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
|
2
|
Item
1. Financial Statements (Unaudited)
|
2
|
Condensed
Consolidated Balance Sheets:
|
2
|
September
30, 2008 and December 31, 2007
|
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss:
|
3
|
Three
and Nine Months Ended September 30, 2008 and 2007
|
|
Condensed
Consolidated Statement of Stockholders’ Equity
|
4
|
January
1, 2008 through September 30, 2008
|
|
Condensed
Consolidated Statements of Cash Flows:
|
5
|
Nine
Months Ended September 30, 2008 and 2007
|
|
Notes
to Unaudited Condensed Consolidated Financial Statements:
|
7
|
September
30, 2008
|
|
Item
2. Management’s Discussion and Analysis
|
29
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
|
40
|
Item
4. Controls and Procedures
|
40
|
PART
II. OTHER INFORMATION
|
41
|
Item
1. Legal Proceedings
|
41
|
Item
1A. Risk Factors
|
41
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
42
|
Item
3. Defaults Upon Senior Securities
|
42
|
Item
4. Submission of Matters to a Vote of Security Holders
|
42
|
Item
5. Other Information
|
43
|
Item
6. Exhibits
|
43
|
ASSETS
|
September
30,
2008
(unaudited)
|
December
31,
2007
|
||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$
|
149,993
|
$
|
1,629,583
|
||||
Accounts
receivable, net of allowance for doubtful accounts of $210,137 and
$111,957at September
30, 2008 and December 31, 2007, respectively
|
787,796
|
2,134,978
|
||||||
Due
from receivable factoring
|
872,719
|
-
|
||||||
Investment
in sales type leases
|
4,040
|
16,501
|
||||||
Inventories
|
2,005,996
|
2,578,084
|
||||||
Prepaid
expenses and deposits
|
564,934
|
645,022
|
||||||
Total
current assets
|
4,385,478
|
7,004,168
|
||||||
Property and equipment, at
cost:
|
||||||||
Furniture
and equipment
|
1,580,087
|
1,660,493
|
||||||
Less:
accumulated depreciation
|
914,183
|
809,915
|
||||||
Total
property and equipment, net
|
665,904
|
850,578
|
||||||
Equipment under operating
leases, at cost:
|
||||||||
Telecommunications
and related equipment, at cost
|
117,493
|
313,941
|
||||||
Less:
accumulated depreciation
|
92,698
|
243,894
|
||||||
Total
equipment under operating leases, net
|
24,795
|
70,047
|
||||||
Cable and related
equipment:
|
||||||||
Telecommunications
and related equipment, at cost
|
6,520,047
|
5,764,645
|
||||||
Less:
accumulated depreciation
|
2,087,869
|
1,537,862
|
||||||
Total
cable and related equipment, net
|
4,432,178
|
4,226,783
|
||||||
Other
assets:
|
||||||||
Long-term
investments
|
62,803
|
62,803
|
||||||
Marketable
securities
|
1,764,863
|
4,541,167
|
||||||
Intangible
assets, net of accumulated amortization of $1,492,969 and $895,085
at
September 30, 2008 and December 31, 2007, respectively
|
5,851,145
|
6,449,029
|
||||||
Financing
costs, net of accumulated amortization of $423,636 and $168,353
at
September 30, 2008 and December 31, 2007, respectively
|
892,178
|
697,461
|
||||||
Goodwill
|
14,670,455
|
14,670,455
|
||||||
Deposits
and other
|
113,676
|
168,854
|
||||||
Total
other assets
|
23,355,120
|
26,589,769
|
||||||
Total
Assets
|
$
|
32,863,475
|
$
|
38,741,345
|
||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$
|
4,797,855
|
$
|
5,700,397
|
||||
Accrued
liabilities
|
2,931,760
|
1,653,782
|
||||||
Capital
lease payable – current
|
36,663
|
-
|
||||||
Related
party advances
|
348,918
|
291,000
|
||||||
Senior
note payable, net of debt discounts
|
-
|
1,470,820
|
||||||
Registration
rights liability
|
-
|
500,000
|
||||||
Deferred
revenue
|
294,201
|
250,613
|
||||||
Working
capital line of credit
|
475,000
|
-
|
||||||
Other
|
221,677
|
128,222
|
||||||
Total
current liabilities
|
9,106,074
|
9,994,832
|
||||||
Long-term
liabilities:
|
||||||||
Convertible
debentures, net of debt discounts
|
6,251,716
|
4,432,342
|
||||||
Capital
lease payable – non current
|
176,011
|
-
|
||||||
Derivative
liability
|
2,993,615
|
-
|
||||||
Deferred
lease liability and other
|
55,611
|
67,112
|
||||||
Total
long-term liabilities
|
9,476,953
|
4,499,454
|
||||||
Commitments
and contingencies
|
-
|
-
|
||||||
Minority
interest
|
2,668,058
|
2,978,918
|
||||||
Stockholders’
equity
|
||||||||
Preferred
stock, par value $.001 per share; 15,000,000 shares
authorized; none
issued and outstanding at September 30, 2008 and December 31,
2007
|
-
|
-
|
||||||
Common
stock, par value $.001 per share; 130,000,000 shares authorized;
82,380,634 and 70,826,544 shares issued and outstanding at September 30,
2008 and December 31, 2007, respectively
|
82,381
|
70,827
|
||||||
Additional
paid-in-capital
|
117,353,721
|
112,013,093
|
||||||
Accumulated
deficit
|
(103,047,408
|
)
|
(90,815,779
|
)
|
||||
Accumulated
comprehensive loss
|
(2,776,304
|
)
|
-
|
|||||
Stockholders’
equity
|
11,612,390
|
21,268,141
|
||||||
Total
Liabilities and Stockholders’ Equity
|
$
|
32,863,475
|
$
|
38,741,345
|
For
The Three Months Ended
September
30,
|
For
The Nine Months Ended
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenues,
net:
|
||||||||||||||||
Product
|
$
|
3,964,419
|
$
|
3,005,144
|
$
|
11,333,574
|
$
|
6,269,079
|
||||||||
Rental
|
1,763,396
|
1,583,633
|
4,977,799
|
3,232,574
|
||||||||||||
Total
Revenue
|
5,727,815
|
4,588,777
|
16,311,373
|
9,501,653
|
||||||||||||
Cost
of Sales:
|
||||||||||||||||
Product
|
2,165,379
|
2,139,034
|
7,124,696
|
4,503,983
|
||||||||||||
Rental
|
1,355,985
|
1,229,985
|
3,975,648
|
3,177,386
|
||||||||||||
Total
Cost of Sales
|
3,521,364
|
3,369,019
|
11,100,344
|
7,681,369
|
||||||||||||
Gross
Profit
|
2,206,451
|
1,219,758
|
5,211,029
|
1,820,284
|
||||||||||||
Costs
and Expenses:
|
||||||||||||||||
Research
and Development
|
509,418
|
646,848
|
1,667,229
|
1,736,656
|
||||||||||||
Selling,
General and Administrative
|
3,111,570
|
4,553,161
|
10,317,209
|
13,057,979
|
||||||||||||
Impairment
Write-Down in Investment in Affiliate
|
-
|
-
|
380,000
|
-
|
||||||||||||
Impairment
Write-Down in Long Lived Assets of Subsidiary
|
330,000
|
-
|
330,000
|
-
|
||||||||||||
Non-Employee
Stock Based Compensation
|
-
|
400,220
|
81,500
|
400,220
|
||||||||||||
Employee
Stock Based Compensation
|
194,483
|
294,859
|
623,113
|
941,900
|
||||||||||||
Employee
Stock Based Compensation of Subsidiary
|
128,507
|
130,941
|
395,904
|
173,967
|
||||||||||||
Depreciation
and Amortization
|
251,587
|
275,611
|
764,157
|
638,131
|
||||||||||||
Total
Operating Expense
|
4,525,565
|
6,301,640
|
14,559,112
|
16,948,853
|
||||||||||||
|
||||||||||||||||
Loss
from Operations
|
(2,319,114
|
)
|
(5,081,882
|
)
|
(9,348,083
|
)
|
(15,128,569
|
)
|
||||||||
Other
Income (Expenses):
|
||||||||||||||||
Interest
Income
|
405
|
37,883
|
28,946
|
110,343
|
||||||||||||
Financing
Expense
|
(789,021
|
)
|
(328,611
|
)
|
(2,494,888
|
)
|
(529,168
|
)
|
||||||||
Gain
(Loss) on Derivative Liability
|
(576,156
|
)
|
-
|
(1,594,609
|
)
|
-
|
||||||||||
Registration
rights liquidated damages of subsidiary
|
-
|
(500,000
|
)
|
500,000
|
(500,000
|
)
|
||||||||||
Other
income
|
-
|
-
|
270,950
|
-
|
||||||||||||
Other
expense
|
-
|
-
|
(1,598,203
|
)
|
-
|
|||||||||||
Total
Other Income (Expenses)
|
(1,364,772
|
)
|
(790,728
|
)
|
(4,887,804
|
)
|
(918,825
|
)
|
||||||||
Loss
Before Provision for Income Taxes
|
(3,683,886
|
)
|
(5,872,610
|
)
|
(14,235,887
|
)
|
(16,047,394
|
)
|
||||||||
Provision
for Income Taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Loss
Before Minority Interest
|
(3,683,886
|
)
|
(5,872,610
|
)
|
(14,235,887
|
)
|
(16,047,394
|
)
|
||||||||
Minority
Interest
|
805,129
|
916,980
|
2,004,258
|
1,105,420
|
||||||||||||
Net
Loss
|
$
|
(2,878,757
|
)
|
$
|
(4,955,630
|
)
|
$
|
(12,231,629
|
)
|
$
|
(14,941,974
|
)
|
||||
Loss
per common share (basic and assuming dilution)
|
$
|
(0.04
|
)
|
$
|
(0.07
|
)
|
$
|
(0.16
|
)
|
$
|
(0.23
|
)
|
||||
Weighted
average common shares outstanding
|
81,422,404
|
67,520,571
|
76,880,047
|
64,324,325
|
||||||||||||
Comprehensive
Loss:
|
||||||||||||||||
Net
Loss
|
$
|
(2,878,757
|
)
|
$
|
(4,955,630
|
)
|
$
|
(12,231,629
|
)
|
$
|
(14,941,974
|
)
|
||||
Unrecognized
loss on investment
|
(1,218,100
|
)
|
-
|
(2,776,304
|
)
|
-
|
||||||||||
Comprehensive
Loss
|
$
|
(4,096,857
|
)
|
$
|
(4,955,630
|
)
|
$
|
(15,007,933
|
)
|
$
|
(14,941,974
|
)
|
Preferred
Shares
|
Preferred
Stock
Amount
|
Common
Shares
|
Common
Stock
Amount
|
Additional
Paid
in
Capital
|
Accumulated
Deficit
|
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||||||
Balance
at January 1, 2008
|
- | - | 70,826,544 | $ | 70,827 | $ | 112,013,093 | $ | (90,815,779 | ) | $ | - | $ | 21,268,141 | ||||||||||||||||||
Shares
issued in exchange for services rendered at approximately $1.09 per
share
|
- | - | 312,911 | 313 | 340,094 | - | - | 340,407 | ||||||||||||||||||||||||
Shares
issued for cashless warrants exercised
|
- | - | 1,000,000 | 1,000 | (1,000 | ) | - | - | - | |||||||||||||||||||||||
Shares
issued in connection with Private Placement
|
- | - | 2,500,000 | 2,500 | 1,497,500 | - | - | 1,500,000 | ||||||||||||||||||||||||
Adjustment
shares issued for investment in affiliate
|
- | - | 3,046,425 | 3,046 | (3,046 | ) | - | - | - | |||||||||||||||||||||||
Adjustment
shares issued for purchase of subsidiary
|
- | - | 1,882,225 | 1,882 | (1,882 | ) | - | - | - | |||||||||||||||||||||||
Shares
issued from escrow contingency in purchase of subsidiary
|
- | - | 600,000 | 600 | 379,400 | - | - | 380,000 | ||||||||||||||||||||||||
Shares
issued in exchange for convertible debentures
|
- | - | 2,212,529 | 2,213 | 707,787 | - | - | 710,000 | ||||||||||||||||||||||||
Value
of additional warrants issued in conjunction with anti-dilution
provision
|
- | - | - | - | 200,459 | - | - | 200,459 | ||||||||||||||||||||||||
Stock-based
compensation expense related to the re-pricing of investor
warrants
|
- | - | - | - | 1,598,203 | - | - | 1,598,203 | ||||||||||||||||||||||||
Stock-based
compensation expense related to employee stock options
|
- | - | - | - | 623,113 | - | - | 623,113 | ||||||||||||||||||||||||
Holding
loss on available for sale securities
|
- | - | - | - | - | - | (2,776,304 | ) | (2,776,304 | ) | ||||||||||||||||||||||
Net
Loss
|
- | - | - | - | - | (12,231,629 | ) | - | (12,231,629 | ) | ||||||||||||||||||||||
Balance
at September 30, 2008
|
- | - | 82,380,634 | $ | 82,381 | $ | 117,353,721 | $ | (103,047,408 | ) | $ | (2,776,304 | ) | $ | 11,612,390 |
For
The Nine Months
Ended
September 30,
|
||||||||
2008
|
2007
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
loss from operating activities
|
$
|
(12,231,629
|
)
|
$
|
(14,941,974
|
)
|
||
Adjustments
to reconcile net loss from operations to cash used in operating
activities
|
||||||||
Minority
interest
|
(2,004,258
|
)
|
(1,105,420
|
)
|
||||
Registration
rights liquidated damages
|
(500,000
|
)
|
500,000
|
|||||
Write-off
of fixed assets in conjunction with loss on sublease
|
-
|
64,608
|
||||||
Amortization
of financing costs
|
267,849
|
101,663
|
||||||
Amortization
of debt discount and warrant on convertible
debentures
|
534,464
|
175,450
|
||||||
Loss
on derivative liability
|
1,594,609
|
-
|
||||||
Impairment
write-down on long lived assets of subsidiary
|
330,000
|
-
|
||||||
Impairment
write-down on goodwill
|
380,000
|
-
|
||||||
Value
of warrant repricing and additional warrants issued
|
2,973,742
|
319,495
|
||||||
Stock
based compensation to employees and consultants in exchange for services
rendered
|
1,100,517
|
1,424,209
|
||||||
Depreciation
and Amortization, including depreciation of equipment under operating
leases and cable and related equipment
|
1,459,861
|
1,181,149
|
||||||
Increase
/ decrease in:
|
||||||||
Accounts
receivable
|
1,330,521
|
(1,573,744
|
)
|
|||||
Due
from receivable factoring
|
(872,719
|
)
|
-
|
|||||
Inventory
|
572,088
|
474,432
|
||||||
Prepaid
expenses and deposits
|
306,978
|
(713,831
|
)
|
|||||
Customer
deposits and other current liability
|
91,373
|
129,368
|
||||||
Accounts
payable and accrued expenses
|
478,345
|
1,480,144
|
||||||
Deferred
revenue
|
35,152
|
(115,927
|
)
|
|||||
Other
|
58,199
|
9,114
|
||||||
Net
Cash (Used in) Operating Activities
|
(4,094,908
|
)
|
(12,591,264
|
)
|
||||
|
||||||||
Cash
Flows from Investing Activities:
|
||||||||
Costs
of equipment under operating leases and cable and related
equipment
|
(999,718
|
)
|
(1,162,832
|
)
|
||||
Investment
in subsidiaries
|
-
|
(5,070,557
|
)
|
|||||
Purchase
of property and equipment, net
|
(9,001
|
)
|
(266,280
|
)
|
||||
Net
Cash (Used in) Investing Activities
|
(1,008,719
|
)
|
(6,499,669
|
)
|
||||
|
||||||||
Cash
Flows from Financing Activities:
|
||||||||
Proceeds
from issuance of convertible debentures, net of costs and
fees
|
3,112,434
|
5,303,238
|
||||||
Proceeds
from the issuance of a senior note payable
|
-
|
1,500,000
|
||||||
Proceeds
from sale of common stock, net of costs
|
1,500,000
|
9,610,000
|
||||||
Proceeds
from subsidiary’s sale of common stock, net of costs
|
-
|
2,694,020
|
||||||
Proceeds
from exercise of stock options and warrants
|
-
|
124,460
|
||||||
Proceeds
from related party advances, net
|
60,000
|
-
|
||||||
Proceeds
from line of credit
|
475,000
|
-
|
||||||
Repayment
of capital lease and other
|
(23,397
|
)
|
-
|
|||||
Repayment
of senior note
|
(1,500,000
|
)
|
-
|
|||||
Repayment
of subsidiary loans
|
-
|
(202,236
|
)
|
|||||
Net
Cash Provided by Financing Activities
|
3,624,037
|
19,029,482
|
||||||
Net
Increase (Decrease) in Cash and Cash Equivalents
|
(1,479,590
|
)
|
(61,451
|
)
|
||||
Cash
and cash equivalents at the beginning of the period
|
1,629,583
|
1,644,037
|
||||||
Cash
and cash equivalents at the end of the period
|
$
|
149,993
|
$
|
1,582,586
|
For
The Nine Months
Ended
September 30,
|
||||||||
2008
|
2007
|
|||||||
Supplemental
Disclosures of Cash Flow Information
|
||||||||
Cash
paid during the period for financing expenses
|
$ | 257,403 | $ | 3,995 | ||||
Income
taxes paid
|
- | - | ||||||
Non-cash
transactions:
|
||||||||
Issuance
of shares for purchase of subsidiary
|
- | 17,286,097 | ||||||
Amortization
of debt discount and warrant on convertible debentures
|
534,464 | - | ||||||
Loss
on derivative liability
|
1,594,604 | - | ||||||
Impairment
write-down on long lived assets of subsidiary
|
330,000 | - | ||||||
Impairment
write-down on goodwill
|
380,000 | - | ||||||
Value
of warrant repricing and additional warrants issued
|
2,973,742 | 319,495 | ||||||
Stock
based compensation to employees and consultants in exchange for services
rendered
|
1,100,517 | 1,424,209 | ||||||
Value of stock based payment for services | 258,907 | - | ||||||
Registration
rights liquidated damages of subsidiary
|
(500,000 | ) | 500,000 | |||||
Capital
lease advances
|
226,185 | - | ||||||
|
||||||||
Acquisition
of subsidiary (Note B):
|
||||||||
Assets
acquired
|
$ | - | $ | 3,052,880 | ||||
Subscriber
lists
|
- | 4,781,893 | ||||||
Goodwill
|
- | 15,096,922 | ||||||
Liabilities
assumed
|
- | (1,356,415 | ) | |||||
Common
stock issued
|
- | (17,286,097 | ) | |||||
Direct
acquisition costs
|
- | (394,183 | ) | |||||
Cash
paid for acquisition
|
$ | - | $ | (3,895,000 | ) |
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
|
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
|
$
|
1,646,054
|
||
Property,
plant and equipment
|
36,020
|
|||
Other
assets
|
8,237
|
|||
Goodwill
|
5,874,016
|
|||
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
|
|||
Subscriber
lists
|
1,980,187
|
|||
Total
assets acquired
|
2,648,294
|
|||
Accounts
payable and accrued liabilities
|
-
|
|||
Total
liabilities assumed
|
-
|
|||
Net
assets acquired
|
$
|
2,648,294
|
For
The Three
Months
Ended
September
30,
|
For
The Nine
Months
Ended
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Product
revenue
|
$
|
3,964,419
|
$
|
3,005,144
|
$
|
11,333,574
|
$
|
7,185,105
|
||||||||
Recurring
revenue
|
1,763,396
|
1,910,742
|
4,977,799
|
4,739,867
|
||||||||||||
Total
|
5,727,815
|
4,915,886
|
16,311,373
|
11,924,972
|
||||||||||||
Net
(loss)
|
$
|
(2,878,757
|
)
|
$
|
(4,687,997
|
)
|
$
|
(12,231,629
|
)
|
$
|
(15,855,515
|
)
|
||||
Basic
(loss) per share
|
(0.04
|
)
|
(0.08
|
)
|
(0.16
|
)
|
(0.25
|
)
|
||||||||
Diluted
(loss) per share
|
(0.04
|
)
|
(0.08
|
)
|
(0.16
|
)
|
(0.25
|
)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average Amortization Period (Years)
|
||||||||||||||||
Amortized
Identifiable Intangible Assets:
|
||||||||||||||||||||
Subscriber
lists – MST
|
$
|
4,444,114
|
$
|
(703,765
|
)
|
3,740,349
|
8.0
|
|||||||||||||
Subscriber
lists - Ethostream
|
2,900,000
|
$
|
(191,320
|
)
|
2,708,680
|
$
|
-
|
12.0
|
||||||||||||
Total
Amortized Identifiable Intangible Assets
|
7,344,114
|
$
|
(895,085
|
)
|
6,449,029
|
-
|
9.6
|
|||||||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||||||
Total
|
$
|
7,344,114
|
$
|
(895,085
|
)
|
6,449,029
|
$
|
-
|
9.6
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Residual
Value
|
Weighted
Average Amortization Period (Years)
|
||||||||||||||||
Amortized
Identifiable Intangible Assets:
|
||||||||||||||||||||
Subscriber
lists – MST
|
$
|
4,444,114
|
$
|
(1,120,399
|
)
|
3,323,715
|
8.0
|
|||||||||||||
Subscriber
lists - Ethostream
|
2,900,000
|
$
|
(372,569
|
)
|
2,527,431
|
$
|
-
|
12.0
|
||||||||||||
Total
Amortized Identifiable Intangible Assets
|
7,344,114
|
$
|
(1,492,969
|
)
|
5,851,145
|
-
|
9.6
|
|||||||||||||
Unamortized
Identifiable Intangible Assets:
|
None
|
|||||||||||||||||||
Total
|
$
|
7,344,114
|
$
|
(1,492,969
|
)
|
5,851,145
|
$
|
-
|
9.6
|
Fiscal
|
||||
October
1 through December 31, 2008
|
199,295
|
|||
2009
|
797,181
|
|||
2010
|
797,181
|
|||
2011
|
797,181
|
|||
2012
and after
|
3,260,307
|
|||
Total
|
$
|
5,851,145
|
2008
|
2007
|
|||||||
Raw
Materials
|
$
|
796,019
|
$
|
928,739
|
||||
Finished
Goods
|
1,209,977
|
1,649,345
|
||||||
Total
|
$
|
2,005,996
|
$
|
2,578,084
|
September
30,
2008
|
December
31,
2007
|
|||||||
Senior
Convertible Debentures, accrue interest at 13% per annum and mature on May
29, 2011
|
$
|
2,790,000
|
$
|
-
|
||||
Debt
Discount - beneficial conversion feature, net of accumulated amortization
of $146,251 and $0 at September 30, 2008 and December 31, 2007,
respectively.
|
(574,713
|
)
|
-
|
|||||
Debt
Discount - value attributable to warrants attached to notes, net of
accumulated amortization of $137,545 and $0 at September 30, 2008 and
December 31, 2007, respectively.
|
(540,495
|
)
|
-
|
|||||
Total
|
$
|
1,674,792
|
$
|
-
|
||||
Less:
current portion
|
-
|
-
|
||||||
$
|
1,674,792
|
$
|
-
|
September
30,
2008
|
December
31,
2007
|
|||||||
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
|
$
|
6,657,872
|
$
|
6,576,350
|
||||
Original
Issue Discount - net of accumulated amortization of $528,524 and $307,038
at September 30, 2008 and December 31, 2007, respectively.
|
(4,348
|
)
|
(219,312
|
)
|
||||
Debt
Discount - beneficial conversion feature, net of accumulated amortization
of $937,365 and $283,464 at September 30, 2008 and December 31, 2007,
respectively.
|
(1,187,204
|
)
|
(1,174,351
|
)
|
||||
Debt
Discount - value attributable to warrants attached to notes, net of
accumulated amortization of $702,301 and $181,118 at September 30, 2008
and December 31, 2007, respectively.
|
(889,396
|
)
|
(750,347
|
)
|
||||
Total
|
$
|
4,576,924
|
$
|
4,432,342
|
||||
Less:
current portion
|
-
|
-
|
||||||
$
|
4,576,924
|
$
|
4,432,342
|
September
30,
2008
|
December
31,
2007
|
|||||||
Senior
Note Payable, accrues interest at 6% per annum, and matures 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 $195,924 and $166,744 at September 30, 2008
and December 31, 2007, respectively.
|
-
|
(29,180
|
)
|
|||||
Total
|
$
|
-
|
$
|
1,470,820
|
||||
Less:
current portion
|
-
|
1,470,820
|
||||||
$
|
-
|
$
|
-
|
For the twelve months
ended September 30,
|
Amount
|
|||
2009
|
$
|
-
|
||
2010
|
6,657,872
|
|||
2011
|
2,790,000
|
|||
$
|
9,447,872
|