000,000 principal amount convertible debentures.
|
ITEM 12.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
From time to time Mr. Marmion, our CEO and principal stockholder, advances us funds for working capital purposes. These advances are unsecured, bear interest at 6% per annum and are due on demand. At December 31, 2006 we owed him $524,056. During Fiscal 2007 Mr. Marmion advances us an additional $60,000 and we repaid Mr. Marmion $250,000 of these advances using a portion of the proceeds from the debentures. At December 31, 2007 we owed him $334,056.
Director Independence
No member of our Board of Directors is an “independent” director within the meaning of Marketplace Rule 4200 of The NASDAQ Stock Market.
The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:
|
2.1
|
Form of Plan and Agreement of Merger dated May 26, 2004 between International Trust and Financial Systems, Inc. and Marmion Industries Corp. (3)
|
|
3.1
|
Articles of Incorporation of Marmion Industries Corp. (3)
|
|
3.2
|
Certificate of Amendment to Articles of Incorporation filed on June 3, 2004. (3)
|
|
3.3
|
Articles of Merger between International Trust and Financial Systems, Inc. and Marmion Industries Corp. as filed with the Secretary of State of Nevada on July 12, 2004 (3)
|
|
3.4
|
Articles of Merger between International Trust and Financial Systems, Inc. and Marmion Industries Corp. as filed with the Secretary of State of Florida on July 12, 2004 (3)
|
|
3.5
|
Certificate of Designation of Class A Preferred Stock (4)
|
|
3.6
|
Certificate of Amendment to Certificate of Designation of Class A Preferred Stock (4)
|
28
|
3.7
|
Certificate of Amendment to Articles of Incorporation as filed on July 3, 2004 (7)
|
|
3.8
|
Certificate of Amendment to the Articles of Incorporation as filed on November 16, 2004 (7)
|
|
3.9
|
Certificate of Designation of Series B Preferred Stock (7)
|
|
3.10
|
Amendment to Certificate of Designation of Class A Preferred Stock (10)
|
|
3.11
|
Amendment to Certificate of Designation of Series B Preferred Stock (10)
|
|
3.12
|
Certificate of Change Pursuant to NRS 78.209 filed January 19, 2006 (9)
|
|
3.13
|
Certificate of Correction as filed on January 23, 2006 (9)
|
|
3.14
|
Form of Certificate of Amendment to the Articles of Incorporation (12)
|
|
3.15
|
Bylaws (3)
|
|
4.1
|
Form of $3,000,000 principal amount debenture (11)
|
|
4.2
|
Form of common stock purchase warrant issued to Dutchess Private Equities Fund, Ltd. (11)
|
|
10.1
|
Purchase and Escrow Agreement between the Registrant (“Seller”), Wilbert H. Marmion (“Purchaser”) and J. Bennett Grocock, P.A. (“Escrow Agent”), dated November 12, 2003. (1)
|
|
10.2
|
Employee Stock Incentive Plan for the Year 2005 (5)
|
|
10.3
|
Non-Employee Director and Consultants Retainer Stock Plan for the Year 2005 (5)
|
|
10.4
|
Employee Stock Incentive Plan for the Year 2005 No. 2 (6)
|
|
10.6
|
Non-Employee Director and Consultants Retainer Stock Plan for the Year 2005 No. 2(6)
|
|
10.7
|
Letter of Intent dated November 22,2005 with M/A Al Dunia (8)
|
|
10.8
|
Form of Subscription Agreement for $3,000,000 principal amount debentures (11)
|
|
10.9
|
Form of Debenture Registration Rights Agreement with Dutchess Private Equities Fund, Ltd. (11)
|
|
10.10
|
Form of Security Agreement with Dutchess Private Equities Fund, Ltd. (11)
|
|
10.11
|
Lease for Principal Executive Offices *
|
|
14.1
|
Code of Ethics and Business Conduct *
|
|
14.2
|
Code of Ethics for Senior Executive Officer and Senior Financial Officer (2)
|
|
21.1
|
Subsidiaries of the registrant (9)
|
|
31.1
|
Section 302 Certificate of Chief Executive Officer *
|
|
31.2
|
Section 302 Certificate of principal financial and accounting officer *
|
|
32.1
|
Section 906 Certificate of Chief Executive Officer *
|
|
32.2
|
Section 906 Certificate of principal financial and accounting officer *
|
|
(1)
|
Incorporated by reference to the Current Report on Form 8-K as filed on February 24, 2004.
|
|
(2)
|
Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003.
|
|
(3)
|
Incorporated by reference to the Current Report on Form 8-K as filed on July 23, 2004.
|
|
(4)
|
Incorporated by reference to the Quarterly Report on Form 10-QSB for the period ended September 30, 2004.
|
|
(5)
|
Incorporated by reference to the registration statement on Form S-8, SEC File No. 333-122492, as filed on January 13, 2005.
|
|
(6)
|
Incorporated by reference to the registration statement on Form S-8, SEC File No. 333-122015, as filed on February 2, 2005.
|
|
(7)
|
Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004.
|
|
(8)
|
Incorporated by reference to the Current Report on Form 8-K as filed on January 27, 2006.
|
|
(9)
|
Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005.
|
|
(10)
|
Incorporated by reference to the Current Report on Form 8-K as filed on August 11, 2006.
|
|
(11)
|
Incorporated by reference to the Current Report on Form 8-K as filed on March 26, 2007.
|
|
(12)
|
Incorporated by reference to the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.
|
29
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
Sherb & Co., LLP. served as our
independent registered public accounting firm for fiscal 2007 and fiscal 2006. The following table shows the fees that were billed
for the audit and other services provided by this firm for fiscal 2007 and 2006.
|
|
|
Fiscal 2007
|
|
Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
35,500
|
|
$
|
21,605
|
|
|
Audit-Related Fees
|
|
|
0
|
|
|
0
|
|
|
Tax Fees
|
|
|
3,500
|
|
|
500
|
|
|
All Other Fees
|
|
|
9,000
|
|
|
0
|
|
|
Total
|
|
$
|
48,000
|
|
$
|
22,105
|
|
Audit Fees
— This category includes the audit of our annual financial statements, review of financial statements included in our Form
10-QSB Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for
those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.
Audit-Related Fees
— This category consists of assurance and related services by the independent auditors that are reasonably related to
the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The
services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other
accounting consulting.
Tax Fees
— This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The
services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees
— This category consists of fees for other miscellaneous items, including review of our registration statement as filed
with the SEC during fiscal 2007.
Our Board of Directors has adopted a
procedure for pre-approval of all fees charged by the our independent auditors. Under the procedure, the Board approves the
engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the
period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire
Board at the next meeting. The audit and tax fees paid to the auditors with respect to fiscal year 2007 were pre-approved by the
entire Board of Directors.
30
SIGNATURES
Pursuant to the requirements of
Section 13 or 15(d) 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.
MARMION INDUSTRIES CORP.
By:
/s/ Wilbert H. Marmion, III
Wilbert H. Marmion, III, Chief Executive Officer, President
Date: April 14, 2008
By:
/s/ Ellen Raidl
Ellen Raidl, Treasurer, principal financial and accounting officer
Date: April 14, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
/s/ Wilbert H. Marmion, III
Wilbert H. Marmion
|
Chief Executive Officer, President and director
|
April 14, 2008
|
|
|
|
|
|
/s/ Ellen Raidl
Ellen Raidl
|
Secretary, Treasurer and director
|
April 14, 2008
|
31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and Directors
Marmion Industries Corp.
Houston, Texas
We have audited the accompanying consolidated balance sheet of Marmion Industries Corp. as of December 31, 2007, and the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the years ended December 31, 2007 and 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Marmion Industries Corp. as of December 31, 2007, and the results of its operations and its cash flows for each of the years then ended December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations, including a net loss of approximately $3.0 million for the year ended December 31, 2007, and has a substantial working capital deficiency as of December 31, 2007. These factors raise substantial doubt the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sherb & Co., LLP
Certified Public Accountants
New York, New York
April 9, 2008
F-1
MARMION INDUSTRIES CORPORATION
CONSOLIDATED BALANCE SHEET
|
|
|
December 31,
2007
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash
|
|
$
|
1,291,966
|
|
|
Accounts receivable, net of allowance for doubtful accounts of $84,818
|
|
|
539,629
|
|
|
Costs and estimated earnings in excess of billings on uncompleted contracts
|
|
|
46,903
|
|
|
Inventory
|
|
|
176,251
|
|
|
Employee Advances
|
|
|
250
|
|
|
Prepaid Expenses
|
|
|
10,408
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
2,065,406
|
|
|
|
|
|
|
|
|
Property and equipment, net of $170,033 accumulated depreciation
|
|
|
410,694
|
|
|
Deferred Financing Cost
|
|
|
87,500
|
|
|
Total Assets
|
|
$
|
2,563,600
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Accounts Payable
|
|
$
|
499,331
|
|
|
Accrued Expenses
|
|
|
81,650
|
|
|
Accrued Salaries - Officers
|
|
|
344,592
|
|
|
Advances-Stockholder
|
|
|
334,056
|
|
|
Current Maturities of Notes Payable
|
|
|
10,847
|
|
|
Convertible Note Payable-Current
|
|
|
1,691,940
|
|
|
Billings in excess of costs and estimated earnings on uncompleted contracts
|
|
|
49,145
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
3,011,561
|
|
|
|
|
|
|
|
|
Notes Payable, net of current maturities
|
|
|
22,807
|
|
|
Convertible Note Payable, Net of current maturities
|
|
|
460,950
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,495,318
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
—
|
|
|
|
|
|
|
|
|
STOCKHOLDER’S EQUITY (DEFICIT):
|
|
|
|
|
|
Series A preferred stock, $.001 par value, 500,000,000 shares designated,
9,500,000 shares issued and outstanding
|
|
|
9,500
|
|
|
Series B preferred stock, $.001 par value, 30,000,000 shares designated,
30,000,000 shares issued and outstanding
|
|
|
30,000
|
|
|
Common stock, $.001 par value, 500,000,000 shares authorized,
85,356,487 shares issued and outstanding
|
|
|
85,356
|
|
|
Additional paid-in capital
|
|
|
15,187,021
|
|
|
Accumulated deficit
|
|
|
(16,243,595
|
)
|
|
|
|
|
|
|
|
Total Stockholders’ Equity (Deficit)
|
|
|
(931,718
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity (Deficit)
|
|
$
|
2,563,600
|
|
See notes to consolidated financial statements.
F-2
MARMION INDUSTRIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2007 AND 2006
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
6,017,373
|
|
$
|
4,613,282
|
|
|
|
|
|
|
|
|
|
|
|
COSTS OF SALES
|
|
|
5,362,175
|
|
|
3,721,102
|
|
|
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
|
655,198
|
|
|
892,180
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
532,064
|
|
|
551,626
|
|
|
General and administrative
|
|
|
855,710
|
|
|
1,447,935
|
|
|
Depreciation and amortization
|
|
|
43,037
|
|
|
32,912
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COSTS AND EXPENSE
|
|
|
1,430,811
|
|
|
2,032,473
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
(775,613
|
)
|
|
(1,140,293
|
)
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,446,211
|
)
|
|
(5,815,610
|
)
|
|
Other income
|
|
|
46,857
|
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(3,174,967
|
)
|
$
|
(6,955,365
|
)
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.05
|
)
|
$
|
(0.35
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
64,033,749
|
|
|
19,979,947
|
|
See notes to consolidated financial statements.
F-3
