x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
|
Colorado
|
84-1374613
|
(State
or other jurisdiction of
incorporation
or organization)
|
(IRS
Employer
Identification
No.)
|
13855
Stowe Drive, Poway, California 92064
|
|
(Address
of principal executive offices)
|
1
|
|
1
|
|
1
|
|
2
|
|
3
|
|
5
|
|
15
|
|
15
|
|
16
|
|
19
|
|
22
|
|
23
|
|
24
|
|
25
|
|
25
|
|
38
|
|
39
|
|
39
|
|
39
|
|
39
|
|
39
|
|
39
|
|
40
|
|
40
|
|
(Unaudited)
|
||||||
|
March
31, 2007
|
December
31, 2006
|
|||||
Assets
|
|||||||
Current
Assets
|
|||||||
Cash
|
$
|
3,494,313
|
$
|
1,438,146
|
|||
Accounts
receivable (Note 2(d))
|
6,852,937
|
7,289,720
|
|||||
Inventory
(Note 2(b))
|
453,634
|
309,205
|
|||||
Other
current assets (Note 6(a))
|
1,024,667
|
599,565
|
|||||
Total
Current Assets
|
11,825,551
|
9,636,636
|
|||||
Fixed
Assets
-
Net
|
3,989,394
|
3,793,365
|
|||||
Intangible
Assets
|
817,448
|
841,133
|
|||||
Goodwill
(Note 5)
|
11,233,665
|
11,233,665
|
|||||
Other
Assets (Note 6(b))
|
733,099
|
626,086
|
|||||
Total
Assets
|
$
|
28,599,157
|
$
|
26,130,885
|
|||
Liabilities
and Stockholders' Equity
|
|||||||
Current
Liabilities
|
|||||||
Accounts
payable and accrued expenses (Note 3(a))
|
$
|
1,565,631
|
$
|
1,755,985
|
|||
Current
portion of capitalized lease obligations
|
74,121
|
35,441
|
|||||
Accrued
payroll, vacation and related taxes
|
1,114,610
|
1,184,457
|
|||||
Billings
in excess of costs and deferred revenue (Note 2(a))
|
2,545,173
|
2,816,072
|
|||||
Revolving
line of credit (Note 3(b))
|
3,427,443
|
805,172
|
|||||
Other
accrued liabilities (Note 2(a))
|
1,985,753
|
1,602,561
|
|||||
Total
Current Liabilities
|
10,712,731
|
8,199,688
|
|||||
Notes
Payable, Less Current Maturities
|
50,193
|
50,193
|
|||||
Capitalized
Lease Obligations, Less Current Maturities
|
278,961
|
136,709
|
|||||
Deferred
Gain - Assets held for sale (Notes 3(a))
|
684,087
|
713,405
|
|||||
Other
Long Term Liabilities
|
15,266
|
15,266
|
|||||
Total
Liabilities
|
11,741,238
|
9,115,261
|
|||||
Commitments
and Contingencies
|
|||||||
Stockholders’
Equity
|
|||||||
Convertible
preferred stock, $.001 par value, 10,000,000 shares
|
|||||||
authorized,
and 252,677 and 252,963 shares issued and outstanding,
|
|||||||
respectively
(Note 4)
|
|||||||
Series
C Convertible preferred stock (Note 4(a))
|
248
|
248
|
|||||
Series
D-1 Convertible preferred stock (Note 4(b))
|
5
|
5
|
|||||
Common
stock, $.0001 par value; 100,000,000 shares authorized, and
|
|||||||
29,627,692
and 29,550,342 shares issued and outstanding,
|
|||||||
respectively
(Note 4)
|
2,963
|
2,953
|
|||||
Additional
paid-in capital
|
33,027,353
|
33,150,566
|
|||||
Accumulated
deficit
|
(16,172,650
|
)
|
(16,138,148
|
)
|
|||
Total
Stockholders’ Equity
|
16,857,919
|
17,015,624
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
28,599,157
|
$
|
26,130,885
|
|
Three
Months Ended
|
||||||||||||
March
31,
|
2007
|
%
|
2006
|
%
|
|||||||||
Net
Sales
|
$
|
9,057,048
|
100.0
|
%
|
$
|
7,174,778
|
100.0
|
%
|
|||||
Total
Cost of Sales*
|
6,966,071
|
76.9
|
%
|
5,265,106
|
73.4
|
%
|
|||||||
Gross
Margin
|
2,090,977
|
23.1
|
%
|
1,909,672
|
26.6
|
%
|
|||||||
Operating
Expenses
|
|||||||||||||
Marketing
and sales
|
586,614
|
6.5
|
%
|
643,560
|
9.0
|
%
|
|||||||
Research
and development
|
39,360
|
0.4
|
%
|
81,777
|
1.1
|
%
|
|||||||
General
and administrative
|
1,243,555
|
13.7
|
%
|
1,230,733
|
17.2
|
%
|
|||||||
Total
Operating Expenses*
|
1,869,529
|
20.6
|
%
|
1,956,070
|
27.3
|
%
|
|||||||
Income/(Loss)
from Operations
|
221,448
|
2.4
|
%
|
(46,398
|
)
|
-0.6
|
%
|
||||||
Non-Operating
Income/(Expense)
|
|||||||||||||
Interest
and other income
|
20,956
|
-0.8
|
%
|
33,615
|
0.5
|
%
|
|||||||
Interest
expense and loan fee
|
(75,358
|
)
|
0.2
|
%
|
(5,283
|
)
|
-0.1
|
%
|
|||||
Gain
on building sale (Note 3(a))
|
29,318
|
0.3
|
%
|
29,318
|
0.4
|
%
|
|||||||
Non-cash
loan fee (Note 3(b))
|
(86,301
|
)
|
-1.0
|
%
|
-
|
0.0
|
%
|
||||||
Total
Non-Operating Income
|
(111,385
|
)
|
-1.2
|
%
|
57,650
|
0.8
|
%
|
||||||
Income
Before Taxes
|
110,063
|
1.2
|
%
|
11,252
|
0.2
|
%
|
|||||||
Income
Tax Provision
|
800
|
0.0
|
%
|
4,235
|
0.1
|
%
|
|||||||
Net
Income
|
$
|
109,263
|
1.2
|
%
|
$
|
7,017
|
0.1
|
%
|
|||||
Net
Income
|
109,263
|
7,017
|
|||||||||||
Less
Preferred Dividend Payments (Note 4(a) and (b))
|
(143,762
|
)
|
(140,740
|
)
|
|||||||||
Adjusted
Net Income (Loss) for EPS Calculation
|
(34,499
|
)
|
(133,723
|
)
|
|||||||||
Net
Income Per Share:
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|||||||
Weighted-Average
Shares Outstanding
|
29,570,306
|
27,276,451
|
|||||||||||
Fully
Diluted Net Income Per Share:
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
|||||||
Fully
Diluted Weighted-Average Shares Outstanding
|
29,570,306
|
27,276,451
|
|||||||||||
*
The following table shows how the Company's stock option expense
would be
allocated to all expenses. These non-cash stock option expenses
are
included in the unaudited operating results stated above.
|
|||||||||||||
Cost
of sales
|
$
|
41,373
|
$
|
-
|
|||||||||
Marketing
and sales
|
13,652
|
-
|
|||||||||||
Research
and development
|
-
|
-
|
|||||||||||
General
and administrative
|
49,594
|
90,701
|
|||||||||||
Total
Non-Cash Stock Option Expense
|
$
|
104,619
|
$
|
90,701
|
Three
Months Ended March 31,
|
2007
|
2006
|
|||||
Cash
Flows From Operating Activities
|
|||||||
Net
income
|
$
|
109,263
|
$
|
7,017
|
|||
Adjustments
to reconcile net income to net cash provided by
|
|||||||
(used
in) operating activities:
|
|||||||
Depreciation
and amortization
|
316,238
|
147,370
|
|||||
Gain
on disposal of building sale
|
(29,318
|
)
|
(29,318
|
)
|
|||
Stock
option expense
|
104,619
|
90,701
|
|||||
Common
stock grant expense
|
-
|
2,175
|
|||||
Non-cash
loan fee
|
86,301
|
-
|
|||||
Change
in operating assets and liabilities
|
(423,014
|
)
|
(3,481,569
|
)
|
|||
Net
Cash Provided By (Used In) Operating Activities
|
164,089
|
(3,263,624
|
)
|
||||
Cash
Flows From Investing Activities
|
|||||||
Other
assets, capitalized acquisition costs
|
-
|
(1,066,564
|
)
|
||||
Purchases
of fixed assets
|
(298,984
|
)
|
(324,256
|
)
|
|||
Net
Cash Used in Investing Activities
|
(298,984
|
)
|
(1,390,820
|
)
|
|||
Cash
Flows From Financing Activities
|
|||||||
Principal
payments on notes payable
|
-
|
(4,675,832
|
)
|
||||
Principal
payments on capitalized lease obligations
|
(8,666
|
)
|
(8,815
|
)
|
|||
Dividend
payments on Series C and Series D-1 preferred
|
(153,855
|
)
|
(98,774
|
)
|
|||
Proceeds
from revolving credit facility
|
2,622,271
|
-
|
|||||
Employee
stock purchase plan
|
12,005
|
42,767
|
|||||
(Repurchase)
Issuance of preferred stock
|
(286,112
|
)
|
4,764,296
|
||||
Proceeds
from issuance of common stock
|
5,419
|
23,359
|
|||||
Net
Cash Provided by Financing Activities
|
2,191,062
|
47,001
|
|||||
Net
Increase (Decrease) in Cash
|
2,056,167
|
(4,607,443
|
)
|
||||
Cash
at Beginning of Period
|
1,438,146
|
5,750,038
|
|||||
Cash
at End of Period
|
$
|
3,494,313
|
$
|
1,142,595
|
Three
Months Ended March 31,
|
2007
|
2006
|
|||||
Supplemental
Disclosures of Cash Flow Information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
expense
|
$
|
75,358
|
$
|
5,283
|
|||
Noncash
Investing and Financing Activities:
|
|||||||
During
the three months ended March 31, 2007, the Company entered
into a capital
lease in
the amount of approximately $190,000.
|
|||||||
During
the three months ended March 31, 2007 and 2006 the Company
accrued
dividends in the amount of $143,762
and $140,740 respectively, for our Series C and Series D-1
Preferred
Stock.
|
|||||||
During
the three months ended March 31, 2007 and 2006, the Company
converted
$52,871 and $34,416 of
employee stock purchase plan contributions into 63,970 and
24,885 shares
of common stock, respectively.
|
(e) |
Estimates
|
(f) |
Warranty
|
(g) |
Taxes
|
· |
A
grant of preemptive rights to the investors to participate in future
financings, which rights expired on January 12,
2007;
|
· |
An
agreement not to effect any transaction involving the issuance
of
securities convertible, exercisable or exchangeable for the Company's
common stock at a price or rate per share which floats (i.e., which
may
change over time), without the consent of a majority of the Series
D-1
preferred stockholders, so long as any shares of Series D-1 Preferred
Stock are outstanding, subject to certain
conditions.
|
Starsys
Research Total Assets
|
$
|
(7,851,494
|
)
|
|
Starsys
Research Total Liabilities
|
13,054,140
|
|||
Cash
to Starsys Stockholders
|
410,791
|
|||
Equity
to Starsys Stockholders
|
5,576,846
|
|||
Fees
Associated with Acquisition
|
1,056,079
|
|||
Total
Goodwill
|
$
|
12,246,362
|
Other
Current Assets - March 31,
|
2007
|
|||
Prepaid:
|
||||
Financing
Fees
|
$
|
317,351
|
||
Computer
& Software
|
110,873
|
|||
Rent
|
13,190
|
|||
Insurance
|
75,196
|
|||
Taxes
|
16,320
|
|||
Other
Accruals
|
491,738
|
|||
Total
Other Current Assets
|
$
|
1,024,667
|
Other
Assets - March 31,
|
2007
|
|||
Prepaid
Rent
|
$ |
188,130
|
||
Deposits
|
|
544,969
|
||
Total
Other Assets
|
$
|
733,099
|
March
31, 2006
|
|||||||||||||
|
SpaceDev
|
Starsys
|
Pro
Forma Adjustments
|
Pro
Forma
|
|||||||||
Net
Sales
|
$
|
2,889,592
|
$
|
5,920,870
|
$
|
(51,345
|
)
|
$
|
8,759,117
|
||||
Cost
of sales
|
2,097,469
|
4,443,218
|
-
|
6,540,687
|
|||||||||
Gross
Margin
|
792,123
|
1,477,652
|
(51,345
|
)
|
2,218,430
|
||||||||
Operating
Expenses
|
|||||||||||||
Marketing
and sales expense
|
497,614
|
265,300
|
(51,345
|
)
|
711,569
|
||||||||
Research
and development
|
67,412
|
9,082
|
-
|
76,494
|
|||||||||
General
and administrative
|
364,718
|
1,176,493
|
-
|
1,541,211
|
|||||||||
Total
Operating Expenses
|
929,744
|
1,450,875
|
(51,345
|
)
|
2,329,274
|
||||||||
Income/(Loss)
from Operations
|
(137,621
|
)
|
26,777
|
-
|
(110,844
|
)
|
|||||||
Non-Operating
Income/(Expense)
|
|||||||||||||
Interest
income
|
33,615
|
28,306
|
-
|
61,921
|
|||||||||
Interest
expense
|
(110
|
)
|
(27,656
|
)
|
-
|
(27,766
|
)
|
||||||
Gain
on building sale
|
29,318
|
-
|
-
|
29,318
|
|||||||||
Total
Non-Operating Income/(Expense)
|
62,823
|
650
|
-
|
63,473
|
|||||||||
Income/(Loss)
Before Income Taxes
|
(74,798
|
)
|
27,427
|
-
|
(47,371
|
)
|
|||||||
Income
tax provision
|
4,200
|
35
|
-
|
4,235
|
|||||||||
Net
Income/(Loss)
|
$
|
(78,998
|
)
|
$
|
27,392
|
$
|
-
|
(51,606
|
)
|
||||
Net
Income/(Loss) Per Share:
|
|||||||||||||
Net
Income/(Loss)
|
$
|
(0.00
|
)
|
$
|
0.05
|
$
|
-
|
$
|
(0.00
|
)
|
|||
Shares
Outstanding
|
28,710,496
|
520,000
|
(520,000
|
)
|
28,710,496
|
· |
General
and administrative expenses increased approximately $13,000 from
approximately $1.23 million, or 17.2% of net sales, for the three
months
ended March 31, 2006 to approximately $1.24 million, or 13.7% of
net
sales, for the same three month period in 2007. The approximate
$13,000
increase can be attributed mainly to the three month period in
2007
including three months of Starsys general and administrative expenses
versus only two months of these costs in 2006. On a pro forma basis,
general and administrative expenses declined from approximately
$1.54
million to approximately $1.24 million for the three month period
ended
March 31, 2006 and 2007, respectively.
|
· |
Research
and development expenses decreased to approximately $39,000, or
0.4% of
net sales, for the three months ended March 31, 2007, from approximately
$82,000, or 1.1% of net sales, during the same period in 2006.
The primary
reason was that James W. Benson resigned as our Chief Technology
Officer
at the end of the third quarter of 2006 and was not
replaced.
|
· |
Marketing
and sales expenses decreased to approximately $587,000, or 6.5%
of net
sales, for the three months ended March 31, 2007, from approximately
$644,000, or 9.0% of net sales, during the same period in 2006.
The total
dollar decrease of approximately $57,000 was mainly due to the
non-repetition in 2007 of certain 2006 marketing and sales costs,
particularly related to bidding a number of proposals, including
the NASA
COTS proposal, which started in early
2006.
|
· |
Our
stock option expense is based on a calculation using the minimum
value
method as prescribed by SFAS 123(R), otherwise known as the Black-Scholes
method. Under this method, we used a risk-free interest rate at
the date
of grant, an expected volatility, an expected dividend yield and
an
expected life of the options to determine the fair value of options
granted. The risk-free interest rate was estimated at 4.0%, expected
volatility ranged from 86.7% to 90.8% at the time all options were
granted, the dividend yield was assumed to be zero, and the expected
life
of the options was assumed to be three years based on the average
vesting
period of options granted. The total expense for the three months
ended
March 31, 2007 and 2006 was approximately $105,000 and $91,000,
respectively.
|
· |
Interest
expense and loan fees for the three months ended March 31, 2007
and 2006
was approximately $75,000 and $5,000, respectively. The increase
was
mainly attributable to utilization of our revolving credit facility
in
2007; whereas, we did not borrow any significant amount during
the same
period in 2006. We generated interest and other income in the three
months
ended March 31, 2007 and 2006 of approximately $21,000 and $34,000,
respectively, due to lower cash balances in 2007.
|
· |
We
recognized approximately $29,000 of the deferred gain on the 2003
sale of
our Poway headquarters building during each of the three month
periods
ended March 31, 2007 and 2006, and we will continue to amortize
the
remaining deferred gain of approximately $684,000 into non-operating
income over the remainder of the leaseback, which expires in January
2013.
|
· |
We
recorded non-cash loan fees related to our revolving credit facility
of
approximately $86,000 for the three month period ended March 31,
2007. The
expense was due to the issuance of 310,009 shares of our common
stock,
valued at $350,000, to Laurus in September 2006 under the terms
of the new
revolving credit facility; we are amortizing this expense over
the life of
the credit facility. We will continue to expense the remaining
$174,000
through September 2007. If the facility is still in place then,
we must
issue another $200,000 of shares to
Laurus
|
For
the three months ended
|
March
31, 2007
|
March
31, 2006
|
|||||
|
(Unaudited)
|
(Unaudited
|
)
|
||||
Net
Income
|
$
|
109,263
|
$
|
7,017
|
|||
Interest
Income
|
(20,956
|
)
|
(33,615
|
)
|
|||
Interest
Expense
|
75,358
|
5,283
|
|||||
Non-Cash
Loan Fee
|
86,301
|
-
|
|||||
Provision
for Income Taxes
|
800
|
4,235
|
|||||
Depreciation
and Amortization
|
316,238
|
147,370
|
|||||
Stock
Option Expense
|
104,619
|
90,701
|
|||||
Gain
on Building Sale
|
(29,318
|
)
|
(29,318
|
)
|
|||
EBITDA
|
$
|
642,305
|
$
|
191,673
|
Three
Months Ended
|
|||||||||||||
March
31,
|
2007
|
|
%
|
2006
|
|
%
|
|||||||
GAAP
Operating Income/(Loss)
|
$
|
221,448
|
2.4
|
%
|
$
|
(46,398
|
)
|
-0.6
|
%
|
||||
SFAS
123(R) stock -based compensation
|
104,619
|
1.2
|
%
|
90,701
|
1.3
|
%
|
|||||||
Non-GAAP
Operating Income/(Loss)
|
326,067
|
3.6
|
%
|
44,303
|
0.6
|
%
|
|||||||
Non-Operating
Income/(Expense)
|
|||||||||||||
Interest
and other income
|
20,956
|
0.2
|
%
|
33,615
|
0.5
|
%
|
|||||||
Interest
expense and loan fee
|
(75,358
|
)
|
-0.8
|
%
|
(5,283
|
)
|
-0.1
|
%
|
|||||
Gain
on building sale
|
29,318
|
0.3
|
%
|
29,318
|
0.4
|
%
|
|||||||
Non-cash
loan fee
|
(86,301
|
)
|
-1.0
|
%
|
-
|
0.0
|
%
|
||||||
Total
Non-Operating Income/(Expense)
|
(111,385
|
)
|
-1.2
|
%
|
57,650
|
0.8
|
%
|
||||||
Non-GAAP
Net Income Before Taxes
|
$
|
214,682
|
2.4
|
%
|
$
|
101,953
|
1.4
|
%
|
|||||
Income
tax provision
|
800
|
0.0
|
%
|
4,235
|
0.1
|
%
|
|||||||
Non-GAAP
Net Income
|
$
|
213,882
|
2.4
|
%
|
$
|
97,718
|
1.4
|
%
|
|||||
Non-GAAP
Net Income
|
213,882
|
97,718
|
|||||||||||
Less
Preferred Dividend Payments
|
(143,762
|
)
|
(140,740
|
)
|
|||||||||
Adjusted
Net Income/(Loss) for EPS Calculation
|
70,120
|
(43,022
|
)
|
||||||||||
Non-GAAP
Net Income Per Share
|
$
|
0.00
|
$
|
(0.00
|
)
|
||||||||
Weighted-Average
Shares Outstanding
|
29,570,306
|
27,276,451
|
|||||||||||
Fully
Diluted Non-GAAP Net Income Per Share:
|
$
|
0.00
|
$
|
(0.00
|
)
|
||||||||
Fully
Diluted Weighted-Average Shares Outstanding Used in EPS Calculation
|
29,758,778
|
27,276,451
|
· |
failure
to successfully manage relationships with customers and other important
relationships;
|
· |
failure
of customers to accept new services or to continue using the products
and
services of the combined company;
|
· |
difficulties
in successfully integrating the management teams and employees
of the two
companies;
|
· |
potential
incompatibility of business cultures;
|
· |
challenges
encountered in managing larger, more geographically dispersed operations;
|
· |
the
loss of key employees;
|
· |
diversion
of the attention of management from other ongoing business concerns;
|
· |
potential
incompatibilities of processes, technologies and systems;
|
· |
potential
difficulties integrating and harmonizing financial reporting systems;
and,
|
· |
potential
failure to implement systems to properly price and manage the execution
of
fixed-price contracts.
|
· |
the
integration of the two companies is unsuccessful;
|
· |
the
costs of or operational difficulties arising from the merger are
greater
than anticipated;
|
· |
the
combined financial results are not consistent with expectations;
|
· |
the
anticipated operating and product synergies of the merger are not
realized; or,
|
· |
the
fixed price development contracts acquired in the merger continue
to incur
major cost overruns or remains unprofitable for other
reasons.
|
· |
include
provisions that allow the government agency to terminate the contract
without penalty;
|
· |
be
subject to purchasing decisions of agencies that are subject to
political
influence;
|
· |
contain
onerous procurement procedures; and,
|
· |
be
subject to cancellation if government funding becomes unavailable.
|
· |
we
may not be awarded all stages of existing or future contracts;
|
· |
significant
contracts may be awarded to our competitors rather than to
us;
|
· |
the
timing of new technological advances and product announcements
or
introductions by us and our competitors;
|
· |
changes
in the terms of our arrangements with customers or suppliers;
|
· |
reliance
on a few customers for a significant portion of our net sales;
|
· |
the
failure of our key suppliers to perform as expected;
|
· |
general
or particular political conditions that could affect spending for
the
products that we offer;
|
· |
changes
in perception of the safety of space
travel;
|
· |
cost
overruns or other delays or failures to satisfy our obligations
under our
contracts on a timely basis;
|
· |
the
failure of our products to successfully launch or operate;
|
· |
the
uncertain market for our technology and products;
|
· |
the
availability and cost of raw materials and components for our products;
and,
|
· |
the
potential loss of or inability to hire key personnel.
|
· |
designing,
constructing, integrating, or testing the small satellite, components,
or
related ground systems;
|
· |
delays
in receiving the license(s) necessary to operate the small satellite
system(s);
|
· |
delays
in obtaining our customer's payload;
|
· |
delays
related to the launch vehicle;
|
· |
weather;
and,
|
· |
other
events beyond our control.
|
· |
problems
assimilating the purchased technologies, products, or business
operations;
|
· |
problems
maintaining uniform standards, procedures, controls, and policies;
|
· |
unanticipated
costs associated with the acquisition;
|
· |
diversion
of management's attention from core businesses;
|
· |
adverse
effects on existing business relationships with suppliers and customers;
|
· |
incompatibility
of business cultures;
|
· |
risks
associated with entering new markets in which we have no or limited
prior
experience;
|
· |
dilution
of common stock and shareholder value as well as adverse changes
in stock
price;
|
· |
potential
loss of key employees of acquired businesses; and,
|
· |
increased
legal and accounting costs as a result of the rules and regulations
related to the Sarbanes-Oxley Act of
2002.
|
· |
deviations
in our results of operations from
estimates;
|
· |
changes
in estimates of our financial
performance;
|
· |
changes
in our markets, including decreased government spending or the
entry of
new competitors;
|
· |
awards
of significant contracts to competitors rather than to
us;
|
· |
our
inability to obtain financing necessary to operate our
business;
|
· |
changes
in technology;
|
· |
potential
loss of key personnel;
|
· |
short
selling;
|
· |
changes
in market valuations of similar companies and of stocks
generally;
|
· |
volume
fluctuations generally including, but not limited to, resales by
former
Starsys stockholders or by Laurus Master Fund;
and,
|
· |
other
factors listed above in "Our
operating results could fluctuate on a quarterly and annual basis,
which
could cause our stock price to fluctuate or decline."
|
· |
make
a special written suitability determination for the purchaser;
|
· |
receive
the purchaser's written agreement to a transaction prior to
sale;
|
· |
provide
the purchaser with risk disclosure documents which identify certain
risks
associated with investing in "penny stocks" and which describe
the market
for these "penny stocks" as well as a purchaser's legal remedies;
and
|
· |
obtain
a signed and dated acknowledgment from the purchaser demonstrating
that
the purchaser has actually received the required risk disclosure
document
before a transaction in a "penny stock" can be completed.
|
Exhibit
No.
|
Description
|
Filed
Herewith
|
Incorporated
by Reference
|
Form
|
Date
Filed with SEC
|
Exhibit
No.
|
31.1
|
Rule
13a-14(a) certification of Chief Executive Officer
|
X
|
10-QSB
|
May
14, 2007
|
31.1
|
|
31.2
|
Rule
13a-14(a) certification of Chief Financial Officer
|
X
|
10-QSB
|
May
14, 2007
|
31.2
|
|
32.1
|
Section
1350/Rule 13a-14(b) certifications
|
X
|
10-QSB
|
May
14, 2007
|
32.1
|