DELAWARE
|
|
77-0289371
|
(State
or Other Jurisdiction of
|
|
(IRS
Employer Identification Number)
|
Incorporation
or Organization)
|
|
|
|
Page
|
|
|
PART
I
|
1
|
|
|
Item
1. Description of Business
|
2
|
Item
2. Description of Properties
|
4
|
Item
3. Legal Proceedings
|
4
|
Item
4. Submission of Matters to a Vote of Securities Holders
|
4
|
|
|
PART
II
|
4
|
|
|
Item
5. Market for Common Equity and Related Stockholder
Matters
|
4
|
Item
6. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
5
|
Item
7. Financial Statements
|
8
|
Item
8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
|
8
|
Item
8A. Control and Procedures
|
9
|
Item
8B. Other Information
|
9
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|
|
PART
III
|
9
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|
|
Item
9. Directors, Executive Officers, Promoters and Control
Persons
|
9
|
Item
10. Executive Compensation
|
10
|
Item
11. Security Ownership of Certain Beneficial Owners and
|
12
|
Item
12. Certain Relationships and Related Transactions
|
13
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Item
13. Exhibits and Reports on Form 8-K
|
13
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Item
14. Principal Accountant Fees and Services
|
13
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FINANCIAL
STATEMENTS
|
|
|
|
Report
of Aidman, Piser & Company P.A.
|
14
|
Consolidated
Balance Sheet at December 31, 2006
|
15
|
Consolidated
Statements of Operations for the years ended December 31, 2006 and
2005
|
16
|
Consolidated
Statements of Stockholders' Equity (Deficit) and Comprehensive Loss
for
the years ended December 31, 2006 and 2005
|
17
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2006 and
2005
|
18
|
Notes
to Consolidated Financial Statements
|
19
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|
SIGNATURE
PAGE
|
34
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|
|
INDEX
TO EXHIBITS
|
35
|
|
|
PRICE
RANGE OF COMMON STOCK
|
|
||||
|
|
|
|
|
|
||
|
|
HIGH
|
|
LOW
|
|
||
|
|
|
|
|
|
||
Year
Ended December 31, 2005:
|
|
|
|
|
|
||
First
Quarter
|
|
$
|
0.540
|
|
$
|
0.130
|
|
Second
Quarter
|
|
|
0.240
|
|
|
0.120
|
|
Third
Quarter
|
|
|
0.360
|
|
|
0.150
|
|
Fourth
Quarter
|
|
|
0.240
|
|
|
0.130
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2006:
|
|
|
|
|
|
|
|
First
Quarter
|
|
$
|
0.170
|
|
$
|
0.090
|
|
Second
Quarter
|
|
|
0.150
|
|
|
0.070
|
|
Third
Quarter
|
|
|
0.080
|
|
|
0.013
|
|
Fourth
Quarter
|
|
|
0.015
|
|
|
0.001
|
|
ITEM
6. MANAGEMENT'S
DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
-
|
Make
a suitability determination prior to selling a penny stock to the
purchaser;
|
-
|
Receive
the purchaser’s written consent to the transaction;
and
|
-
|
Provide
certain written disclosures to the
purchaser.
|
ITEM 8.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
|
ITEM 8B.
|
OTHER
INFORMATION
|
Name
|
Age
|
Position
|
Daniel
W. Rumsey
|
46
|
President,
Chief Executive Officer, Chief Financial Officer and Chairman of the
Board of Directors
|
Mark
Schaftlein
|
45
|
Director
|
Richard
Reiss
|
50
|
Director
|
ITEM 10.
|
EXECUTIVE
COMPENSATION
|
Name
and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Daniel
W. Rumsey(1)
President,
Chief Executive Officer and Chief Financial Officer
|
2006
|
191,442
|
-
|
15,000(2)
|
206,442
|
|
James
Chinnick(3)
(10)
Former
President and Interim Chief Executive Officer and
Vice
President, Product Operations
|
2006
|
126,647
|
-
|
2,993(4)
|
129,640
|
|
Charles
Brown(5)
(10)
Former
Chief Executive Officer
|
2006
|
73,260
|
-
|
-
|
73,260
|
|
Scott
Worthington(6)
(10)
Former
Chief Financial Officer
|
2006
|
124,948
|
-
|
-
|
124,948
|
|
Don
Meiners(7)
Former
President
|
2006
|
104,677
|
-
|
18,850(8)
|
123,527
|
|
Carlos
Belfiore(9)
Former
Chief Technical Officer
|
2006
|
125,098
|
41,400
|
-
|
166,498
|
(1)
|
Mr.
Rumsey’s employment was terminated on April 1, 2006 as a result of the
WaveRider Merger; however, Mr. Rumsey continued to receive severance
payments under his employment agreement until September
2007. As a result of the termination of Mr. Chinnick’s
employment with the Company on October 20, 2006, Mr. Rumsey assumed
the
position of Chief Restructuring Officer. Mr. Rumsey is
currently a consultant to the Company, serving in the capacity as
President and Chief Executive Officer, and Chief Financial
Officer.
|
(2)
|
Beginning
November 2006, WaveRider paid Mr. Rumsey $7,500 per month for
administrative services relating to the liquidation of
WaveRider.
|
(3)
|
Mr.
Chinnick’s assumed the position of Vice President, Product Operations of
the Company on April 1, 2006 as a result of the WaveRider Merger,
and the
position as President and Interim Chief Executive Officer on August
2,
2006 as a result of Mr. Brown’s resignation as Chief Executive
Officer. Mr. Chinnick’s employment was terminated on October
20, 2006.
|
(4)
|
Represents
consulting fees provided to the Company and WaveRider by Mr. Chinnick
following his termination on October 20,
2006.
|
(5)
|
Mr.
Brown assumed the position of Chief Executive Officer and a director
of
the Company on April 1, 2006 as a result of the WaveRider
Merger. Mr. Brown resigned from the Company as Chief Executive
Officer and as a director effective July 28,
2006.
|
(6)
|
Mr.
Worthington assumed the position of Chief Financial Officer on April
1,
2006 as a result of the WaveRider Merger. Mr. Worthington’s
employment was terminated on October 31,
2006.
|
(7)
|
Mr.
Meiners served as the Company’s President until his termination on
September 1, 2006.
|
(8)
|
Represents
consulting fees provided to the Company by Mr. Meiners following
his
termination on September 1, 2006.
|
(9)
|
Dr.
Belfiore served as the Company’s Chief Technical Officer until his
termination on November 3, 2006.
|
(10)
|
Amounts
paid to Messrs. Brown, Chinnick and Worthington reflect only amounts
paid
to such persons after consummation of the WaveRider Merger on April
1,
2007.
|
Name
and Address of Beneficial Owner
|
Common
Stock
|
Percentage
of Shares Outstanding
|
SDS
Capital Group SPC, Ltd.
113
Church Street
P.O.
Box 134GT
Grand
Canyon, Cayman Islands
|
80,000
|
80%
|
CGA
Resources LLC
c/o
Cass G. Adelman
30
E. 72nd
Street, 5th
Floor
New
York, NY 10021
|
10,000
|
10%
|
Smithfield
Fiduciary LLC
c/o
Highbridge Capital Management
1350
Avenue of the Americas
33rd
Floor
New
York, NY 10019
|
10,000
|
10%
|
|
|
|
|
||
|
|
|
|
/s/
Aidman, Piser
&
Company, P.A.
|
|
Tampa,
Florida
December
27, 2007
|
||
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,849
|
|
Accounts
receivable
|
|
|
391
|
|
Inventory
|
|
4
|
|
|
Note
receivable
|
|
|
426
|
|
|
|
|
|
|
Total
current assets
|
|
|
2,670
|
|
|
|
|
|
|
SPEEDLAN
automated test equipment
|
|
|
16
|
|
Goodwill
|
|
|
100
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,786
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
408
|
|
Accounts
payable subject to compromise
|
|
1,191
|
|
|
Other
accrued liabilities
|
|
|
589
|
|
Other
accrued liabilities subject to compromise
|
|
|
1,812
|
|
Deferred
revenue subject to compromise
|
|
|
1,322
|
|
Derivative
liability for excess shares subject to compromise
|
|
|
30
|
|
Current
maturities of long-term debt subject to compromise
|
|
|
3,319
|
|
|
|
|
|
|
Total
current liabilities and total liabilities
|
|
|
8,671
|
|
|
|
|
|
|
Commitments
and contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
Series
E Preferred Stock
|
|
|
332
|
|
Series
G Preferred Stock
|
|
|
3,224 |
|
Series
J and J-1 Preferred Stock
|
|
|
16,824
|
|
Common
stock, par value $0.0001 per share; 250 million shares
authorized;
|
|
|
8
|
|
75,111
shares issued; 75,081 shares outstanding
|
|
|
|
|
Treasury
stock, at cost; 30 shares
|
|
|
(74
|
)
|
Additional
paid-in capital
|
|
|
391,660
|
|
Accumulated
deficit
|
|
|
(417,859
|
)
|
|
|
|
|
|
Total
stockholders' deficit
|
|
|
(5,885 |
)
|
|
|
|
|
|
Total
liabilities and stockholders' deficit
|
|
$
|
2,786
|
|
|
|
|
|
|
|
FOR
THE YEARS ENDED DECEMBER 31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
Sales
|
|
$
|
1,411
|
|
$
|
1,723
|
|
Cost
of sales
|
|
|
712
|
|
|
898
|
|
Gross
profit
|
|
|
699
|
|
|
825
|
|
Operating
expense:
|
|
|
|
|
|
|
|
Research
and development
|
|
|
1,059
|
|
|
2,982
|
|
Selling
and marketing
|
|
|
1,055
|
|
|
3,139
|
|
General
and administrative
|
|
|
526
|
|
|
3,497
|
|
Impairment
and other charges
|
|
|
24,647
|
|
|
─
|
|
Restructuring
charges
|
|
|
─
|
|
|
5,597
|
|
Total
operating expenses
|
|
|
27,287
|
|
|
15,215
|
|
Loss
from operations
|
|
|
(26,588
|
)
|
|
(14,390
|
)
|
Other
income (expenses):
|
|
|
|
|
|
|
|
Financing
expense
|
|
|
(10,325
|
)
|
|
─
|
|
Derivative
financial instrument income
|
|
|
5,140
|
|
─
|
||
Interest
expense
|
|
|
(675
|
)
|
|
(960
|
)
|
Other
income, net
|
|
|
(58
|
)
|
|
271
|
|
Loss
from continuing operations
|
|
|
(32,506
|
)
|
|
(15,079
|
)
|
Income
tax benefit
|
|
|
--
|
|
|
--
|
|
Loss
before discontinued operations
|
|
|
(32,506
|
)
|
|
(15,079
|
)
|
Income
(loss) from discontinued operations
|
|
|
(319
|
)
|
|
2,497
|
|
Net
loss
|
|
|
(32,825
|
)
|
|
(12,582
|
)
|
Preferred
stock accretions
|
|
|
(1,199
|
)
|
|
(3,287
|
)
|
Preferred
stock dividends
|
|
|
─
|
|
(541
|
)
|
|
Net
loss attributable to common stockholders
|
|
$
|
(34,024
|
)
|
$
|
(16,410
|
)
|
Basic
and diluted loss per common share:
|
|
|
|
|
|
|
|
Loss
from continuing operations
|
|
$
|
(0.54
|
)
|
$
|
(1.20
|
)
|
Income
(loss) from discontinued operations
|
|
|
(0.01
|
) |
|
0.16
|
|
Basic
and diluted loss per common share
|
|
$
|
(0.55
|
)
|
$
|
(1.04
|
)
|
Shares
used in basic and diluted per share computation
|
|
|
62,224
|
|
|
15,814
|
|
Shares
|
Amount
|
||||||||||||||||||
Common
|
Preferred
|
Common
|
Preferred
|
Additional
|
Treasury
|
Accumulated
|
Accumulated
|
Total
|
|||||||||||
E
|
F
|
G
|
H
|
I
|
J/J-1
|
E
|
F
|
G
|
H
|
I
|
J/J-1
|
Paid-in
Capital
|
Stock
|
Deficit
|
Other
|
||||
Comprehensive
|
|||||||||||||||||||
Income (Loss)
|
|||||||||||||||||||
Balance
at December 31, 2004
|
11,795.0
|
-
|
-
|
-
|
-
|
-
|
-
|
$ 35
|
-
|
-
|
-
|
-
|
-
|
-
|
$376,430
|
$ (74)
|
$(368,885)
|
$ 2
|
$ 7,508
|
Series
C Preferred converted to common stock
|
34.0
|
- | - | - | - | - | - |
3
|
- | - | - | - | - | - |
5
|
- | - | - |
8
|
Warrants
in connection with notes
payable
|
-
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
44
|
- | - | - |
44
|
Warrants
for former officer settlement
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
93
|
- | - | - |
93
|
Series
B Preferred converted to common stock
|
382.0
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
1,708
|
- | - | - |
1,708
|
Series
E Preferred issued in exchange for
vendor payables
|
- |
0.9
|
- | - | - | - | - | - |
332
|
- | - | - | - | - | - | - | - | - |
332
|
Series
F Preferred converted to common stock
|
1,120.0
|
(189)
|
189
|
-
|
|||||||||||||||
Series
G Preferred, common stock and warrants issued to redeem Series C
Preferred
|
7,090.0
|
- | - |
5.6
|
- | - | - |
1
|
- | - |
2,839
|
- | - | - |
2,838
|
- |
(2,008)
|
- |
3,670
|
Series
G Preferred and warrants issued to
redeem Series D Preferred
|
- | - | - |
1.0
|
- | - | - | - | - | - |
360
|
- | - | - |
180
|
- |
1,460
|
- |
2,000
|
Series
F Preferred and common stock issued for debt payments
|
628.0
|
- |
0.3
|
- | - | - | - |
2
|
- |
850
|
- | - | - | - |
196
|
- | - | - |
1,048
|
Warrants
issue with lease settlement
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
233
|
- | - | - |
233
|
Warrants
issued in connection with investor
bank promissory note, net
of expense
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
549
|
- | - | - |
549
|
Warrants
issued in lieu of debt payment
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
552
|
- | - | - |
552
|
Warrants
issued for debt payment penalty
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
165
|
- | - | - |
165
|
Common
stock issued for vendor settlement
|
184.0
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
20
|
- | - | - |
20
|
Common
stock issued in lieu of debt payment
|
372.0
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
59
|
- | - | - |
59
|
Restricted
stock issue
|
550.0
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
82
|
- | - | - |
82
|
Adjustment
for 1:30 reverse stock split
|
- | - | - | - | - | - | - |
(39)
|
- | - | - | - | - | - |
39
|
- | - | - |
-
|
Redeemable
preferred stock accretions
through
date of redemption
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
(1,279)
|
- |
(1,279)
|
Exercise
of stock options
|
7.0
|
- | - | - | - | - | - |
-
|
- | - | - | - | - | - |
-
|
- | - | - |
-
|
Series
C Preferred dividends
|
- | - | - | - | - | - | - | - | - | - |
145
|
- | - | - |
396
|
- |
(541)
|
- |
-
|
Foreign
currency translation adjustments
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
(2)
|
(2)
|
Net
loss
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
(12,582)
|
- |
(12,582)
|
Balance
at December 31, 2005
|
22,162.0
|
0.9
|
0.3
|
6.6
|
-
|
-
|
-
|
2
|
332
|
661
|
3,344
|
-
|
-
|
-
|
383,778
|
(74)
|
(383,835)
|
-
|
4,208
|
Series
F Preferred converted to common stock
|
3,880.0
|
- |
(0.3)
|
- | - | - | - |
1
|
- |
(661)
|
- | - | - | - |
660
|
- | - | - |
-
|
Series
G Preferred converted to common stock
|
467.2
|
- | - |
(0.3)
|
- | - | - |
-
|
- | - |
(120)
|
- | - | - |
120
|
- | - | - |
-
|
Acquisition
of WaveRider
|
48,362.0
|
- | - | - |
1,326.4
|
132.6 | 60.0 |
5
|
- | - | - |
1,882
|
2,823
|
958
|
8,282
|
- | - | - |
13,950
|
Series
J Preferred issued to redeem Series
H and I Preferred
|
- | - | - | - |
(1,326.4)
|
(132.6)
|
353.7
|
- | - | - |
(1,882)
|
(2,823)
|
4,705
|
-
|
- | - | - |
-
|
|
Series
J Preferred issued in exchange for
Bridge Notes
|
- | - | - | - | - | - | 317.3 | - | - | - | - | - | - |
4,442
|
- | - | - | - |
4,442
|
Series
J Preferred issued in exchange for
SDS Notes
|
- | - | - | - | - | - | 260.3 | - | - | - | - | - |
3,644
|
- | - | - | - |
3,644
|
|
Warrants issued in connection with notes converted to Series J Preferred | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 2,426 | - | - | - | 2,426 |
Series
J Preferred issued to consultants
|
- | - | - | - | - | - | 42.7 | - | - | - | - | - | - |
568
|
167 | - | - | - |
735
|
Sale
of Series J Preferred
|
- | - | - | - | - | - | 334.3 | - | - | - | - | - | - |
1,308
|
917 | - | - |
2,225
|
|
Accretion
of contructive dividend in connection
sales of Series J Preferred
|
- | - | - | - | - | - | - | - | - | - | - | - | - |
1,199
|
- | - |
(1,199)
|
- |
-
|
Warrants
and beneficial conversion feature of investor notes
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - |
479
|
- | - | - |
479
|
Issued
common stock to consultants
|
240.0
|
- | - | - | - | - | - |
-
|
- | - | - | - | - | - |
1
|
- | - | - |
1
|
Derivative liability reclassification | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (5,170) | - | - | - | (5,170) |
Net
loss
|
- | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
(32,825)
|
- |
(32,825)
|
Balance
at December 31, 2006
|
75,111.2
|
0.9
|
-
|
6.3
|
-
|
-
|
1,368.3
|
$ 8
|
$332
|
$ -
|
$3,224
|
$ -
|
$ -
|
$16,824
|
$391,660
|
$ (74)
|
$(417,859)
|
$ -
|
$(5,885)
|
|
|
Years
ended December 31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
Cash
flows from operating activities:
|
|
|
|
|
|
||
Net
loss
|
|
$
|
(32,825
|
)
|
$
|
(12,582
|
)
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation
in continuing operations
|
|
|
85
|
|
|
550
|
|
Depreciation
in discontinued operations
|
|
|
108
|
|
|
--
|
|
(Gain)
loss on sale of equipment
|
|
|
366
|
|
(238
|
)
|
|
Gain on
discontinued operations
|
|
|
(1,008
|
) |
|
--
|
|
Gain
on sale of patent
|
|
|
(30
|
) |
|
(400
|
)
|
(Gain)/Loss
on debt extinguishment
|
|
|
(26
|
)
|
|
13
|
|
Warrant
expense
|
|
|
--
|
|
|
408
|
|
Inventory
valuation and other charges
|
|
|
--
|
|
|
56
|
|
Asset
impairment and other restructuring charges
|
|
|
24,647
|
|
|
5,597
|
|
Loss
on conversion of promissory notes
|
|
|
7,643
|
|
|
--
|
|
Stock-based
compensation
|
|
|
--
|
|
|
93
|
|
Derivative
financial instrument income
|
|
|
(5,140
|
)
|
|
--
|
|
Securities
issued to consultants
|
|
|
735
|
|
|
--
|
|
Amortization
of debt discount
|
|
|
1,017
|
|
|
175
|
|
Bad
debt expense
|
|
|
1,031
|
|
|
336
|
|
Increase
(decrease) in cash resulting from changes in:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(719)
|
|
|
1,447
|
|
Inventory
|
|
|
75
|
|
|
1,482
|
|
Prepaid
expenses and other assets
|
|
|
423
|
|
|
1,072
|
|
Accounts
payable
|
|
|
252
|
|
|
(1,104
|
)
|
Other
accrued liabilities
|
|
|
(264)
|
|
(2,534
|
)
|
|
Deferred
revenue
|
|
|
465
|
|
|
750
|
|
Net
cash flows from operating activities
|
|
|
(3,165
|
)
|
|
(4,879
|
)
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Acquisition
of property and equipment
|
|
|
--
|
|
|
(44
|
)
|
Proceeds
from sale of patent
|
|
|
30
|
|
|
400
|
|
Proceeds
from sale of property and equipment
|
|
|
123
|
|
|
482
|
|
Net
cash received on acquisition of WaveRider
|
|
|
174
|
|
|
--
|
|
Proceeds
from sale of discontinued operations
|
|
|
2,163
|
|
|
--
|
|
Purchase
WaveRider Note
|
|
|
--
|
|
|
(250
|
)
|
Net
cash flows from investing activities
|
|
|
2,490
|
|
|
588
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Payments
of notes payable
|
|
|
(299
|
)
|
|
(716
|
)
|
Proceeds
from (repayment of) loan payable to bank
|
|
|
(771
|
)
|
|
759
|
|
Proceeds
from sale of preferred shares (net of cash fees of $281)
|
|
|
2,225
|
|
|
--
|
|
Proceeds
from convertible notes
|
|
|
--
|
|
|
850
|
|
Proceeds
from debentures
|
|
|
--
|
|
|
1,700
|
|
Payments
on debentures
|
|
|
--
|
|
|
(200
|
)
|
Proceeds
from debt financing (net of cash fees of $101 in 2006)
|
|
|
989
|
|
|
--
|
|
Net
cash flows from financing activities
|
|
|
2,144
|
|
|
2,393
|
|
Effect
of exchange rate changes on cash
|
|
|
--
|
|
|
(2
|
)
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
1,469
|
|
(1,900
|
)
|
|
Cash
and cash equivalents at beginning of the year
|
|
|
380
|
|
|
2,280
|
|
Cash
and cash equivalents at end of the year
|
|
$
|
1,849
|
|
$
|
380
|
|
(000’s | ) | |||
Cash
|
$ |
1,849
|
(1) | |
Other
current assets
|
821
|
|||
Total current assets |
2,670
|
|||
Goodwill
and other assets
|
116
|
|||
Total
assets
|
$ |
2,786
|
||
Current
and total liabilities
|
$ |
861
|
(2) | |
Common stock | 100 | (3) | ||
Additional
paid-in capital
|
1,825
|
|||
Total
liabilities and stockholder’s equity
|
$ |
2,786
|
|
2006
|
|
2005
|
|
||
Net
Loss
|
$
|
(32,825
|
)
|
$
|
(12,582
|
)
|
Foreign
currency translation adjustment
|
|
─
|
|
|
(2
|
)
|
Comprehensive
loss
|
$
|
(32,825
|
)
|
$
|
(12,584
|
)
|
|
|
|
||
Stock-based
employee compensation costs used in the determination of net income
(loss)
attributable to common stockholders , as reported
|
|
|
--
|
|
Loss
attributable to common stockholders, as reported
|
|
$
|
(16,410
|
)
|
|
|
|
|
|
Stock-based
employee compensation costs that would have been included in the
determination of net loss if the fair value method (SFAS 123) had
been
applied to all awards
|
|
$
|
($484
|
)
|
|
|
|
|
|
Pro
forma net loss attributable to common stockholders, if the fair value
method had been applied to all awards
|
|
$
|
(16,894
|
)
|
|
|
|
|
|
Net
loss attributable to common stockholders per common share, as
reported
|
|
$
|
(1.04
|
)
|
|
|
|
|
|
Pro
forma net loss attributable to common Stockholders per common share,
if
the fair value method had been applied to all awards
|
|
$
|
(1.07
|
)
|
The
WaveRider Merger was accounted for as a purchase and is summarized
as
follows (in thousands $):
|
Cash
on hand (including cash from loans made by the Company prior
to
the
acquisition which were forgiven on acquisition)
|
||
$
|
413
|
|
Other
current assets
|
2,241
|
|
Fixed
assets
|
200
|
|
Current
liabilities
|
(2,787)
|
|
Net
assets received
|
67
|
|
Goodwill
|
14,745
|
|
Total
consideration received
|
$
|
14,812
|
Common
stock issued on closing
|
$
|
6,432
|
Preferred
stock issued on closing
|
5,663
|
|
Warrants
issued on closing at fair value
|
1,773
|
|
WaveRider
shares forfeited on merger
|
450
|
|
Employee
stock options issued on closing at fair value
|
81
|
|
Expenses
incurred on acquisition
|
413
|
|
Total
consideration given
|
$
|
14,812
|
The
cash effect of this transaction is summarized as follows:
|
||
Cash
acquired on closing
|
$
|
413
|
WaveRider
Communications Inc.
|
$
|
12,679
|
WaveRider
Communications (Australia) Pty Ltd.
|
1,150
|
|
WaveRider
Communications (Canada) Inc.
|
916
|
|
$
|
14,745
|
|
Wave
Wireless
Repair
& Maintenance
|
WaveRider
Australia
|
WaveRider
Canada
|
Total
|
|||||||||||||
Revenues
|
$ |
2,667
|
$ |
1,243
|
$ |
3,145
|
$ |
7,055
|
||||||||
Cost
of goods sold
|
2,468
|
654
|
2,175
|
5,297
|
||||||||||||
Gross
profit
|
199
|
589
|
970
|
1,758
|
||||||||||||
Operating
expenses
|
-
|
380
|
2,705
|
3,085
|
||||||||||||
Gain/(loss)
on operations during 2006
|
199
|
209
|
(1,735 | ) |
(1,327
|
) | ||||||||||
Sales
price
|
405
|
370
|
1,814
|
2,589
|
||||||||||||
Net
book value of assets sold
|
-
|
1,305
|
276
|
1,581
|
||||||||||||
Gain/(loss)
on disposal of assets
|
405
|
(935 | ) |
1,538
|
1,008 | |||||||||||
Gain/(loss)
from discontinued operations
|
$ |
604
|
$ | (726 | ) | $ | (197 | ) | $ | (319 | ) |
Compensation
and employee benefits
|
|
$
|
29
|
|
Legal
and accounting
|
|
|
168
|
|
Customer
deposit
|
|
|
50
|
|
Severance
|
|
|
102
|
|
Development
work and royalty
|
240
|
|||
|
|
$
|
589
|
|
Penalty
for
late
filing
of
registration
statement
|
|
$
|
820
|
|
Severance
|
|
|
553
|
|
Warranty
|
|
|
303
|
|
Other
|
|
|
136
|
|
|
|
$
|
1,812
|
|
|
|
|||
Balance
at January 1,
|
|
$
|
493
|
|
Reclassed
to discontinued operations
|
|
|
(38
|
)
|
Payments
|
|
|
(152
|
)
|
Balance
at December 31,
|
|
$
|
303
|
|
|
|
2006
|
|
2005
|
|
||
Gains
(losses) on settlements of accounts payable and
liabilities
|
|
$
|
--
|
$
|
(82
|
)
|
|
Gains
(losses) on disposals of property and equipment
|
|
|
(366
|
)
|
|
238
|
|
Royalties
|
|
|
146
|
|
|
--
|
|
Gain
on sale of patents for licensed products
|
|
|
30
|
|
|
400
|
|
Property
tax refund
|
|
|
89
|
|
|
--
|
|
Gains
(losses) on transactions denominated in foreign currencies
|
|
|
--
|
|
(342
|
)
|
|
Other
income (expenses), net
|
|
|
43
|
|
|
57
|
|
Total
other income (loss), net
|
|
$
|
(58
|
)
|
$
|
271
|
|
Debenture
financing, in default
|
$
|
2,602
|
Note
payable – Siemens; in default
|
350
|
|
Note
payable, former vendor, due in monthly installments of $35,000
through June 2006; in default
|
322
|
|
|
|
|
Other
|
45
|
|
$
|
3,319
|
In
connection with exchange for Series H and I shares
|
$
|
4,705
|
In
connection with exchange of Bridge Notes
|
4,442
|
|
In
connection with debenture exchange
|
3,644
|
|
Sold
to qualified investors (excluding $1,199 included in derivative liability
for excess shares)
|
1,309
|
|
Issued
to consultants in connection with the WaveRider Merger
|
957
|
|
Issued
to consultants in connection with the sale of a qualified
financing
|
568
|
|
Accretion
of shares sold to qualified investors to face value
|
1,199
|
|
$
|
16,824
|
|
|
2006
|
|
2005
|
|
||||||||
|
|
Shares
|
|
Price
Range
|
|
Shares
|
|
Price
Range
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Outstanding
at beginning of year
|
|
|
20,686
|
|
|
$0.0001-$1,275.00
|
|
|
2,703
|
|
|
$0.56-$1,275.00
|
|
Issued
|
|
|
39,507
|
|
$0.12-$0.20
|
|
|
18,008
|
|
|
$0.0001-$0.30
|
|
|
Exercised
|
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
Cancelled
|
|
|
(8,842
|
)
|
|
$0.20
|
|
|
(25
|
)
|
|
$3.00-$9.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of year
|
|
|
51,351
|
|
|
|
|
|
20,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
exercisable at end of year
|
|
|
51,351
|
|
|
|
|
|
20,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
exercise price
ofwarrants issued
during the year
|
|
$
|
0.18
|
|
|
|
|
$
|
0.56
|
|
|
|
|
|
|
2006
|
|
2005
|
|
||||||||
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|||||
|
|
|
Average
|
|
|
|
Average
|
|
|||||
|
|
Shares
|
|
Price
|
|
Shares
|
|
Price
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Outstanding
at beginning of year
|
|
|
3,033
|
|
$
|
6.85
|
|
|
1,166
|
|
$
|
23.30
|
|
Granted
|
|
|
-
|
|
$
|
-
|
|
2,385
|
|
$
|
0.15
|
|
|
Exercised
|
|
|
-
|
$
|
-
|
|
(7
|
)
|
$
|
0.15
|
|
||
Canceled
|
|
|
(3,033
|
)
|
$
|
6.85
|
|
|
(511
|
)
|
$
|
13.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of year
|
|
|
-
|
$
|
-
|
|
3,033
|
|
$
|
6.85
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at year-end
|
|
|
-
|
$
|
-
|
|
1,345
|
|
$
|
14.62
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average fair value of options granted
|
$
|
-
|
|
|
$ |
0.15
|
|
|
|
December
31,
|
|
||||
|
|
2006
|
|
2005
|
|
||
Net
operating loss carry-forwards
|
|
$
|
135,849
|
|
$
|
110,587
|
|
Credit
carry-forwards
|
|
|
3,888
|
|
|
3,957
|
|
Intangible
assets
|
|
|
576
|
|
|
16,567
|
|
Reserves
and other
|
|
|
1,278
|
|
|
7,448
|
|
Total
deferred tax assets
|
|
$
|
141,591
|
|
$
|
138,559
|
|
Valuation
allowance
|
|
|
(141,591
|
)
|
|
(138,559
|
)
|
Net
deferred tax asset
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
||
Income
tax benefit at federal statutory rate
|
|
|
-35.0
|
%
|
|
-35.0
|
%
|
State
income taxes net of federal benefit
|
|
|
-5.8
|
%
|
|
-5.8
|
%
|
Change
in valuation allowance
|
|
|
40.8
|
%
|
|
40.8
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
||
Cash
paid for income taxes
|
|
$
|
--
|
|
$
|
--
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
12
|
|
$
|
876
|
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
||||
YEAR
ENDED DECEMBER 31, 2006
|
|
|
|
|
|
|
|
|
|
||||
Net
sales
|
|
$
|
448
|
|
$
|
366
|
|
$
|
222
|
|
$
|
375
|
|
Gross
Profit
|
|
|
228
|
|
179
|
|
|
133
|
|
|
158
|
|
|
Income
(loss) from continuing operations
|
|
|
(10,973
|
)
|
|
(24,701
|
)
|
|
2,369
|
|
798
|
||
Income
(loss) from discontinued operations
|
173
|
(1,102)
|
439
|
171
|
|||||||||
Preferred
stock accretions and dividends
|
|
|
-
|
|
(1,199
|
)
|
|
-
|
|
-
|
|
||
Net
income (loss) applicable to common shareholders
|
|
|
(10,800
|
)
|
|
(27,002
|
)
|
|
2,808
|
|
970
|
||
Income
(loss) per common share
|
|
|
(0.45
|
)
|
|
(0.37
|
)
|
|
0.04
|
|
0.02
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
||||
YEAR
ENDED DECEMBER 31, 2005
|
|
|
|
|
|
|
|
|
|
||||
Net
sales
|
|
$
|
330
|
|
$
|
408
|
|
$
|
506
|
|
$
|
479
|
|
Gross
Profit
|
|
|
142
|
|
196
|
|
|
251
|
|
|
236
|
|
|
Income
(loss) from continuing operations
|
|
|
(8,608
|
)
|
|
(2,621
|
)
|
|
(2,408
|
)
|
|
(1,422
|
)
|
Income
(loss) from discontinued operations
|
(190)
|
1,129
|
1,136
|
422
|
|||||||||
Preferred
stock accretions and dividends
|
|
|
(580
|
)
|
|
(578
|
)
|
|
(2,670
|
)
|
|
--
|
|
Net
income (loss) applicable to common shareholders
|
|
|
(9,378
|
)
|
|
(2,070
|
)
|
|
(3,942
|
)
|
|
(1,020
|
)
|
Income
(loss) per common share
|
|
|
(0.79
|
)
|
|
(0.17
|
)
|
|
(0.22
|
)
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Date:
December 27, 2007
|
By:
|
/s/
Daniel W.
Rumsey
|
|
Daniel
W. Rumsey
|
|
|
Chief
Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Daniel W. Rumsey
|
|
Chief
Executive Officer
|
|
|
Daniel
W. Rumsey
|
|
(Principal
Executive Officer)
|
|
December
27, 2007
|
|
|
|
|
|
/s/
Daniel W.
Rumsey
|
|
(Principal
Financial Officer and
|
|
|
Daniel
W. Rumsey
|
|
Principal
Accounting Officer)
|
|
December
27, 2007
|
|
|
|
|
|
/s/
Richard Reiss
|
|
Director
of the Company
|
|
December
27, 2007
|
Richard
Reiss
|
|
|
|
|
|
|
|
|
|
/s/
Mark Shaftlein
|
|
Director
of the Company
|
|
December
27, 2007
|
Mark
Shaftlein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agreement
and Plan of Merger, dated January 3, 2006, between The Company
Corporation, Wave Acquisition Corporation and WaveRider Communications
Inc.
|
||
2.2(1)
|
Amendment
to Agreement and Plan of Merger, dated January 26, 2006, between
The
Company Corporation, Wave Acquisition Corporation and WaveRider
Communications Inc.
|
|
2.3(2)
|
Joint
Plan of Reorganization
|
|
3.1
(2)
|
Amended
and Restated Articles of Incorporation
|
|
3.2(2)
|
Amended
and Restated Bylaws
|
|
4.5
|
Form
of Common Stock Certificate
|
|
10.1*(3)
|
2004
Equity Incentive Plan
|
|
10.2*(4)
|
Amendment
to Severance Agreement, dated July 13, 2005, between P-Com, Inc.
and
Daniel W. Rumsey.
|
|
10.3*(5)
|
Letter
Agreement dated March 22, 2006, between Don Meiners and the
Company.
|
|
10.4*(5)
|
Letter
Agreement dated March 22, 2006, between Daniel W. Rumsey and the
Company.
|
|
10.5(2)
|
Contingent
Unsecured Promissory Note of the Registrant in Favor of the Plan
Trust.
|
|
10.6(2)
|
Secured
Promissory Note in Favor of SDS Capital Group SPC, Ltd.
|
|
10.7(2)
|
Security
Agreement in Favor of SDS Capital Group SPC, Ltd.
|
|
14.1
|
Code
of Ethics
|
|
Subsidiaries
|
||
Rule
13a-14(a)/15d-14(a) Certification
|
||
31.2
|
Rule
13a-14(a)/15d-14(a) Certification
|
|
32.1
|
Section
1350 Certification
|
|
32.2
|
Section
1350 Certification
|
Compensatory
benefit arrangement.
|
(1)
|
Incorporated
by reference to the exhibits filed as part of the Company’s Registration
Statement on Form S-4 (File No. 333-13157), declared effective with
the
Securities and Exchange Commission on February 13,
2006.
|
(2)
|
Incorporated
by reference to Exhibits 3.1 and 3.2 of the Company’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on July
5,
2007.
|
(3)
|
Incorporated
by reference to Appendix A attached to the Company’s Schedule 14A filed
with the Securities and Exchange Commission on September 13,
2004.
|
(4)
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on July 14,
2005.
|
|
|
|
|
|
|
||
|
|
|
Date:
December 27, 2007
|
/s/
Daniel W.
Rumsey
|
|
|
Daniel
W. Rumsey
Chief
Executive Officer
and
Chief Financial Officer
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
||
|
|
|
Date:
December 27, 2007
|
/s/
Daniel W.
Rumsey
|
|
|
Daniel
W. Rumsey
Chief
Executive Officer
and
Chief Financial Officer
(Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
Date:
December 27, 2007
|
By:
|
/s/
Daniel W.
Rumsey
|
|
Daniel
W. Rumsey
Chief
Executive Officer
and
Chief Financial Officer
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
||
|
|
|
Date:
December 27, 2007
|
By:
|
/s/
Daniel W.
Rumsey
|
|
Daniel
W. Rumsey
Chief
Executive Officer
and
Chief Financial Officer
(Principal
Financial Officer)
|
|
|