UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC. - Quarter Report: 2009 June (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended June 30, 2009
o |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from _________ to ________
Commission file numbers 000-50081
INVISA, INC.
(Name of registrant as specified in its charter)
Nevada |
65-1005398 |
(State or Other Jurisdiction of Organization) |
(IRS Employer Identification Number) |
5425 N Washington Blvd, Suite B28, Sarasota, FL 34234
(Address of principal executive offices)
(941) 870-3950
(Issuer'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 o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer o |
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 o No x
The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, at June 30, 2009 was 34,781,081.
Invisa, Inc.
Form 10-Q
Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements,” including without limitation statements containing the words “believes,” “anticipates,” “intends,” “expects” and words of similar import, as well as all projections
of future results. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of Invisa, Inc. to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: risks involved in implementing our business strategy; our ability to obtain financing on acceptable terms; our ability to manage growth; our dependence
on key personnel; the ability to protect our intellectual property rights; risks of technological change, new technology, and new products; competition; and government regulation.
Page | |||
Part I. |
Financial Information |
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1 | |||
5 | |||
8 | |||
Part II. |
Other Information |
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8 | |||
9 | |||
9 | |||
9 | |||
9 | |||
9 | |||
10 |
Part I. Financial Information
Item 1. Financial Statements
Invisa, Inc.
(A Development Stage Enterprise)
Condensed Balance Sheets
December 31,
2008 |
June 30,
2009 |
|||||||
(Unaudited) |
||||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
---- |
$ |
169 |
||||
Accounts receivable, net of allowance |
6,498 |
13,814 |
||||||
Inventories |
35,115 |
15,308 |
||||||
Prepaids and other assets |
5,366 |
4,129 |
||||||
Total current assets |
46,979 |
33,420 |
||||||
Furniture, fixtures and equipment, net of accumulated depreciation |
2,800 |
2,595 |
||||||
Total assets |
$ |
49,779 |
$ |
36,015 |
||||
Liabilities and Stockholders’ (Deficit) |
||||||||
Current liabilities: |
||||||||
Bank overdraft |
$ |
191 |
$ |
---- |
||||
Accounts payable, trade |
118,410 |
102,512 |
||||||
Accrued expenses |
30,377 |
60,032 |
||||||
Due to stockholders and officers |
105,334 |
105,334 |
||||||
Notes payable |
494,030 |
537,000 |
||||||
Preferred dividends payable |
261,375 |
285,345 |
||||||
Total current liabilities |
1,009,717 |
1,090,223 |
||||||
Stockholders’ (Deficit): |
||||||||
Convertible Preferred Stock, 5,000,000 shares authorized ($0.001 par value): |
||||||||
Series A, 9,715 shares issued and outstanding |
798,500 |
798,500 |
||||||
Series B, 9,000 shares issued and outstanding |
900,000 |
900,000 |
||||||
Series C, 6,628 shares issued and outstanding |
654,907 |
654,907 |
||||||
Common Stock, 95,000,000 shares authorized, $.001 par value, 34,781,081 shares issued and outstanding |
34,781 |
34,781 |
||||||
Additional paid-in capital |
31,975,470 |
31,995,398 |
||||||
Deficit accumulated during the development stage |
(35,323,596 |
) |
(35,437,794 |
) | ||||
Total stockholders’ (deficit) |
(959,938 |
) |
(1,054,208 |
) | ||||
Total liabilities and stockholders’ (deficit) |
$ |
49,779 |
$ |
36,015 |
See notes to condensed financial statements.
Invisa, Inc.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
February 12, | ||||||||||||||||||
1997 (Date of | ||||||||||||||||||||
Inception) | ||||||||||||||||||||
Three months ended June 30, |
Six months ended June 30, |
Through June | ||||||||||||||||||
2008 |
2009 |
2008 |
2009 |
30, 2009 |
||||||||||||||||
Net sales |
$ | 26,870 | $ | 47,245 | $ | 55,976 | $ | 65,468 | $ | 1,582,082 | ||||||||||
Other operating revenues |
— | — | — | 300,000 | ||||||||||||||||
26,870 | 47,245 | 55,976 | 65,468 | 1,882,082 | ||||||||||||||||
Costs and other expenses: |
||||||||||||||||||||
Cost of goods |
31,627 | 22,124 | 43,638 | 28,660 | 1,111,542 | |||||||||||||||
Research and development costs |
— | — | — | — | 3,471,292 | |||||||||||||||
Selling, general and administrative expenses |
73,934 | 49,410 | 136,959 | 119,953 | 16,117,415 | |||||||||||||||
Patent amortization |
— | — | — | — | 4,646,599 | |||||||||||||||
Impairment of Patent |
— | — | — | — | 9,064,867 | |||||||||||||||
(Loss) from operations |
(78,691 | ) | (24,289 | ) | (124,621 | ) | (83,145 | ) | (32,529,633 | ) | ||||||||||
Other income (expense): |
||||||||||||||||||||
Interest (expense) and other, net |
(23,959 | ) | (13,895 | ) | (25,240 | ) | (28,283 | ) | (1,059,705 | ) | ||||||||||
Debt extinguishment gain |
63,893 | 21,228 | 398,337 | 21,228 | 758,682 | |||||||||||||||
Income (Loss) before income tax |
(38,757 | ) | (16,956 | ) | 248,476 | (90,200 | ) | (32,830,656 | ) | |||||||||||
Income tax |
— | — | — | — | — | |||||||||||||||
Net Income (Loss) |
(38,757 | ) | (16,956 | ) | 248,476 | (90,200 | ) | (32,830,656 | ) | |||||||||||
Non-cash constructive dividend related to Convertible Preferred Stock accretions |
— | — | — | — | (2,296,640 | ) | ||||||||||||||
Preferred stock dividends |
(22,500 | ) | (15,215 | ) | (45,000 | ) | (23,978 | ) | (310,498 | ) | ||||||||||
Net Income (Loss) applicable to Common Stockholders |
$ | (61,257 | ) | $ | (32,171 | ) | $ | 203,476 | $ | (114,178 | ) | $ | (35,437,794 | ) | ||||||
Net Loss per share applicable to Common Stockholders: |
||||||||||||||||||||
Basic and diluted |
$ | (0.00 | ) | $ | (0.00 | ) | $ | 0.01 | $ | (0.00 | ) | |||||||||
Weighted average Common Stock shares Outstanding : |
||||||||||||||||||||
Basic and diluted |
32,234,808 | 34,781,091 | 28,650,467 | 34,781,091 |
See notes to condensed financial statements.
Invisa, Inc.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June
30, |
February 12, 1997
(Date of Inception)
Through June 30, |
|||||||||||
2008 |
2009 |
2009 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net Income (loss) |
$ |
248,476 |
$ |
(90,200) |
$ |
(32,830,536) |
||||||
Adjustments to reconcile net income (loss) to net cash (used in) operating activities: |
||||||||||||
Patent impairment |
---- |
---- |
9,064,867 |
|||||||||
Depreciation and amortization |
205 |
205 |
5,204,162 |
|||||||||
Modification of warrant |
---- |
---- |
60,000 |
|||||||||
Common Stock and options issued for services |
---- |
---- |
3,028,164 |
|||||||||
Share-based compensation and pro forma officer compensation |
26,448 |
18,000 |
427,473 |
|||||||||
Abandonment loss on furniture, equipment and leaseholds |
---- |
---- |
23,817 |
|||||||||
Debt extinguishment gain |
(398,337 |
) |
(21,228 |
) |
(758,682) |
|||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts and notes receivable |
(4,118 |
) |
(7,316) |
(160,527) |
||||||||
Inventories |
5,883 |
19,807 |
(15,534) |
|||||||||
Prepaid and other assets |
(13,693 |
) |
4,320 |
(1,047) |
||||||||
Accounts payable, trade |
(81,829 |
) |
7,230 |
245,039 |
||||||||
Accrued expenses |
18,685 |
26,572 |
185,573 |
|||||||||
Net cash (used in) operating activities |
(198,280 |
) |
(42,610) |
(15,527,231) |
||||||||
Cash flows from investing activities: |
||||||||||||
Patent acquisition |
---- |
---- |
(550,000 |
) | ||||||||
Transaction costs in connection with RMI business combinations |
---- |
---- |
(121,475 |
) | ||||||||
Purchases of furniture, fixtures and equipment |
---- |
---- |
(238,949 |
) | ||||||||
Net cash (used in) investing activities |
---- |
---- |
(910,424 |
) | ||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from notes payable |
196,875 |
42,970 |
715,146 |
|||||||||
Proceeds from notes payable and redeemable Preferred Stock |
---- |
---- |
908,000 |
|||||||||
Payment of notes payable |
---- |
---- |
(520,800 |
) | ||||||||
Collection of stock subscriptions |
---- |
---- |
36,500 |
|||||||||
Stockholder advances |
---- |
---- |
1,585,007 |
|||||||||
Proceeds from sale of Convertible Preferred Stock |
---- |
---- |
2,815,000 |
|||||||||
Proceeds from sale of Common Stock |
10,631,413 |
|||||||||||
Proceeds from the exercise of stock |
---- |
---- |
24,250 |
|||||||||
Cash received with combination transaction |
---- |
---- |
243,308 |
|||||||||
Bank overdraft |
---- |
(191) |
---- |
|||||||||
Net cash provided by financing activities |
196,875 |
42,779 |
16,437,824 |
|||||||||
Net increase (decrease) in cash |
(1,405 |
) |
169 |
169 |
||||||||
Cash at beginning of period |
2,281 |
---- |
---- |
|||||||||
Cash at end of period |
$ |
876 |
$ |
169 |
$ |
169 |
See notes to condensed financial statements
Invisa, Inc.
(A Development Stage Enterprise)
Notes to Condensed Financial Statements
June 30, 2009
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and Rule 8.03 of Regulation SX. The December 31, 2008 balance sheet data was derived from audited financial statements, but does
not include all of the information and notes required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of Invisa, Inc. for the year ended December 31, 2008. When used in these notes, the terms “Company”, “we,” “us” or “our” mean Invisa, Inc. In the opinion of management, all adjustments (including normal recurring
accruals) considered necessary for a fair presentation have been included. Operating results for the six-months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.
Invisa, Inc. is a development stage enterprise that incorporates safety system technology and products into automated closure devices, such as parking gates, sliding gates, overhead garage doors and commercial overhead doors. Invisa has also demonstrated production-ready prototypes of security products for museums and other markets.
The Company has not fully implemented its sales and marketing plan and has, therefore, not emerged from the development stage. While most of the Company's operations have been curtailed due to cash flow difficulties the Company continues to sell powered closure safety devices for certain gates. The Company acquired a license to use the core technology used in the powered closure safety devices in 1997.
Note B - Operating Matters and Liquidity
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the six months ended June 30, 2009 and since the date of inception, the Company has had net (losses) applicable to Common Shareholders of $(114,178) and $(35.4) million, respectively. As
of June 30, 2009, the Company has not emerged from the development stage and has negative working capital of $(1,056,803). Since inception, the Company has financed its operations principally from the sale of equity securities and debt, as the Company has not generated significant revenues from the sales of its products. Continuation of the Company as a going concern is dependent upon additional external funding and, ultimately, a substantial increase in sales volume and achievement of profitable operations.
The Company intends to finance any future development activities and its working capital needs largely from additional borrowing and potential unidentified financing and business development until such time that funds provided by operations are sufficient to fund working capital requirements. While management believes that such borrowing will be available to the Company, there can be no assurance in that regard. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty. The Company’s auditors issued a “going-concern” uncertainty opinion on the financial statements for the year ended December 31, 2008, citing significant losses at that date, which raised substantial doubt about the Company’s ability to continue as a going-concern. Continuation of the company as a going concern is dependent upon additional external funding and, ultimately, a substantial increase in sales volume and achievement of profitable operations.
To finance planned operations through at least the next 12 months the Company will continue to depend upon its existing current assets, which are limited, together with any net proceeds additional borrowing and potential unidentified financing and business development which we may obtain in the future. Management is uncertain
as to the level of cash that may be required for product development and operations, especially for the marketing, production and sale of its products in the future. Management's plan is to access all additional cash required from additional borrowing or potentially from a variety of potential sources, including: private equity financing, licenses, joint ventures, partnerships or other business relationships, debt and the potential sale of Company's technology or interest therein.
In the event the Company is unable to access sufficient funding to carryout the aforementioned plan or adopt an alternative plan, the Company may enter into a corporate merger or other form of business combination or sale transaction. Accordingly, the Company is currently considering changes which may involve reducing or disposing of its current business as necessary to access additional capital or manage operations to a level permitted by available capital. There can be no assurances that these plans
will be successful. Failure to secure additional financing in a timely manner and on favorable terms when needed will have a material adverse effect on the Company's ability to continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Note C – Equity
During the six months ended June 30, 2008 and 2009, no stock options were outstanding, granted or exercised. In addition, no shares of common or preferred stock were issued other than shares of preferred stock issued pursuant to an agreement dated December 23, 2008, which were considered outstanding at December 31, 2008.
During the six months ended June, 2009, an officer contributed services with a fair value of $18,000 to the capital of the Company.
Note D – Due to Stockholders and Officers
Due to Stockholders and Officers at June 30, 2009 is as follows:
Monarch Point Fund, Ltd |
$ |
85,074 |
||
Edmund C. King |
20,260 |
|||
Total |
$ |
105,334 |
Note E - Notes Payable
The Company has four lines of credit with a private investor. The credit facilities allow for advances up to $500,000 bear interest at 10% and have a first security interest in all of the Company’s assets. Additionally the credit facilities are secured by a security interest in 53,333,333 shares of the Company’s
common stock which are held in escrow. Because the credit facilities are not in default the shares are not treated as issued and outstanding. At June 30, 2009, $537,000 is outstanding. The Notes were due December 31, 2008, but under an oral understanding had been held in abeyance while discussions are in progress for anticipated additional financing. The $37,000 in excess of the Notes has also been borrowed under an oral understanding with the lender with terms similar
to the Notes.
Note F- Earnings per Common Share
Basic and diluted earnings per share are computed based on the weighted average number of common stock outstanding during the period. Common stock equivalents are not considered in the calculation of diluted earnings per share for the periods presented because their effect would not be material or would be anti-dilutive.
Note G- Subsequent Events
During July 2009 the Company authorized the issuance of 375,000 shares of Common stock to its Directors for compensation.
Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operations
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this filing. This discussion and analysis contains forward-looking statements including information about possible or assumed results
of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
The cautionary statements made herein should be read as being applicable to all related forward-looking statements in this Quarterly Report on Form 10-Q.
Background of our Company
We are a development-stage company, and we expect to continue the commercialization of our InvisaShield technology. For the six months ended June, 2009, we had revenue from product sales of $65,468 principally representing sales of our product for powered parking gates. In addition to limited revenue, these sales have been a vehicle
for receiving customer feedback on the reliability, ease of installation, and determining the market’s acceptance of our safety product.
Financing for our operations in 2009 were derived from limited sales and short-term debt financing. We are working to increase our sales of product, further reduce operating costs and obtain financing including through business combinations and licensing relationships and transactions. In the future based on available financing, we
may develop additional safety and security products and bring them to market.
Limited Operating History
We have had a limited history of operations and anticipate that our quarterly results of operations will fluctuate significantly for the foreseeable future. We believe that period-to-period comparisons of our operating results should not
be relied upon as predictive of future performance. The information in this Form 10-Q must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly companies commercializing new and evolving technologies such as InvisaShield.
Quarter Ended June 30, 2008 Compared to the Quarter Ended June 30, 2009
Net Sales and Cost of Sales - During the quarter ended June 30, 2008 and 2009, product sales totaled $26,870 and $47,245 respectively. The Company's sales to date have been limited and constrained by lack of capital. While the sales increased by $20,375, the cost of goods sold (before patent amortization) as a percent
of sales declined from 118% to 47 % as a result of lower product cost in 2009.
Research and Development Expenses - The Company has suspended ongoing research and development activities due to cash constraints. In the fourth Quarter of 2006, employment of our in-house engineer and his assistant was terminated. These former employees are currently considered outside consulting resources on an as requested/as
available basis. To date, we have not requested significant access to this consulting resource and accordingly have experienced a reduction in research and development expenses.
Selling, General and Administrative Expenses - During the second quarter of 2008 and 2009 selling, general and administrative expenses totaled $73,934 and $49,418, respectively. The decrease of $24,516 in 2009 principally resulted from a reduction in overhead and insurance expenses.
Interest (Expense) and other, Net - During second quarter of 2008 and 2009 interest (expense) and other totaled ($23,959) and ($13,895), respectively. The interest expense during 2008 related to debt paid off during 2008 and to financing costs and interest due to certain stockholders under lines of credit
to the Company. During 2009 the interest expense related primarily to the latter. The Company made the decision to settle a trade payable at an extinguishment gain of $21,228 in 2009.
Net Income (Loss) - Net Loss decreased from $(38,757) in 2008 to a net loss of $(16,964) in 2009. This decrease resulted from the cost reductions and the other matters discussed above.
Six Months Ended June 30, 2008 and 2009
Net Sales and Cost of Sales - During the six months ended June 30, 2008 and 2009, net sales totaled $55,976 and $65,468 respectively. The Company's sales to date have been limited and constrained by lack of capital. Cost of sales totaled $43,638 and $28,660, respectively, or 78% and 44% of related sales.
Research and Development Expenses - The Company has suspended ongoing research and development activities due to cash constraints. In the fourth Quarter of 2006, employment of our in-house engineer and his assistant was terminated. These former employees are currently considered outside consulting resources on an as requested/as
available basis. To date, we have not requested significant access to this consulting resource and accordingly have experienced a reduction in research and development expenses.
Selling, General and Administrative Expenses - During the six months ended June 30, 2008 and 2009, selling, general and administrative expenses totaled $136,959 and $119,953. The decrease of $17,006 in 2009 principally resulted from a reduction in staffing, compensation and related payroll. Marketing activities have been severely
limited due to cash constraints.
Interest Income (Expense) and other, Net - During the six months ended June 30, 2008 and 2009, net interest (expense) income totaled $(25,240) and $(28,283). The interest expense during 2008 related to debt paid off during 2008 and to financing costs and interest due to certain stockholders under lines of credit
to the Company. During 2009 the interest expense related primarily to the latter.
Net Income (Loss) - The Company’s net income for these periods decreased from $248,476 in 2008 to a loss of ($90,200) in 2009. The principal difference resulted from a decrease in the gain of debt extinguishment from $398,337 in 2008 to $21,228 in 2009.
Plan of Development and Operations
We obtained funding of $262,730, in the form of short-term debt financing in 2008, and an additional $42,970 in the first six months of 2009, which together with our limited cash from sales supported our operations at a low level. Due to the limited amount of financing available to us in 2007, we reduced
our staff to one part-time person who is supported by consultants, hired on an as needed basis. During 2008 we further reduced our leased space to less than 550 square feet of space. Additional financing or increased cash from sales will be necessary to continue our operations at their current level. We do not plan to engage in additional technology or product development until we are able to secure sufficient financing to conduct our operations and fund such research and development.
Recommencing the Company's plan of development and operations will require additional funding. Accordingly, the Company is pursuing additional funding which may include debt or equity financing. Additionally, the Company is considering the
potential for establishing business relationships or transactions, such as a business combination or joint venture/strategic partnerships, which may improve the Company's access to additional capital and/or funding and also potentially support its current and future operations. In the event the Company is not able to access sufficient funding to support its operations its business operations will be effected adversely.
Liquidity and Capital Resources
From inception through June 30, 2009 we raised cash of approximately $16.4 million net of issuance costs, principally through private placements of common and preferred stock financings. At June 30, 2009, we had cash and cash equivalents totaling $169.
The Company has obtained financing arrangements with its senior lender aggregating $500,000 at December 31, 2008 under which it had borrowed in full as of that date. The financing arrangements comprise Notes entered into (i) July 2008 for $100,000, (ii) March 2008 for $150,000 and (iii) prior to 2008 for $250,000. Each
of these notes bears interest at 10 percent per annum and are secured by all of the assets of the Company. Additionally, the Company has pledged an aggregate of 53,333,333 shares of its common stock which were issued for the sole purpose of being deposited into an escrow account. These shares, held as collateral, will be delivered to the lender only in the event of a default under or non payment of the Notes. Upon full repayment of the Notes, said shares will be returned to the
Company. The shares delivered to the escrow agent as security for the Notes are not being treated as outstanding and will only be considered as being issued and outstanding if and when the shares are released by the escrow agent and delivered to the lender as a result of a default or non payment under the Promissory Notes and related security agreement. The Notes were due on December 31, 2008, but under an oral understanding have been held in abeyance while discussions are in progress for anticipated
additional financing. The $37,000 in excess of the Notes has also been borrowed under an oral understanding with the lender with terms similar to the Notes.
From inception (February 12, 1997) through June 30, 2009 we were largely focused on technology and product development. The estimated dollar amount spent during this period on company-sponsored research and development was $3,471,292. Because of the Company’s net losses (which aggregate $35.4 million from inception through
June 30, 2009) and limited capital, the Company’s consolidated financial statements report that substantial doubt exists regarding the Company’s ability to continue as a going concern.
The Company had negative working capital at June 30, 2009, totaling $(1,056,803). At June 30, 2009 the Company had $169 in cash and cash equivalents to fund its operations. To finance planned operations through at least the next 12 months,
we will continue to depend upon our ability to access additional financing. To support operations, in March 2008 and July 2008, we entered into additional credit facility agreements pursuant to which we could borrow up to $150,000 and $100,000, respectively, subject to agreement of the lender, under secured promissory notes. Through December 31, 2008, we have borrowed all of the $150,000 under that facility plus as well as all of the $100,000 facility. Additional financing arrangements
are currently in progress. We have previously borrowed $250,000 from a series of notes from our senior lender. Our plan is to seek to obtain the funding required to meet ongoing operating expenses through additional private equity and debt financing, license fees, grants, and through potential strategic or business relationships, transactions or business combinations.
Additional funding may not be available when required or it may not be available on favorable terms. Without adequate funds, we may need to significantly reduce or refocus our operations or obtain funds through arrangements that may require us
to relinquish rights to certain or potential markets, either of which could have a material adverse effect on our business, financial condition and results of operations. To the extent that additional funding is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in ownership dilution to our existing stockholders.
The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information
required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Acting President, Chief Financial Officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes
that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
Our management, including our Acting President and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2009 and concluded that our disclosure controls and procedures
were effective as of June 30, 2009.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
During the quarter ended June 30, 2009, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d–15(f) under the Exchange Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
Part II. Other Information
None
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
On July 15, 2009 the Company issued at an aggregrate 375,000 shares of unregistered common stock to its three Directors. The shares were issued as compensation at the Company’s common stock market price on the award date. The shares are restricted as to transfer and were issued pursuant to an exemption from
registration under Section 4(2) in Regulation D.
Item 3. Defaults by the Company on its Senior Securities
The Series B Preferred Stock pays a mandatory quarterly dividend due in arrears on the last day of each quarter. On the date of this filing, accumulated dividends for the quarter ended June 30, 2009 totaling $285,345 have not been paid.
Item 4. Submission of
Matters to a Vote of Securities Holders
None
None
(a) Exhibits filed herewith, Item Number - Description:
Item No. |
Description | |
31.1 |
Chief Operating Officer Certification Pursuant to Securities Exchange Act Rules 13a-14(a). | |
31.2 |
Chief Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14(a). | |
32.1 |
Chief Operating Officer Certification Pursuant to 18 U.S.C. Section 1350. | |
32.2 |
Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350. | |
(b) 8-K Reports:
none
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Invisa has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INVISA, INC. |
|||
Date: August 12, 2009 |
By: |
/s/ Edmund C. King |
|
Edmund C. King |
|||
Title: Acting President and Acting Chief Operating
Officer |
|||
Date: August 12, 2009 |
By: |
/s/ Edmund C. King |
|
Edmund C. King |
|||
Title: Chief Financial Officer |
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