Item 1.
Business.
Introduction
We are a Nevada corporation organized in 1997. From 1999 through 2004, we were in the business of developing and publishing packaged software for Macintosh and Windows computers. In 2005, we acquired SpaceLogic, Ltd., an Israeli corporation, which developed and sold system related to airport baggage inspection. We operated this business until July, 2008 when we sold SpaceLogic, Ltd back to its original stockholders. Although we own several non-exclusive licenses to SpaceLogic’s products, we have yet to re-enter into the airport security business. Since July, 2008, we have not conducted any material business operations and have been searching to acquire an operating business. Our only expenses have related to seeking an acquisition, our auditing and legal fees, and other public company expenses.
Our Plan
Our business plan is to seek, investigate, and, if warranted, acquire an interest in a business opportunity, including possibly re-entering the market for airport security products through either an acquisition or through organic growth. In the event that we acquire another business, the acquisition may be made by merger, exchange of stock, or otherwise. We have no target under consideration, we have very limited sources of capital, and we probably will only be able to take advantage of one business opportunity. At the present time we have not identified any business opportunity that we plan to pursue, nor have we reached any preliminary or definitive agreements or understandings with any person concerning an acquisition or merger.
We have had only limited operating activity since completing the sale of our subsidiary in July, 2008. Our management intends to create operating revenue through either re-entering the airport security market or acquiring an operating business. Our search for a business opportunity will not be limited to any particular geographical area or industry, including both U.S. and international companies. Our management has unrestricted discretion in seeking and participating in a business opportunity, subject to the availability of such opportunities, economic conditions and factors. Our management believes that companies who desire a public market to enhance liquidity for current stockholders or plan to acquire additional assets through issuance of securities rather than for cash will be potential merger or acquisition candidates.
Investigation and Selection of Business Opportunities
We anticipate that business opportunities will come to our attention from various sources, including our sole officer/director, our stockholders, professional advisors such as attorneys and accountants, securities broker-dealers, investment banking firms, venture capitalists, members of the financial community and others who may present unsolicited proposals. Management expects that prior personal and business relationships may lead to contacts for business opportunities; however, we have not entered into any direct or indirect negotiations at the time of this filing with any person, corporation or other entity regarding any possible business reorganization involving the Company.
A decision to participate in a specific business opportunity may be made upon our management’s analysis of the quality of the other company’s management and personnel, the anticipated acceptability of the business opportunity’s new products or marketing concept, the merit of its technological changes, the perceived benefit that it will derive from becoming a publicly held entity, and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. In many instances, we anticipate that the historical operations of a specific business opportunity may not necessarily be indicative of the potential for the future because of the possible need to shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment management, or make other changes. We will be dependent upon the owners of a business opportunity to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes.
In our analysis of a business opportunity we anticipate that we will consider, among other things, the following factors:
·
Potential for growth and profitability, indicated by new technology, anticipated market expansion, or new products;
·
Our perception of how any particular business opportunity will be received by the investment community and by our stockholders;
·
Whether, following the business combination, the financial condition of the business opportunity would be, or would have a significant prospect in the foreseeable future of becoming sufficient to enable our securities to qualify for listing on a exchange or on a national automated securities quotation system, such as the stock market.
·
Capital requirements and anticipated availability of required funds, to be provided by us or from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;
·
The extent to which the business opportunity can be advanced;
·
Competitive position as compared to other companies of similar size and experience within the industry segment as well as within the industry as a whole;
·
Strength and diversity of existing management, or management prospect that are scheduled for recruitment;
·
The cost of our participation as compared to the perceived tangible and intangible values and potential; and
·
The accessibility of required management expertise, personnel, raw materials, services, professional assistance, and other required items.
No one of the factors described above will be controlling in the selection of a business opportunity. Management will attempt to analyze all factors appropriate to each opportunity and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries and at various stages of development. Thus, the task of comparative investigation and analysis of such business opportunities will be extremely difficult and complex. Potential investors must recognize that, because of our limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
Form of Acquisition
We cannot predict the manner in which we may participate in a business opportunity. Specific business opportunities will be reviewed as well as our needs and desires and those of the promoters of the opportunity. The legal structure or method deemed by management to be suitable will be selected based upon management’s review and our relative negotiating strength. We may agree to merge, consolidate or reorganize with another corporation or form of business organization.
Regardless of the legal structure, we likely will acquire another corporation or entity through the issuance of Common Stock or other securities. Although the terms of any such transaction cannot be predicted, it is possible that the acquisition will occur simultaneously with a sale of shares representing a controlling interest by our current principal stockholder. In addition, our present management and stockholders most likely will not have control of a majority of our voting shares following a merger or reorganization transaction. As part of such a transaction, our existing director will probably resign and new directors may be appointed without any vote by our stockholders.
This method may also include, but is not limited to, leases, purchase and sale agreements, licenses, joint ventures and other contractual arrangements. We may act directly or indirectly through an interest in a partnership, corporation or other forms of organization.
Competition
In our effort to locate an attractive opportunity, we expect to encounter competition from business development companies, venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small investment companies, and wealthy individuals. Many of these persons or entities have significantly greater experience, resources and managerial capabilities than we do and will be in a better position than we are to obtain access to attractive business opportunities. We also will experience competition from other public “blank check” companies, many of which may have more funds available for the investigation and selection of a business opportunity. In addition, we expect competition will be especially tough due to the recent downturns in the economy which includes poor performance by stocks in both the national markets and in the over-the-counter markets making it less attractive for private companies to “go public.”
Item 1A.
Item 1A.
Risk Factors.
Not applicable for smaller reporting companies.
Item 1B.
Item 1B.
Unresolved Staff Comments.
None.
Item 2.
Item 2.
Properties.
We do not currently own or lease any property. Pending the resumption of operations or an acquisition, our sole officer and director provides us with office space and administrative services.
Item 3.
Item 3.
Legal Proceedings.
None.
Item 4.
Item 4.
Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The following table sets forth, for the periods indicated, the range of quarterly high and low sales prices for our Common Stock which trades on the Over-the-Counter Bulletin Board under the symbol “SLGI.”
Holders
As of March 30, 2009, there were approximately 60 stockholders of record. The Company believes that it has approximately 300 beneficial stockholders.
Dividend Policy
We have never paid cash dividends on our Common Stock. Payment of dividends is within the discretion of board of directors and will depend upon our earnings, capital requirements and operating and our future financial condition.
Sales of Unregistered Securities for the year ended December 31, 2008.
None
Purchases of Equity Securities.
During the year ended December 31, 2008, we did not purchase any of our equity securities, nor did any person or entity purchase any equity securities on our behalf.
Item 6.
Item 6.
Selected Financial Data.
Not Applicable.
Item 7.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following Management’s Discussion and Analysis or Plan of Operation contains forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.
The following discussion and analysis should be read in conjunction with our audited 2007 and 2008 financial statements which are included herein. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussions represent only the best present assessment of our management.
Overview
Prior to the reversal of the acquisition of our SpaceLogic, Ltd. and SecureLogic, Ltd subsidiaries (the “Subsidiaries”) on or about July 15, 2008 through the transfer of those Subsidiaries to the former owners of the Subsidiaries (the “Acquisition Reversal”), the Company was engaged in the business of developing and marketing systems that manage the movement of people and baggage through airports. Subsequent to the Acquisition Reversal, the Company is engaged in reconstituting its business plan to re-enter the homeland security marketplace through a combination of organic development, the acquisition of products and/or the acquisition of companies.
In reading Management’s Discussion and Analysis of Financial Condition and Results of Operations, the reader should keep in mind that the Company’s financial statements reflect the treatment of the transfer of the Subsidiaries in the Acquisition Reversal as a discontinued operation and therefore, does not reflect the business of the Company after July 15, 2008 through the date of this Report.
Results of Operations
Total revenues for the year ended December 31, 2008 was $0, which reflects the discontinued operations of our Israeli subsidiary as a result of the Acquisition Reversal which occurred on July 15, 2008. Gross profit for the year ended December 31, 2008, 2008 was both $0, which reflects the discontinued operations of our Israeli subsidiary as a result of the Acquisition Reversal which occurred on July 15, 2008.
Expenses
Our total expenses for the year ended December 31, 2008 was $39,000 which reflects legal and professional fees incurred in connection with maintaining the Company’s reporting obligations thereafter.
Operating Profit (Loss)
Our operating loss for the year ended December 31, 2008 was $39,000 which represents the expenses described above.
Gain on Sale of Assets
In the year ended December 31, 2008, the Company realized a non-cash gain on the sale of assets in the amount of $6,884,000 which was determined by the value of the Company’s stock returned in the Acquisition Reversal less the carrying value of the assets and liabilities transferred in the Acquisition Reversal. However, the parties involved in the transaction are deemed to be related parties. As such, the gain has been reclassified to Additional Paid-in-Capital on the Company’s consolidated balance sheet.
Liquidity and Capital Resources
As of December 31, 2008, total current assets were $215,000 and total current liabilities were $16,000. As of December 31, 2008, the Company had a cash balance of $215,000.
We believe that our existing cash together with potential revenue from the licenses received in the Acquisition Reversal will be sufficient to support our operations through the fourth quarter of 2009; provided that, in the event that that Company shall acquire additional products or subsidiaries, we may require significant amounts of additional capital sooner than the fourth quarter of 2009. In such a case, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders. Incurring indebtedness would result in an increase in our fixed obligations and could result in borrowing covenants that would restrict our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services, or, we may potentially not be able to continue business activities. Any of these events could have a material and adverse effect on our business, results of operations and financial condition.
Critical Accounting Policies and Estimates
Our discussion and analysis of its financial condition and results of operations are based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, income taxes and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements as defined in Item 303(c)(2) of Regulation S-K.
Forward-Looking Statements
The statement made above relating to the adequacy of our working capital is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. The statements that express the “belief,” “anticipation,” “plans,” “expectations,” “will” and similar expressions are intended to identify forward-looking statements.
The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include matters relating to the business and financial condition of any company we acquire. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
Item 7A.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable
Item 8.
Item 8.
Financial Statements and Supplementary Data.
See the Item 15 on page 14.
Item 9.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
We have had no disagreements with our independent registered public accounting firms during our last two fiscal years. In September 2009, Bagell, Josephs, Levine & Company, LLC was retained as our independent registered public accounting firm.
Item 9A(T)
Item 9A(T)
Controls and Procedures.
Disclosure Controls.
We carried out an evaluation required by Rule 13a-15(b) of the Securities Exchange Act of 1934 under the supervision and with the participation of our chief executive officer and chief financial officer of the effectiveness of the design and operation of our “disclosure controls and procedures” as of the end of the period covered by this Report.
Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer’s reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this Report. This type of evaluation will be done quarterly so that the conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant.
Based on their evaluation, our chief executive officer and chief financial officer has concluded that our disclosure controls and procedures are not effective in timely alerting him to material information relating to Bay Acquisition Corp. required to be included in our periodic reports filed with the SEC as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management necessarily applied its judgment in assessing the benefits of controls relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and may not be detected. Our internal control over financial reporting was not effective for the following reasons:
a.
The deficiency was identified as the Company’s limited segregation of duties amongst the Company’s employees with respect to the Company’s control activities. This deficiency is the result of the Company’s limited number of employees. This deficiency may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
b.
The deficiency was identified with respect to the Company’s Board of Directors. This deficiency is the result of the Company’s limited number of external board members. This deficiency may give the impression to the investors that the board is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the cost-benefit relationship of possible changes in the organization of the Board of Directors.
Internal Controls.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, consisting of one person who serves as our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2008 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under that criteria, our management concluded that our internal control over financial reporting was not effective as of December 31, 2008.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we engaged our independent registered public accounting firm to perform, an audit on our internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2008 that have materially affected, or are reasonably likely to material affect, our internal control over financial reporting.
Item 9B.
Item 9B.
Other Information.
None.
PART III
Item 10.
Item 10.
Directors, Executive Officers and Corporate Governance.
We have only one officer and director.
Name
Age
Position(s)
Paul Goodman
President, Secretary, Treasurer and Director
Mr. Goodman has been our sole officer and director since July 2008. Mr. Goodman is a partner in the New York City law firm of Cyruli Shanks & Zizmor LLP and concentrates on the representation of Internet and new media clients handling a wide range of corporate and financing transactions including venture capital, angel round investing and mergers and acquisitions. He was formerly a faculty member of the Queens College Computer Science Department and is the author of five books on computer programming. Mr. Goodman became a director of Maxus Technology Corporation in December 2006. He has also been on the board of directors of the Company since 1999 and serves on the Audit Committee. Mr. Goodman received his law degree from the City University of New York and also holds a Bachelors and Masters Degree in Computer Science.
Audit Committee
We do not have an audit committee.
Audit Committee Financial Expert
Not applicable.
Limitation of Our Director’s Liability
Our Articles of Incorporation eliminate the liability of our directors for monetary damages to the fullest extent possible. However, our sole director (and future directors) remains liable for:
·
any breach of the director's duty of loyalty to us or our stockholders,
·
acts or omission not in good faith or that involve intentional misconduct or a knowing violation of law,
·
payments of dividends or approval of stock repurchases or redemptions that are prohibited by Delaware law, or
·
any transaction from which the director derives an improper personal benefit.
These provisions do not affect any liability any director may have under federal and state securities laws.
Code of Ethics
On March 15, 2005, the Company adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For purposes of this Item, the term “Code of Ethics” means written standards that are reasonably designed to deter wrongdoing and to promote: Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely, and understandable disclosure in reports and documents that the issuer files with, or submits to, the SEC and in other public communications made by the Company; compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the code to the board of directors or another appropriate person or persons; and, accountability for adherence to the code. copy of the Code of Ethics can be found as Exhibit 99 to our Form 10-KSB dated April 15, 2005.
Item 11.
Item 11.
Executive Compensation.
We currently have no employees, and Mr. Paul Goodman our President, is our only executive officer. Mr. Goodman receives no compensation.
Outstanding Awards at Fiscal Year End
The Company had no unexercised options, restricted stock that has not vested, or equity incentive plans as of December 31, 2008
Item 12.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table provides information as of March 31, 2009 concerning the beneficial ownership of our Common Stock by each director, each person known by us to be the beneficial owner of at least 5% of any class of our Common Stock, and all executive officers and directors as a group. All address are c/o the Company,
* -
Less than 1.0%
(1)
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all securities beneficially owned by them. Beneficial ownership exists when a person has either the power to vote or sell our Common Stock. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options, warrants or otherwise.
(2)
Includes shares of Common Stock held by Michael Gardner. Mr. Gardner is the managing member of Baytree Capital Associates LLC.
Item 13.
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
None
Item 14.
Item 14.
Principal Accounting Fees and Services.
Audit Fees
The fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements and review of our financial statements included in our Forms 10-K and 10-Q for the fiscal year ended December 31, 2008 were $7,500 as compared to $35,000 for the fiscal year ended December 31, 2007.
Audit-Related Fees
We did not incur any audit related fees during the fiscal years ended December 31, 2008 or 2007.
Tax Fees
Our principal independent registered public accounting firms did not perform any tax related services for us during the fiscal years ended December 31, 2008 or 2007.
All Other Fees
Our independent registered public accounting firms did not perform any other services for us during the fiscal years ended December 31, 2008 or 2007. We have not adopted audit committee pre-approval policies and procedures.
PART IV
Item 15.
Item 15.
Exhibits, Financial Statement Schedules.
(a)
Documents filed as part of the report.
(1)
All Financial Statements
Consolidated Balance Sheets at December 31, 2008 and 2007
Consolidated Statements of Operations for the year ended December 31, 2008 and
Consolidated Statement of Changes in Stockholders’ Equity for Years Ended December 31, 2008 and 2007
Consolidated Statement of Cash Flows for Years Ended December 31, 2008 and 2007
(2)
Financial Statements Schedule
(3)
Exhibits
Exhibit
Number
Description
3.1
Articles of Incorporation of the Registrant.*
3.2
Certificate of Amendment to the Articles of Incorporation of the Registrant.*
3.3
By-Laws of Registrant.*
4.1
Form of Common Stock Certificate *
10.1
Stock Option Plan (Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-8 (Commission File Number 333-46712) filed with the SEC on September 27, 2000).***
10.2
Equity Compensation Plan (incorporated by reference to the Company's definitive proxy statement filed with the SEC on April 5, 2005).***
10.3
Form of Option Agreement.***
Code of Ethics.**
21.1
Subsidiaries of Registrant
23.2
Consent of Brightman Almagor & Co
CEO and CFO certifications required under Section 302 of the Sarbanes-Oxley Act of 2002
CEO and CFO certifications required under Section 906 of the Sarbanes-Oxley Act of 2002
*
Incorporated into this Report by reference to the Registrant's Registration Statement on Form 10 dated November 15, 1999.
**
Incorporated into this Report by reference to Exhibit 99 to the Registrant's Annual Report on Form-10KSB filed April 14, 2005.
***
Incorporated into this Report by reference to the Registrant's Annual Report on Form-10KSB filed April 12, 2007.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Paul Goodman
Director
May 18,
Paul Goodman
BAY ACQUISITION CORP
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
BAGELL, JOSEPHS, LEVINE & COMPANY, LLC
Certified Public Accountants
Lippincott Drive, Suite J
Marlton, NJ 08053
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
of Bay Acquisition Corp.
We have audited the accompanying consolidated balance sheet of Bay Acquisition Corp. (a Delaware corporation) (the “Company”) as of December 31, 2008 and the related consolidated statements of operations, retained earnings and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements of Space Logic, Ltd and Secure Logic, Ltd., wholly owned subsidiaries, which statements reflect total assets of $1,186 (U.S. dollars in thousands, except share data) as of June 30, 2008, and total revenues of $1,793 (U.S. dollars in thousands, except share data) for the six month period then ended and are presented as discontinued operations because of the shareholder settlement requiring the acquisition be reversed. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Space Logic, Ltd. and Secure Logic, Ltd., is based solely on the report of the other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bay Acquisition Corp. as of December 31, 2008, and the results of its operations and its cash flows for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred recurring losses and experiences deficiency of cash flow from operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management plans regarding those matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Marlton, New Jersey
April 15,
To the Shareholders of
SECURELOGIC CORP.
We have audited the accompanying consolidated balance sheet of Securelogic Corp. ("the Company") and its subsidiaries as of December 31, 2007 and the related consolidated statements of operations, changes in shareholders' deficiency and comprehensive loss and cash flows for the year ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of December 31, 2007, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a shareholders' deficiency that raises doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Brightman Almagor & Co.
Certified Public Accountants
A member firm of Deloitte Touche Tohmatsu
Tel-Aviv, Israel
April 9,
BAY ACQUISITION CORP
(FORMERLY: SECURELOGIC CORP.)
CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in thousands, except share data)
See notes to consolidated financial statements.
BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except share and per share data)
See notes to consolidated financial statements.
BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(U.S. Dollars in thousands, except share data)
See notes to consolidated financial statements.
BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
See notes to consolidated financial statements.
BAY ACQUISITION CORP.
(FORMERLY SECURELOGIC CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Bay Acquisition Corp. (formerly: SecureLogic Corp) (“the Company”) is incorporated in Nevada. In 2005, the Company acquired SpaceLogic, an Israeli-based company, in exchange for a total of 33,253,611 newly issued shares of the Company’s common stock, which represented 59.8% of the Company’s common shares. The acquisition was accounted for as a reverse acquisition. SpaceLogic is in the business of developing Airport Baggage Handling Systems, as well as Automated Materials Handling Systems.
In July, 2008, as further described in NOTE 4 below, as a result of the settlement of certain litigation, and upon the approval by the court and the Company’s shareholders, the SpaceLogic acquisition that closed in May 2005 was reversed and the Company’s business operations associated with the airport security screening and handling markets that were acquired in 2005 was returned to the previous owners as was the shares of the Company’s common stock issued in that acquisition.
The Company is actively seeking to merge, invest in or acquire other companies to generate revenues and profits.
All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements presented those of Bay Acquisition Corp.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
FINANCIAL STATEMENTS IN U.S. DOLLARS
The reporting currency of the Company is the U.S. dollar (“dollar").
The dollar is the functional currency of the Company and its subsidiary in the United States. Transactions and balances originally denominated in dollars are presented at their original amounts. Non-dollar transactions and balances are re-measured into dollars in accordance with the principles set forth in Statement of Financial Accounting Standards ("SFAS") No. 52 “Foreign Currency Translation” (“SFAS No. 52”). All exchange gains and losses from re-measurement of monetary balance sheet items resulting from transactions in non-dollar currencies are recorded in the statement of operations as they arise.
The functional currency of the Israeli Subsidiaries is the New Israeli Shekel ("NIS"). Their financial statements are translated into dollars in accordance with the principles set forth in SFAS No. 52. The translation of assets and liabilities is at year-end exchange rates; results of operations have been translated at average exchange rates. The translation adjustments are included in accumulated other comprehensive income in shareholders' deficiency .
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its majority owned subsidiary (the “Group”). Intercompany transactions and balances have been eliminated upon consolidation.
CASH AND CASH EQUIVALENTS
Cash equivalents include unrestricted, short-term, highly liquid investments that are readily convertible to cash with maturities of three months or less at the date of acquisition.
CONCENTRATION OF CREDIT RISKS
Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.
The Group maintains cash and cash equivalents and investments with major financial institutions and limits the amount of credit exposure with any institution.
The Group performs ongoing credit evaluations of its customers and to date, has not experienced any unexpected material losses. An allowance for doubtful accounts is determined with respect to specific accounts receivable that the management evaluates to be uncollectible.
PROPERTY AND EQUIPMENT
Equipment is stated at cost, net of accumulated depreciation.
Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:
The Company’s long-lived assets are reviewed for impairment in accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If an asset is determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. As of December 31, 2007, impairment losses of $10 have been identified.
DEFERRED TAXES
The Company and its subsidiary account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No.109”). This Statement prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company and its subsidiary provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
SEVERANCE PAY
The liabilities of the Group for severance pay are calculated based on the most recent salary of the employees as of the balance sheet date in accordance with Israeli Severance Pay Law.
The Company’s obligation for severance pay is provided by monthly deposits with insurance companies (“Severance pay funds”). Severance pay funds presented in the balance sheet include profits accumulated to balance sheet date. The amounts deposited may only be withdrawn after fulfillment of the obligations pursuant to Israeli Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash surrender value of these funds and includes immaterial profits.
Severance pay expenses for the years ended December 31, 2007 and 2006 amounted to approximately $55 and $116 respectively.
STOCK-BASED COMPENSATION
Stock-Based Compensation Plans-Effective January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R) requiring that compensation cost relating to share-based payment awards made to employees and directors be recognized in the financial statements. The cost for such awards is measured at the grant date based on the calculated fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods (generally the vesting period of the equity award) in the Consolidated Statement of Operations. The following table summarizes the effects of stock-based compensation resulting from the application of SFAS No. 123R (revised 2004) included in discontinued operations in the Statement of Operations as follows:
REVENUE RECOGNITION
The Company generated revenues from a long-term contract of installing a material handling system in Israel and from the sale of its self - developed software relating to Warehouse Management Systems. The Company also generated revenues from providing maintenance services and support, from the sale of spare parts and from commissions on supplying spare parts.
1.
Revenue from installation automated material handling system
Revenue from installation an automated material handling system contract is recognized based on Statement of Position 81-1 “Accounting for Performance of Construction-Type and Certain Production - Type Contracts” (“SOP 81-1”) whereby revenue is recognized according to the percentage - of - completion method.
Sales and anticipated profit under the long-term contract are recorded using the cost-to-cost method of accounting, where by percentage of completion is measured based on the ratio of costs incurred, to estimated total project costs. This percentage approximates the engineering percentage of completion.
Estimated gross profit from long-term contracts may change due to changes in estimates resulting from differences between actual performance and original forecasts. Such changes in estimated gross profit are recorded in results of operations when they are reasonably determinable by management, on a cumulative catch-up basis.
Amounts representing contract change orders, claims or other items are included in sales only when they can be reliably estimated and realization is probable.
2.
Revenues from sale of software and products
Revenues from sale of software are recognized in accordance with Statement of Position 97-2, “Software Revenue Recognition”, as amended (“SOP 97-2”). SOP 97-2 generally requires revenue earned on software arrangements involving multiple elements to be allocated to each element based on the relative fair value of the elements The Company has adopted Statement of Position 98-9, “Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain Transactions”, (“SOP 98-9”). SOP 98-9 requires that revenue be recognized under the “residual method” when Vendor Specific Objective Evidence (“VSOE”) of fair value exists for all undelivered elements and VSOE does not exist for all of the delivered elements. Under the residual method any discount in the arrangement is allocated to the delivered elements.
Revenues from sale of software license are recognized when delivery of the product has occurred, the fee is fixed or determinable, collectibility is probable, vendor specific objective evidence exists to allocate total fees to elements of the arrangement and persuasive evidence of an arrangement exists.
The Company also generated revenues from products sales which are recognized in accordance with Staff Accounting Bulletin No. 104 “Revenue Recognition” when delivery has occurred and, where applicable, after installation has occurred, there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivable is probable and no further obligations exist. In cases where delivery has occurred but the required installation has not been performed, the Company does not recognize the revenue until the installation is completed.
3.
Revenues from maintenance services and support
Revenues from maintenance services and support are recognized on a straight-line basis over the term of the maintenance services and support agreement.
4.
Revenues from sale of spare parts
Revenues from sale of spare parts are recognized when delivery of the spare parts has occurred, the fee is fixed or determinable, collectibility is probable and persuasive evidence of an arrangement exists.
5.
Revenues from commissions
Revenue from commissions on supplying spare parts is earned when the sale is consummated.
6.
Deferred revenue
Deferred revenue includes unearned amounts received under maintenance services and support contracts.
PROVISION FOR WARRANTIES
The Company estimates the costs that may be incurred under its basic warranty and records a liability in the amount of such costs at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the product sold and the work preformed. Factors that affect the Company’s warranty liability include the anticipated work, weighted average cost of employees, engineering estimates and anticipated rates of warranty claims. The Company’s management periodically assesses the adequacy of its recorded warranty liability based on the past experience of management and adjusts the amount as necessary.
Changes in the Company’s provision for warranty during the year are as follows:
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount reported in the balance sheet for cash and cash equivalents, short-term bank deposits, trade receivables, other accounts receivable, long-term deposits, long-term note receivables, long-term loans, trade payables and other accounts payable approximates their fair value.
BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share are presented in conformity with SFAS No. 128 "Earnings per Share" for all years presented. Basic and diluted net loss per share have been computed using the weighted-average number of ordinary shares outstanding during the year.
Outstanding share options and shares issued and reserved for outstanding share options have been excluded from the calculation of basic and diluted net loss per share to the extent such securities are anti-dilutive
RECENT ACCOUNTING PRONOUNCEMENTS
1.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). The purpose of SFAS No. 157 is to define fair value, establish a framework for measuring fair value, and enhance disclosures about fair value measurements. The measurement and disclosure requirements are effective for the Company beginning in the first quarter of fiscal year 2008. The Company does not believe that the adoption of SFAS No. 157 will have a significant impact on its consolidated financial statement.
2.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS No. 159). SFAS No. 159 permits companies to choose to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS No. 159 is effective for the Company beginning in the first quarter of fiscal year 2008, although earlier adoption is permitted. The Company does not believe that the adoption of SFAS No. 159 will have a significant impact on its consolidated financial statement.
3.
In June 2007, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research and Development Activities” (EITF 07-3). EITF 07-3 requires non-refundable advance payments for goods and services to be used in future research and development activities to be recorded as an asset and the payments to be expensed when the research and development activities are performed. EITF 07-3 applies prospectively for new contractual arrangements entered into beginning in the first quarter of fiscal year 2008. We currently recognize these non-refundable advanced payments as an expense upon payment. The adoption of EITF 07-3 is not expected to have a significant impact on the Company's consolidated financial statements.
4.
In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statement” (“SFAS 160”) . SFAS 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under FAS 141, some of which could have a material impact on how we account for business combinations. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. The Company is required to adopt SFAS 141(R) and SFAS 160 simultaneously in its fiscal year beginning November 1, 2009. The provisions of SFAS 141(R) will only impact the Company if it is a party to a business combination after the pronouncement has been adopted. Currently, the Company does not believe that the adoption of SFAS No. 141R and SFAS No. 160 will have a significant impact on its consolidated financial statement.
RECLASSIFICATION OF ACCOUNT IN THE PRIOR FINANCIAL STATEMENTS
The Company has reclassified certain accounts in the financial statements for the year ended December 31, 2007 to reflect the discontinued operations associated with the shareholder settlement requiring the acquisition reversal of its subsidiaries, Space Logic, Ltd. and Secure Logic, Ltd. The statements reflect the reclassification of these operations in accordance with the provisions of SFAS No. 144 “Accounting for Impairment or Disposal of Long Lived Assets”. There has been no effect on net loss for the year ended December 31, 2007.
INCOME TAXES
The Company reports income for tax purposes on the cash basis. Deferred taxes result from temporary differences and the net operating loss carryforward. An allowance for the full amount of the gross deferred tax asset has been established due to the uncertainty of utilizing the deferred tax asset in the future.
NOTE 3 - GOING CONCERN
As reflected in the accompanying financial statements, the Company’s operations for the year ended December 31, 2008, resulted in a net loss of $39,000. The Company’s ability to continue operating as a “going concern” is dependent on its ability to raise sufficient additional working capital. Management’s plans in this regard include raising additional cash from current stockholders and potential investors and lenders.
NOTE 4 - SETTLEMENT OF SHAREHOLDER SUITS
On November 14, 2006, Michael Gardner, a stockholder holding approximately 7.9% of the Company’s Common Stock, filed a complaint in the Supreme Court of New York for the County of New York against defendants, which include certain officers and directors of the Company, Gary Koren, Shalom Dolev, Cathal L. Flynn, Iftach Yeffet, Tony Gross and Michael Klein and SecureLogic, as a nominal defendant. The complaint purported to be a shareholder derivative action, alleging that the Defendants breached their fiduciary duties as directors and officers, committed waste, and were unjustly enriched (the “Baytree Action”).
On November 15, 2006, Treeline Investment Partners and David Jaroslawicz filed a complaint in the Supreme Court of New York for New York County against Gary Koren and Killy Koren regarding two transactions for the purchase of shares of the Company’s Common Stock performed in 2005. While the Company is not a party to this litigation, the Company may be obligated to indemnify Mr. Koren for some or all of his litigation expenses (the “Treeline Action”).
On December 28, 2007, the parties in both the Baytree Action and the Treeline Action entered into a comprehensive Settlement Agreement and Release to settle the lawsuits. On May 1, 2008, the United States District Court for the Southern District of New York approved the Settlement Agreement. Thereafter, the stockholders of the Company approved the Settlement Agreement and the transactions called for in the Settlement Agreement.
Pursuant to the Settlement Agreement, on or about July 15, 2008, the parties effectively reversed the May 2005 acquisition whereby the Company acquired the outstanding capital stock and business of SpaceLogic Ltd. and its subsidiary SecureLogic Ltd. in exchange for shares of the Company’s Common Stock. Pursuant to the Settlement Agreement, on or about July 15, 2008, the following events occurred: (i) the individual Defendants surrendered their Common Stock to the Company for cancellation with Mr. Koren transferring 1,200,000 of his shares to Treeline Investment Partners, L.P. and Mr. Jaroslowicz, and (ii) the Company transferred to a new entity beneficially owned by Messrs. Koren, Dolev, Yeffet, Gross and Klein (“Newco”), all of the business and assets of the Company other than (a) $350,000 in cash, (b) accounts in existence prior to the acquisition in 2005, (c) corporate and tax records, and (d) 75% of the proceeds from the Company’s directors and officers insurance policy after payment of certain legal fees and expenses. Newco assumed all liabilities and obligations of the Company except certain liabilities and obligations of the Plaintiffs, other shareholders, and tax and Securities and Exchange Commission filings not to exceed $5,000 in the aggregate. The Settlement Agreement also includes mutual general releases and non-disparagement provisions.
As December 31, 2008, all shares which were surrendered to the Company are being held as treasury shares.
In addition, Newco granted the Company or a designated subsidiary four non-exclusive licenses for individual iScreen Systems. Pursuant to these licenses, the Company will not market the iScreen Systems except through Newco or its designee. Each license will give the Company or its designated subsidiary the right to receive the first $200,000 in proceeds from the sale of the licensed iScreen System and an equal portion in any amount in excess of $200,000.
On July 22, 2008, the Company amended its Articles of Incorporation to change the Company’s name to “Bay Acquisition Corp.”
NOTE 5 - CASH AND CASH EQUIVALENTS
NOTE 6 - SHORT-TERM BANK DEPOSITS
(1)
The deposits include a balance in the amount of $87 that serves as collateral for a bank guarantee issued to secure a bid submittal, a balance of $11 serves as collateral for bank guarantees issued to secure rental fees (see Note 11a) and a balance of $42 serves as collateral for bank guarantees issued to secure advances received from customers.
(2)
The deposits include a balance of $27 serves as collateral for bank guarantees issued to secure advances received from customers and a balance of $74 serves as collateral against credit line.
NOTE 7 - PROPERTY AND EQUIPMENT, NET
A.
COMPOSITION
B.
Depreciation expense for the years ended December 31, 2008 and 2007 amounted to $24 and $44 respectively. In addition, the Company recognized in 2007 an impairment loss of $44.
NOTE 8 - OTHER ACCOUNTS PAYABLE
NOTE 9 - LONG-TERM LOANS
a.
COMPOSITION:
The maturities of these loans after December 31, 2007 are as follows:
b.
With respect to collateral, see Note 11b.
NOTE 10 - TAXES ON INCOME
a.
APPLICABLE TAX LAWS - this pertains to discontinued operations:
The provisions of the Income Tax (Inflationary Adjustments) Law, 1985 apply to the Israeli subsidiaries of the Company. According to the law, the results for tax purposes are measured based on the changes in the Israeli CPI.
b.
TAX LOSSES CARRYFORWARD this pertains to discontinued operations:
As of December 31, 2007, the Company’s Israeli subsidiaries have tax losses of approximately $3,057 that may be carried forward for an indefinite period.
c.
FINAL TAX ASSESSMENTS - this pertains to discontinued operations:
The Company's and its U.S. subsidiary tax filings are open to examination by the Internal Revenue Service and California Franchise Tax Board for 3 and 4 years, respectively SpaceLogic has tax assessments, which are considered final through 2000. Other subsidiaries have no final tax assessments since inception.
d.
DEFERRED TAXES - this pertains to discontinued operations:
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred taxes computed at the enacted tax rate that is expected to be in effect at the time the differences are expected to reverse. Significant components of the Group’s deferred tax assets are as follows:
DEFERRED TAX ASSETS:
The Company adopted the provisions of FASB interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an Interpretation of SFAS 109 on January 1,2007. There was no impact as result of this adoption.
e.
INCOME TAX EXPENSES
Income tax expense consists of:
For the year ended December 31, 2007, the expense in included in discontinued operations. Also included in discontinued operations for the six months ended June 30, 2008 was a credit of $216.
In 2005 the Israeli Knesset approved a law for the amendment of the Income Tax Ordinance, according to which the regular corporate tax rate is to be reduced gradually and annually from 34% to 29% for the 2007 tax year ending at 25% for the 2010 tax year.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
a.
GUARANTEES:
In 2007 the Company provided bank guarantees at the amount of $77 in order to secure advances received from customers $22 to secure rental fees, and $87 to secure a bid submittal.
b.
CHARGES:
In 2007, as collateral for loans granted by a leasing company and a bank, a fixed charge has been placed on motor vehicles.
For deposits serving as collateral for bank guarantees, see Note 6.
NOTE 12 - RELATED PARTY TRANSACTIONS
The President and CEO of the Company, Mr. Paul Goodman, had performed legal services for the Company and received remuneration in the amount of $14,250 for the year ended December 31, 2008. For the year ended December 31, 2007, salary and related expenses to the Company’s CEO totaled $144,000 less participation in general expenses of $6,000 that were included in operating expenses of discontinued operations.
NOTE 13 - DISCONTINUED OPERATIONS
As previously disclosed in Note 4, the Company completed the reversal of the May 2005 acquisition.
The summarized results of operations for the six months ended June 30, 2008 and the year ended December 31, 2007 are as follows:
NOTE 14 - SUBSEQUENT EVENT
On February 11, 2009, the Company made a short term bridge loan to a stockholder of the Company in the amount of $171. The loan bears interest at a rate of 8% per annum and is due and payable on May 31, 2009.