[ ]
|
No fee required
|
[X]
|
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
|
(1)
|
Title of each class of securities to which transaction applies:
|
(2)
|
Aggregate number of securities to which transaction applies:
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing is calculated and state how it was determined.):
2,175,564 common stock shares to be issued at a $0.10 per share market value equals $217,556 times one-fiftieth of one percent or .0002 totals $43.51)
|
(4)
|
Proposed maximum aggregate value of transaction:
|
(5)
|
Total Fee Paid: $44
|
[ ]
|
Fee paid previously with preliminary materials.
|
[ ]
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
1.
|
Amend the Corporation's Articles of Incorporation with the Nevada Secretary of State to increase the Corporation’s authorized shares of common stock, 50,000,000 shares to 100,000,000 shares.
|
2.
|
Execute a 1-for-20 reverse stock split of the shares of our common stock to take effect on a date not later than December 31, 2011 so that stockholders will receive one share of our common stock for each twenty shares now held.
|
3.
|
Change of the Corporation’s fiscal year from September 30 to a December 31 year end.
|
4.
|
Approve the acquisition of Cogility Software Corporation, a Delaware corporation (“Cogility”), through a to be formed wholly-owned subsidiary of the Corporation via a "reverse merger" pursuant to which Cogility would be merged with and into a wholly-owned single purpose merger subsidiary of the Corporation, with Cogility being the survivor of the Merger and a wholly-owned subsidiary of the Corporation. This acquisition shall be
pursuant to the terms and conditions of an Agreement effective as of November 4, 2010, by and among Cogility, Deborah Sue Ghourdjian Separate Property Trust which is Cogility’s majority shareholder, Matthew Ghourdjian who is Cogility’s Chief Executive Officer, the Corporation, and all of the members of the Corporation’s board of directors.
In the Merger: (a) the current stockholders of Cogility would receive 2,175,564 shares of our common stock (88.2% of the shares of our common stock outstanding after the Merger); (b) the current optionholders of Cogility would receive options to purchase an aggregate of 1,117,925 shares of our common stock at exercise prices ranging from $0.001 to $5.00 per share; and (c) directors, officers, employees and consultants to Cogility would receive options to purchase an aggregate of 1,500,000 shares of our common stock at an exercise price of $5.00 per share.
|
·
|
Acquired Sales Corp. is required to complete a 1-for-20 reverse stock split of the shares of its common stock;
|
·
|
Post-split, Acquired Sales would have outstanding 291,624 shares of common stock;
|
·
|
In addition, Acquired Sales would have outstanding options to purchase an aggregate of 630,000 shares of its common stock at an exercise price of $2.00 per share.
|
·
|
The vesting of the Acquired Sales stock options would be contingent upon the closing of its acquisition of Cogility.
|
·
|
Acquired Sales will form a new wholly-owned subsidiary in Delaware (the “Cogility Acquisition Sub”), the single purpose of the Cogility Acquisition Sub would be to acquire Cogility.
|
·
|
Cogility would be merged with and into the Cogility Acquisition Sub, with Cogility being the survivor of such merger (the “Merger”).
|
·
|
From and after the closing of the Merger, Cogility would be a wholly-owned subsidiary of Acquired Sales.
|
·
|
(a) the current stockholders of Cogility would receive 2,175,564 shares of our common stock (88.2% of the shares of our common stock outstanding after the Merger);
|
·
|
(b) the current optionholders of Cogility would receive options to purchase an aggregate of 1,117,925 shares of our common stock at exercise prices ranging from $0.001 to $5.00 per share; and
|
·
|
(c) directors, officers, employees and consultants to Cogility would receive options to purchase an aggregate of 1,500,000 shares of our common stock at an exercise price of $5.00 per share.
|
·
|
(a) The 1-for-20 reverse split of Acquired Sales’ common stock shall have been completed, reducing the number of shares of Acquired Sales’ common stock outstanding from 5,832,482 down to 291,624;
|
·
|
(b) Cogility and Acquired Sales each shall have completed its “due diligence” investigation of the other and the results of such investigation shall be satisfactory to each of them, in its sole discretion;
|
·
|
(c) audited financial statements of Cogility shall have been completed and delivered to Acquired Sales, and such audited financial statements shall be acceptable to Acquired Sales in its sole discretion;
|
·
|
(d) Cogility and Acquired Sales shall have negotiated, executed and delivered mutually agreeable definitive transaction documentation;
|
·
|
(e) all material third party approvals shall have been obtained, including approval of the definitive transaction documentation by the boards of directors of both Cogility and Acquired Sales;
|
·
|
(f) all necessary securities filings shall have been made; and
|
·
|
(g) no governmental or shareholder investigations, actions, orders, lawsuits or other proceedings are pending in regard to the securities filings or the Merger
|
·
|
(1) the exchange of 11,530,493 outstanding shares of Cogility common stock for 2,175,564 shares of post-reverse split common stock of Acquired Sales, which Acquired Sales shares have an aggregate fair value of $4,351,128 based on the pre-split market value of $0.10 per share, or $2.00 per share post-split;
|
·
|
(2) the exchange of 5,925,000 outstanding options to purchase shares of Cogility common stock for 1,117,925 options to purchase post-reverse split common stock of Acquired Sales at exercise prices ranging from $0.001 to $5.00 per share, which Acquired Sales options have an aggregate fair value of $1,466,341 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: post-split exercise price of $1.06 per share, estimated term of 4.3 years, estimated volatility of 80%, estimated yield of 0% and estimated risk-free interest rate of 2.0%;
|
·
|
(3) the elimination of the existing Cogility bonus plan, and the issuance of 1,500,000 options to purchase post-reverse split common stock of Acquired Sales at an exercise price of $5.00 per share, which Acquired Sales options have an aggregate fair value of $1,182,830 computed using the Black-Scholes option pricing model and the weighted-average assumptions listed in (2) above except the weighted-average post-split exercise price is $5.00 per share and the estimated term is 4.0 years;
|
·
|
(4) in November 2010, Acquired Sales granted stock options to the members of management and directors that participated in structuring the financing and the merger with Cogility; those stock options are for the purchase of 12,600,000 pre-split common shares at $0.10 per share, or 630,000 post-split common shares at $2.00 per share, and vest upon the occurrence of the merger; which Acquired Sales options have an aggregate fair value of $801,762 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: estimated term of 5.2 years, estimated volatility of 78%, estimated yield of 0% and estimated risk-free interest rate of 1.1%; and
|
·
|
(5) the issuance of Acquired Sales stock options to purchase 75,000 post-reverse split Acquired Sales common stock to a consultant with 25,000 options exercisable at $0.001 per share and 50,000 options exercisable at $2.00 per share, which Acquired Sales options have an aggregate fair value of $113,030 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: post-split exercise price of $1.34 per share, estimated term of 5.0 years, estimated volatility of 77%, estimated yield of 0% and estimated risk-free interest rate of 2.0%.
|
·
|
The total acquisition consideration for Cogility is $7,915,091.
|
5.
|
Approve a post-acquisition option plan for the officers, directors and employees of the Corporation.
|
6.
|
Elect Gerard M. Jacobs, Joshua A. Bloom, M.D., Roger S. Greene, James S. Jacobs, M.D., Michael D. McCaffrey, Richard E. Morrissy, and Vincent J. Mesolella to our board of directors to serve for a period of one year or until their successors are duly elected and qualified and in connection with the same, ratify the Board of Directors intention to amend, pursuant to Article 8.06, the Corporation's By-Laws to increase the size of the Corporation's Board of Directors from seven to ten, and to appoint Matthew Ghourdjian, and two additional persons designated by Matthew Ghourdjian and acceptable to the Corporation's Chairman and Chief Executive Officer, as new members of the Corporation's Board of Directors to fill the three vacancies on the Corporation's Board of Directors.
|
· |
Each holder of shares of Common Stock is entitled to one vote per share on all matters to be voted on by our stockholders generally, including the election of directors;
|
· |
There are no cumulative voting rights;
|
· |
The holders of our Common stock are entitled to dividends and other distributions as may be declared from time to time by the Board out of funds legally available for that purpose, if any, subject to any dividend rights of the preferred stock, if any;
|
· |
Upon our liquidation, dissolution or winding up, the holders of shares of Common Stock will be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities and the payment of the liquidation preference of any outstanding preferred stock; and
|
· |
The holders of Common Stock have no preemptive or other subscription rights to purchase shares of our stock, and are not entitled to the benefits of any redemption or sinking fund provisions.
|
Name
|
Number of Shares
|
|
Leonard Dee Hall
|
600,000
|
|
Janet Brandler Custodian Christian Brandler
|
162,354
|
|
Kevin L. Cannon
|
200,000
|
|
Jennifer Christensen
|
200,000
|
|
Dan Carter
|
262,355
|
|
Jason Carter
|
200,000
|
|
Brian Williams
|
200,000
|
|
Kathy Carter
|
200,000
|
|
Ardeth Celano
|
200,000
|
|
Kiel Christensen
|
200,000
|
|
Roberti Jacobs Family Trust u/a/d 11-11-99 (1)
|
1,166,497
|
|
Total
|
3,591,206
|
Name
|
Age
|
Position
|
||
Gerard M. Jacobs
|
56
|
Chairman, chief executive officer, president, secretary, treasurer
|
||
Joshua A. Bloom, M.D.
|
55
|
Director
|
||
Roger S. Greene
|
56
|
Director
|
||
James S. Jacobs, MD
|
57
|
Director
|
||
Michael D. McCaffrey
|
65
|
Director
|
||
Richard E. Morrissy
|
56
|
Director
|
||
Vincent J. Mesolella
|
62
|
Director
|
||
Matthew Ghourdjian
|
55
|
Intended Director
|
||
Name and Principal Position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards
($)
(e)
|
Option
Awards
($)
(f)
|
NonEquity
Incentive
Plan
Compensation
($) (g)
|
Nonqualified
Deferred
Compensation
Earnings
($)(h)
|
All
Other
Compensation
($) (i)
|
Total
($)
(j)
|
Gerard M. Jacobs, CEO(1)
|
2010
2009
|
$ -
$ -
|
$ -
$ -
|
$ -
$ -
|
$769,560(2)
$ -
|
$ -
$ -
|
$ -
$ -
|
$ -
$ -
|
$769,560
$ -
|
(1)
|
Mr. Jacobs has been issued options to purchase 12,100,000 shares of our common stock at a purchase price of $0.10 per share. These options will vest upon closing of the Cogility acquisition and expire on November 4, 2020.
|
(2)
|
The weighted-average grant-date fair value of options granted during the three months ended December 31, 2010 was $0.0636 per share. The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock.
|
Name
|
Fees earned or paid in cash ($)
|
Stock awards ($)
|
Option awards
($)
(1)(2)
|
Non-equity incentive plan compensation ($)
|
Nonqualified deferred
compensation earnings
($)
|
All other compensation ($)
|
Total
($)
(3)
|
|
Gerard M. Jacobs(4)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Joshua A. Bloom
|
-
|
-
|
$6,360
|
-
|
-
|
-
|
$6,360
|
|
Roger S. Greene
|
-
|
-
|
$6,360
|
-
|
-
|
-
|
$6,360
|
|
Michael McCaffrey
|
-
|
-
|
$6,360
|
-
|
-
|
-
|
$6,360
|
|
Vincent J. Mesolella
|
-
|
-
|
$6,360
|
-
|
-
|
-
|
$6,360
|
|
Richard E. Morrissy
|
-
|
-
|
$6,360
|
-
|
-
|
-
|
$6,360
|
|
(1)
|
These options entitle the holder to purchase shares of our common stock at a purchase price of $0.10 per share. These options will vest upon closing of the Cogility acquisition and expire on November 4, 2020.
|
(2)
|
The weighted-average grant-date fair value of options granted during the three months ended December 31, 2010 was $0.0636 per share. The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock.
|
(3)
|
The current market price of the underlying common stock shares as of the date of this filing is approximately $0.10 per common share.
|
(4)
|
Mr. Jacobs’ option compensation described in the preceding table is deemed to be executive compensation.
|
Outstanding Equity Awards At Fiscal Year End
(see description of columns (a) through (j) below)
Option Awards Stock Awards
|
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Gerard M. Jacobs 12,100,000 - - $0.10 11/4/20 12,100,000 $769,560 - -
CEO
|
(a)
|
The name of the named executive officer (column (a));
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Equity Compensation Plan Information
|
|||
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
Equity compensation plans approved by security holders
|
12,600,000(1)
|
$0.06
|
1,117,925(2)
|
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
Total
|
12,600,000(3)(4)
|
$0.06
|
1,117,925(5)
|
-
|
-
|
1.
|
In November 2010, Acquired Sales granted these stock options to the members of management and directors that participated in structuring the financing and the merger with Cogility. Those stock options were for the purchase of 12,600,000 pre-split common shares at $0.10 per share, or 630,000 post-split common shares at $2.00 per share. The options vest upon the occurrence of the merger, which as of the date of this filing, has not occurred. The grant-date fair value of these stock options of $801,762 less $308,787 already included in Acquired Sales’ operations is recognized as compensation expense.
|
2.
|
Prior to the merger, Cogility had stock options outstanding that permit the holders thereof to purchase 5,925,000 Cogility common shares at prices ranging from $0.001 to $1.40 per share. In the merger transaction, the Cogility option holders are to exchange these stock options for 1,117,925 Acquired Sales stock options exercisable at prices ranging from $0.001 to $5.00 per share. The exchange of these stock options is considered to be part of the recapitalization of Cogility and is not a modification of the Cogility stock options. There are 3,295,000 of these Cogility stock options that are exchangeable for 621,698 Acquired Sales stock options that vested during 2011 upon Acquired Sales obtaining at least $500,000 of financing and the remaining Cogility stock options vest upon occurrence of the merger with the Acquired Sales subsidiary.
|
3.
|
Gerard M. Jacobs is the only executive officer of the Company. He has received 12,100,000 options.
|
4.
|
The current directors who are not executive officers have collectively received 500,000 options.
|
5.
|
Of the 1,117,925 Cogility options, Gerard M. Jacobs holds options that are to be exchanged for 571,698 Acquired Sales options should the acquisition of Cogility be completed. This would increase the number of post-reverse split Acquired Sales options held by Mr. Jacobs to 1,176,698 from 605,000 presently held. Roger S. Greene and Vincent J. Mesolella each hold Cogility options that are to be exchanged for 25,000 Acquired Sales options should the acquisition of Cogility be completed. This would increase the number of post-reverse split Acquired Sales options held by each of Mr. Greene and Mr. Mesolella to 30,000 from 5,000 presently held.
|
Page
|
|
PRO FORMA FINANCIAL INFORMATION
|
|
Unaudited Pro Forma Condensed Consolidated Financial Information
|
F-3
|
Unaudited Pro Forma Condensed Consolidated Balance Sheet, March 31, 2011
|
F-4
|
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2011
|
F-5
|
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended
December 31, 2010
|
F-6
|
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
|
F-7
|
ACQUIRED SALES CORP.
|
|
Condensed Balance Sheets, March 31, 2011
|
F-10
|
Condensed Statements of Operations for the Three Months Ended March 31, 2011
and 2010, and for the period May 27, 2004 (Date of Inception of the Development Stage)
through March 31, 2011 (Unaudited)
|
F-11
|
Condensed Statements of Cash Flows for the Three Months Ended
March 31, 2011 and 2010, and for the period May 27, 2004 (Date of Inception
of the Development Stage) through March 31, 2011 (Unaudited)
|
F-12
|
Notes to Condensed Financial Statements (Unaudited)
|
F-13
|
Report of Independent Registered Public Accounting Firm
|
F-18
|
Balance Sheets, December 31, 2010 and September 30, 2010 and 2009
|
F-19
|
Statements of Operations for the Three Months Ended December 31, 2010 and 2009,
for the Years Ended September 30, 2010 and 2009, and for the Period May 27, 2004
Date of Inception of the Development Stage) through December 31, 2010
|
F-20
|
Statements of Shareholders’ Deficit for the Period from May 27, 2004
(Date of Inception of the Development Stage) through September 30, 2007,
for the Years Ended September 30, 2008, 2009 and 2010 and for the Three Months
Ended December 31, 2010
|
F-21
|
Statements of Cash Flows for the Three Months Ended December 31, 2010 and 2009,
for the Years Ended September 30, 2010 and 2009, and for the Period May 27, 2004
(Date of Inception of the Development Stage) through December 31, 2010
|
F-22
|
Notes to Financial Statements
|
F-23
|
COGILITY SOFTWARE CORPORATION
|
|
Condensed Balance Sheet, March 31, 2011 (Unaudited)
|
F-30
|
Condensed Statements of Operations for the Three Months Ended March 31, 2011
and 2010 (Unaudited)
|
F-31
|
Condensed Statement of Shareholders’ Deficit for the Three Months Ended
March 31, 2011 (Unaudited)
|
F-32
|
Condensed Statements of Cash Flows for the Three Months Ended
March 31, 2011 and 2010 (Unaudited)
|
F-33
|
Notes to Condensed Financial Statements (Unaudited)
|
F-34
|
Report of Independent Registered Public Accounting Firm
|
F-39
|
Balance Sheets, December 31, 2010 and 2009
|
F-40
|
Statements of Operations for the Years Ended December 31, 2010 and 2009
|
F-41
|
Statements of Shareholders’ Deficit for the Years Ended December 31, 2009 and 2010
|
F-42
|
Statements of Cash Flows for the Years Ended December 31, 2010 and 2009
|
F-43
|
Notes to Financial Statements
|
F-44
|
Acquired
|
Pro Forma |
Pro Forma
|
|||||||||||||||
Cogility
|
Sales
|
Adjustments |
Results
|
||||||||||||||
Revenue
|
|||||||||||||||||
Maintenance and support services
|
$ | 18,388 | $ | - | $ | 18,388 | |||||||||||
Total Revenue
|
18,388 | - | 18,388 | ||||||||||||||
Cost of Revenue
|
|||||||||||||||||
Cost of services
|
88 | - | 88 | ||||||||||||||
Total Cost of Revenue
|
88 | - | 88 | ||||||||||||||
Gross Profit
|
18,300 | - | 18,300 | ||||||||||||||
Selling, General and Administrative
|
|||||||||||||||||
Expense
|
1,197,056 | 304,667 | $ | 436,268 | C | 1,937,991 | |||||||||||
Loss from Operations
|
(1,178,756 | ) | (304,667 | ) | (436,268 | ) | (1,919,691 | ) | |||||||||
Interest Income
|
- | 3,921 | (3,921 | ) | D | - | |||||||||||
Interest Expense
|
(10,376 | ) | (18,502 | ) | (592 | ) | D | (29,470 | ) | ||||||||
Loss before Income Taxes
|
(1,189,132 | ) | (319,248 | ) | (440,781 | ) | (1,949,161 | ) | |||||||||
Provision for Income Taxes
|
(800 | ) | - | (800 | ) | ||||||||||||
Net Loss
|
$ | (1,189,932 | ) | $ | (319,248 | ) | $ | (440,781 | ) | $ | (1,949,961 | ) | |||||
Basic and Diluted Loss per Share
|
$ | (0.10 | ) | $ | (0.05 | ) | $ | (0.79 | ) |
Acquired
|
Pro Forma
|
Pro Forma
|
|||||||||||||||
Cogility
|
Sales
|
Adjustments
|
Results
|
||||||||||||||
Revenue
|
|||||||||||||||||
Software licensing and hardware sales
|
$ | 524,527 | $ | - | $ | 524,527 | |||||||||||
Consulting Services
|
4,215,775 | - | 4,215,775 | ||||||||||||||
Maintenance and support services
|
110,888 | - | 110,888 | ||||||||||||||
Total Revenue
|
4,851,190 | - | 4,851,190 | ||||||||||||||
Cost of Revenue
|
|||||||||||||||||
Hardware and software costs
|
510,427 | - | 510,427 | ||||||||||||||
Cost of services
|
1,996,982 | - | 1,996,982 | ||||||||||||||
Total Cost of Revenue
|
2,507,409 | - | 2,507,409 | ||||||||||||||
Gross Profit
|
2,343,781 | - | 2,343,781 | ||||||||||||||
Selling, General and Administrative
|
|||||||||||||||||
Expense
|
2,467,872 | 344,057 | 1,495,714 | C | 4,307,643 | ||||||||||||
Loss from Operations
|
(124,091 | ) | (344,057 | ) | (1,495,714 | ) | (1,963,862 | ) | |||||||||
Interest Expense
|
(63,110 | ) | (2,715 | ) | (88,978 | ) | D | (154,803 | ) | ||||||||
Loss before Income Taxes
|
(187,201 | ) | (346,772 | ) | (1,584,692 | ) | (2,118,665 | ) | |||||||||
Provision for Income Taxes
|
(13,523 | ) | - | (13,523 | ) | ||||||||||||
Net Loss
|
$ | (200,724 | ) | $ | (346,772 | ) | $ | (1,584,692 | ) | $ | (2,132,188 | ) | |||||
Basic and Diluted Loss Per Share
|
$ | (0.02 | ) | $ | (0.06 | ) | $ | (0.86 | ) |
|
A – Cogility shareholders owning the outstanding 11,530,493 Cogility common shares receive 2,175,564 Acquired Sales common shares, or one Acquired Sales common share for each 5.3 Cogility common shares outstanding. The historical Cogility financial statements are restated on a retroactive basis for all periods presented for the effects of this 5.3-for-1 reverse stock split.
|
|
B –Acquired Sales reverse splits its common shares outstanding on a 1-for-20 basis, which results in the 5,832,482 Acquired Sales pre-split common shares currently outstanding becoming 291,624 Acquired Sales common shares. For financial reporting purposes, the 291,624 common shares are effectively issued in exchange for the assumption of the $202,700 of net assets of Acquired Sales and are recorded at the fair value of the net assets of $202,700.
|
|
|
C – Prior to the merger, Cogility had stock options outstanding that permit the holders thereof to purchase 5,925,000 Cogility common shares at prices ranging from $0.001 to $1.40 per share. In the merger transaction, the Cogility option holders exchange these stock options for 1,117,925 Acquired Sales stock options exercisable at prices ranging from $0.001 to $5.00 per share. The exchange of these stock options is considered to be part of the recapitalization of Cogility and is not a modification of the Cogility stock options. There are 3,295,000 of these Cogility stock options that are exchangeable for 621,698 Acquired Sales stock options that vested during 2011 upon Acquired Sales obtaining at least $500,000 of financing and the remaining Cogility stock options vest upon occurrence of the merger with the Acquired Sales subsidiary; accordingly. For purposes of these pro forma financial statements, the remaining unrecognized grant-date fair value of these Cogility stock options of $3,325 and $507,723 for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively, is recognized as compensation expense.
|
|
D – During the three months ended March 31, 2011, Acquired Sales issued $920,000 of 3% promissory notes and warrants to purchase 460,000 post-split shares of common stock at $2.00 per share. The promissory notes accrue interest at the stated rate of 3% per annum payable, mature on December 31, 2014 and are secured by all of the assets of Acquired Sales. The proceeds were allocated $610,998 to the notes payable and $309,002 to the warrants based on their relative fair values. The resulting $309,002 discount to the notes payable is being amortized over the term of the promissory notes using the interest method and is causing the notes payable to have an effective interest rate of 14.5%. The pro forma statements of operations have been adjusted to reflect interest expense on these promissory notes as though they had been issued at the beginning of each period.
|
|
E – On September 22, 2010, the majority shareholder of Cogility signed an agreement that in the event of the merger, $73,558 of accrued compensation payable would be forgiven. The accompanying pro forma financial statements recognize this transaction as the conversion of the $73,588 of accrued compensation to officers to additional paid-in capital without the issuance of additional common shares.
|
Three Months Ended
|
Year Ended
|
|||||||
March 31, 2011
|
December 31, 2010
|
|||||||
Pro forma net loss
|
$ | (1,949,961 | ) | $ | (2,132,188 | ) | ||
Weighted-average common shares outstanding
|
2,467,188 | 2,467,188 | ||||||
Pro forma basic and diluted loss per share
|
$ | (0.79 | ) | $ | (0.86 | ) |
Three Months Ended December 31, 2010
|
|||
Weighted-average volatility
|
77.88 | % | |
Expected dividends
|
0 | % | |
Expected term (years)
|
5.20 | ||
Risk-free interest rate
|
1.11 | % |
Weighted-
|
|||||||||||||||
Weighted -
|
Average
|
||||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||||
Exercise
|
Contractual
|
Instrinsic
|
|||||||||||||
Options
|
Shares
|
Price
|
Term (Years)
|
Value
|
|||||||||||
Outstanding, October 1, 2010
|
- | $ | - | ||||||||||||
Granted during the three months ended December 31, 2010
|
12,600,000 | 0.10 | |||||||||||||
Outstanding, December 31, 2010
|
12,600,000 | $ | 0.10 | 5.2 | $ | - | |||||||||
Exercisable, December 31, 2010
|
- | $ | - | - | $ | - |
December 31,
|
September 30,
|
|||||||||||
2010
|
2010
|
2009
|
||||||||||
Warrants outstanding
|
$ | - | $ | 4,465 | $ | 4,465 | ||||||
Stock option compensation
|
115,177 | - | - | |||||||||
Operating loss carryforwards
|
148,026 | 37,098 | 28,252 | |||||||||
Total deferred tax assets
|
263,203 | 41,563 | 32,717 | |||||||||
Less: Valuation allowance
|
(263,203 | ) | (41,563 | ) | (32,717 | ) | ||||||
Net Deferred Tax Asset
|
$ | - | $ | - | $ | - |
December 31,
|
September 30,
|
|||||||||||
2010
|
2010
|
2009
|
||||||||||
Federal income tax benefit
|
||||||||||||
at statutory rate of 34%
|
$ | (110,928 | ) | $ | (8,846 | ) | $ | (4,194 | ) | |||
Change in valuation allowance
|
110,928 | 8,846 | 4,194 | |||||||||
Provision for income taxes
|
$ | - | $ | - | $ | - |
Assets
|
||||
Cash and total current assets
|
$ | 105,148 | ||
Long-term 5% notes receivable from Cogility
|
820,000 | |||
Total Assets
|
$ | 925,148 | ||
Liabilities and Stockholders' Equity
|
||||
Accounts payable
|
$ | 17,055 | ||
Notes payable to related parties
|
44,000 | |||
Total current liabilities
|
61,055 | |||
Long-term liabilities
|
||||
3% Notes payable to related parties; $400,000 face amount;
|
||||
less $132,828 unamortized discount based on effective interest
|
||||
rate of 14.0%
|
267,172 | |||
3% Notes payable; $520,000 face amount; less $172,675
|
||||
unamortized discount based on effective interest rate of 14.0%
|
347,325 | |||
Total liabilities
|
675,552 | |||
Stockholders' equity
|
||||
Common stock
|
5,833 | |||
Additional paid-in capital
|
760,257 | |||
Deficit accumulated prior to the development stage
|
(69,151 | ) | ||
Deficit accumulated during the development stage
|
(447,343 | ) | ||
Total stockholders' equity
|
249,596 | |||
Total Liabilities and Stockholders' Equity
|
$ | 925,148 |
ASSETS
|
||||
Current Assets
|
||||
Cash and cash equivalents
|
$ | 34,526 | ||
Accounts receivable
|
129,736 | |||
Receivables from employees
|
7,107 | |||
Prepaid expenses
|
1,695 | |||
Total Current Assets
|
173,064 | |||
Property and Equipment
, net of accumulated depreciation of $2,202,173
|
70,308 | |||
Note receivable from related party
|
30,588 | |||
Deposits
|
12,535 | |||
Total Assets
|
$ | 286,495 | ||
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
||||
Current Liabilities
|
||||
Trade accounts payable
|
$ | 326,531 | ||
Accrued liabilities
|
176,813 | |||
Billings in excess of costs on uncompleted contracts
|
86,225 | |||
Unearned revenue
|
41,572 | |||
Accrued compensation
|
358,496 | |||
Notes payable
|
450,376 | |||
Short-term notes payable to related party
|
73,558 | |||
Total Current Liabilities
|
1,513,571 | |||
Long-Term Liabilities
|
||||
Notes payable to related party
|
820,000 | |||
Total Long-Term Liabilities
|
820,000 | |||
Shareholders' Deficit
|
||||
Common stock, $0.01 par value; 30,000,000 shares authorized;
|
||||
11,530,493 shares outstanding
|
11,530 | |||
Additional paid-in capital
|
3,967,016 | |||
Accumulated deficit
|
(6,025,622 | ) | ||
Total Shareholders' Deficit
|
(2,047,076 | ) | ||
Total Liabilities and Shareholders' Equity
|
$ | 286,495 |
For the Three Months
|
||||||||
Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Revenue
|
||||||||
Consulting Services
|
$ | - | $ | 18,917 | ||||
Maintenance and Support Services
|
18,388 | 21,250 | ||||||
Total Revenue
|
18,388 | 40,167 | ||||||
Cost of Revenue
|
||||||||
Cost of Services
|
88 | 21,206 | ||||||
Total Cost of Revenue
|
88 | 21,206 | ||||||
Gross Profit
|
18,300 | 18,961 | ||||||
Selling, General and Administrative Expenses
|
1,197,056 | 580,892 | ||||||
Loss From Operations
|
(1,178,756 | ) | (561,931 | ) | ||||
Interest Expense
|
10,376 | 18,500 | ||||||
Loss Before Provision for Income Taxes
|
(1,189,132 | ) | (580,431 | ) | ||||
Provision for Income Taxes
|
800 | 800 | ||||||
Net Loss
|
$ | (1,189,932 | ) | $ | (581,231 | ) | ||
Basic and Diluted Loss Per Share
|
$ | (0.10 | ) | $ | (0.05 | ) | ||
Basic and Diluted Weighted Average Shares Outstanding
|
11,530,493 | 11,530,493 |
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid-in
|
Accumulated
|
Shareholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
||||||||||||||||
Balance, December 31, 2010
|
11,530,493 | $ | 11,530 | $ | 3,400,118 | $ | (4,835,690 | ) | $ | (1,424,042 | ) | |||||||||
Services contributed by shareholder,
|
||||||||||||||||||||
no additional shares issued
|
- | - | 62,500 | - | 62,500 | |||||||||||||||
Share-based compensation
|
- | - | 504,398 | - | 504,398 | |||||||||||||||
Net loss
|
- | - | - | (1,189,932 | ) | (1,189,932 | ) | |||||||||||||
Balance, March 31, 2011
|
11,530,493 | $ | 11,530 | $ | 3,967,016 | $ | (6,025,622 | ) | $ | (2,047,076 | ) |
For the Three Months
|
||||||||
Ended March 31,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net loss
|
$ | (1,189,932 | ) | $ | (581,231 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Services contributed by shareholder, no additional shares issued
|
62,500 | - | ||||||
Share-based compensation
|
504,398 | 3,850 | ||||||
Expenses paid by by increase in notes payable
|
4,571 | 5,715 | ||||||
Expenses paid by by increase in notes payable to related party
|
3,617 | 12,785 | ||||||
Depreciation and amortization
|
9,887 | 8,553 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(129,737 | ) | (871,716 | ) | ||||
Prepaid expenses and deposits
|
1,272 | 7,983 | ||||||
Accounts payable
|
(220,228 | ) | (77,354 | ) | ||||
Accrued liabilities
|
5,693 | 938 | ||||||
Unearned revenue
|
(18,388 | ) | (16,450 | ) | ||||
Billings in excess of costs on uncompleted contracts
|
86,225 | 1,077,327 | ||||||
Accrued compensation
|
52,897 | 84,260 | ||||||
Net Cash Used in Operating Activities
|
(827,225 | ) | (345,340 | ) | ||||
Cash Flows from Investing Activities
|
||||||||
Advances on related party notes receivable
|
(11,169 | ) | (70,300 | ) | ||||
Purchase of property and equipment
|
(6,612 | ) | (12,367 | ) | ||||
Net cash Flows Used In Investing Activities
|
(17,781 | ) | (82,667 | ) | ||||
Cash Flow from Financing Activities
|
||||||||
Proceeds from issuance of notes payable
|
600,000 | - | ||||||
Principal payments on notes payable to related party
|
- | (327,500 | ) | |||||
Principal payments on notes payable
|
- | (125,000 | ) | |||||
Net Cash Provided by (Used In) Financing Activities
|
600,000 | (452,500 | ) | |||||
Net Decrease in Cash
|
(245,006 | ) | (880,508 | ) | ||||
Cash and Cash Equivanlents at Beginning of Period
|
279,532 | 881,008 | ||||||
Cash and Cash Equivalents at End of Period
|
$ | 34,526 | $ | 500 | ||||
Supplemental Cash Flow Information
|
||||||||
Cash paid for interest
|
$ | 4,797 | $ | - | ||||
Supplemental Schedule of Noncash Investing and Financing
|
||||||||
Activities
|
||||||||
Assignment of note receivable to the Company from a related party
|
$ | 20,000 | $ | - |
Billings to date
|
$ | 129,737 | ||
Less: Costs incurred on uncompleted contracts
|
(43,512 | ) | ||
Billings in excess of costs on uncompleted contracts
|
$ | 86,225 |
10% Note payable
, payments made in behalf of the Company
|
$ | 3,615 | ||
Accrued consulting fees
, balance beginning of period
|
69,943 | |||
Total short-term notes payable to related party
|
$ | 73,558 |
5.75% $318,000 note payable to an individual; unsecured;
|
||||
due October 15, 2012; includes $8,111 of accrued interest
|
$ | 326,111 | ||
5.75% $18,728 note payable to an individual; unsecured;
|
||||
due October 25, 2012; includes $467 of accrued interest
|
19,195 | |||
Non-interest bearing notes payable to a lending company;
|
||||
unsecured; due on demand
|
105,070 | |||
Total notes payable
|
$ | 450,376 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 279,532 | $ | 881,008 | ||||
Accounts receivable, net of allowance for doubtful accounts
|
||||||||
of $0 and $3,450, respectively
|
- | 505,299 | ||||||
Receivable from employees
|
6,526 | 57,277 | ||||||
Prepaid expenses
|
2,711 | 9,955 | ||||||
Total Current Assets
|
288,769 | 1,453,539 | ||||||
Property and Equipment
, net of accumulated depreciation of
|
||||||||
$2,192,286 and $2,149,636, respectively
|
73,583 | 73,377 | ||||||
Deposits and Other Assets
|
12,791 | 12,585 | ||||||
Total Assets
|
$ | 375,143 | $ | 1,539,501 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
||||||||
Current Liabilities
|
||||||||
Trade accounts payable
|
$ | 546,759 | $ | 371,279 | ||||
Accrued liabilities
|
171,120 | 121,164 | ||||||
Billings in excess of costs on uncompleted contracts
|
- | 1,815,300 | ||||||
Unearned revenue
|
59,960 | 62,500 | ||||||
Accrued compensation
|
305,598 | - | ||||||
Notes payable
|
445,805 | 470,355 | ||||||
Short-term notes payable to related party
|
69,943 | 465,604 | ||||||
Total Current Liabilities
|
1,599,185 | 3,306,202 | ||||||
Long-Term Liabilities
|
||||||||
Note payable to related party
|
200,000 | - | ||||||
Total Long-Term Liabilities
|
200,000 | - | ||||||
Shareholders' Deficit
|
||||||||
Common stock, $0.01 par value; 30,000,000 shares authorized;
|
||||||||
11,530,493 shares outstanding
|
11,530 | 11,530 | ||||||
Additional paid-in capital
|
3,400,118 | 2,856,735 | ||||||
Accumulated deficit
|
(4,835,690 | ) | (4,634,966 | ) | ||||
Total Shareholders' Deficit
|
(1,424,042 | ) | (1,766,701 | ) | ||||
Total Liabilities and Shareholders' Deficit
|
$ | 375,143 | $ | 1,539,501 |
For the Years Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Revenue
|
||||||||
Software licensing and hardware sales
|
$ | 524,527 | $ | 1,100,000 | ||||
Consulting services
|
4,215,775 | 2,598,431 | ||||||
Maintenance and support services
|
110,888 | 77,500 | ||||||
Total Revenue
|
4,851,190 | 3,775,931 | ||||||
Cost of Revenue
|
||||||||
Cost of software and hardware sold
|
510,427 | 312,470 | ||||||
Cost of services
|
1,996,982 | 2,829,189 | ||||||
Total Cost of Revenue
|
2,507,409 | 3,141,659 | ||||||
Gross Profit
|
2,343,781 | 634,272 | ||||||
Selling, General and Administrative Expense
|
2,467,872 | 1,284,645 | ||||||
Loss from Operations
|
(124,091 | ) | (650,373 | ) | ||||
Interest expense
|
63,110 | 49,972 | ||||||
Loss before Provision for Income Taxes
|
(187,201 | ) | (700,345 | ) | ||||
Provision for Income Taxes
|
13,523 | 68,987 | ||||||
Net Loss
|
$ | (200,724 | ) | $ | (769,332 | ) | ||
Basic and Diluted Loss per Share
|
$ | (0.02 | ) | $ | (0.07 | ) | ||
Basic and Diluted Weighted-Average Shares Outstanding
|
11,530,493 | 11,530,493 | ||||||
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid-in
|
Accumulated
|
Shareholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
||||||||||||||||
Balance, December 31, 2008
|
11,530,493 | $ | 11,530 | $ | 2,727,429 | $ | (3,865,634 | ) | $ | (1,126,675 | ) | |||||||||
Services contributed by shareholder,
|
||||||||||||||||||||
no additional shares issued
|
- | - | 112,500 | - | 112,500 | |||||||||||||||
Share-based compensation
|
- | - | 16,806 | - | 16,806 | |||||||||||||||
Net loss
|
- | - | - | (769,332 | ) | (769,332 | ) | |||||||||||||
Balance, December 31, 2009
|
11,530,493 | 11,530 | 2,856,735 | (4,634,966 | ) | (1,766,701 | ) | |||||||||||||
Services contributed by shareholder,
|
||||||||||||||||||||
no additional shares issued
|
- | - | 137,500 | - | 137,500 | |||||||||||||||
Share-based compensation
|
- | - | 405,883 | - | 405,883 | |||||||||||||||
Net loss
|
- | - | - | (200,724 | ) | (200,724 | ) | |||||||||||||
Balance, December 31, 2010
|
11,530,493 | $ | 11,530 | $ | 3,400,118 | $ | (4,835,690 | ) | $ | (1,424,042 | ) | |||||||||
For the Years Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net loss
|
$ | (200,724 | ) | $ | (769,332 | ) | ||
Adjustments to reconcile net loss to net cash provided by
|
||||||||
(used in) operating activities:
|
||||||||
Services contributed by shareholder, no additional shares issued
|
137,500 | 112,500 | ||||||
Share-based compensation
|
405,883 | 16,806 | ||||||
Accrued interest and expenses paid by increase in notes payable
|
78,700 | 51,375 | ||||||
Depreciation
|
42,649 | 32,673 | ||||||
Compensation from forgiveness of receivable from employees
|
129,283 | 25,000 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
505,299 | (460,000 | ) | |||||
Prepaid expenses
|
7,244 | (8,437 | ) | |||||
Accounts payable
|
175,800 | 249,709 | ||||||
Accrued liabilities
|
49,490 | 98,028 | ||||||
Billings in excess of costs on uncompleted contracts
|
(1,815,300 | ) | 1,182,148 | |||||
Unearned revenue
|
(2,540 | ) | 17,501 | |||||
Accrued compensation
|
305,598 | - | ||||||
Net Cash Provided by (Used in) Operating Activities
|
(181,118 | ) | 547,971 | |||||
Cash Flows from Investing Activities
|
||||||||
Increase in deposits and other assets
|
(526 | ) | (7,550 | ) | ||||
Advances and loans to employees
|
(78,532 | ) | (74,276 | ) | ||||
Payments on loans from employees
|
- | 10,985 | ||||||
Purchase of property and equipment
|
(42,855 | ) | (67,267 | ) | ||||
Net Cash Flows Used in Investing Activities
|
(121,913 | ) | (138,108 | ) | ||||
Cash Flow from Financing Activities
|
||||||||
Proceeds from borrowing under notes payable
|
160,000 | 425,285 | ||||||
Proceeds from borrowing under notes payable to related parties
|
267,000 | 75,000 | ||||||
Principal payments on notes payable
|
(225,000 | ) | - | |||||
Principal payments on notes payable to related parties
|
(500,445 | ) | (435,328 | ) | ||||
Payment for redemption of common shares
|
- | (25,000 | ) | |||||
Net Cash Provided by (Used in) Financing Activities
|
(298,445 | ) | 39,957 | |||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
(601,476 | ) | 449,820 | |||||
Cash and Cash Equivalents at Beginning of Year
|
881,008 | 431,188 | ||||||
Cash and Cash Equivalents at End of Year
|
$ | 279,532 | $ | 881,008 | ||||
Supplemental Cash Flow Information
|
||||||||
Cash paid for interest
|
$ | - | $ | - | ||||
Cash paid for income taxes
|
$ | 800 | $ | 800 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Billings on uncompleted contracts
|
$ | - | $ | (2,158,207 | ) | |||
Less: Costs incurred on uncompleted contracts
|
- | 342,907 | ||||||
Billings in excess of costs on uncompleted contracts
|
$ | - | $ | (1,815,300 | ) |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Computer equipment
|
$ | 185,860 | $ | 148,770 | ||||
Computer software
|
2,074,315 | 2,070,000 | ||||||
Leasehold improvements
|
2,019 | 2,019 | ||||||
Funiture and fixtures
|
3,674 | 2,224 | ||||||
Total property and equipment
|
2,265,869 | 2,223,013 | ||||||
Less: accumulated depreciation
|
(2,192,286 | ) | (2,149,636 | ) | ||||
Property and equipment, net
|
$ | 73,583 | $ | 73,377 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
10% Note payable
|
||||||||
Balance, beginning of year
|
$ | 130,604 | $ | 439,557 | ||||
Cash advanced to the Company
|
67,000 | 75,000 | ||||||
Payments made in behalf of the Company
|
- | 1,403 | ||||||
Interest accrued
|
37,784 | 49,972 | ||||||
Payments made
|
(235,388 | ) | (435,328 | ) | ||||
Balance, end of year
|
- | 130,604 | ||||||
Accrued consulting fees
|
||||||||
Balance, beginning of year
|
335,000 | 335,000 | ||||||
Payments made
|
(265,057 | ) | - | |||||
Balance, end of year
|
69,943 | 335,000 | ||||||
Notes payable to related party
|
$ | 69,943 | $ | 465,604 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
5.75% interesting bearing note payable to an individual; unsecured;
|
||||||||
due October 15, 2012; includes $3,809 and $0 of accrued interest
|
$ | 321,809 | $ | 300,000 | ||||
5.75% interesting bearing note payable to an individual; unsecured;
|
||||||||
due October 25, 2012; includes $198 of accured interest
|
18,926 | - | ||||||
Non-interest bearing notes payable to a lending company;
|
||||||||
unsecured; due on demand
|
105,070 | 170,355 | ||||||
Total Notes Payable
|
$ | 445,805 | $ | 470,355 | ||||
2010
|
2009
|
|||||||
Weighted-average volatility
|
78 | % | 76 | % | ||||
Expected dividends
|
0 | % | 0 | % | ||||
Expected term (years)
|
5.14 | 6.50 | ||||||
Risk-free interest rate
|
1.04 | % | 2.82 | % |
Weighted-
|
||||||||||
Weighted -
|
Average
|
|||||||||
Average
|
Remaining
|
Aggregate
|
||||||||
Exercise
|
Contractual
|
Instrinsic
|
||||||||
Shares
|
Price
|
Term (Years)
|
Value
|
|||||||
Outstanding, December 31, 2008
|
2,070,000 | $ | 0.32 | |||||||
Granted
|
565,000 | 0.67 | ||||||||
Outstanding, December 31, 2009
|
2,635,000 | 0.40 | ||||||||
Granted
|
3,295,000 | 0.29 | ||||||||
Expired
|
(1,667 | ) | 0.50 | |||||||
Forfeited
|
(3,333 | ) | 0.50 | |||||||
Outstanding, December 31, 2010
|
5,925,000 | $ | 0.33 |
8.86
|
$ -
|
|||||
Exercisable, December 31, 2010
|
2,015,000 | $ | 0.35 |
7.51
|
$ -
|
2010
|
2009
|
|||||||
Current
|
||||||||
Federal
|
$ | - | $ | 10,923 | ||||
State and local
|
13,523 | 58,064 | ||||||
Provision for income taxes
|
$ | 13,523 | $ | 68,987 |
For the Years Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Tax benefit at statutory rate (35%)
|
$ | (65,520 | ) | $ | (245,121 | ) | ||
State tax benefit, net of federal tax
|
(8,518 | ) | (31,866 | ) | ||||
Non-deductible expenses
|
75,427 | 19,773 | ||||||
Benefit of operating loss carry forwards
|
- | (323,517 | ) | |||||
U.S. Federal alternative minimun tax
|
- | 10,923 | ||||||
Other
|
(2,242 | ) | (16,665 | ) | ||||
Other changes in valuation allowance
|
14,376 | 655,460 | ||||||
Provision for income taxes
|
$ | 13,523 | $ | 68,987 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
Operating loss and alternative minimum tax credit carry forwards
|
$ | 1,608,152 | $ | 873,324 | ||||
Stock-based compensation
|
182,489 | 11,317 | ||||||
Billings in excess of costs on uncompleted contracts
|
- | 717,951 | ||||||
Accrued liabilities and other items
|
25,789 | 190,550 | ||||||
Depreciation
|
(19,082 | ) | (10,170 | ) | ||||
Less: Valuation allowance
|
(1,797,348 | ) | (1,782,972 | ) | ||||
Net deferred income tax asset
|
$ | - | $ | - |
·
|
Acquired Sales Corp. is required to complete a 1-for-20 reverse stock split of the shares of its common stock;
|
·
|
Post-split, Acquired Sales would have outstanding 291,624 shares of common stock;
|
·
|
In addition, Acquired Sales would have outstanding options to purchase an aggregate of 630,000 shares of its common stock at an exercise price of $2.00 per share.
|
·
|
The vesting of the Acquired Sales stock options would be contingent upon the closing of its acquisition of Cogility.
|
·
|
Acquired Sales will form a new wholly-owned subsidiary in Delaware (the “Cogility Acquisition Sub”), the single purpose of the Cogility Acquisition Sub would be to acquire Cogility.
|
·
|
Cogility would be merged with and into the Cogility Acquisition Sub, with Cogility being the survivor of such merger (the “Merger”).
|
·
|
From and after the closing of the Merger, Cogility would be a wholly-owned subsidiary of Acquired Sales.
|
·
|
(a) the current stockholders of Cogility would receive 2,175,564 shares of our common stock (88.2% of the shares of our common stock outstanding after the Merger);
|
·
|
(b) the current optionholders of Cogility would receive options to purchase an aggregate of 1,117,925 shares of our common stock at exercise prices ranging from $0.001 to $5.00 per share; and
|
·
|
(c) directors, officers, employees and consultants to Cogility would receive options to purchase an aggregate of 1,500,000 shares of our common stock at an exercise price of $5.00 per share.
|
·
|
(a) The 1-for-20 reverse split of Acquired Sales’ common stock shall have been completed, reducing the number of shares of Acquired Sales’ common stock outstanding from 5,832,482 down to 291,624;
|
·
|
(b) Cogility and Acquired Sales each shall have completed its “due diligence” investigation of the other and the results of such investigation shall be satisfactory to each of them, in its sole discretion;
|
·
|
(c) audited financial statements of Cogility shall have been completed and delivered to Acquired Sales, and such audited financial statements shall be acceptable to Acquired Sales in its sole discretion;
|
·
|
(d) Cogility and Acquired Sales shall have negotiated, executed and delivered mutually agreeable definitive transaction documentation;
|
·
|
(e) all material third party approvals shall have been obtained, including approval of the definitive transaction documentation by the boards of directors of both Cogility and Acquired Sales;
|
·
|
(f) all necessary securities filings shall have been made; and
|
·
|
(g) no governmental or shareholder investigations, actions, orders, lawsuits or other proceedings are pending in regard to the securities filings or the Merger
|
·
|
(1) the exchange of 11,530,493 outstanding shares of Cogility common stock for 2,175,564 shares of post-reverse split common stock of Acquired Sales, which Acquired Sales shares have an aggregate fair value of $4,351,128 based on the pre-split market value of $0.10 per share, or $2.00 per share post-split;
|
·
|
(2) the exchange of 5,925,000 outstanding options to purchase shares of Cogility common stock for 1,117,925 options to purchase post-reverse split common stock of Acquired Sales at exercise prices ranging from $0.001 to $5.00 per share, which Acquired Sales options have an aggregate fair value of $1,466,341 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: post-split exercise price of $1.06 per share, estimated term of 4.3 years, estimated volatility of 80%, estimated yield of 0% and estimated risk-free interest rate of 2.0%;
|
·
|
(3) the elimination of the existing Cogility bonus plan, and the issuance of 1,500,000 options to purchase post-reverse split common stock of Acquired Sales at an exercise price of $5.00 per share, which Acquired Sales options have an aggregate fair value of $1,182,830 computed using the Black-Scholes option pricing model and the weighted-average assumptions listed in (2) above except the weighted-average post-split exercise price is $5.00 per share and the estimated term is 4.0 years;
|
·
|
(4) in November 2010, Acquired Sales granted stock options to the members of management and directors that participated in structuring the financing and the merger with Cogility; those stock options are for the purchase of 12,600,000 pre-split common shares at $0.10 per share, or 630,000 post-split common shares at $2.00 per share, and vest upon the occurrence of the merger; which Acquired Sales options have an aggregate fair value of $801,601 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: estimated term of 5.2 years, estimated volatility of 78%, estimated yield of 0% and estimated risk-free interest rate of 1.1%; and
|
·
|
(5) the issuance of Acquired Sales stock options to purchase 75,000 post-reverse split Acquired Sales common stock to a consultant with 25,000 options exercisable at $0.001 per share and 50,000 options exercisable at $2.00 per share, which Acquired Sales options have an aggregate fair value of $113,030 computed using the Black-Scholes option pricing model and the following weighted-average assumptions: post-split exercise price of $1.34 per share, estimated term of 5.0 years, estimated volatility of 77%, estimated yield of 0% and estimated risk-free interest rate of 2.0%.
|
·
|
The total acquisition consideration for Cogility is $7,915,091.
|
·
|
Information Modeling - The artifacts of the information model describe the business objects of the enterprise. A customer, for example, is represented as a class artifact with such attributes as first name, last name, customer ID, address and so forth.
|
·
|
Message modeling - The message model is concerned with the communication between the application and the outside world (other applications). Message artifacts represent JMS messages, which are connected to conversion artifacts that isolate the model from the physical communication and enforce the abstractions. This allows the business logic to deal with “events” that are separate from the technology concerns.
|
·
|
Behavior modeling – Objects in the Cogility system have behavior and respond to events (external and internal). This allows the system to be dynamic, and to localize changes to the part of the model directly affected by a change. The behavior modeling also includes the inclusion of human users into the process logic of the system for consultation or information presentation purposes. The synergy of automation and human control is a key enabler of complex event driven process based systems.
|
·
|
Transformation modeling - At the heart of an integration model, transformation objects describe the way data from an application gets mapped to another application. Transformation maps, classifier maps and feature maps are all examples of transformation artifacts defined by the CWMM standard and implemented in the Cogility transformation engine. Cogility is unique in allowing transformations to be embedded in a process allowing automation or manual interaction as part of the transformation process or to control the timing of the transformation.
|
·
|
Web service modeling - Web service modeling artifacts provide for communication between the model's J2EE application and other systems and applications. Both SOAP and HTTP web services are support and can be supported simultaneously for the same business logic. Just like message modeling, web service modeling can generate events that are fed to the behavior model unifying the treatment of external communications.
|
·
|
An authentication layer that restricts access to critical information based on user account and password;
|
·
|
Access to business data through the web Services layer, supporting easy access from across and outside a user's enterprise with standard security features that are provided through web server technology;
|
·
|
Access to business web service interfaces permitting service invocation for testing purposes;
|
·
|
Auditing of executing as well completed processes, with full access to runtime state data;
|
·
|
Display of accumulated usage and trend analysis of the relevant key performance indicators (KPI’s) defined by the user in the Cogility system model;
|
·
|
Automatic updating as the model is updated and redeployed without the need for additional manual steps;
|
·
|
Access to configuration management version numbers for all deployed artifacts, including business process definitions, encapsulated business logic, business web services, queries, to facilitate configuration identification throughout the system development and maintenance life cycle.
|
·
|
Optimization of existing IT investments
|
·
|
Reduced IT costs and complexity
|
·
|
Faster development schedules
|
·
|
Improved enterprise-wide data management and data integration
|
·
|
Definition and adherence to sound business practices
|
·
|
Cogility has entered into a Strategic Alliance Agreement and related agreements with privately owned and controlled Defense & Security Technology Group, LLC, South Riding, Virginia ("DSTG"). DSTG is pursuing a number of potential consulting and software technology projects with the U.S. defense and intelligence communities that may result in the deployment of Cogility software technology. Cogility holds options to purchase membership interests in DSTG; those options are subject to the prior fulfillment of certain contingencies.
|
·
|
Cogility has entered into an Agreement with privately controlled Cortez Systems, Chino Hills, California. Cortez Systems is developing and marketing certain technological solutions developed by Cogility to municipal, county, and state government agencies, initially within California. Cogility owns 49% of the shares of common stock of Cortez Systems, and holds an option to purchase the other 51% of the shares of common stock of Cortez Systems.
|
March 31,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Cash and cash equivalents
|
$ | 34,526 | $ | 279,532 | ||||
Working capital
|
(1,340,507 | ) | (1,310,416 | ) | ||||
Long-term debt
|
820,000 | 200,000 |
For the Three Months
|
||||||||
Ended March
|
||||||||
2011
|
2010
|
|||||||
Cash used in operating activities
|
$ | (827,225 | ) | $ | (345,340 | ) | ||
Cash used in investing activities
|
(17,781 | ) | (82,667 | ) | ||||
Cash provided by ( used in ) financing activities
|
600,000 | (452,500 | ) |
For the Three Months
|
||||||||||||||||
Ended March 31,
|
||||||||||||||||
2011
|
2010
|
Change
|
Percent
Change
|
|||||||||||||
REVENUE
|
||||||||||||||||
Consulting Services
|
0 | 18,917 | (18,917 | ) | -100.0 | % | ||||||||||
Maintenance and support services
|
18,388 | 21,250 | (2,862 | ) | -13.5 | % | ||||||||||
Total Revenue
|
$ | 18,388 | $ | 40,167 | $ | (21,779 | ) | -54.2 | % | |||||||
COST OF REVENUE
|
||||||||||||||||
Cost of Services
|
88 | 21,206 | (21,118 | ) | -99.6 | % | ||||||||||
Total Cost of Revenue
|
88 | 21,206 | (21,118 | ) | -99.6 | % | ||||||||||
Gross Profit
|
$ | 18,300 | $ | 18,961 | $ | (661 | ) | -3.5 | % |
For the Year
|
||||||||||||||||
Ended December 31,
|
||||||||||||||||
2010
|
2009
|
Change
|
Percent
Change
|
|||||||||||||
REVENUE
|
||||||||||||||||
Software licensing and hardware sales
|
524,527 | 1,100,000 | (575,473 | ) | -52.3 | % | ||||||||||
Consulting Services
|
4,215,775 | 2,598,431 | 1,617,344 | 62.2 | % | |||||||||||
Hosting, Maintenance and support services
|
110,888 | 77,500 | 33,388 | 43.1 | % | |||||||||||
Total Revenue
|
$ | 4,851,190 | $ | 3,775,931 | $ | 1,075,259 | 28.5 | % | ||||||||
COST OF REVENUE
|
||||||||||||||||
Hardware and software sales
|
510,427 | 312,470 | 197,957 | 63.4 | % | |||||||||||
Cost of Services
|
1,996,982 | 2,829,189 | (832,207 | ) | -29.4 | % | ||||||||||
Total Cost of Revenue
|
2,507,409 | 3,141,659 | (634,250 | ) | -20.2 | % | ||||||||||
Gross Profit
|
$ | 2,343,781 | $ | 634,272 | $ | 1,709,509 | 269.5 | % |
Name and Address
|
Amount and Nature of Beneficial Ownership
|
Percent of Voting Securities
|
||
Leonard D. Hall (1)
|
600,000
|
10.3%
|
||
Gerard M. Jacobs (2)
|
25,366,497
|
434.9%
|
||
Joshua A. Bloom, M.D. (3)
|
100,000
|
1.7%
|
||
Roberti Jacobs Family Trust (4)
|
4,666,497
|
80.0%
|
||
Roger S. Greene (5)
|
350,000
|
6.0%
|
||
Michael D. McCaffrey (6)
|
100,000
|
1.7%
|
||
Richard E. Morrissy (7)
|
100,000
|
1.7%
|
||
Vincent J. Mesolella (8)
|
350,000
|
6.0%
|
||
Joseph S. Keller (9)
|
3,000,000
|
51.4%
|
||
John and Susan Heider (10)
|
1,500,000
|
25.7%
|
||
Total Officers and Directors as group (6 persons)(11)
|
25,866,497
|
443.5% | ||
Gerard M. Jacobs
|
55
|
Chairman
|
Joshua A. Bloom, M.D.
|
54
|
Director
|
Roger S. Greene
|
55
|
Director
|
James S. Jacobs, MD
|
56
|
Director
|
Michael D. McCaffrey
|
64
|
Director
|
Richard E. Morrissy
|
56
|
Director
|
Vincent J. Mesolella
|
61
|
Director
|
NAME OF STOCKHOLDER:
|
|
SIGNATURE:
|
|
NUMBER OF SHARES OWNED:
|
|
DATE:
|
|
Grantee
|
Number of
AQSP Options
|
|
Joshua A. Bloom
Roger S. Greene
Gerard M. Jacobs
Michael D. McCaffrey
Vincent J. Mesolella
Richard E. Morrissy
Total
|
100,000
100,000
12,100,000
100,000
100,000
100,000
12,600,000
|
Grantee
|
Number of
Cogility Options
|
Exercise
Price
Per Share
|
|
Gerard M. Jacobs
Gerard M. Jacobs
Roger S. Greene
Vincent J. Mesolella
Total
|
2,500,000
530,000
132,500
132,500
3,295,000
|
$0.377358
$0.000001
$0.000001
$0.000001
|
Prime Contractor
|
Subcontractor |
Technical:
|
Robert Leseman |
Title:
|
Program Director |
Telephone:
|
703-738-2841 |
Fax:
|
703-883-4037 |
Email:
|
robert.leseman@gtec-inc. com |
Contract:
|
Elaine Schlegel |
Title:
|
Contract Administrator |
·
|
Select a Project from ' Project' from dropdown list.
|
·
|
Select 'Task' if dropdown contains selectable list.
|
·
|
Select 'Project Type' from dropdown list.
|
·
|
Pay Code defaults to R for regular time.
|
·
|
Enter hours worked to the 112 hr. on appropriate day.
|
·
|
Enter optional comments for reported hours. Click insert icon to enter additional rows/projects.
|
·
|
Press 'Save' button to record hours.
|
Issue Date:
PO Number:
Customer:
Project:
Start Date:
End Date:
|
June 27, 2011
COGPMA265P1-1
NAVAIR PMA265
Program Budget & Asset Management Tool (B&AMT)
Proof of Concept Pilot
July 15, 2011
October 31, 2011
|
·
|
Provide a limited scope management toolset to enable centralized planning, budgeting and asset management. Provide the ability to run up to 5 fixed and dynamic service life excursion types
|
·
|
Provide an integrated budget master information data model for a single product or functional area of responsibility (e.g.,
E/F/G Air Vehicle)
|
·
|
Provide a single enterprise process thread through the B&AMT initial system to show budget and asset management data and process integration capability across 2-3 input sources (initially with structured data source(s); data sources to be provided by Microsoft Excel)
|
·
|
Provide event-driven integration of 2 dynamic operational process templates (templates shall include demonstration of business rules management)
|
·
|
Provide rapid iterative changes to process templates to proof-of-concept system
|
Milestone
|
REPORT/DELIVERABLE
|
Due Date
|
1.1 & 1.2
|
·
Initial Configuration Approach
·
B&AMT Initial Configuration Master Information Model Architecture
·
Single-Thread Scenario Definition
·
Scope and Acceptance Criteria
|
Contract Award + 30 Days
|
1.3
|
·
Process and Business Use Case Test Documentation
·
Data Integration Architecture
|
Contract Award + 60 Days
|
1.4
|
·
Version .01 Demo Test Scenarios & Acceptance
|
Contract Award + 90 Days
|
1.5
|
·
Monthly Status Report
·
Version .01 Delivery
·
Final System Summary
·
Executive Summary and Key Findings
|
Contract Award + 120 Days
|
Resource
|
Role
|
Rate
|
Himansu Desai
|
·
Senior Architect
|
$163.46 per hour
|
Alex Jiang
|
·
Modeler and Developer
|
$122.60 per hour
|
Thien Pham
|
·
User Interface
·
Modeler and Developer
|
$122.60 per hour
|
Buyer: | P.O. Acknowledged by: | ||
/s/ Minh Le | 6/27/2011 | /s/ Matthew Ghourdjian | 6/27/2011 |
Minh Le | Date | Mathew Ghourdjian | Date |
Issue Date:
PO Number:
Customer:
Project:
Start Date:
End Date:
|
June 27, 2011
COGNA42P1-1
NAVAIR 4.2 Cost Performance
Command Information Center – Data Integration (CIC-DI)
Proof of Concept
July 15, 2011
September 30, 2011
|
·
|
Demonstrate a single thread through the CIC-DI prototype to show data and process integration capability across 1-2 input sources (initially with structured data source(s))
|
·
|
Demonstrate event-driven system to system integration of 2 dynamic operational process templates (templates shall include business rules)
|
·
|
Demonstrate rapid iterative changes to process templates to proof-of-concept system
|
Milestone
|
REPORT/DELIVERABLE
|
Due Date
|
1.1
|
·
Proof-of-Concept (PoC) Approach
·
Proof-of-Concept Master Information Model Architecture
·
Single-Thread Scenario Definition
·
PoC Scope and Acceptance Criteria
|
Contract Award + 30 Days
|
1.2
|
·
Process and Business Use Case Test Documentation
·
Data Integration Architecture
|
Contract Award + 60 Days
|
1.3
|
·
PoC Version .01 Demo Test Scenarios & Acceptance
|
Contract Award + 90 Days
|
1.4
|
·
PoC Version .01 Demo
·
Final PoC Evaluation Summary
|
Contract Award + 120 Days
|
Resource
|
Role
|
Rate
|
Alex Jiang
|
·
Modeler and Developer
|
$122.60 per hour
|
Thien Pham
|
·
User Interface
·
Modeler and Developer
|
$122.60 per hour
|
Buyer: | P.O. Acknowledged by: | ||
/s/ Minh Le | 6/27/2011 | /s/ Matthew Ghourdjian | 6/27/2011 |
Minh Le | Date | Mathew Ghourdjian | Date |