Utah
|
87-0627421
|
(State
of Incorporation)
|
(IRS
Employer Identification No.)
|
Large
Accelerated Filer o
|
Accelerated Filer x
|
Non-Accelerated
Filer o
|
|
Page
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
Item
1. Financial Statements (Unaudited)
|
|
|
|
Condensed
Consolidated Balance Sheets:
|
2
|
September
30, 2007 and December 31, 2006
|
|
|
|
Condensed
Consolidated Statements of Operations:
|
3
|
Three
and Nine months Ended September 30, 2007 and 2006
|
|
|
|
Condensed
Consolidated Statement of Stockholders’ Equity
|
4
|
January
1, 2007 through September 30, 2007
|
|
|
|
Condensed
Consolidated Statements of Cash Flows:
|
5
|
Nine
months Ended September 30, 2007 and 2006
|
|
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements:
|
7
|
September
30, 2007
|
|
|
|
Item
2. Management’s Discussion and Analysis
|
32
|
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
|
46
|
|
|
Item
4. Controls and Procedures
|
46
|
|
|
PART
II. OTHER INFORMATION
|
47
|
|
|
Item
1. Legal Proceedings
|
47
|
|
|
Item
1A. Risk Factors
|
47
|
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
48
|
|
|
Item
3. Defaults Upon Senior Securities
|
48
|
|
|
Item
4. Submission of Matters to a Vote of Security Holders
|
48
|
|
|
Item
5. Other Information
|
48
|
|
|
Item
6. Exhibits
|
48
|
|
(Unaudited)
September
30, 2007
|
December
31,
2006
|
||||||
ASSETS
|
|
|
||||||
Current
Assets:
|
|
|
||||||
Cash
and cash equivalents
|
$ |
1,582,586
|
$ |
1,644,037
|
||||
Accounts
Receivable: net of allowance for doubtful accounts of $207,000
and $60,000
at September 30, 2007 and December 31, 2006, respectively
|
2,616,205
|
295,116
|
||||||
Income
tax receivable
|
291,000
|
291,000
|
||||||
Note
receivable
|
17,876
|
-
|
||||||
Inventories
|
2,125,082
|
1,306,593
|
||||||
Deposits - Inventory | 379,281 | - | ||||||
Other
|
585,239
|
229,333
|
||||||
Total
current assets
|
7,597,269
|
3,766,079
|
||||||
|
||||||||
Property
and Equipment:
|
||||||||
Furniture
and equipment, at cost
|
1,616,058
|
1,370,780
|
||||||
Less:
accumulated depreciation
|
741,856
|
577,759
|
||||||
Total
property and equipment, net
|
874,202
|
793,021
|
||||||
|
||||||||
Cable
Equipment, Installation and Equipment under Operating
Leases:
|
||||||||
Capitalized
equipment, at cost
|
5,773,229
|
4,026,255
|
||||||
Less:
accumulated depreciation
|
1,130,731
|
568,721
|
||||||
Total
cable equipment, installation and equipment under operating leases,
net
|
4,642,498
|
3,457,534
|
||||||
|
||||||||
Other
Assets:
|
||||||||
Long-term
investments
|
193,847
|
193,847
|
||||||
Intangible
assets, net of accumulated amortization of $693,229 and $282,325
at
September 30, 2007 and December 31, 2006, respectively
|
6,552,591
|
2,181,602
|
||||||
Financing
costs, net of accumulated amortization of $101,663
|
764,151
|
-
|
||||||
Goodwill
|
16,877,978
|
1,977,768
|
||||||
Note
receivable
|
17,974
|
- | ||||||
Deposits
and other
|
154,357
|
146,665
|
||||||
Total
other assets
|
24,560,898
|
4,499,882
|
||||||
Total
Assets
|
$ |
37,674,867
|
$ |
12,516,516
|
||||
|
||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ |
4,850,231
|
$ |
2,859,863
|
||||
Notes
payable - officer
|
-
|
80,444
|
||||||
Income
tax refund due to officer
|
291,000
|
291,000
|
||||||
Deferred
revenue
|
218,076
|
160,125
|
||||||
Senior
note payable, net of discount for warrant feature of
$125,058
|
1,374,942
|
-
|
||||||
Registration
Rights Liability of subsidiary
|
500,000
|
-
|
||||||
Note
payable under subsidiary acquisition
|
-
|
900,000
|
||||||
Customer
deposits and other
|
195,241
|
5,281
|
||||||
Total
current liabilities
|
7,429,490
|
4,296,713
|
||||||
|
||||||||
Long
Term Liabilities:
|
||||||||
Deferred
Revenue
|
13,903
|
42,019
|
||||||
Deferred
lease liability & other
|
61,841
|
42,561
|
||||||
Convertible
debentures, net
|
4,605,920
|
-
|
||||||
Total
long term liabilities
|
4,681,664
|
84,580
|
||||||
Total
Liabilities
|
12,111,154
|
4,381,293
|
||||||
|
||||||||
Commitments
and Contingencies
|
||||||||
Minority
Interest
|
3,783,829
|
-
|
||||||
|
||||||||
Stockholders’
Equity :
|
||||||||
Preferred
stock, par value $.001 per share; 15,000,000 shares
authorized;
none
issued and outstanding at September 30, 2007 and December 31,
2006
|
-
|
-
|
||||||
Common
stock, par value $.001 per share; 100,000,000 shares
authorized;
67,736,342
and 56,992,301 shares issued and outstanding at September 30,
2007
and December 31, 2006, respectively
|
67,736
|
56,992
|
||||||
Additional
paid-in-capital
|
107,078,791
|
78,502,900
|
||||||
Accumulated
deficit
|
(85,366,643 | ) | (70,424,669 | ) | ||||
Stockholders’
equity
|
21,779,884
|
8,135,223
|
||||||
Total
Liabilities And Stockholders’ Equity
|
$ |
37,674,867
|
$ |
12,516,516
|
|
For
The Three months Ended
September
30,
|
For
The Nine months Ended
September
30,
|
||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues,
net:
|
||||||||||||||||
Product
|
$ |
3,005,144
|
$ |
585,535
|
$ |
6,269,079
|
$ |
2,697,424
|
||||||||
Rental
|
1,583,633
|
557,562
|
3,232,574
|
1,542,056
|
||||||||||||
Total
Revenue
|
4,588,777
|
1,143,097
|
9,501,653
|
4,239,480
|
||||||||||||
|
||||||||||||||||
Cost
of Sales:
|
||||||||||||||||
Product
|
2,139,034
|
345,244
|
4,503,983
|
2,349,056
|
||||||||||||
Rental
|
1,229,985
|
714,804
|
3,177,386
|
1,019,404
|
||||||||||||
Total
Cost of Sales
|
3,369,019
|
1,060,048
|
7,681,369
|
3,368,460
|
||||||||||||
|
||||||||||||||||
Gross
Profit
|
1,219,758
|
83,049
|
1,820,284
|
871,020
|
||||||||||||
|
||||||||||||||||
Costs
and Expenses:
|
||||||||||||||||
Research
and Development
|
646,848
|
447,092
|
1,736,656
|
1,411,791
|
||||||||||||
Selling,
General and Administrative
|
4,553,161
|
3,551,569
|
13,057,979
|
10,390,864
|
||||||||||||
Impairment
write-down in investment in affiliate
|
-
|
-
|
-
|
38,000
|
||||||||||||
Non-Employee
Stock Based Compensation
|
400,220
|
-
|
400,220
|
277,344
|
||||||||||||
Employee
Stock Based Compensation
|
425,800
|
230,991
|
1,115,867
|
815,809
|
||||||||||||
Depreciation
and Amortization
|
275,611
|
141,548
|
638,131
|
412,267
|
||||||||||||
Total
Operating Expense
|
6,301,640
|
4,371,200
|
16,948,853
|
13,346,075
|
||||||||||||
|
||||||||||||||||
Loss
from Operations
|
(5,081,882 | ) | (4,288,151 | ) | (15,128,569 | ) | (12,475,055 | ) | ||||||||
|
||||||||||||||||
Other
Income (Expenses):
|
||||||||||||||||
Loss
on early extinguishment of debt
|
-
|
(4,626,679 | ) |
-
|
(4,626,679 | ) | ||||||||||
Registration
rights liquidated damages of subsidiary
|
(500,000 | ) |
-
|
(500,000 | ) |
-
|
||||||||||
Interest
Income
|
37,883
|
106,074
|
110,343
|
294,614
|
||||||||||||
Interest
Expense
|
(328,611 | ) | (1,665,030 | ) | (529,168 | ) | (5,515,378 | ) | ||||||||
Total
Other Income (Expenses)
|
(790,728 | ) | (6,185,635 | ) | (918,825 | ) |
(9,847,443
|
|||||||||
|
||||||||||||||||
Loss
Before Provision for Income Taxes
|
(5,872,610 | ) | (10,473,786 | ) | (16,047,394 | ) | (22,322,498 | ) | ||||||||
Provision
for Income Taxes
|
-
|
-
|
-
|
-
|
||||||||||||
|
||||||||||||||||
Loss
Before Minority Interest
|
(5,872,610 | ) | (10,473,786 | ) | (16,047,394 | ) | (22,322,498 | ) | ||||||||
Minority
Interest
|
916,980
|
-
|
1,105,420
|
19,569
|
||||||||||||
Net
Loss
|
$ | (4,955,630 | ) | $ | (10,473,786 | ) | $ | (14,941,974 | ) | $ | (22,302,929 | ) | ||||
|
||||||||||||||||
Loss
per common share (basic and assuming dilution)
|
$ | (0.07 | ) | $ | (0.20 | ) | $ | (0.23 | ) | $ | (0.46 | ) | ||||
|
||||||||||||||||
Weighted
average common shares outstanding
|
67,520,571
|
52,602,757
|
64,324,325
|
48,784,948
|
|
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 approximately $1.05
per
share
|
-
|
-
|
118,500
|
119
|
124,342
|
124,460
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Shares
issued in exchange for services rendered at approximately $2.63 per
share
|
-
|
-
|
21,803
|
22
|
57,320
|
57,342
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
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 Private Placement
|
-
|
-
|
4,000,000
|
4,000
|
9,606,000
|
9,610,000
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Issuance
of shares for acquisition by subsidiary
|
866,856
|
867
|
1,529,133
|
1,530,000
|
||||||||||||||||||||||||
Shares
issued in exchange for services at $1.68 per share
|
50,000
|
50
|
83,950
|
84,000
|
||||||||||||||||||||||||
Value
of additional warrants issued in conjunction with exchange of convertible
debentures
|
-
|
-
|
-
|
-
|
132,949
|
132,949
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Debt
discount attributable to warrants attached to Note
|
-
|
-
|
195,924
|
195,924
|
||||||||||||||||||||||||
Stock-based
compensation expense related to employee stock options
|
-
|
-
|
-
|
-
|
941,900
|
941,900
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock-based
compensation related to Stock option expenses accrued in prior
period
|
-
|
-
|
-
|
-
|
153,963
|
153,963
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net
Loss
|
-
|
-
|
(14,941,974 | ) | (14,941,974 | ) | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance
at September 30, 2007
|
-
|
$ |
-
|
67,736,342
|
$ |
67,736
|
$ |
107,078,791
|
$ | (85,366,643 | ) | $ |
21,779,884
|
|
For
The Nine months
Ended
September 30,
|
|||||||
|
2007
|
2006
|
||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
loss
|
$ | (14,941,974 | ) | $ | (22,302,929 | ) | ||
Adjustments
to reconcile net loss from operations to cash used in operating
activities
|
||||||||
Minority
interest
|
(1,105,420 | ) | (19,569 | ) | ||||
Amortization
and write-off of financing costs in connection with conversion
of
convertible debentures
|
-
|
1,145,911
|
||||||
Amortization
of financing costs
|
101,663
|
-
|
||||||
Write-off
of fixed assets in conjunction with loss on sublease
|
64,608
|
-
|
||||||
Registration
rights liquidated damages of subsidiary
|
500,000
|
-
|
||||||
Warrants
issued for interest expense
|
319,495
|
|||||||
Warrants
issued with conversion of convertible debentures
|
-
|
2,921,023
|
||||||
Common
stock issued in exchange for and penalty in connection with early
extinguishment of debt
|
-
|
1,982,078
|
||||||
Common
stock issued in exchange for interest expense
|
-
|
23,951
|
||||||
Amortization
of debt discount
|
175,450
|
-
|
||||||
Amortization
and write-off of debt discount - beneficial conversion feature
of
convertible debentures
|
-
|
1,390,137
|
||||||
Amortization
and write-off of debt discount - value of warrants attached to
convertible
debentures
|
-
|
2,743,342
|
||||||
Stock
options and warrants issued in exchange for services
rendered
|
1,115,867
|
1,093,153
|
||||||
Common
stock issued in exchange for services rendered
|
308,342
|
203,027
|
||||||
Impairment
write-down in investment in Amperion
|
-
|
38,000
|
||||||
Depreciation,
including depreciation of equipment under operating leases
|
1,181,149
|
699,268
|
||||||
Increase
/ decrease in:
|
||||||||
Accounts
receivable
|
(1,573,744 | ) | (327,325 | ) | ||||
Inventory
|
474,432
|
172,041
|
||||||
Prepaid
expenses and deposits
|
(713,831 | ) | (425,359 | ) | ||||
Customer
deposits and other
|
129,368
|
(72,662 | ) | |||||
Accounts
payable and accrued expenses
|
1,480,144
|
(217,001 | ) | |||||
Deferred
revenue
|
(115,927 | ) |
87,467
|
|||||
Deferred
lease liability and other
|
9,114
|
245
|
||||||
Net
Cash (Used in) Operating Activities
|
(12,591,264 | ) | (10,014,484 | ) | ||||
|
||||||||
Cash
Flows from Investing Activities:
|
||||||||
Costs
of cable equipment, installation and equipment under operating
leases
|
(1,162,832 | ) | (1,576,980 | ) | ||||
Proceeds
from sale of equipment under operating lease
|
-
|
350,571
|
||||||
Released
funds from Restricted Certificate of Deposit
|
-
|
10,000,000
|
||||||
Investment
in Newport
|
(1,020,000 | ) |
-
|
|||||
Payment
of note payable and investment in subsidiary
|
(900,000 | ) | (1,017,822 | ) | ||||
Net
cash acquired from MST
|
-
|
59,384
|
||||||
Investment
in subsidiaries
|
(3,150,557 | ) |
-
|
|||||
Investment
in affiliate
|
-
|
(44 | ) | |||||
Purchase
of property and equipment, net
|
(266,280 | ) | (708,598 | ) | ||||
Net
Cash Provided by (Used in) Investing Activities
|
(6,499,669 | ) | 7,106,511 | |||||
|
||||||||
Cash
Flows from Financing Activities:
|
||||||||
Proceeds
from sale of common stock, net of costs
|
9,610,000
|
6,000,000
|
||||||
Proceeds
from the issuance of senior note payable
|
1,500,000
|
-
|
||||||
Proceeds
from subsidiaries’ sale of common stock, net of costs
|
2,694,020
|
-
|
||||||
Proceeds
from the issuance of convertible debentures, net of costs and
fees
|
5,303,238
|
-
|
||||||
Repayment
of convertible debentures
|
-
|
(7,750,000 | ) | |||||
Repayment
of senior notes
|
-
|
(100,000 | ) | |||||
Proceeds
from exercise of stock options and warrants
|
124,460
|
2,371,300
|
||||||
Repayment
of subsidiary loans
|
(202,236 | ) | (412,119 | ) | ||||
Net
Cash Provided by Financing Activities
|
19,029,482
|
109,181
|
||||||
|
||||||||
Net
(Decrease) in Cash and Cash Equivalents
|
(61,451 | ) | (2,798,792 | ) | ||||
|
||||||||
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
|
$ |
1,582,586
|
$ |
5,623,287
|
|
For
The Nine months
Ended
September 30,
|
|||||||
|
2007
|
2006
|
||||||
Supplemental
Disclosures of Cash Flow Information
|
||||||||
Cash
paid during the period for interest
|
$ |
3,995
|
$ |
1,014,797
|
||||
Income
taxes paid
|
-
|
-
|
||||||
Non-cash
transactions:
|
||||||||
Note
payable under subsidiary acquisition
|
-
|
900,000
|
||||||
Common
stock issued in exchange for convertible debentures
|
-
|
12,250,000
|
||||||
Common
stock issued in exchange for interest expense and penalty in connection
with early extinguishment of debt
|
-
|
2,006,029
|
||||||
Registration
rights liquidated damages of subsidiary
|
500,000
|
-
|
||||||
Issuance
of shares for purchase of subsidiary
|
17,286,097
|
2,700,000
|
||||||
Employee
stock-based compensation
|
1,095,863
|
815,809
|
||||||
Issuance
of stock options and warrants in exchange for services
rendered
|
-
|
277,344
|
||||||
Common
stock issued for services rendered
|
141,342
|
203,026
|
||||||
Value of stock options issued for accrued expenses | 153,963 | - | ||||||
Acquisition
of subsidiaries (Note B):
|
||||||||
Assets
acquired
|
3,052,880
|
1,656,673
|
||||||
Subscriber
lists
|
4,781,893
|
2,463,927
|
||||||
Goodwill
(including purchase price contingency)
|
15,096,922
|
6,477,767
|
||||||
Minority
Interest
|
-
|
(19,569 | ) | |||||
Liabilities
assumed
|
(1,356,415 | ) | (1,460,976 | ) | ||||
Common
stock issued
|
(17,286,097 | ) | (2,700,000 | ) | ||||
Notes
payable issued
|
-
|
(900,000 | ) | |||||
Purchase
price contingency
|
-
|
(4,500,000 | ) | |||||
Direct
acquisition costs
|
(394,183 | ) | (117,822 | ) | ||||
Cash
paid for acquisition
|
$ | (3,895,000 | ) | $ | (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
|
|
|
131,543
|
|
Total
Purchase Price
|
|
$
|
7,006,543
|
|
Current
assets
|
|
$
|
1,416,299
|
|
Property,
plant and equipment
|
|
|
36,020
|
|
Other
assets
|
|
|
8,237
|
|
Goodwill
|
|
|
6,103,771
|
|
Total
assets acquired
|
|
|
7,564,327
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
(557,784
|
)
|
Total
liabilities assumed
|
|
|
(557,784
|
)
|
Net
assets acquired
|
|
$
|
7,006,543
|
|
|
|
As
Reported
|
|
|
Common
stock
|
|
$
|
9,756,097
|
|
Cash
|
|
|
2,000,000
|
|
Direct
acquisition costs
|
|
|
164,346
|
|
Total
Purchase Price
|
|
$
|
11,920,443
|
|
Current
assets
|
|
$
|
949,308
|
|
Property,
plant and equipment
|
|
|
51,724
|
|
Other
assets
|
|
|
21,602
|
|
Subscriber
lists
|
|
|
2,900,000
|
|
Goodwill
|
|
|
8,796,440
|
|
Total
assets acquired
|
|
|
12,719,074
|
|
Accounts
payable and accrued liabilities
|
|
|
(798,631
|
)
|
Total
liabilities assumed
|
|
|
(798,631
|
)
|
Net
assets acquired
|
|
$
|
11,920,443
|
|
|
|
As
Reported
|
|
|
Common
stock
|
|
$
|
1,530,000
|
|
Cash
|
|
|
1,020,000
|
|
Direct
acquisition costs
|
|
|
98,294
|
|
Total
Purchase Price
|
|
$
|
2,648,294
|
|
Current
assets
|
|
$
|
-
|
|
Property,
plant and equipment
|
|
|
668,107
|
|
Other
assets
|
|
|
98,294
|
|
Subscriber
lists
|
|
|
1,881,893
|
|
Goodwill
|
|
|
-
|
|
Total
assets acquired
|
|
|
2,648,294
|
|
Accounts
payable and accrued liabilities
|
|
|
-
|
|
Total
liabilities assumed
|
|
|
-
|
|
Net
assets acquired
|
|
$
|
2,648,294
|
|
Nine
months Ended
|
|||||||
|
September
30,
|
|||||||
|
Proforma
|
Proforma
|
||||||
|
2007
|
2006
|
||||||
|
|
|
||||||
Product
revenue
|
$ |
7,185,105
|
$ |
5,636,119
|
||||
Rental
revenue
|
4,739,867
|
3,666,301
|
||||||
Total
revenues
|
11,924,972
|
9,302,420
|
||||||
|
||||||||
Net
(loss)
|
$ | (15,855,515 | ) | $ | (23,185,452 | ) | ||
Basic
(loss) per share
|
$ | (0.25 | ) | $ | (0.39 | ) | ||
Diluted
(loss) per share
|
$ | (0.25 | ) | $ | (0.39 | ) |
|
September
30, 2007
|
December
31, 2006
|
||||||
Raw
Materials
|
$ |
1,050,880
|
$ |
516,604
|
||||
Finished
Goods
|
1,074,202
|
789,989
|
||||||
|
$ |
2,125,082
|
$ |
1,306,593
|
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average
Amortization
Period
(Years)
|
|||||||||||||||
Amortized
Identifiable intangible 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
|
$ |
-
|
8.0
|
|||||||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||||||
Total
|
$ |
2,463,927
|
$ | (282,325 | ) | $ |
2,181,602
|
$ |
-
|
8.0
|
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average Amortization Period (Years)
|
|||||||||||||||
Amortized
Identifiable Intangible Assets:
|
|
|
|
|
|
|||||||||||||||
Subscriber
lists – MST
|
$ |
4,345,820
|
$ | (562,326 | ) |
3,783,494
|
|
8.0
|
||||||||||||
Subscriber
lists - Ethostream
|
2,900,000
|
$ | (130,903 | ) |
2,769,097
|
$ |
-
|
12.0
|
||||||||||||
|
||||||||||||||||||||
Total
Amortized Identifiable Intangible Assets
|
7,245,820
|
$ | (693,229 | ) |
6,552,591
|
-
|
9.6
|
|||||||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||||||
Total
|
$ |
7,245,820
|
$ | (693,229 | ) |
6,552,591
|
$ |
-
|
9.6
|
Fiscal
|
|
|
|
|
October
1 - December 31, 2007
|
|
|
196,223
|
|
2008
|
|
|
784,894
|
|
2009
|
|
|
784,894
|
|
2010
|
|
|
784,894
|
|
2011
|
|
|
784,894
|
|
2012
and after
|
|
|
3,216,792
|
|
Total
|
|
$
|
6,552,591
|
|
|
2007
|
2006
|
||||||
Senior
Convertible Debentures, accrue interest at 8% per annum commencing
on the
first anniversary of the original issue date of the debentures, payable
quarterly in cash or common stock, at MSTI Holdings Inc.’s option, and
mature on April 30, 2010
|
$ |
6,576,350
|
$ |
-
|
||||
Original
Issue Discount - net of accumulated amortization of $175,450 and
$0 at
September 30, 2007 and December 31, 2006, respectively.
|
(350,900 | ) |
-
|
|||||
Debt
Discount - beneficial conversion feature, net of accumulated amortization
of $57,840 and $0 at September 30, 2007 and December 31, 2006,
respectively.
|
(809,765 | ) | ||||||
Debt
Discount - value attributable to warrants attached to notes, net
of
accumulated amortization of $57,840 and $0 at September 30, 2007
and
December 31, 2006, respectively.
|
(809,765 | ) |
-
|
|||||
|
||||||||
Total
|
$ |
4,605,920
|
$ |
-
|
||||
Less:
current portion
|
-
|
-
|
||||||
|
$ |
4,605,920
|
$ |
-
|
For
the twelve months ended September 30
|
Amount
|
|||
2007
|
-
|
|||
2008
|
-
|
|||
2009
|
-
|
|||
2010
|
6,576,350
|
|||
|
$ |
6,576,350
|
|
2007
|
2006
|
||||||
Senior
Note Payable, accrues interest at 6% per annum, and mature on the
earlier
to occur of (i) the closing of the Company’s next financing, or (ii)
January 28, 2008.
|
$ |
1,500,000
|
$ |
-
|
||||
Debt
Discount - value attributable to warrants attached to notes, net
of
accumulated amortization of $70,866 and $0 at September 30, 2007
and
December 31, 2006, respectively.
|
(125,058 | ) |
-
|
|||||
|
||||||||
Total
|
$ |
1,374,942
|
$ |
-
|
||||
Less:
current portion
|
1,374,942
|
-
|
||||||
|
$ |
-
|
$ |
-
|
For
the twelve months ended September 30
|
Amount
|
|||
2007
|
$ |
-
|
||
2008
|
1,500,000
|
|||
2009
|
-
|
|||
2010
|
-
|
|||
|
$ |
1,500,000
|
|
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
|
4,273,429
|
5.41
|
$ |
1.04
|
4,083,429
|
$ |
1.00
|
||||||||||||||
$ |
2.00-$2.99
|
1,995,750
|
7.37
|
$ |
2.54
|
1,329,750
|
$ |
2.49
|
||||||||||||||
$ |
3.00-$3.99
|
1,811,000
|
7.68
|
$ |
3.27
|
1,177,750
|
$ |
3.38
|
||||||||||||||
$ |
4.00-$4.99
|
160,000
|
7.47
|
$ |
4.44
|
66,500
|
$ |
4.44
|
||||||||||||||
$ |
5.00-$5.99
|
146,750
|
7.36
|
$ |
5.24
|
70,250
|
$ |
5.21
|
||||||||||||||
8,386,929
|
6.44
|
$ |
2.01
|
6,456,179
|
$ |
1.72
|
|
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
|
|||||
Canceled
or expired
|
(372,200 | ) |
3.74
|
|||||
Outstanding
at December 31, 2005
|
10,151,078
|
$ |
1.85
|
|||||
Granted
|
1,125,000
|
3.01
|
||||||
Exercised
|
(2,051,399 | ) |
1.30
|
|||||
Canceled
or expired
|
(703,750 | ) |
2.67
|
|||||
Outstanding
at December 31, 2006
|
8,520,929
|
$ |
2.06
|
|||||
Granted
|
935,000
|
2.55
|
||||||
Exercised
(Note J)
|
(118,500 | ) |
1.05
|
|||||
Canceled
or expired
|
(950,500 | ) |
3.01
|
|||||
Outstanding
at September 30, 2007
|
8,386,929
|
$ |
2.01
|
|
2007
|
2006
|
||||||
Significant
assumptions (weighted-average):
|
|
|
||||||
Risk-free
interest rate at grant date
|
4.8% | 5.0% | ||||||
Expected
stock price volatility
|
70% | 65% | ||||||
Expected
dividend payout
|
-
|
-
|
||||||
Expected
option life-years
|
5.0
|
5.0
|
||||||
Expected
forfeiture rate
|
12% | 12% | ||||||
Fair
value per share of options granted
|
$ |
1.57
|
$ |
1.94
|
|
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
|
4.59
|
$ |
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
|
|||||