PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
VUBOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
SEPTEMBER 30, 2007
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash
|
|
$
|
590,912
|
|
|
Accounts receivable
|
|
483
|
|
|
Deposits
|
|
1,297
|
|
|
Total current assets
|
|
592,692
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
Fixed assets, net of accumulated depreciation of $8,584
|
|
24,437
|
|
|
Intangible assets
|
|
102,529
|
|
|
Impairment reserve
|
|
(102,529
|
)
|
|
|
|
|
|
|
Total Assets
|
|
$
|
617,129
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,126,385
|
|
|
Accrued payroll
|
|
47,433
|
|
|
Accrued interest
|
|
7,228
|
|
|
Convertible notes payable
|
|
1,425,001
|
|
|
Discount on convertible notes payable
|
|
(303,750
|
)
|
|
Notes payable
|
|
967,701
|
|
|
Due to related party
|
|
66,485
|
|
|
Total liabilities (All Current)
|
|
3,336,483
|
|
|
|
|
|
|
|
Stockholders’ (Deficit)
|
|
|
|
|
Common stock, $0.001 par value, 100,000,000 shares authorized,
52,773,718 shares issued and outstanding
|
|
52,774
|
|
|
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no
shares issued and outstanding
|
|
—
|
|
|
Additional paid-in capital
|
|
12,990,702
|
|
|
Accumulated deficit
|
|
(15,762,830
|
)
|
|
|
|
(2,719,354
|
)
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
617,129
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
3
VUBOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2007 AND 2006
(Unaudited)
|
|
|
For the nine-month
period ended
September 30, 2007
|
|
For the nine-month
period ended
September 30, 2006
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
25,272
|
|
$
|
37,000
|
|
|
|
|
|
|
|
|
|
Product development
|
|
365,174
|
|
368,038
|
|
|
Sales and marketing
|
|
349,856
|
|
485,343
|
|
|
General and administrative
|
|
894,052
|
|
1,585,340
|
|
|
|
|
1,609,082
|
|
2,438,721
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(1,583,810
|
)
|
(2,401,721
|
)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(15,918
|
)
|
(50,143
|
)
|
|
Interest income
|
|
1,737
|
|
4,732
|
|
|
Gain on debt restructure
|
|
—
|
|
798,046
|
|
|
|
|
(14,181
|
)
|
752,635
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,597,991
|
)
|
$
|
(1,649,086
|
)
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and fully diluted
|
|
$
|
(0.03
|
)
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
51,761,681
|
|
41,006,311
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
4
VUBOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2007 AND 2006
(Unaudited)
|
|
|
For the three-month
period ended
September 30, 2007
|
|
For the three-month
period ended
September 30, 2006
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
484
|
|
$
|
37,000
|
|
|
|
|
|
|
|
|
|
Product development
|
|
67,690
|
|
190,534
|
|
|
Sales and marketing
|
|
97,600
|
|
75,041
|
|
|
General and administrative
|
|
468,947
|
|
269,517
|
|
|
|
|
634,237
|
|
535,092
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(633,753
|
)
|
(498,092
|
)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(3,467
|
)
|
(12,548
|
)
|
|
Interest income
|
|
5
|
|
4,732
|
|
|
|
|
(3,462
|
)
|
(7,816
|
)
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(637,215
|
)
|
$
|
(505,908
|
)
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and fully diluted
|
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
52,290,022
|
|
45,362,088
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
5
VUBOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2007 AND 2006
(Unaudited)
|
|
|
For the nine-month
period ended
September 30, 2007
|
|
For the nine-month
period ended
September 30, 2006
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,597,991
|
)
|
$
|
(1,649,086
|
)
|
|
|
Adjustments:
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
804,400
|
|
961,007
|
|
|
Gain on debt restructure
|
|
—
|
|
(798,046
|
)
|
|
Depreciation
|
|
5,183
|
|
490
|
|
|
Changes in:
|
|
|
|
|
|
|
Accounts receivable
|
|
(483
|
)
|
(37,000
|
)
|
|
Accounts payable and accrued expenses
|
|
(89,048
|
)
|
346,122
|
|
|
Accrued payroll and payroll liabilities
|
|
(19,581
|
)
|
41,706
|
|
|
Accrued interest
|
|
6,186
|
|
(2,935
|
)
|
|
Net cash used in operating activities
|
|
(891,334
|
)
|
(1,137,742
|
)
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
(808
|
)
|
(17,631
|
)
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
Proceeds from issuance of convertible notes
|
|
1,021,250
|
|
—
|
|
|
Proceeds from bridge loans
|
|
95,000
|
|
—
|
|
|
Proceeds from the issuance of common stock
|
|
—
|
|
2,280,401
|
|
|
Repayments of notes payable
|
|
(134,643
|
)
|
(194,005
|
)
|
|
Loans from related party
|
|
—
|
|
197,298
|
|
|
Loans repayments
|
|
(12,500
|
)
|
—
|
|
|
Net cash provided by financing activities
|
|
969,107
|
|
2,283,694
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
76,965
|
|
1,128,321
|
|
|
Cash — beginning of period
|
|
513,947
|
|
183
|
|
|
Cash — end of period
|
|
590,912
|
|
1,128,504
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
32,575
|
|
$
|
17,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes
are an integral part of these consolidated financial statements.
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
During
the nine months ended September 30, 2007:
The Company issued 2,403,000 shares of common stock
for services rendered in 2006 valued at $720,900 and 45,000 shares of common
stock for services rendered valued at $13,500 during the first and second
quarter of 2007.
The Company issued 500,000 shares of common stock
for services rendered valued at $70,000 during the third quarter of 2007..
6
VUBOTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2007 AND 2006
(Unaudited)
NOTE 1 — ORGANIZATION AND
DESCRIPTION OF BUSINESS
Business Operations
In 2004, Halifax International, Inc. changed its name to VuBotics, Inc.
(the “Company”). The Company is an intellectual asset development and marketing
company with two non-operating subsidiaries, QuantumReader, Inc. (“QR”) and
Truscom, a Japanese subsidiary.
The Company, through one of its wholly-owned subsidiaries,
QuantumReader, Inc., is developing a new type of software product called
QuantumReader. According to the Company, QuantumReader is a hardware
independent software system which changes the way in which text is displayed on
electronic displays.
Going Concern
These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. In the opinion of management, the accompanying unaudited financial statements fairly present the financial position of the Company at September 30, 2007 and its results of operations and cash flows for all periods presented.
As of September 30, 2007, the Company has accumulated net operating losses of $15,762,832. The Company also had a working capital deficiency of $2,743,791 and an equity deficiency of $2,719,354 at September 30, 2007 and has significant currently maturing debt.
The Company has raised capital to fund the operating activities primarily through private placements of its debt and equity securities, loans from stockholders and other demand loans. The Company intends on financing its future development activities and its working capital needs largely from public and private sales of its debt and equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts.
NOTE 2 — NOTES PAYABLE
The Company’s notes payable at September 30,
2007 are summarized as follows:
|
10% note payable to a stockholder. The note is unsecured. Interest is
accrued and payable monthly.*
|
|
$
|
561,016
|
|
|
|
|
|
|
|
10% note payable to a stockholder. The note is unsecured. Interest is
accrued and payable monthly.*
|
|
155,650
|
|
|
|
|
|
|
|
10% note payable to a stockholder. The note is unsecured. Interest is
accrued and payable quarterly.
|
|
251,035
|
|
|
|
|
|
|
|
Total notes payable
|
|
$
|
967,701
|
|
*
As of September 30, 2007,
the Company was in default of each of these debentures as to payments of
interest and principal, and interest continues to accrue.
7
The aggregate principal amounts of the notes
payable maturing in subsequent years as of September 30, 2007 are as follows:
|
Amount outstanding in subsequent years (reclassified as current
liabilities)
|
|
$
|
567,701
|
|
|
Currently Due:
|
|
$
|
400,000
|
|
NOTE 3 — SENIOR SECURED CONVERTIBLE NOTES DUE MARCH 28, 2008
On August 28, 2007, the Company entered into a Securities Purchase
Agreement with certain purchasers and a collateral agent pursuant to which the
Company anticipated that it would raise up to an aggregate of $2,000,000 in
proceeds from the sale of (i) senior, secured convertible notes (the “Notes”)
and (ii) warrants to purchase shares of the Company’s common stock.
The Notes (a) were issued in a face amount equal to
120% of a Purchaser’s subscription price, (b) do not bear interest prior to
their maturity date of March 28, 2008 (or acceleration as a result of an event
of default thereunder), but bear interest thereafter at the rate of 18%, (c)
are convertible into shares of the Company’s common stock (the “Common Stock”)
at the option of the purchaser or the Company under certain circumstances, and
(d) are secured by a first priority security interest in all of the Company’s
assets, including its intellectual property.
The Purchasers designated a collateral agent who will exercise the
Purchasers rights in connection therewith.
The Purchasers were issued five year warrants to purchase ten shares of
Common Stock for every $1.00 in subscription price paid for their respective
Note and Warrant at an exercise price of $.20.
As of September, 30, 2007, the Company had issued and
sold notes for an aggregate face amount of
$1,425,001 under the Securities Purchase Agreement dated August 28,
2007.
NOTE 4 — STOCKHOLDERS’ EQUITY
During
the nine months ended September 30, 2007:
The Company issued 2,403,000 shares of unregistered
common stock in lieu of cash for services rendered in 2006 valued at $720,900
and 45,000 shares of common stock for services rendered valued at $13,500
during the first and second quarters of 2007.
The Company issued 500,000 shares of common stock for services rendered
valued at $70,000 during the third quarter of 2007. All shares issued for services rendered were
issued at a price equal to the closing price of our common stock on date of
issuance.
NOTE 5 — COMMITMENTS AND
CONTINGENCIES
Litigation
On February 6, 2007, the Company was served with a
complaint which had been filed on January 29, 2007 in the Superior Court of
Fulton County, Georgia by Ekistics Research, LLC
(“Ekistics”)
and Craig J. Larson, a
former director and officer of the Company, against the Company and VuBotics
Georgia, Inc. The complaint alleged,
among other things, that the Company breached its obligation to provide up to
$500,000 for working capital, software development, inventory purchases and
promotion of the QuantumReader software during the 12-month period after the
Company’s acquisition of QuantumReader, Inc. (now a wholly owned subsidary of
the Company) under the Plan and Agreement of Reorganization dated November 17,
2004 among the Company, Mr. Larson and others.
The plaintiffs were seeking monetary damages, as well as an injunction
requiring the Company to provide Mr. Larson with a non-exclusive, worldwide,
perpetual, irrevocable, paid-up license to the QuantumReader software. In March, 2007, Ekistics Research, LLC and
Mr. Larson withdrew the complaint.
On
September 4, 2007, Ekistics and Mr. Larson refiled their complaint against the
Company and certain other parties in the Superior Court of Fulton County,
Georgia. This complaint is virtually identical to the previous complaint
that Mr. Larson and Ekistics filed and withdrew earlier this year. In the
second complaint, the plaintiffs are seeking monetary damages, as well as an
Order declaring Mr. Larson the owner of a patent application that was the
principal asset of QuantumReader, Inc. when it was acquired by the Company and
an injunction against the Company. At this time, the Company’s management
believes that the lawsuit is without merit, and the Company intends to show,
among other defenses, that it made available well in excess of $500,000 during
the requisite time period in 2004 and 2005.
On October 4, 2007, QuantumReader, Inc. filed a motion to intervene in
the lawsuit along with pleadings asserting numerous claims against Mr. Larson
alleging that he has willfully interfered with QuantumReader, Inc.’s
intellectual property. In addition, QuantumReader, Inc. filed a motion
for a preliminary injunction asking the court to immediately prohibit Mr.
Larson from further interfering with QuantumReader, Inc.’s intellectual
property. Due to the inherent
uncertainties in litigation, and because the ultimate resolution of the
proceeding is influenced by factors outside of the Company’s control, the
ultimate outcome of this proceeding is uncertain and unpredictable.
8
NOTE 6 —
RELATED PARTY TRANSACTIONS
During the three months
ended March 31, 2007, loan repayments totaling a net of $12,500 were paid to
Philip E. Lundquist, the chief executive officer and director of the Company.
In an effort to conserve
cash, in March, 2007, the Company issued 2,403,000 shares of unregistered
common stock to officers and contractors in lieu of cash for services rendered
in 2006 valued $720,900. All shares were
issued at a price equal to market value.
In March 2007, the Company received a $75,000 unsecured bridge loan
from a shareholder. In July 2007, the
Company received an additional $20,000 unsecured bridge loan from the same
shareholder. The Company utilized the
proceeds from both bridge loans for working capital purposes. In an effort to conserve cash, and in lieu of
repaying the bridge loans and accrued interest of $5,000 at this time, the
Company issued a senior, secured convertible loan note and warrants to purchase
shares of the Company’s common stock to the shareholder pursuant to a
Securities Purchase Agreement with the shareholder, certain other purchasers
thereunder and a collateral agent.
NOTE 7 —
SUBSEQUENT EVENTS
Between October 3, 2007 and
October 31, 2007, the Company issued and sold notes and warrants to six
additional purchasers under the Securities Purchase Agreement dated August 28,
2007 for an aggregate subscription price of $240,000.
ITEM 2.
Management’s Discussion and Analysis and plan of Operation.
DISCLOSURE REGARDING FORWARD LOOKING
STATEMENTS
This Quarterly Report on Form 10-QSB includes forward-looking
statements (“Forward Looking Statements”)
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than
statements of historical fact included in this report are Forward Looking
Statements. In the normal course of its business, the Company, in an effort to
help keep its shareholders and the public informed about the Company’s
operations, may from time to time issue certain statements, either in writing
or orally, that contain or may contain Forward Looking Statements. Although the Company believes that the
expectations reflected in such Forward Looking Statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Generally, these statements relate to business plans or strategies, projected
or anticipated benefits or other consequences of such plans or strategies, past
and possible future acquisitions and projected or anticipated benefits from acquisitions
made by or to be made by the Company, or projections involving anticipated
revenues, earnings, levels of capital expenditures or other aspects of
operating results. All phases of the
Company operations are subject to a number of uncertainties, risks and other
influences, many of which could materially affect the results of the Company’s
proposed operations and whether Forward Looking Statements by the Company
ultimately prove to be accurate. Such
important factors (“Important Factors”) and other factors could cause actual
results to differ materially from the Company’s expectations as disclosed in
this Quarterly Report. All prior and
subsequent written and oral Forward Looking Statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Important Factors described below that could cause actual
results to differ materially from the Company’s expectations as set forth in
any Forward looking Statement made by or on behalf of the Company.
BUSINESS RISKS
Readers are cautioned to consider the specific business risk
factors related to our operations, technologies and markets described in our
annual report on Form 10-KSB for the year ended December 31, 2006. There have been no material changes in the
risk factors previously disclosed in that Form 10-KSB.
9
BUSINESS
VuBotics has now transitioned its
core platform of patents from concepts to market accepted products and
services. First Quarter announcements for VuIT eMail for BlackBerry
demonstrate the Company’s resolve to deliver against a consumer and business
enterprise plan.
While still early in revenue
development, VuBotics’ licensing agreements in global markets with leading
mobile software application distributors and directly with enterprise clients
marks a historic shift in the Company from pre-revenue to revenue stages.
Initial market reviews and paying customer feedback about VuIT continues to
validate and exceed expectations for technology product adoption.
VuIT is a sequential word
delivery engine that delivers streaming text in a cadence, or rhythm, similar
to sub-vocalization that allows readers to consume text at 2X - 4X faster than
average college educated readers.
That engine is the basis of a
platform that will be used to exploit markets in mobile and computer based
eMail, mobile and computer based email attachments and documents, mobile
messaging, mobile internet content and online content presentation, and
providing metrics and relational advertising insertion. In the mobile
markets, VuIT represents a unique business model for advertising sponsored
video content as well as content presentation for mobile entertainment.
VuBotics
continues to own operating subsidiaries in Delaware and Tokyo and plans to
initiate UK/EU operations in the immediate future. The construction of
this world-wide business entity is designed to allow VuBotics to license and
distribute its VuIT platform throughout the world, in over 80 languages, while
maximizing its IP protection, maintaining proximity to markets and creating the
most efficient financial structures available within today’s complex regulatory
environment. VuBotics will be using this investment in structure as a
repeatable means to continuously deliver new patented technologies into the
global markets.
RESULTS OF OPERATIONS
Nine months ended
September 30, 2007 and 2006
General.
The following
discussion and analysis explains trends in the Company’s financial condition
and results of operations for the nine months ended September 30, 2007 and
2006. The consolidated financial statements and notes thereto, included as part
of the financial statements, should be read in conjunction with these
discussions.
The Company incurred a net
loss for the nine months ended September 30, 2007 of $1,597,991. This compares
to a loss of $1,649,086 for the same period in 2006, a decrease of
$51,095. The decrease is primarily the
result of lower operating expenses of $829,639 and lower interest expense of
$34,225 during the nine months ended September 30, 2007 offset by a gain on debt
restructure of $798,046 in the second quarter 2006.
Operating expenses decreased
$829,639 to $1,609,082 from $2,438,721 during the same period in 2006. The decrease is primarily the result of a
reduction in non-cash stock compensation offset by an increase of $73,484 in
general and administrative expenses and marketing expenses of $65,013 during
the nine months ended September 30, 2007.
Non-cash stock compensation related to marketing and general and
administrative was lower by $200,500 and $764,772, respectively during the nine
months ended September 30, 2007, as compared to the same period in 2006.
General and administrative expenses increased due to increased reporting and
compliance costs.
The Company recorded revenue
of $25,272 for the nine months ended September 30, 2007 and $37,000 for the
nine months ended September 30, 2006.
These revenues were derived from a follow-on pilot project with a major
media content provider and royalties from licenses of the VuIT
tm
email Reader.
Three months ended
September 30, 2007 and 2006
General.
The following
discussion and analysis explains trends in the Company’s financial condition
and results of operations for the three months ended September 30, 2007 and
2006. The consolidated financial statements and notes thereto, included as part
of the financial statements, should be read in conjunction with these
discussions.
The Company incurred a net
loss for the three months ended September 30, 2007 of $637,215. This compares
to a loss of $505,908 for the same period in 2006, an increase of
$131,307. The increase is primarily the
result of higher operating expenses of
$99,145 and lower revenue.
10
Operating expenses increased
$99,145 to $634,237 from $535,092 during the same period in 2006. The increase is primarily the result of an
increase of $70,207 in general and administrative expenses offset by lower
product development expenses of $122,844 during the three months ended
September 30, 2007. Non-cash stock
compensation increased $90,780 related to general and administrative expenses
and decreased $17,680 related to marketing expenses during the three months
ended September 30, 2007 as compared to the same period in 2006.
The Company recorded revenue
of $484 for the three months ended September 30, 2007 and $37,000 for the same
period in 2006. These revenues were
derived from royalties from licenses of the VuIT
tm
email Reader.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2007,
the Company had a cash balance of $590,912, and $617,129 in total assets. The
Company’s current liabilities increased from $1,767,475 to $3,336,483. This
increase is primarily due to the issuance of senior, secured convertible loan
notes and to the reclassification of the long-term portion of notes payable to
current liabilities offset by the payment of accrued compensation with the
issuance of restricted common stock of the Company. Net cash used by operations was $891,334. Net
cash provided by financing activities was $989,107 for the nine months ended
September 30, 2007 primarily resulting from the proceeds of the issuance of
senior, secured convertible loan notes.
The Company has financed its
operations primarily through the sale of its common stock and private
placements of its debt and equity
securities.
The Company believes that
its cash needs for the next twelve months will be met by debt financings, loans
from its directors, officers and shareholders and private placements of its
debt and equity securities. However, there can be no assurances that the Company
will be successful in obtaining sufficient funds needed for the development of
its business. If the Company issues more
shares of its common stock its shareholders may experience dilution in the
value per share of their common stock.
On
August 28, 2007, the Company entered into a Securities Purchase Agreement
pursuant to which the Company issued and sold to purchasers senior, secured
convertible loan notes and warrants to purchase shares of the Company’s common
stock for up to a maximum of $2,000,000 in subscription price. Between August 28, 2007 and November 1, 2007,
the Company issued and sold notes and warrants to five purchasers thereunder
for an aggregate subsciption price of $1,415,000 (including the note and
warrants issued to as repayment of the bridge loans and placement agent fees). The Company
continues to investigate the availability, source and terms for other types of
external financing. The Company cannot assure that funds will be available from
any source, or, if available, that the Company will be able to obtain the funds
on terms agreeable to it. Any additional debt the Company incurs could result
in a substantial portion of its cash flows from operating activities, if any,
being used for the payment of principal and interest on the indebtedness, and
could render the Company more vulnerable to competitive challenges and economic
downturns.
ITEM 3. Controls and Procedures
In accordance with Rule 13a-15(b) of the Exchange Act, an evaluation
was carried out by the Company’s Chief Executive Officer and Chief Financial
Officer of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures (pursuant to Rules 13a-14(c) and
15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act)) which was completed in consultation with management. The Company’s Chief Executive Officer and
Chief Financial Officer has concluded that the Company’s disclosure controls
and procedures were effective as of the date of such evaluation in timely
alerting the Company’s management to material information required to be
included in this Form 10-QSB and other Exchange Act filings. There were no
significant changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in the Company’s internal controls or
other factors that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting
subsequent to the date of the evaluation described above.
PART II. OTHER INFORMATION.
ITEM 1.
Legal Proceedings.
On February 6, 2007, the Company was served with a
complaint which had been filed on January 29, 2007 in the Superior Court of
Fulton County, Georgia by Ekistics Research, LLC
(“Ekistics”)
and Craig J. Larson, a
former director and officer of the Company, against the Company and VuBotics
Georgia, Inc. The complaint alleged,
among other things, that the Company breached its obligation to provide up to
$500,000 for working capital, software development, inventory purchases and
promotion of the QuantumReader software during the 12-month period after the
Company’s acquisition of QuantumReader, Inc. (now a wholly owned subsidary of
the Company) under the Plan and Agreement of Reorganization dated November 17,
2004 among the Company, Mr.
11
Larson and others.
The plaintiffs were seeking monetary damages, as well as an injunction
requiring the Company to provide Mr. Larson with a non-exclusive, worldwide,
perpetual, irrevocable, paid-up license to the QuantumReader software. In March, 2007, Ekistics Research, LLC and
Mr. Larson withdrew the complaint.
On September 4, 2007, Ekistics and Mr. Larson refiled
their complaint against the Company and certain other parties in the Superior
Court of Fulton County, Georgia. This complaint is virtually identical to
the previous complaint that Mr. Larson and Ekistics filed and withdrew earlier
this year. In the second complaint, the plaintiffs are seeking monetary damages,
as well as an Order declaring Mr. Larson the owner of a patent application that
was the principal asset of QuantumReader, Inc. when it was acquired by the
Company and an injunction against the Company. At this time, the Company’s
management believes that the lawsuit is without merit, and the Company intends
to show, among other defenses, that it made available well in excess of
$500,000 during the requisite time period in 2004 and 2005. On October 4, 2007, QuantumReader, Inc. filed
a motion to intervene in the lawsuit along with pleadings asserting numerous
claims against Mr. Larson alleging that he has willfully interfered with
QuantumReader, Inc.’s intellectual property. In addition, QuantumReader,
Inc. filed a motion for a preliminary injunction asking the court to
immediately prohibit Mr. Larson from further interfering with QuantumReader,
Inc.’s intellectual property. Due to the
inherent uncertainties in litigation, and because the ultimate resolution of
the proceeding is influenced by factors outside of the Company’s control, the
ultimate outcome of this proceeding is uncertain and unpredictable.
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
During
the nine months ended September 30, 2007:
The Company issued 2,403,000 shares of unregistered
common stock in lieu of cash for services rendered in 2006 valued at $720,900
and 45,000 shares of common stock for services rendered valued at $13,500
during the first and second quarters of 2007.
In addition, the Company issued 500,000 shares of common stock for
services rendered valued at $70,000 during the third quarter of 2007. All shares issued for services rendered were
issued at a price equal to the closing price of our common stock on date of
issuance.
Under the Securities Purchase Agreement dated August
28, 2007, the Company issued warrants to purchase up to 11,937,500 shares of
the Company’s common stock and convertible loan notes (which are convertible
into
Common Stock at
the option of the purchaser or the Company under certain circumstances)
for an
aggregate subsciption price of $1,415,000 between August 28, 2007 and November
1, 2007.
ITEM 3.
Defaults Upon Senior Securities.
None.
ITEM 4.
Submission of Matters to a Vote of Security Holders.
None.
ITEM 5.
Other Information.
None.
ITEM 6.
Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1
Articles of Incorporation of VuBotics, Inc. (Georgia) (1)
3.2
Bylaws of VuBotics, Inc. (2)
10.1
Securities Purchase Agreement dated August 28, 2007 by and
among the Company, Jay Weil, as collateral agent and the Purchasers listed
therein (3)
10.2
Form of Senior, Secured Convertible Note issued pursuant to
the Securities Purchase Agreement dated August 28, 2007 (3)
12
10.3
Form of Common Stock Purchase Warrant issued pursuant to the Securities Purchase
Agreement dated August 28, 2007 *
10.4
Registration Rights Agreement dated August 28, 2007 by and
among the Company and the Purchasers listed therein (3)
10.5
Security Agreement dated August 28, 2007 between the Company
and the Collateral Agent listed therein (3)
31.1
Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or 15d-14(a)*
31.2
Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or 15d-14(a)*
32.1
Certification
of Chief Executive Officer under 18 U.S.C. Section 1350*
32.2
Certification
of Chief Financial Officer under 18 U.S.C. Section 1350*
* Filed herewith
(1)
Incorporated
by reference to Exhibit 3(i)(7) to the Company’s Form SB-2/A filed on February
13, 2007.
(2)
Incorporated
by reference to Exhibit 3(ii)(2) to the Company’s Form SB-2/A filed on February
13, 2007.
(3)
Incorporated
by reference to the Company’s Current Report on Form 8-K filed on September 4,
2007.
(b) Reports on Form 8-K.
On June 15, 2007, the Company filed a Current Report on Form
8-K which addressed the resignation of William T. Uniack, the Company’s
principal accountant from E. Phillip Bailey in order to form his own firm, WT
Uniack & Co. On June 29, 2007, the
Company filed an amendment to the aforementioned Form 8-K in order to
supplement the information provided therein.
On
August 22, 2007, the Company filed a Current Report on Form 8-K which addressed
the appointment of Marc Owensby as a new director. This appointment increases the number of
members of the Board from three to four.
Mr. Owensby will serve for a term expiring at the Company’s 2008 Annual
Meeting of Stockholders.
On
September 4, 2007, the Company filed a Current Report on Form 8-K which
addressed the Company’s entering into a Securities Purchase Agreement with
certain purchasers and a collateral agent pursuant to which the Company issued
and sold to purchasers senior, secured convertible loan notes and
warrants to purchase shares of the Common
stock for up to a maximum of $2,000,000 in subscription price.
On
October 4, 2007, the Company filed a Current Report on Form 8-K which addressed
the issuance and sale of senior, secured convertible notes and warrants for an
aggregate subscription price of $840,000 to purchasers under the Securities
Purchase Agreement.
On
October 5, 2007, the Company filed a Current Report on Form 8-K which addressed
the re-filing of the complaint against VuBotics, Inc. by Ekistics Research, LLC
and Craig Larson in the Superior Court of Fulton County, Georgia,
QuantumReader, Inc.’s filing of a motion to intervene
in the lawsuit and QuantumReader, Inc. filing of a motion for a preliminary
injunction asking the court to immediately prohibit Mr. Larson from further
interfering with QuantumReader, Inc.’s intellectual property.
On
October 16, 2007, the Company filed a Current Report on Form 8-K which
addressed the issuance and sale of senior, secured convertible notes and
warrants for an aggregate subscription price of $50,000 to a purchaser under
the Securities Purchase Agreement dated August 28, 2007.
On
November 5, 2007, the Company filed a Current Report on Form 8-K which
addressed the issuance and sale of senior, secured convertible notes and
warrants for an aggregate subscription price of $75,000 to purchasers under the
Securities Purchase Agreement dated August 28, 2007.
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
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VUBOTICS, INC.
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Date: November 14, 2007
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/s/ Philip E. Lundquist
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By: Philip E. Lundquist, Chief Executive
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Officer and Chief Financial Officer
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14
Vubotics (CE) (USOTC:VBTC)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
Vubotics (CE) (USOTC:VBTC)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024
