Utah
|
87-0627421
|
(State
of Incorporation)
|
(IRS
Employer Identification No.)
|
Large
Accelerated Filer [ ]
|
Accelerated
Filer [X]
|
Non-Accelerated
Filer [ ]
|
|
Page
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
Item
1. Financial Statements (Unaudited)
|
|
|
|
Condensed
Consolidated Balance Sheets:
|
|
March
31, 2007 and December 31, 2006
|
3
|
|
|
Condensed
Consolidated Statements of Operations:
|
4
|
Three
Months Ended March 31, 2007 and 2006
|
|
|
|
Condensed
Consolidated Statement of Stockholders’ Equity
|
|
Three
Months Ended March 31, 2007
|
5
|
|
|
Condensed
Consolidated Statements of Cash Flows:
|
|
Three
Months Ended March 31, 2007 and 2006
|
6
|
|
|
Notes
to Unaudited Condensed Consolidated Financial Information:
|
|
March
31, 2007
|
8
|
|
|
Item
2. Management’s Discussion and Analysis
|
26
|
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
36
|
|
|
Item
4. Controls and Procedures
|
37
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
Item
1. Legal Proceedings
|
37
|
|
|
Item
1A. Risk Factors
|
37
|
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
38
|
|
|
Item
3. Defaults Upon Senior Securities
|
38
|
|
|
Item
4. Submission of Matters to a Vote of Security Holders
|
38
|
|
|
Item
5. Other Information
|
38
|
|
|
Item
6. Exhibits
|
38
|
|
(Unaudited)
|
|
|||||
|
March
31, 2007
|
December
31, 2006
|
|||||
ASSETS
|
|
|
|||||
Current
Assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
2,187,024
|
$
|
1,644,037
|
|||
Accounts
Receivable: net of allowance for doubtful accounts of $207,000
and
$60,000 at March 31, 2007 and December 31, 2006.
|
1,384,299
|
295,116
|
|||||
Income
tax receivable
|
291,000
|
291,000
|
|||||
Note
receivable
|
37,562
|
-
|
|||||
Inventory
|
2,530,623
|
1,306,593
|
|||||
Prepaid
expenses and deposits
|
473,291
|
229,333
|
|||||
Total
current assets
|
6,903,799
|
3,766,079
|
|||||
|
|||||||
Property
and Equipment:
|
|||||||
Furniture
and equipment, at cost
|
1,384,538
|
1,370,780
|
|||||
Less:
accumulated depreciation
|
599,497
|
577,759
|
|||||
Total
property and equipment, net
|
785,041
|
793,021
|
|||||
|
|||||||
Equipment
under Operating Leases:
|
|||||||
Capitalized
equipment, at cost
|
4,218,582
|
4,026,255
|
|||||
Less:
accumulated depreciation
|
738,660
|
568,721
|
|||||
Total
equipment under operating leases, net
|
3,479,922
|
3,457,534
|
|||||
|
|||||||
Other
Assets:
|
|||||||
Long-term
investments
|
193,847
|
193,847
|
|||||
Intangible
assets, net of accumulated amortization of $367,656and $282,325
at
March 31, 2007 and December 31, 2006, respectively
|
4,096,271
|
2,181,602
|
|||||
Note
receivable
|
17,974
|
-
|
|||||
Goodwill
|
17,775,662
|
1,977,768
|
|||||
Deposits
and other
|
157,802
|
146,665
|
|||||
Total
other assets
|
22,241,556
|
4,499,882
|
|||||
|
|||||||
TOTAL
ASSETS
|
$
|
33,410,318
|
$
|
12,516,516
|
|||
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
3,908,835
|
$
|
2,859,863
|
|||
Note
payable - officer
|
80,444
|
80,444
|
|||||
Income
tax refund due to officer
|
291,000
|
291,000
|
|||||
Deferred
revenue
|
207,397
|
160,125
|
|||||
Note
payable under subsidiary acquisition
|
-
|
900,000
|
|||||
Customer
deposits and other
|
70,439
|
5,281
|
|||||
Total
current liabilities
|
4,558,115
|
4,296,713
|
|||||
|
|||||||
Long
Term Liabilities:
|
|||||||
Deferred
revenue
|
29,473
|
42,019
|
|||||
Deferred
lease liability & Other
|
52,727
|
42,561
|
|||||
Total
long term liabilities
|
82,200
|
84,580
|
|||||
|
|||||||
Commitments
and Contingencies
|
-
|
-
|
|||||
Minority
Interest
|
-
|
-
|
|||||
|
|||||||
Stockholders’
Equity :
|
|||||||
Preferred
stock, par value $.001 per share; 15,000,000 shares authorized;
none
issued and outstanding at March 31, 2007 and December 31, 2006
|
-
|
-
|
|||||
Common
stock, par value $.001 per share; 100,000,000 shares authorized;
66,710,183
and 56,992,301 shares issued and outstanding at March 31, 2007
and
December 31, 2006, respectively
|
66,710
|
56,992
|
|||||
Additional
paid-in-capital
|
104,529,437
|
78,502,900
|
|||||
Accumulated
deficit
|
(75,826,144
|
)
|
(70,424,669
|
)
|
|||
Stockholders’
equity
|
28,770,003
|
8,135,223
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
33,410,318
|
$
|
12,516,516
|
|
For
The Three Months
Ended
March 31,
|
||||||
|
2007
|
2006
|
|||||
Revenues,
net:
|
|||||||
Product
|
$
|
637,856
|
$
|
1,549,975
|
|||
Rental
|
608,413
|
393,937
|
|||||
Total
Revenue
|
1,246,269
|
1,943,912
|
|||||
|
|||||||
Cost
of Sales:
|
|||||||
Product
|
429,468
|
983,651
|
|||||
Rental
|
886,993
|
311,919
|
|||||
Total
Cost of Sales
|
1,316,461
|
1,295,570
|
|||||
|
|||||||
Gross
Profit
|
(70,192
|
)
|
648,342
|
||||
|
|||||||
Costs
and Expenses:
|
|||||||
Research
and Development
|
474,603
|
432,569
|
|||||
Selling,
General and Administrative
|
4,260,111
|
3,092,043
|
|||||
Non-Employee
Stock Options and Warrants
|
-
|
277,344
|
|||||
Employee
Stock Based Compensation
|
354,186
|
376,281
|
|||||
Depreciation
and Amortization
|
151,147
|
119,227
|
|||||
Total
Operating Expense
|
5,240,047
|
4,297,464
|
|||||
|
|||||||
Loss
from Operations
|
(5,310,239
|
)
|
(3,649,122
|
)
|
|||
|
|||||||
Other
Income (Expenses):
|
|||||||
Interest
Income
|
42,347
|
102,684
|
|||||
Interest
Expense
|
(133,584
|
)
|
(720,253
|
)
|
|||
Total
Other Income (Expenses)
|
(91,237
|
)
|
(617,569
|
)
|
|||
|
|||||||
Loss
Before Provision for Income Taxes
|
(5,401,476
|
)
|
(4,266,691
|
)
|
|||
Provision
for Income Taxes
|
-
|
||||||
Loss
Before Minority Interest
|
(5,401,476
|
)
|
(4,266,691
|
)
|
|||
|
|||||||
Minority
Interest
|
-
|
19,569
|
|||||
|
|||||||
Net
Loss
|
$
|
(5,401,476
|
)
|
$
|
(4,247,122
|
)
|
|
|
|||||||
Loss
per common share (basic and assuming dilution)
|
$
|
(0.09
|
)
|
$
|
(0.09
|
)
|
|
|
|||||||
Weighted
average common shares outstanding
|
58,606,420
|
46,187,202
|
|
Preferred
Shares
|
Preferred
Stock
Amount
|
Common
Shares
|
Common
Stock Amount
|
Additional
Paid
in Capital
|
Accumulated
Deficit
|
Total
|
|||||||||||||||
Balance
at January 1, 2007
|
-
|
-
|
56,992,301
|
$
|
56,992
|
$
|
78,502,900
|
$
|
(70,424,669
|
)
|
$
|
8,135,223
|
||||||||||
|
||||||||||||||||||||||
Shares
issued for employee stock options exercised at $1.00 per
share
|
-
|
-
|
31,000
|
31
|
30,969
|
-
|
31,000
|
|||||||||||||||
|
||||||||||||||||||||||
Issuance
of shares for purchase of subsidiary
|
-
|
-
|
2,227,273
|
2,227
|
5,997,773
|
-
|
6,000,000
|
|||||||||||||||
|
||||||||||||||||||||||
Issuance
of shares for purchase of subsidiary
|
-
|
-
|
3,459,609
|
3,460
|
9,752,637
|
-
|
9,756,097
|
|||||||||||||||
Shares
issued in connection with a private placement, net of
costs
|
-
|
-
|
4,000,000
|
4,000
|
9,606,000
|
-
|
9,610,000
|
|||||||||||||||
|
||||||||||||||||||||||
Warrants
issued in exchange for interest expenses
|
-
|
-
|
-
|
-
|
131,009
|
-
|
131,009
|
|||||||||||||||
Stock-based
compensation expense related to employee stock options
|
-
|
-
|
-
|
-
|
354,186
|
-
|
354,186
|
|||||||||||||||
|
||||||||||||||||||||||
Stock
options granted to directors in exchange for accrued service
fees
|
-
|
-
|
-
|
-
|
153,963
|
-
|
153,963
|
|||||||||||||||
Net
Loss
|
-
|
-
|
(5,401,476
|
)
|
(5,401,476
|
)
|
||||||||||||||||
|
||||||||||||||||||||||
Balance
at March 31, 2007
|
-
|
$
|
-
|
66,710,183
|
$
|
66,710
|
$
|
104,529,437
|
$
|
(75,826,144
|
)
|
$
|
28,770,003
|
|
For
The Three Months
Ended
March 31,
|
||||||
|
2007
|
2006
|
|||||
Cash
Flows from Operating Activities:
|
|
|
|||||
Net
loss from operating activities
|
$
|
(5,401,476
|
)
|
$
|
(4,247,122
|
)
|
|
Adjustments
to reconcile net loss from operations to cash used in operating
activities
|
-
|
||||||
Minority
interest
|
-
|
(19,569
|
)
|
||||
Amortization
of financing costs
|
100,225
|
||||||
Write-off
of fixed assets in conjunction with loss on sublease
|
64,608
|
-
|
|||||
Value
of additional warrants issued for senior convertible
debenture
|
131,009
|
-
|
|||||
Amortization
of debt discount - beneficial conversion feature of convertible
debentures
|
-
|
121,586
|
|||||
Amortization
of debt discount - value of warrants attached to convertible
debentures
|
-
|
239,943
|
|||||
Stock
options and warrants issued in exchange for services
rendered
|
508,149
|
653,625
|
|||||
Common
stock issued in exchange for services rendered
|
-
|
81,271
|
|||||
Depreciation,
including depreciation of equipment under operating leases
|
321,146
|
215,537
|
|||||
Increase
/ decrease in:
|
|||||||
Accounts
receivable
|
42,132
|
(320,083
|
)
|
||||
Inventory
|
(130,631
|
)
|
157,727
|
||||
Prepaid
expenses and deposits
|
(286,327
|
)
|
2,220
|
||||
Customer
deposits and other current liability
|
9,683
|
(66,996
|
)
|
||||
Accounts
payable and accrued expenses
|
(33,447
|
)
|
(155,536
|
)
|
|||
Deferred
revenue
|
(37,848
|
)
|
97,963
|
||||
Deferred
lease liability
|
-
|
245
|
|||||
Net
Cash (Used in) Operating Activities
|
(4,813,002
|
)
|
(3,138,964
|
)
|
|||
|
|||||||
Cash
Flows from Investing Activities:
|
|||||||
Costs
of equipment under operating leases
|
(276,292
|
)
|
(316,716
|
)
|
|||
Proceeds
from sale of equipment under operating lease
|
-
|
340,130
|
|||||
Payment
of note payable under subsidiary acquisition
|
(900,000
|
)
|
(1,017,822
|
)
|
|||
Net
cash acquired from MST
|
-
|
59,384
|
|||||
Investment
in subsidiaries
|
(2,875,000
|
)
|
-
|
||||
Investment
in affiliate
|
-
|
(44
|
)
|
||||
Purchase
of property and equipment, net
|
(34,760
|
)
|
(134,704
|
)
|
|||
Net
Cash (Used in) Investing Activities
|
(4,086,052
|
)
|
(1,069,772
|
)
|
|||
|
|||||||
Cash
Flows from Financing Activities:
|
|||||||
Repayment
of convertible debentures
|
-
|
(1,250,000
|
)
|
||||
Proceeds
from sale of common stock, net of costs
|
9,610,000
|
- | |||||
Proceeds
from exercise of stock options and warrants
|
31,000
|
974,503
|
|||||
Repayment
of subsidiary loans
|
(198,959
|
)
|
(409,675
|
)
|
|||
Net
Cash Provided by (Used in) Financing Activities
|
9,442,041
|
(685,172
|
)
|
||||
|
|||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
542,987
|
(4,893,908
|
)
|
||||
|
|||||||
Cash
and cash equivalents at the beginning of the
period
|
1,644,037
|
8,422,079
|
|||||
|
|||||||
Cash
and cash equivalents at the end of the period
|
$
|
2,187,024
|
$
|
3,528,171
|
|
For
The Three Months
Ended
March 31,
|
||||||
|
2007
|
2006
|
|||||
Supplemental
Disclosures of Cash Flow Information
|
|
|
|||||
Cash
paid during the period for interest
|
$
|
-
|
$
|
622,530
|
|||
Income
taxes paid
|
-
|
-
|
|||||
Non-cash
transactions:
|
|||||||
Note
payable under subsidiary acquisition
|
-
|
900,000
|
|||||
Issuance
of shares for purchase of subsidiary
|
15,756,097
|
1,800,000
|
|||||
Employee
stock-based compensation
|
508,149
|
376,281
|
|||||
Warrants
issued in exchange for interest expense
|
131,009
|
-
|
|||||
Issuance
of stock options and warrants in exchange for services
rendered
|
-
|
277,344
|
|||||
Common
stock issued for services rendered
|
-
|
81,271
|
|||||
Acquisition
of subsidiary (Note B):
|
|||||||
Assets
acquired
|
$
|
4,386,762
|
$
|
4,120,600
|
|||
Goodwill
(including purchase price contingency)
|
15,797,894
|
6,477,767
|
|||||
Minority
Interest
|
-
|
(19,569
|
)
|
||||
Liabilities
assumed
|
(1,303,559
|
)
|
(1,460,976
|
)
|
|||
Common
stock issued
|
(15,756,097
|
)
|
(1,800,000
|
)
|
|||
Notes
payable issued
|
-
|
(900,000
|
)
|
||||
Purchase
price contingency
|
-
|
(5,400,000
|
)
|
||||
Direct
acquisition costs
|
(250,000
|
)
|
(117,822
|
)
|
|||
Cash
paid for acquisition
|
$
|
(2,875,000
|
)
|
$
|
(900,000
|
)
|
|
As
Reported
|
Including
Purchase
Price Contingency (*)
|
|||||
Common
stock
|
$
|
2,700,000
|
$
|
7,200,000
|
|||
Cash
(including note payable)
|
1,800,000
|
1,800,000
|
|||||
Direct
acquisition costs
|
117,822
|
117,822
|
|||||
Purchase
price
|
4,617,822
|
9,117,822
|
|||||
Minority
interest
|
19,569
|
19,569
|
|||||
Total
|
$
|
4,637,391
|
$
|
9,137,391
|
|
As
Reported
|
Including
Purchase
Price Contingency (*)
|
|||||
Cash
and other current assets
|
$
|
346,548
|
$
|
346,548
|
|||
Equipment
and other assets
|
1,310,125
|
1,310,125
|
|||||
Subscriber
lists
|
2,463,927
|
2,463,927
|
|||||
Goodwill
and other intangible assets
|
1,977,767
|
6,477,767
|
|||||
Subtotal
|
6,098,367
|
10,598,367
|
|||||
Current
liabilities
|
1,460,976
|
1,460,976
|
|||||
Total
|
$
|
4,637,391
|
$
|
9,137,391
|
|
As
Reported
|
|||
Common
stock
|
$
|
6,000,000
|
||
Cash
|
875,000
|
|||
Direct
acquisition costs
|
100,000
|
|||
Total
Purchase Price
|
$
|
6,975,000
|
Current
assets
|
$
|
1,229,867
|
||
Property,
plant and equipment
|
36,020
|
|||
Other
assets
|
8,237
|
|||
Goodwill
|
6,258,660
|
|||
Total
assets acquired
|
7,532,784
|
|||
|
||||
Accounts
payable and accrued liabilities
|
(557,784
|
)
|
||
Total
liabilities assumed
|
(557,784
|
)
|
||
Net
assets acquired
|
$
|
6,975,000
|
|
As
Reported
|
|||
Common
stock
|
$
|
9,756,097
|
||
Cash
|
2,000,000
|
|||
Direct
acquisition costs
|
150,000
|
|||
Total
Purchase Price
|
$
|
11,906,097
|
Current
assets
|
$
|
1,029,615
|
||
Property,
plant and equipment
|
51,724
|
|||
Other
assets
|
31,299
|
|||
Subscriber
lists
|
2,000,000
|
|||
Goodwill
|
9,539,234
|
|||
Total
assets acquired
|
12,651,872
|
|||
Accounts
payable and accrued liabilities
|
(745,775
|
)
|
||
Total
liabilities assumed
|
(745,775
|
)
|
||
Net
assets acquired
|
$
|
11,906,097
|
|
Three
Months Ended
March
31,
|
||||||
|
Proforma
2007
|
Proforma
2006
|
|||||
Product
revenue
|
$
|
1,386,652
|
$
|
2,407,050
|
|||
Recurring
revenue
|
1,180,909
|
813,605
|
|||||
|
2,567,561
|
3,220,655
|
|||||
|
|||||||
Net
(loss)
|
$
|
(5,668,394
|
)
|
$
|
(4,627,504
|
)
|
|
Basic
(loss) per share
|
$
|
(.08
|
)
|
$
|
(.08
|
)
|
|
Diluted
(loss) per share
|
$
|
(.08
|
)
|
$
|
(.07
|
)
|
|
March
31, 2007
|
December
31, 2006
|
|||||
Raw
Materials
|
$
|
1,301,618
|
$
|
516,604
|
|||
Finished
Goods
|
1,229,005
|
789,989
|
|||||
|
$
|
2,530,623
|
$
|
1,306,593
|
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average
Amortization
Period
(Years)
|
|||||||||||
Amortized
Identifiable tangible Assets:
|
||||||||||||||||
Subscriber
lists
|
$
|
2,463,927
|
$
|
(282,325
|
)
|
$
|
2,181,602
|
$
|
-
|
8.0
|
||||||
|
||||||||||||||||
Total
Amortized Identifiable Intangible Assets
|
|
2,463,927
|
(282,325
|
)
|
2,181,602
|
$
|
-
|
|||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||
Total
|
$
|
2,463,927
|
$
|
(282,325
|
)
|
$
|
2,181,602
|
$
|
-
|
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average Amortization Period (Years)
|
|||||||||||
Amortized
Identifiable tangible Assets:
|
||||||||||||||||
Subscriber
lists - MST
|
$
|
2,463,927
|
$
|
(359,323
|
)
|
$
|
2,104,604
|
$
|
-
|
8.0
|
||||||
Subscriber
lists - Ethostream
|
|
2,000,000
|
|
(8,333
|
)
|
1,991,667
|
|
-
|
10.0
|
|||||||
Total
Amortized Identifiable Intangible Assets
|
4,463,927
|
(367,656
|
)
|
4,096,271
|
-
|
|||||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||
Total
|
$
|
4,463,927
|
$
|
(367,656
|
)
|
$
|
4,096,271
|
$
|
-
|
|
2007
|
|
$
380,993
|
|
|
2008
|
|
507,991
|
|
|
2009
|
|
507,991
|
|
|
2010
|
|
507,991
|
|
|
2011
|
|
507,991
|
|
|
2012
and after
|
|
1,683,314
|
|
|
Total
|
|
$
4,096,271
|
|
|
|
Options
Outstanding
|
|
|
|
Options
Exercisable
|
||||
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
Weighted
Average Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average Exercise Price
|
$
1.00 - $1.99
|
|
4,166,929
|
|
5.71
|
|
$
1.00
|
|
4,166,929
|
|
$
1.00
|
$
2.00 - $2.99
|
|
2,130,000
|
|
8.10
|
|
$
2.57
|
|
1,022,750
|
|
$
2.46
|
$
3.00 - $3.99
|
|
2,558,000
|
|
8.40
|
|
$
3.21
|
|
907,500
|
|
$
3.34
|
$
4.00 - $4.99
|
|
160,000
|
|
8.38
|
|
$
4.44
|
|
54,250
|
|
$
4.44
|
$
5.00 - $5.99
|
|
160,000
|
|
8.14
|
|
$
5.28
|
|
58,250
|
|
$
5.25
|
|
|
9,174,929
|
|
7.11
|
|
$
2.12
|
|
6,209,679
|
|
$
1.65
|
|
Number
of Shares
|
Weighted
Average
Price
Per Share
|
|||||
Outstanding
at January 1, 2005
|
9,614,767
|
$
|
1.61
|
||||
Granted
|
1,325,000
|
3.97
|
|||||
Exercised
|
(415,989
|
)
|
1.18
|
||||
Cancelled
or expired
|
(372,700
|
)
|
3.74
|
||||
Outstanding
at December 31, 2005
|
10,151,078
|
$
|
1.85
|
||||
Granted
|
1,125,000
|
3.01
|
|||||
Exercised
|
(2,051,399
|
)
|
1.30
|
||||
Cancelled
or expired
|
(703,750
|
)
|
2.67
|
||||
Outstanding
at December 31, 2006
|
8,520,929
|
$
|
2.06
|
||||
Granted
|
705,000
|
2.76
|
|||||
Exercised
(Note I)
|
(31,000
|
)
|
1.00
|
||||
Cancelled
or expired
|
(20,000
|
)
|
3.26
|
||||
Outstanding
at March 31, 2007
|
9,174,929
|
$
|
2.12
|
|
|
2007
|
|
2006
|
|
||
Significant
assumptions (weighted-average):
|
|
|
|
|
|
||
Risk-free
interest rate at grant date
|
|
|
4.75%
|
|
|
5.0%
|
|
Expected
stock price volatility
|
|
|
70%
|
|
|
65%
|
|
Expected
dividend payout
|
|
|
-
|
|
|
-
|
|
Expected
option life-years
|
|
|
5.0
|
|
|
5.0
|
|
|
|
Options
Outstanding
|
|
|
|
Options
Exercisable
|
||||
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
Weighed
Average Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average Exercise Price
|
$
1.00
|
|
1,815,937
|
|
5.09
|
|
$
1.00
|
|
1,815,937
|
|
$
1.00
|
|
Number
of Shares
|
Weighted
Average
Price
Per Share
|
|||||
Outstanding
at January 1, 2005
|
1,999,169
|
$1.07
|
|||||
Granted
|
15,000
|
3.45
|
|||||
Exercised
|
(172,395
|
)
|
2.07
|
||||
Canceled
or expired
|
-
|
-
|
|||||
Outstanding
at December 31, 2005
|
1,841,774
|
$
|
1.00
|
||||
Granted
|
-
|
-
|
|||||
Exercised
|
(25,837
|
)
|
1.00
|
||||
Canceled
or expired
|
-
|
-
|
|||||
Outstanding
at December 31, 2006
|
1,815,937
|
$
|
1.00
|
||||
Granted
|
-
|
-
|
|||||
Exercised
|
-
|
-
|
|||||
Canceled
or expired
|
-
|
-
|
|||||
Outstanding
at March 31, 2007
|
1,815,937
|
$
|
1.00
|
|
|
Warrants
Outstanding
|
|
|
|
Warrants
Exercisable
|
||||
Exercise
Prices
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
Weighed
Average Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average Exercise Price
|
$
2.59
|
|
862,452
|
|
4.37
|
|
$
2.59
|
|
862,452
|
|
$
2.59
|
$
4.17
|
|
4,236,739
|
|
4.69
|
|
$
4.17
|
|
4,236,739
|
|
$
4.17
|
$
4.70
|
|
2,211,628
|
|
3.96
|
|
$
4.70
|
|
2,211,628
|
|
$
4.70
|
|
|
7,310,819
|
|
4.43
|
|
$
4.14
|
|
7,310,819
|
|
$
4.14
|
|
Number
of Shares
|
Weighted
Average Price Per Share
|
|||||
Outstanding
at January 1, 2005
|
575,900
|
$
|
1.12
|
||||
Granted
|
1,040,000
|
4.85
|
|||||
Exercised
|
(371,900
|
)
|
1.00
|
||||
Canceled
or expired
|
(14,000
|
)
|
1.00
|
||||
Outstanding
at December 31, 2005
|
1,230,000
|
$
|
4.31
|
||||
Granted
|
3,657,850
|
4.03
|
|||||
Exercised
|
(47,750
|
)
|
1.15
|
||||
Canceled
or expired
|
(282,250
|
)
|
2.64
|
||||
Outstanding
at December 31, 2006
|
4,557,850
|
$
|
4.20
|
||||
Granted
|
2,752,969
|
4.18
|
|||||
Exercised
|
-
|
-
|
|||||
Canceled
or expired
|
-
|
-
|
|||||
Outstanding
at March 31, 2007
|
7,310,819
|
$
|
4.14
|
Three
Months ended March 31,
|
|||||||
2007
|
2006
|
||||||
(In
thousands of U.S. $)
|
|||||||
Revenues:
|
|||||||
Telkonet
|
$ |
759
|
$ |
1,636
|
|||
MST
|
487
|
308
|
|||||
Total
revenue
|
$
|
1,246
|
$
|
1,944
|
|||
|
Three
Months ended March 31,
|
||||||
2007
|
2006
|
||||||
|
(In
thousands of U.S. $)
|
||||||
Gross
Profit
|
|||||||
Telkonet
|
$ |
233
|
$ |
679
|
|||
MST
|
(303
|
)
|
(31
|
)
|
|||
Total
gross profit
|
$
|
(70
|
)
|
$
|
648
|
||
Loss
from Operations:
|
|||||||
Telkonet
|
$ |
(4,147
|
)
|
$ |
(3,280
|
)
|
|
MST
|
(1,163
|
)
|
(369
|
)
|
|||
Total
operating loss
|
$
|
(5,310
|
)
|
$
|
(3,649
|
)
|
|
March
31,
2007
|
December
31
2006
|
||||||
(In
thousands of U.S. $)
|
|||||||
Assets
|
|||||||
Telkonet
|
$ |
24,210
|
$ |
4,137
|
|||
MST
|
9,200
|
8,379
|
|||||
Total
assets
|
$
|
33,410
|
$
|
12,516
|
|||
Total
Minimum Lease Payments to be Received
|
$
|
60,668
|
||
Less:
Unearned Interest Income
|
(5,132
|
)
|
||
Net
Investment in Sales-Type Lease Notes Receivable
|
55,536
|
|||
Less:
Current Maturities
|
(37,562
|
)
|
||
Non-Current
Portion
|
$
|
17,974
|
2007
|
$
|
40,383
|
||
2008
|
11,690
|
|||
2009
|
7,703
|
|||
2010
|
912
|
|||
|
$
|
60,688
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Product
|
$637,856
|
51%
|
$1,549,975
|
80%
|
$(912,119)
|
-59%
|
Recurring
(lease)
|
608,413
|
49%
|
393,937
|
20%
|
214,476
|
54%
|
Total
|
$1,246,269
|
100%
|
$1,943,912
|
100%
|
$(697,643)
|
-36%
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Product
|
$429,468
|
67%
|
$983,651
|
63%
|
$(554,183)
|
-56%
|
Recurring
(lease)
|
886,993
|
146%
|
311,919
|
79%
|
575,074
|
184%
|
Total
|
$1,316,461
|
106%
|
$1,295,570
|
67%
|
$20,891
|
2%
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Product
|
$208,388
|
33%
|
$566,324
|
37%
|
$(357,936)
|
-63%
|
Recurring
(lease)
|
(278,580)
|
-46%
|
82,018
|
21%
|
(360,598)
|
-440%
|
Total
|
$(70,192)
|
-6%
|
$648,342
|
33%
|
$(718,534)
|
-111
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Total
|
$5,240,047
|
|
$4,297,464
|
|
$942,583
|
22%
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Total
|
$474,603
|
$432,569
|
|
$42,034
|
10%
|
|
Three
months Ended
|
|||||
|
March
31, 2007
|
March
31, 2006
|
Variance
|
|||
|
|
|
|
|
|
|
Total
|
$4,260,111
|
|
$3,092,043
|
|
$1,168,068
|
38%
|
|
·
|
Cash
had an increase from working capital by $542,987 for the period ended
March 31, 2007. The most significant uses and proceeds of cash are
as
follows:
|
|
o
|
Approximately
$4,800,000 of cash consumed directly in operating
activities
|
|
o
|
A
cash payment of $900,000 representing the second installment of the
cash
portion of the purchase price for the acquisition of
MST
|
|
o
|
The
cash payment in the acquisition of Ethostream amounted to approximately
$2,000,000, and as part of the acquisition the debt payoff amounted
to
approximately $200,000—see discussion of acquisition
below;
|
|
o
|
The
cash payments in the acquisition of SSI amounted to approximately
$875,000—see discussion of acquisition
below;
|
|
o
|
A
private placement from the sale of 4,000,000 shares of common stock
at
$2.50 per share provided proceeds of
$9,610,000.
|
|
|
Payment
Due by Period
|
|
|||||||||||||
Contractual
obligations
|
|
|
Total
|
|
|
Less
than 1 year
|
|
|
1-3
years
|
|
|
3-5
years
|
|
|
More
than 5 years
|
|
Long-Term
Debt Obligations
|
|
- | - | - | - |
|
|
-
|
|
|||||||
Capital
Lease Obligations
|
|
$
|
17,921
|
6,078 | 11,843 | - |
|
|
-
|
|
||||||
Operating
Lease Obligations
|
|
$
|
1,758,147
|
493,068
|
693,551
|
296,306
|
|
|
275,222
|
|
||||||
Purchase
Obligations
|
|
|
|
|
-
|
|
||||||||||
Other
Long-Term Liabilities Reflected on the Registrant’s Balance Sheet Under
GAAP
|
|
|
|
|
-
|
|
||||||||||
Total
|
|
$
|
1,776,068
|
499,146
|
705,394
|
296,306
|
|
|
275,222
|
|