Bitech Technologies Corp - Quarter Report: 2009 September (Form 10-Q)
UNITED
STATES SECURITIES AND
EXCHANGE
COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the
Quarter Ended September 30, 2009
Commission
File No.
000-27407
Versa Card,
Inc.
(Formerly
“Intrepid Global Imaging 3D, Inc.”)
(Exact
name of small business issuer as specified in its charter)
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DELAWARE
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98-0187705
|
|
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(State
or other jurisdiction of
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(I.R.S.
Employer
|
|
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incorporation
or organization)
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Identification
No.)
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5225
Katy Freeway
Suite
600
Houston,
Texas 77007
(Address
of principal executive office) (Postal Code)
(713) 816-7303
(Registrant’s
telephone number)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large
Accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨ Smaller Reporting
Company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.
Yes ¨ No x
The
number of issued and outstanding of the registrant's common stock, $0.001 par
value (the only class of voting stock), as of October 14, 2009 was
16,317,682
VERSA
CARD, INC.
FORM
10-Q
TABLE OF
CONTENTS
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PART
I
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FINANCIAL
INFORMATION
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F-1
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Item
1.
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Financial
Statements
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F-1
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Balance
Sheet as of September 30, 2009, Unaudited and December 31, 2008
Audited
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F-1
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|
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Unaudited
Statement of Operations for the nine and three months ended September 30,
2009 and 2008
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F-2
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|
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Unaudited
Statement of Cash Flows for the nine and three months ended September 30,
2009 and 2008
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F-3
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|
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Notes
to Financial Statements
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F-4
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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F-7
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Item
3.
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Quantitative
and Qualitative Disclosures about Market Risk
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F-10
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Item 4T.
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Controls
and Procedures
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F-11
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PART
II
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OTHER
INFORMATION
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13
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Item
1.
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Legal
Proceedings
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13
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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13
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Item
3.
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Defaults
Upon Senior Securities
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13
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Item
4.
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Submission
of Matters to a Vote of Security Holders.
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13
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Item
5.
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Exhibits
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14
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SIGNATURES
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15
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2
PART
I. FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
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VERSA CARD, INC.
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||||||||
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BALANCE SHEETS
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||||||||
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September 30,
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December 31,
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|||||||
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2009
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2008
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||||||
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ASSETS
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||||||||
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CURRENT
ASSETS:
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(Unaudited)
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(Audited)
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||||||
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Cash
and cash equivalents
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$ | 884 | $ | - | ||||
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Account
receivable, net
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218,000 | $ | - | |||||
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Total
current assets
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218,884 | - | ||||||
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Intangible
assets
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230,697 | - | ||||||
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TOTAL
ASSETS
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$ | 449,581 | $ | - | ||||
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LIABILITIES
AND STOCKHOLDERS' DEFICIT
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||||||||
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CURRENT
LIABILITIES
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||||||||
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Accounts
payable and accrued liabilities
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$ | 710,049 | $ | 601,660 | ||||
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Notes
payable
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10,676 | 10,676 | ||||||
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Due
to former related parties
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56,016 | 56,016 | ||||||
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Due
to related party
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272,756 | - | ||||||
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Total
current liabilities
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1,049,497 | 668,352 | ||||||
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COMMITMENTS
AND CONTINGENCIES
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||||||||
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STOCKHOLDERS'
DEFICIT
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||||||||
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Common
stock: $0.001 par value, 50,000,000 shares authorized; 16,317,682 and
13,317,682 shares issued and outstanding at September 30, 2009 and
December 31, 2008, respectively
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16,318 | 13,318 | ||||||
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Additional
paid-in capital
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14,549,199 | 13,552,502 | ||||||
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Stock
subscription
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50,000 | 50,000 | ||||||
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Accumulated
deficit
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(8,143,573 | ) | (8,143,573 | ) | ||||
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Accumulated
deficit during development stage
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(7,071,860 | ) | (6,140,599 | ) | ||||
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Total
stockholders’ deficit
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(599,916 | ) | (668,352 | ) | ||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
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$ | 449,581 | $ | - | ||||
The
accompanying notes are an integral part of the financial
statements
F-1
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VERSA CARD, INC.
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||||||||||||||||
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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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||||||||||||||||
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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September 30,
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September 30,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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REVENUE
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$ | 230,000 | $ | - | $ | 230,000 | $ | - | ||||||||
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SERVICE
COSTS
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64,900 | - | 64,900 | - | ||||||||||||
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GROSS
MARGIN
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165,100 | - | 165,100 | - | ||||||||||||
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GENERAL
AND ADMINISTRATIVE EXPENSES
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45,458 | 123,028 | 1,096,361 | 356,899 | ||||||||||||
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NET
PROFIT (LOSS)
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$ | 119,642 | $ | (123,028 | ) | $ | (931,261 | ) | $ | (356,899 | ) | |||||
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NET
PROFIT (LOSS) PER SHARE:
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||||||||||||||||
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Basic
and Diluted
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$ | 0.01 | $ | (0.00 | ) | $ | (0.06 | ) | $ | (0.01 | ) | |||||
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WEIGHTED-AVERAGE
SHARES
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||||||||||||||||
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Basic
and Diluted
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16,317,682 | 35,409,682 | 15,680,319 | 32,169,682 | ||||||||||||
The
accompanying notes are an integral part of the financial
statements
F-2
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VERSA
CARD, INC.
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||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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||||||||
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Nine
Months Ended
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||||||||
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September 30,
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||||||||
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2009
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2008
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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||||||||
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Net
loss
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$ | (931,261 | ) | $ | (356,899 | ) | ||
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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||||||||
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Allowance
of doubtful accounts
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12,000 | - | ||||||
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Issuance
of common stock for services
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769,000 | 43,084 | ||||||
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Accounts
receivable
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(230,000 | ) | - | |||||
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Accounts
payable and accrued liabilities
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108,389 | 183,665 | ||||||
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Net
cash used in operating activities
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(271,872 | ) | (130,150 | ) | ||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Proceeds
from subscription payable
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- | 50,000 | ||||||
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Proceeds
from advances payable
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- | 77,936 | ||||||
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Proceeds
from related party
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272,756 | - | ||||||
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Net
cash provided by financing activities
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272,756 | 127,936 | ||||||
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NET
DECREASE IN CASH AND CASH EQUIVALENTS
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884 | (2,214 | ) | |||||
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BEGINNING
OF PERIOD
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- | 10,198 | ||||||
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END
OF PERIOD
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$ | 884 | $ | 7,984 | ||||
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Supplementary
disclosure of cash flow information:
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||||||||
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Cash
paid for interest
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$ | - | $ | - | ||||
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Cash
paid for taxes
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$ | - | $ | - | ||||
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Non-cash
investing and financing activities:
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||||||||
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Acquisition
of intangible assets
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$ | (230,697 | ) | $ | - | |||
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Issuance
of common stock in acquisition of a business
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$ | 230,697 | $ | - | ||||
The
accompanying notes are an integral part of the financial
statements
F-3
VERSA
CARD, INC.
NOTES
TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE
1. DESCRIPTION OF BUSINESS
Versa
Card, Inc. (the “Company”), was incorporated in Delaware on March 4, 1998 to
acquire interests in various business operations and assist in their
development.
Since
inception, the Company had engaged in and contemplated several ventures and
acquisitions, many of which were not consummated. During the fourth quarter of
2007 and into the fourth quarter of 2008, the Company focused on consummating a
transaction with a smartcard / e-purse company, First Versatile Smartcard
Solutions Corporation (“FVS”), and put on hold the development of its web portal
for the Company’s MangaPets business. In November 2007 the Company entered into
an agreement to merge with FVS, and subsequently in April 2008, the transaction
was restructured as a stock purchase agreement. Based on various factors, the
acquisition of FVS did not meet the expectations of the Company or FVS, and on
December 30, 2008 the Company entered into a Mutual Release and Settlement
Agreement to effectively rescind the transactions effected by the FVS
acquisition agreements.
At the
end of 2008, the Company launched its new business concept of spine pain
management. The Company’s goal is to engage in the delivery of turnkey solutions
to spine surgeons, orthopedic surgeons and other healthcare providers for
necessary and appropriate treatment of musculo-skeletal spine injuries. With the
new business plan, the Company will be reevaluating MangaPet's business of
developing a web portal containing games, merchandizing, and other entertainment
activities to determine the viability of that business concept. No formal
timeline has been established for this reevaluation.
On
February 28, 2009, the Company entered into an agreement with Brian Koslow and
David Waltzer to acquire the website and proprietary methodologies of One Source
Plaintiff Funding, Inc., a Florida corporation (“One Source”). The agreement
provided for the Company to acquire the website and proprietary methodologies of
One Source in exchange for 900,000 shares of the Company’s common stock. One
Source’s website and proprietary methodologies are used in the business of
"lawsuit funding" for plaintiff personal injury cases. The Company altered its
business plan in July 2009 and no longer plans to utilize One Source’s website
and proprietary methodologies. Further, the Company is in the process of
evaluating whether the 900,000 shares of common stock issued in exchange for the
One Source assets were issued for valid consideration and is evaluating its
rights in connection with the transaction. Mr. Koslow, the principal founder of
One Source, resigned as Executive Vice President of Business Development of the
Company on July 8, 2009. The Company is currently evaluating the expected life
of the assets acquired. Impairments, if any, will be recorded in the Company’s
statement of operations for the fiscal year ending December 31, 2009. Moving
forward, the Company’s main focus will be on the development of spine testing
centers needed by spine surgeons, orthopedic surgeons and other healthcare
providers. The Company began treating patients in August 2009 at the Company’s
first spine testing center located at 5225 Katy Freeway, Suite 600, Houston,
Texas 77007.
NOTE
2. GOING CONCERN
The
financial statements are presented on the basis that the Company is a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business over a reasonable length of time.
At September 30, 2009, the Company had a working capital deficiency of $830,613
and a stockholders’ deficit of $599,916. Further, the Company had a net loss of
$931,261 for the nine months ended September 30, 2009 and an accumulated deficit
of approximately $7.1 million. Since the opening of the treatment center in
August, 2009, the Company has generated revenue of $230,000 and going forwards,
hopes to continue to increase revenue from operations.
The
Company’s continued existence is dependent upon its ability to successfully
execute its business plan. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of liabilities that may result from the outcome of this
uncertainty.
F-4
NOTE
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
unaudited financial statements as of September 30, 2009 and for the nine months
ended September 30, 2009 and 2008 have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information and with instructions to Form 10-Q. In the opinion of
management, the unaudited financial statements have been prepared on the same
basis as the annual financial statements and reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
financial position as of September 30, 2009 and the results of operations and
cash flows for the periods ended September 30, 2009 and 2008. The financial data
and other information disclosed in these notes to the interim financial
statements related to these periods are unaudited. The results for the nine
months ended September 30, 2009 is not necessarily indicative of the results to
be expected for any subsequent quarter of the entire year ending December 31,
2009.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to the Securities and
Exchange Commission’s rules and regulations. These unaudited financial
statements should be read in conjunction with the audited financial statements
and notes thereto for the year ended December 31, 2008, as included in our
report on Form 10-K.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
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 revenues and expenses during the reporting
period.
Reclassification
Certain
amounts in the prior year consolidated financial statements have been
reclassified for comparative purposes to conform to the presentation in the
current year consolidated financial statements.
Accounting
for Long-Lived Assets
In
accordance with SFAS 144, long-lived assets other than goodwill are reviewed on
a periodic basis for impairment whenever events or changes in circumstances
indicate that the carrying amounts of the assets may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets.
Development
Stage:
In the
third quarter of 2009 the Company began to generate revenue. Therefore, in
accordance with SFAS 7, “Accounting and Reporting by Development Stage
Enterprises”, the Company is no longer required to disclose a cumulative amount
for development stage activities, for comparative purposes, in its Statements of
Operations and Statements of Cash Flows.
Revenue
Recognition:
The
Company’s new business concept is focused on the development of spine testing
centers needed by spine surgeons and orthopedic surgeons in order to provide the
appropriate treatment for musculo-skeletal spine injuries. The Company
began treating patients in August 2009 at the Company’s first spine testing
center located at 5225 Katy Freeway, Suite 600, Houston, Texas 77007. The
Company conforms to SEC Staff Accounting Bulletin (“SAB 104”) for guidance in
recognizing revenue. Persuasive evidence of an arrangement is obtained
prior to services being rendered when the patient completes and signs the
medical and financial paperwork. Delivery of services is considered to
have occurred when treatment(s) are provided to the patient. The price and
terms for the services are considered fixed and determinable at the time that
the treatments are provided and are based upon the type and extent of the
services rendered. The Company’s credit policy has been established based
upon extensive experience by management in the industry and has been determined
to ensure that collectability is reasonably assured. Payment for services
are primarily made to the Company by a third party and the credit policy
includes terms of net 120 days for collections.
F-5
NOTE
4 – ACCOUNTING STANDARDS UPDATES
In June
2009, the Financial Accounting Standards Board (FASB) issued its final Statement
of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a Replacement of FASB Statement No. 162”. SFAS No. 168
made the FASB Accounting Standards Codification (the Codification) the single
source of U.S. GAAP used by nongovernmental entities in the preparation of
financial statements, except for rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws, which are sources of authoritative accounting guidance for SEC
registrants. The Codification is meant to simplify user access to all
authoritative accounting guidance by reorganizing U.S. GAAP pronouncements
into roughly 90 accounting topics within a consistent structure; its purpose is
not to create new accounting and reporting guidance. The Codification supersedes
all existing non-SEC accounting and reporting standards and was effective for
the Company beginning July 1, 2009. Following SFAS No. 168, the
Board will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead, it will issue
Accounting Standards Updates (ASU). The FASB will not consider ASUs as
authoritative in their own right; these updates will serve only to update the
Codification, provide background information about the guidance, and provide the
bases for conclusions on the change(s) in the Codification.
In August
2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10,
“Fair Value Measurements and Disclosures—Overall”. The update provides
clarification that in circumstances, in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the techniques provided for in this
update. The amendments in this ASU clarify that a reporting entity is not
required to include a separate input or adjustment to other inputs relating to
the existence of a restriction that prevents the transfer of the liability and
also clarifies that both a quoted price in an active market for the identical
liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the
quoted price of the asset are required are Level 1 fair value measurements. The
guidance provided in this ASU is effective for the first reporting period,
including interim periods, beginning after issuance. The adoption of this
standard did have a material impact on the Company’s (consolidated) financial
position and results of operations.
In
September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740),
”Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities”, which provides implementation
guidance on accounting for uncertainty in income taxes, as well as eliminates
certain disclosure requirements for nonpublic entities. For entities that are
currently applying the standards for accounting for uncertainty in income taxes,
this update shall be effective for interim and annual periods ending after
September 15, 2009. For those entities that have deferred the application of
accounting for uncertainty in income taxes in accordance with paragraph
740-10-65-1(e), this update shall be effective upon adoption of those standards.
The adoption of this standard is not expected to have an impact on the Company’s
financial position and results of operations since this accounting standard
update provides only implementation and disclosure amendments.
In
September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements
and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10,
“Fair Value Measurements and Disclosures – Overall”, to permit a reporting
entity to measure the fair value of certain investments on the basis of the net
asset value per share of the investment (or its equivalent). This ASU also
requires new disclosures, by major category of investments including the
attributes of investments within the scope of this amendment to the
Codification. The guidance in this Update is effective for interim and annual
periods ending after December 15, 2009. Early application is permitted. The
Company is in the process of evaluating the impact of this standard on its
(consolidated) financial position and results of operations. The adoption of
this standard is not expected to have a material impact (any impact) on the
Company’s (consolidated) financial position and results of operations. The
adoption of this standard did/did not have an impact on the Company’s financial
position and results of operations.
In
October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic
605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products
or services (deliverables) separately rather than as a combined unit.
Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue
Recognition-Multiple-Element Arrangements”, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have a material impact on the
Company’s financial position and results of operations. The adoption of this
standard did not have an impact on the Company’s financial position and results
of operations. The adoption of this standard will have an impact on the
Company’s financial position and results of operations for all multiple
deliverable arrangements entered into or materially modified in fiscal year
ended December 31, 2009.
F-6
In
October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain
Revenue Arrangements that Include Software Elements” and changes the accounting
model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components
and nonsoftware components that function together to deliver the tangible
product's essential functionality are excluded from the software revenue
guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition,
hardware components of a tangible product containing software components are
always excluded from the software revenue guidance. The guidance in this ASU is
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted. The adoption of this standard is not expected to have a material
impact (any impact) on the Company’s financial position and results of
operations. The adoption of this standard did not have an impact on the
Company’s financial position and results of operations. The adoption of this
standard will have an impact on the Company’s financial position and results of
operations for all revenue arrangements entered into or materially modified in
fiscal year ended December 31, 2009.
Other
ASUs not effective until after September 30, 2009, are not expected to have
a significant effect on the Company’s financial position or results of
operations.
NOTE
5 – LEGAL MATTERS
We are
subject to claims and legal actions that arise in the ordinary course of
business. However, we are not currently subject to any claims or actions that we
believe would have a material adverse effect on our financial position or
results of operations.
In April
2009, the Company reached a settlement in the case of Martin Nathan, a former
attorney for the Company, who filed suit against the Company. In his
petition, Mr. Nathan asserted that he performed certain legal services for the
Company and was never compensated. On November 14, 2007, the Company
failed to appear for a preliminary hearing held before the 295th Judicial
District Court of Harris County, and the Court entered an interlocutory default
judgment against the Company. On January 16, 2008, the Court entered a
final judgment against the Company, finding the Company liable for Mr. Nathan’s
damages, for a total amount of $90,456. Subsequently, the Company
filed a motion for new trial. In April 2009, the parties reached an
agreement on the terms of a settlement of this matter, and the Company agreed to
issue Mr. Nathan 80,000 shares of restricted common stock valued at $90,456.
This amount has been accrued and reflected in the Company’s statements of
operations for the nine and three months ended September 30, 2009. However, a
settlement agreement has not yet been documented.
NOTE
6 - SUBSEQUENT EVENTS
None.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion and analysis should be read in conjunction with our
Financial Statements and Notes thereto appearing elsewhere in this
document.
Certain
statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report are
forward-looking statements that involve risks and uncertainties. These
statements relate to future events or our future financial performance. In some
cases, forward-looking statements can be identified by terminology such as
"may," "will", "should", "expect", "anticipate", "intend", "plan", "believe",
"estimate", "potential", or "continue", the negative of these terms or other
comparable terminology. These statements involve a number of risks and
uncertainties. Actual events or results may differ materially from any
forward-looking statement as a result of various factors, including those
described in the Company’s last Form 10-K for 2008 under "Risk Factors". We have
no obligation to release publicly the result of any revisions to any of our
"forward-looking statements" to reflect events or circumstances that occur after
the date of this Report or to reflect the occurrence of other unanticipated
events.
F-7
Management
Overview
Since
inception, the Company had engaged in and contemplated several ventures and
acquisitions, many of which were not consummated. In April 2005, the Company
began focusing on the development of the “MangaPets” interactive web portal and
acquiring other ventures in the technology sector. The Company entered into a
Portal Development Agreement in July 2005, with Sygenics Interactive Inc.
(“Sygenics”), a developer of advanced information management technology, located
in Montreal, Quebec, Canada, and an authorized licensee of Sygenics Inc. The
agreement provided for the design, development and deployment of an online
virtual pet portal/website. However, in 2006, prior to Sygenics’ completion of
the first stage of the portal, a dispute arose between the Company and Sygenics
that resulted in work being halted. Since that time, the Company has attempted
to develop the web portal or form another strategic relationship with a
different developer to complete development of the web portal.
During
the fourth quarter of 2007 through the fourth quarter of 2008, the Company
focused on consummating a transaction with a smartcard/e-purse company, First
Versatile Smartcard Solutions Corporation (“FVS”). Through FVS, the Company
planned to provide a transnational electronic payment or e-purse system using a
third generation smart card technology and central clearing house that can be
used, inter alia, to pay for purchases, bills, and other transactions related to
mass transit systems, convenience stores, fast-food outlets, telecommunications,
gas, electricity, water and other utilities, healthcare institutions, gas
stations, drugstores, supermarkets, ATMs, banks, credit cards, cell phones,
vending machines, toll roads, parking, and other commercial establishments. The
transaction with FVS, however, was ultimately rescinded.
At the
end of 2008, the Company launched its new business concept of delivering turnkey
solutions to spine surgeons and orthopedic surgeons for necessary and
appropriate treatment for musculo-skeletal spine injuries. In connection with
this business plan, in February 2009, the Company entered into an agreement with
Brian Koslow and David Waltzer to acquire the website and proprietary
methodologies of One Source Plaintiff Funding, Inc., a Florida corporation (“One
Source”). The agreement provided for the Company to acquire the website and
proprietary methodologies of One Source in exchange for 900,000 shares of the
Company’s common stock. One Source’s website and proprietary methodologies are
used in the business of "lawsuit funding" for plaintiff personal injury cases.
The Company altered its business plan in July 2009 and no longer plans to
utilize One Source’s website and proprietary methodologies. Further, the Company
is in the process of evaluating whether the 900,000 shares of common stock
issued in exchange for the One Source assets were issued for valid consideration
and is evaluating its rights in connection with the transaction. Mr. Koslow, the
principal founder of One Source, resigned as Executive Vice President of
Business Development of the Company on July 8, 2009, as reported in the Form 8-K
filed with the Securities and Exchange Commission on July 13, 2009. The Company
is currently evaluating the expected life of the assets acquired. Impairments,
if any, will be recorded in the Company’s statement of operations for the fiscal
year ending December 31, 2009. Moving forward, the Company’s main focus will be
on the development of spine testing centers needed by spine surgeons and
orthopedic surgeons. The Company began treating patients in August 2009 at the
Company’s first spine testing center located at 5225 Katy Freeway, Suite 600,
Houston, Texas 77007.
Effective
July 8, 2009, John A. Talamas resigned as Chief Operating Officer of the Company
for personal reasons. Previously, on February 25, 2009, Mr. Talamas
had entered into an offer letter, Employee Agreement and Restricted Stock Grant
Agreement with the Company (collectively, the “Talamas Employment Agreement”),
whereby the Company issued him 500,000 shares of the Company’s common
stock. In connection with Mr. Talamas’ resignation, the Company and
Mr. Talamas terminated the Talamas Employment Agreement and Mr. Talamas
transferred the 500,000 shares previously issued to him back to the
Company.
On
September 16, 2009, our Board of Directors (the “Board”) approved an amendment
to our Certificate of Incorporation, as amended, to change our name from “Versa
Card, Inc.” to “Spine Pain Management, Inc.” The holders of a majority of the
outstanding shares of our common stock also have executed an Action by Written
Consent of Stockholders in Lieu of a Special Meeting approving the amendment. An
Information Statement pursuant to Schedule 14C was mailed to stockholders on
October 14, 2009. In accordance with the federal securities laws, the proposed
name change can not be effected until at least twenty (20) calendar days
following the mailing of the Information Statement. As such, the name change
will become effective on the date the amendment is filed with the Delaware
Secretary of State, which we anticipate to be on or around November 11,
2009.
F-8
Spine
Pain Management, Inc. (SPMI)
Following
the exit from the smart card business at the end of December 2008, through Spine
Pain Management, Inc. (“SPMI”), the Company began initial work to launch its new
business of delivering turnkey solutions to spine surgeons and orthopedic
surgeons for necessary and appropriate treatment for musculo-skeletal spine
injuries resulting from automobile and work-related accidents. A goal of the
Company is to become a leader in providing care management services to spine
surgeons and orthopedic surgeons to facilitate proper treatment of their injured
clients. By providing early treatment, the Company believes that health
conditions can be prevented from escalating and injured victims can be quickly
placed on the road to recovery. The Company believes its patient advocacy will
be rewarding to patients who obtain needed relief from painful conditions. The
Company intends to provide a care management program that advocates for the
injured victims by moving treatment forward to conclusion without the delay and
hindrance of the legal process.
In August
2009, the Company opened its first spine injury treatment center in Houston,
Texas to provide medical diagnostic services, through an independent contractor,
for evaluation and treatment of patients with spine injuries. The Company is
also currently evaluating the development of additional spine injury treatment
centers in Texas. The Company intends to continue developing or acquiring
businesses that will focus on the management of musculo-skeletal injuries,
including pain management, medical imaging, and surgical evaluation. With SPMI's
new business plan, the Company will be reevaluating MangaPet's business of
developing a web portal containing games, merchandizing, and other entertainment
activities to determine the viability of that business concept. No formal
timeline has been established for this reevaluation.
The
Company has begun to generate revenue. However, the Company may need a capital
infusion of operating capital, over the next fiscal year. It may be necessary
for the Company to either borrow funds to operate or generate funds through the
sale of equity in the Company or its subsidiaries. The Company anticipates that
it will be able to generate sufficient income from operations, borrowing, the
sale of equity, or a combination thereof to allow it to operate its business
during the coming year, of which there can be no assurance.
Results
of Operations
The
unaudited financial statements as of September 30, 2009 and for the three and
nine months ended September 30, 2009 and 2008 have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with instructions to Form 10-Q. In the opinion of
management, the unaudited financial statements have been prepared on the same
basis as the annual financial statements and reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the
financial position as of September 30, 2009 and the results of operations and
cash flows for the periods ended September 30, 2009 and 2008. The financial data
and other information disclosed in these notes to the interim financial
statements related to these periods are unaudited. The results for the three and
nine months ended September 30, 2009 are not necessarily indicative of the
results to be expected for any subsequent quarter or of the entire year ending
December 31, 2009.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to the Securities and
Exchange Commission’s rules and regulations. These unaudited financial
statements should be read in conjunction with our audited financial statements
and notes thereto for the year ended December 31, 2008 as included in our report
on Form 10-K.
Comparison
of the three month period ended September 30, 2009 with the three month period
ended September 30, 2008.
The
Company recorded revenues of $230,000 from operations for the three months ended
September 30, 2009 as compared to no revenue for the same period in 2008. This
increase is attributable to revenues the Company received from its new spine
injury treatment center, which was opened in August 2009. There were $64,900
service costs, associated with the revenue for the three months ended September
30, 2009.
During
the three month period ended September 30, 2009, the Company’s operations
included opening its first spine injury treatment center in Houston, Texas,
planning of the Company’s SPMI business and satisfying continuous public
disclosure requirements.
F-9
The total
operating expenses for the three months ended September 30, 2009 and September
30, 2008 were $110,358 and $123,028, respectively, representing a decrease of
$12,670 or 10.3%. Total operating expenses for the three months ended September
30, 2009 and 2008 were related to selling, general and administrative
expenses.
As a
result of the foregoing, we incurred a net profit of $119,642 for the three
months ended September 30, 2009, compared to a net loss of $140,659 for the
three months ended September 30, 2008, a difference of $260,301 or
185.1%.
Comparison
of the nine month period ended September 30, 2009 with the nine month period
ended September 30, 2008.
The
Company recorded revenues of $230,000 from operations for the nine months ended
September 30, 2009 as compared to no revenue for the same period in 2008. This
increase is attributable to revenues the Company received from its new spine
injury treatment center, which was opened in August 2009. There were $64,900
service costs, associated with the revenue for the nine months ended September
30, 2009.
The total
operating expenses for the nine months ended September 30, 2009 and September
30, 2008 were $1,173,261 and $356,899, respectively, representing an increase of
$816,362 or 228.7%. This increase is due primarily to stock based compensation
expenses in 2009 as well as accrual expenses for legal settlement. Total
operating expenses for the nine months were related to selling, general and
administrative expenses.
As a
result of the foregoing, we incurred a net loss of $931,261 for the nine months
ended September 30, 2009, compared to $356,899 for the nine months ended
September 30, 2008, a difference of $574,362 or 160.9%.
Liquidity
and Capital Resources
Net cash
used in operating activities for the nine month period ended September 30, 2009
was $271,872 as compared to cash used in operating activities of $130,150 for
the nine month period ended September 30, 2008. The increase of cash flow used
in operating activities was due in large part to an increase in losses for the
period of $574,362, an increase in accounts receivable of $230,000 and a
decrease in accounts payable and accrued liabilities of approximately $74,971,
offset by an increase of costs of issuing common stock for services of
approximately $725,916. There were no cash flows from or used in investing
activities for the nine month period ended September 30, 2009 and 2008. Net cash
provided by financing activities of $272,756 for the nine months period ended
September 30, 2009 was related to proceeds from related party. Cash flows
provided by financing activities for the nine month period ended September 30,
2008 was $127,936, representing $50,000 of proceeds from advances payable and
$77,936 of proceeds from related party.
The
Company has begun to generate revenue. However, the Company may need a capital
infusion of operating capital, over the next fiscal year. It may be necessary
for the Company to either borrow funds to operate or generate funds through the
sale of equity in the Company or its subsidiaries. The Company anticipates that
it will be able to generate sufficient income from operations, borrowing, the
sale of equity, or a combination thereof to allow it to operate its business
during the coming year, of which there can be no assurance.
Critical
Accounting Policies
In the
notes to the audited consolidated financial statements for the year ended
December 31, 2008 and in our annual report on Form 10-K filed with the
Securities and Exchange Commission, the Company discusses those accounting
policies that are considered to be critical in determining the results of
operations and its financial position. We believe that the accounting principles
it uses conform to accounting principles generally accepted in the United States
of America.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
Applicable.
F-10
ITEM
4T. CONTROLS AND PROCEDURES
Our
principal executive officer and principal financial officer (the “Certifying
Officer”) is responsible for establishing and maintaining disclosure controls
and procedures for our Company. Such officer has concluded (based upon his
evaluation of these controls and procedures as of the end of the period covered
by this report) that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in this report is
accumulated and communicated to management, including our principal executive
and principal financial officer as appropriate, to allow timely decisions
regarding required disclosure.
The
Certifying Officer has also indicated that there were no changes in our internal
controls over financial reporting or other factors that could significantly
affect such controls during the period covered by this report, and there were no
corrective actions with regard to significant deficiencies and material
weaknesses.
Our
management, including the Certifying Officer, does not expect that our
disclosure controls or our internal controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is 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. Because of these inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.
F-11
PART
II OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
In April
2009, the Company reached a settlement in the case of Martin Nathan, a former
attorney for the Company, who filed suit against the Company. In his petition,
Mr. Nathan asserted that he performed certain legal services for the Company and
was never compensated. On November 14, 2007, the Company failed to appear for a
preliminary hearing held before the 295th Judicial District Court of Harris
County, and the Court entered an interlocutory default judgment against the
Company. On January 16, 2008, the Court entered a final judgment against the
Company, finding the Company liable for Mr. Nathan’s damages, for a total amount
of $90,456. Subsequently, the Company filed a motion for new trial. In April
2009, the parties reached an agreement on terms of a settlement of this matter,
and the Company agreed to issue Mr. Nathan 80,000 shares of restricted common
stock valued at $90,456. This amount has been accrued and reflected in the
Company’s statements of operations for the nine and three months ended September
30, 2009. However, a settlement agreement has not yet been
documented.
In March
2008, Kent Caraquero, Leslie Lounsbury, Riverside Manitoba, Inc. and Tyeee
Capital Consultants, Inc. filed suit against the Company, Richard Specht, Rene
Hamouth, Hamouth Family Trust, William R. Dunavant, and William R. Dunavant
Family Holdings, Inc. The suit was filed in The United States District Court,
Middle District of Florida and requests damages in an unspecified amount and
injunctive relief for various breaches of contract and securities violations. A
default judgment was entered against the defendants on July 20, 2008. The
default judgment was set aside and the case reopened on November 7, 2008. The
Company will continue its efforts to settle the claims that pertain to the
Company; however, there is no assurance that the matter can be settled on terms
favorable to the Company.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. EXHIBITS
INDEX
TO EXHIBITS
|
Exhibit
No.
|
Description
|
|
|
3(i)(a)
|
Articles
of Incorporation dated March 4, 1998. (Incorporated by reference from Form
10SB filed with the SEC on January 5, 2000.) *
|
|
|
3(i)(b)
|
Amended
Articles of Incorporation dated April 23,1998. (Incorporated by reference
from Form 10SB filed with the SEC on January 5, 2000.)
*
|
|
|
3(i)(c)
|
Amended
Articles of Incorporation dated January 4, 2002. (Incorporated by
reference from Form 10KSB filed with the SEC on May 21, 2003.)
*
|
|
|
3(i)(d)
|
Amended
Articles of Incorporation dated December 19, 2003. (Incorporated by
reference from Form 10KSB filed with the SEC on May 20, 2004.)
*
|
|
|
3(i)(e)
|
Amended
Articles of Incorporation dated November 4, 2004. (Incorporated by
reference from Form 10KSB filed with the SEC on April 15,2005)
*
|
|
|
3(i)(f)
|
Amended
Articles of Incorporation dated September 7,2005. (Incorporated by
reference from Form 10QSB filed with the SEC on November 16, 2005)
*
|
3
|
3(ii)
|
By-Laws
dated April 23, 1998. (Incorporated by reference from Form 10SB filed with
the SEC on January 5, 2000.) *
|
|
|
10(i)
|
The
2003 Benefit Plan of Delta Capital Technologies, Inc. dated August 20,
2003 (Incorporated by reference from Form S-8 filed with the SEC on August
26, 2003) *
|
|
|
10(ii)
|
Employee
Agreement dated April 30, 2004 between the Company and Kent Carasquero.
(Incorporated by reference from Form 10KSB filed with the SEC on May 20,
2004 *
|
|
|
10(iii)
|
Employee
Agreement dated April 30, 2004 between the Company and Martin Tutschek.
(Incorporated by reference from Form 10KSB filed with the SEC on May 20,
2004) *
|
|
|
10(iv)
|
Employee
Agreement dated October 1, 2004 between the Company and Roderick Shand
(Incorporated by reference from Form 10KSB filed with the SEC on April 15,
2005) *
|
|
|
10(v)
|
Employee
Agreement dated October 1, 2004 between the Company and Mr. Paul Bains
(Incorporated by reference from Form 10KSB filed with the SEC on April 15,
2005) *
|
|
|
10(vi)
|
Consulting
Agreement dated October 1, 2004 between the Company and Kent Carasquero.
(Incorporated by reference from Form 10KSB filed with the SEC on April 15,
2005) *
|
|
|
10(vii)
|
Portal
Development Agreement dated July 15, 2005 between the Company and Sygenics
Interactive Inc. (Incorporated by reference from Form 8-K filed with the
SEC on August 9, 2005) *
|
|
|
10(viii)
|
Debt
Settlement Agreement dated August 3, 2005 between the Company and Rajesh
Vadavia and Sygenics Interactive, Inc. (Incorporated by reference from
Form 10KSB filed with the SEC on April 17, 2006) *
|
|
|
10(ix)
|
Debt
Settlement Agreement dated September 30, 2005 between the Company and
Leslie Lounsbury. (Incorporated by reference from Form 10QSB
filed with the SEC on November 16, 2005) *
|
|
|
10(x)
|
Debt
Settlement Agreement dated November 9, 2005 between the Company and
Roderick Shand. (Incorporated by reference from Form 10KSB filed on April
17, 2006) *
|
|
|
10(xi)
|
Debt
Settlement Agreement dated November 9, 2005 between the Company and Paul
Bains. (Incorporated by reference from Form 10KSB filed on April 17, 2006)
*
|
|
|
10(xii)
|
Agreement
and Plan of Merger between MangaPets Inc. and Intrepid World
Communications Corporation dated January 29, 2007.(Incorporated by
reference from Form 8k filed on January 29,2007) *
|
|
|
10(xiii)
|
Merger
Agreement dated November 21, 2007 between the Company and First Versatile
Smartcard Solutions Corporation (Incorporated by reference from Form 8-K
filed on April 22, 2008) *
|
|
|
10(xiv)
|
Stock
Purchase Agreement dated April 28, 2008 between the Company, First
Versatile Smartcard Solutions Corporation and MacKay Group,
Ltd. (Incorporated by reference from Form 10-K filed on April 15,
2009)*
|
|
|
10(xv)
|
Mutual
Release and Settlement Agreement dated December 30, 2008 between the
Company, James MacKay, MacKay Group, Ltd., Celebrity Foods, Inc. and
Michael Cimino. (Incorporated by reference from Form 10-K filed on April
15, 2009)*
|
|
|
10(xvi)
|
Employment
Agreement dated February 21, 2009 between the Company and William Donovan,
M.D. (Incorporated by reference from Form 10-K filed on April 15,
2009)*
|
|
|
10(xvii)
|
Employment
Agreement dated February 25, 2009 between the Company and John Talamas
(Incorporated by reference from Form 10-K filed on April 15,
2009)*
|
|
|
10(xviii)
|
Employment
Agreement dated February 21, 2009 between the Company and Brian Koslow
(Incorporated by reference from Form 10-K filed on April 15,
2009)*
|
|
|
31
|
Certification
Pursuant to Rule 13a-14(A)/15d-14(A) of the Securities Act of 1934 as
amended, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of
2003.
|
|
|
32
|
Certification
Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act
of 2002.
|
*
Incorporated by reference from previous filings of the Company
4
SIGNATURES
Pursuant
to the requirements 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.
| Versa Card, Inc. | ||
| By: |
/s/
William Donovan, M.D.
|
Dated:
November 12, 2009
|
| William Donovan, M.D. | ||
| President and Chief Executive Officer | ||
5