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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

þ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:
  For the fiscal year ended:   December 31, 2012
   
¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:
  For the transition period from:

 

000-50081

(Commission File Number)

 

Invisa, Inc.

(Exact name of small business issuer as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

65-1005398

(I.R.S. employer identification number)

 

1800 2nd Street Suite 965

Sarasota, Florida 34236

(Address of principal executive offices)

 

(941) 870-3950

(Issuer’s telephone number)

 

Securities registered under Section 12(b) of the Act:   None.

 

Securities registered under Section 12(g) of the Act:   Common Stock, $0.001 par value per share.

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ¨   No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.    ¨

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes þ   No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes þ   No ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨

 
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):   Yes ¨   No þ

 

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer    ¨ Accelerated filer    ¨
Non-accelerated filer (Do not check if a smaller reporting company)    ¨ Smaller reporting company    þ

 

As of December 31, 2012, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $3,660,235.

 

On February 21, 2013, 14,214,398 shares of Invisa Common Stock, $0.001 par value, were outstanding.

 

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TABLE OF CONTENTS

 

  Page
Part I
Item 1 Description of Business 4
Item 1A Risk Factors 7
Item 1B Unresolved Staff Comments 9
Item 2 Properties 9
Item 3 Legal Proceedings 9
Item 4 Mine Safety Disclosures 9
   
Part II  
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 10
Item 6 Selected Financial Data 11
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
Item 7A Quantitative and Qualitative Disclosures about Market Risk 13
Item 8 Financial Statements 13
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 13
Item 9A Controls and Procedures 13
Item 9B Other Information 14
   
Part III  
Item 10 Directors, Executive Officers and Corporate Governance 15
Item 11 Executive Compensation 18
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 21
Item 13 Certain Relationships and Related Transactions, and Director Independence 22
Item 14 Principal Accountant Fees and Services 22
     
Part IV  
Item 15 Exhibits, Financial Statements Schedules 23
     
Signature Page 27
   
Financial Statements  
Report of Kingery & Crouse, PA F-1
Balance Sheets at December 31, 2011 and 2012 F-2
Statements of Operations for the years ended December 31, 2011 and 2012 F-3
Statements of Stockholders’ (Deficit) for the years ended December 31, 2011 and 2012 F-4
Statements of Cash Flows for the years ended December 31, 2011 and 2012 F-5
Notes to Financial Statements F-7
     
Index to Exhibits   23

 

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PART I

 

Note regarding forward-looking statements: Except for statements of historical fact, certain information contained herein constitutes forward-looking statements including, without limitation, statements containing the words believes, anticipates, intends, expects, and words of similar import, as well as all projections of future results. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of Invisa, Inc. to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: risks involved in implementing our business strategy; our ability to obtain financing on acceptable terms; competition; our ability to manage growth; risks of technological change; our dependence on key personnel; our ability to protect our intellectual property rights; risks of new technology and new products; and government regulation.

 

ITEM 1. DESCRIPTION OF BUSINESS

 

Invisa, Inc. is a Nevada corporation that manufactures and sells a line of SmartGate ® brand safety sensors used in or with parking gates to protect life and property. Parking gates are motorized barriers used to control the flow of vehicular traffic in areas such as parking facilities, vehicle storage facilities, tollbooths, and metered entry points for highways. Our SmartGate sensors are based on presence sensing technology that we call InvisaShield. While we believe that our InvisaShield technology may have additional applications for safety products, to date substantially all of our revenue has been derived from the sale of SmartGate sensors used in parking gates.

 

We acquired the InvisaShield™ presence-sensing technology in 2004. Presence sensing is the repeatable detection of people and conductive objects within a certain perimeter of the sensor. InvisaShield technology detects objects at a distance of typically less than one meter. Invisa currently owns the patent and patent applications, as well as the sole rights to the InvisaShield technology in all markets worldwide.

 

Our offices are located at 1800 2nd Street, Suite 965, Sarasota, FL 34236, telephone (941) 870-3950.

 

Our SmartGate ™ Product

 

Many products use presence-sensing technology; however, we believe that our InvisaShield technology is particularly suited to safety sensors for use in the parking gate market. In 2011 and 2012, all of our revenues were derived from the sale of SmartGate safety sensors used with powered parking gates. These gates typically have a power-operated barrier arm made of metal, wood or PVC. This arm moves vertically between an open and a closed position. Our device places an invisible presence-sensing field around the potentially dangerous barrier arm to detect people and vehicles in its path. Our device signals the powered gate to trigger a predetermined response, such as stopping and reversing the barrier arm. The retail price for our SmartGate™ sensors allow us to realize an acceptable gross profit margin, however, we continue to look for ways to decrease our cost of goods and increase our distribution to improve our profit margins.

 

Marketing and Sales

 

We sell our safety products to manufacturers, dealers and end-users. As part of our current sales efforts, we have attended trade shows and have continued our relationships with our customer list which comprises manufacturers, dealers and end users. We also receive unsolicited orders either by telephone, fax or internet. In addition, during fiscal year 2012, we have sought relationships with architectural engineering firms and municipalities that are implementing projects requiring parking barrier gates, such as municipal parking lots and airport reconstruction. Although we do not maintain a full-time sales force, we do engage outside sales consultants.

 

In 2012, Ultimate Systems Solutions, LLC was our largest customer comprising 24% of our sales. In 2011, SkiData, Inc. was our largest customer, also responsible for 24% of our product revenues. Ultimate Systems Solutions, LLC in 2012 included a single large project and no assurance can be given that we will continue to sell products to Ultimate Systems at the same level once the project is complete.

 

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Technology

 

InvisaShield technology uses electronic circuitry that emits, controls, and monitors changes in an invisible energy field. The field is based, in part, upon low energy radio waves oscillating within a controlled frequency range. The field that is monitored can be varied in sensitivity from a distance of approximately one meter to a centimeter or less, depending upon the selected application. Circuitry constantly checks the field to test for the presence of people, vehicles or other conductive objects (objects that conduct electricity) that would disturb the monitored field.

 

We believe that the InvisaShield technology is a novel and proprietary way to provide presence sensing. At the core of the technology is the ability to project a field or zone capable of detecting most conductive objects that enter the field. The field is projected from a metallic substance, referred to as an antenna, which may consist of wire, self-adhesive metallic tape or other metallic items. The technology allows flexibility in designing and locating the antenna. This may offer unique opportunities to place presence-sensing fields where they can be used more efficiently or effectively. This adaptability may permit the InvisaShield technology to perform non-contact presence-sensing tasks not currently possible with competing technologies and/or it may perform presence-sensing tasks similar to those performed by competing technologies, but in a more efficient, effective, and reliable manner.

 

InvisaShield technology does not depend upon lenses, beams or reflectors, which may require replacement, cleaning and aligning. Its operating environment, including electronic noise, mechanical noise, temperature, dust, frost, snow, ice or other operating conditions, generally does not disrupt the non-intrusive, non-contact presence-sensing capability of our technology.

 

We have, in the past, sought to develop additional products based on our InvisaShield technology. We have developed pre-production prototypes of safety products for various power doors such as slide-gates, commercial overhead doors, powered industrial doors (which are used in commercial, manufacturing and industrial facilities) and residential garage doors and pre-production prototypes of security products various applications in museums, retail and industrial. We have indefinitely delayed such development projects; however, in 2011 we made certain modifications improving our line of antenna products.

 

Competing Technologies - The presence-sensing business is highly competitive, consisting of numerous manufacturers of presence-sensing products based on various technologies, including infrared, ultrasonic, laser, microwave, and similar technologies. For the most part, these technologies have been in use for a number of years and, in many cases, may not be proprietary. Our competitors provide a variety of presence-sensing and other safety and security alternatives such as motion detectors, CCTV-based movement detection systems, infrared and visible light beam detectors, light curtains, on/off switching mats and pads, tape switches, contact edges, as well as others.

 

In the safety and/or security sectors we compete with many companies, including MillerEdge, Stanley, Optex, Napco, Pelco, and DMP, along with other large and well-established firms such as Honeywell, Tyco, General Electric, Bosch, and Siemens. Many of our competitors have substantially greater development, technical, marketing, sales and financial capabilities than we have. As a result of these factors, competitors and potential competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements and/or to devote greater resources to the development, promotion and sale of their products and services than we can.

 

Patents and Trademarks - We own five Patents issued by the U.S. Patent Office, three of which were issued in the year 2006 or the first quarter of 2007: Patent No. 5,337,039 issued on August 9, 1994, Patent No. 6,819,242 issued on November 16, 2004, Patent No. 7,023,222, B2 issued on April 4, 2006; Patent No. 7,167,093 B2 issued on January 23, 2007 and Patent No. 7,187,282 issued on March 6, 2007. In addition, we have filed for two patents (as PCT, or Patent Cooperation Treaty filings), one provisional patent application and have one application pending, all of which cover improvements to the InvisaShield technology.

 

We have a trademark on the trade name “SmartGate” which we use in our safety products category. We have filed trademark applications for the following: “Invisa”, “InvisaShield” and the tagline “Safe. Secure. No Question.” We believe that our patent and trademark position will be useful in our efforts to protect our perceived competitive advantages.

 

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Materials and Manufacturing

 

All components and parts are modified or manufactured to our specifications by third parties or are otherwise generally available as off-the-shelf materials. Our products have a number of components including proprietary electronic circuitry manufactured to our specifications by third party manufacturers and a standard power supply available in the marketplace. The antenna is standard wire, tape or other metallic materials, which can generally be purchased in bulk. Whenever possible, we use fixed price manufacturing for our electronic circuitry, placing the responsibility for component supply on the manufacturer. We believe that there are multiple manufacturers and suppliers for each component and that adequate components and materials will be available to support our business plan. We perform some final assembly and predetermined quality control procedures in our facility using contractors, including contract piece work in connection with the assembly when needed. All shipping is done directly from our facility.

 

Government Regulation

 

The Federal Communications Commission regulates the use of radio frequency or “RF”, such as that used by our safety products. We currently have FCC Certification for our product. We will endeavor to continue satisfying all requirements of the FCC to maintain our FCC Certification.

 

On March 1, 2001, Underwriters Laboratory (UL) implemented a new safety standard for the powered gate, door and window industry. This rule, UL-325, while not a governmental regulation, is considered an indication of reasonable safety for powered gates, doors and windows, and is a requirement for UL certification for certain powered gate, door and window operators. Gate and operator manufacturers that rely upon UL certification or consider UL certification important for components most likely will require that our products be UL certified before incorporating our products as original equipment. We do not have a UL certification and the absence of UL certification for our products may represent a sales or marketing barrier in certain market categories and to certain customers.

 

Our products have also earned the Conformité Européenne marking (also known as CE mark) which is a mandatory conformity mark placed on many products used in the single market in the European Economic Area. The CE mark certifies that a product has met EU consumer safety, health or environmental requirements. This marking is mandatory for sales of products in approximately 27 European countries but is usually preferred by customers whether or not required in their respective countries.

 

In addition to gaining the CE mark, our products are now RoHS compliant and have been since late 2008. The directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment 2002/95/EC; commonly referred to as the Restriction of Hazardous Substances Directive or RoHS) was adopted in February 2003 by the European Union and took effect in July 2006. This directive restricts the use of six hazardous materials (lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls and polybrominated diphenyl ether), in the manufacture of various types of electronic and electrical equipment. By complying with the RoHS directive, our customers are assured that our products are free of these hazardous substances.

 

Warranty

 

Our safety products are sold with a 90-day limited warranty against manufactures parts and defects. We have had no significant claims expensed under the warranty in 2011 or 2012.

 

Employees

 

We have no full time employees. Our Chief Executive Officer, who is currently our Chief Financial Officer, serves in both capacities on a part-time consulting basis. We support our operations by using consultants and third party contract piece workers as required .

 

Research and Development

 

We are not conducting any research and development with respect to our technology at this time. Therefore, during the years ended December 31, 2011 and 2012 we incurred no research and development expenses.

 

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ITEM 1A. RISK FACTORS

 

You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we may face. . We have historically incurred losses and losses are expected to continue in the future, which means that we may not be able to continue operations unless we obtain additional funding.

 

We continue to incur losses.

 

In the twelve months ended December 31, 2012, we sustained a net loss from operations of $257,366. Absent a dramatic increase in our market share or demand for our products, future losses are expected to continue. Accordingly, we will experience significant liquidity and cash flow problems if we are not successful in increasing our sales and lowering costs. No assurances can be given that we will be successful in reaching or maintaining profitable operations. Our ability to generate revenue and achieve profitability depends upon our ability to manufacture and sell our products in sufficient volume to cover our fixed and variable costs of operations.

 

We will need to continue financing our operations through third party sources or we may be unable to fund our operations, promote our products or develop our technology.

 

In recent years, our operations have relied almost entirely on external financing to fund our operations; however, in 2012 sales revenues satisfied approximately 19% of our cash operational costs and expenses. During 2011 and 2012, we funded our operations with funds borrowed under short-term and long-term notes which, for the most part, were secured with the Company’s assets. We anticipate, based on our current proposed plans and assumptions relating to our operations, that the line of credit established by our Senior Lender will provide adequate funding to continue to operate our business through December 31, 2013. Unless our sales increase significantly, we will need to raise additional capital to fund our operating expenses beyond December 31, 2013. We cannot assure you that financing, whether from external sources or related parties, will be available if needed or on favorable terms beyond December 31, 2013. If additional financing is not available when required or is not available on acceptable terms, we may be unable to support our secured debt, fund our operations and planned growth, take advantage of business opportunities or respond to competitive market pressures, any of which could have a material adverse affect on our long-term business plan.

 

Our financing requirements could result in dilution to existing stockholders.

 

The additional financings we will require may be obtained through one or more transactions, which effectively dilute the ownership interests of our stockholders. Further, we may not be able to secure such additional financing on terms acceptable to us, if at all. We have the authority to issue additional shares of common stock, as well as additional classes or series of ownership interests or debt obligations that may be convertible into any one or more classes or series of ownership interests. We are authorized to issue 95,000,000 shares of common stock and 5,000,000 shares of preferred stock. Such securities may be issued without the approval or other consent of our stockholders.

 

Our revenues.

 

We anticipate that we will encounter difficulties and risks relating to our sales revenues, which include, but are not limited to, the introduction of new products, the ability to hire full time personnel, access to required capital, management issues, increasing our manufacturing capacity, and other similar aspects of operations which are important to our business operations.

 

We will be required to compete with larger, more established, and better financed companies.

 

There are a number of well-established companies that are well known in the manufacture and/or distribution of products for the security and life-safety markets. Such companies include Honeywell, Tyco, General Electric, Bosch, Siemens and others. Accordingly, we are subject to the difficult challenge of introducing and commercializing our new technology and products in a strong competitive environment. Additionally, our technology and products based thereon will have to compete with other technologies such as passive infrared and various types of motion detection that are well known and well accepted.

 

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We continue to experience uncertainty and risks related to market acceptance.

 

We continue our efforts to expand the market for our safety sensor product, to gain broader market acceptance and to demonstrate competitive advantages. Our success is dependent, to a large degree, upon our ability to successfully market our technology and its perceived competitive advantages. Accordingly, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the operation of a small business in a highly competitive industry, characterized by frequent new product introductions. We anticipate that we will continue to be disadvantaged by our limited revenues as they will inhibit our ability to expand our marketing and sales efforts in the domestic and international marketplace.

 

The limits of our of product liability insurance coverage may affect our Business.

 

We may be exposed to potential product liability claims by consumers. Although we maintain product liability insurance, there can be no assurance that such insurance will be sufficient to cover all possible liabilities to which we may be exposed. Any product liability claim, even one that was not in excess of our insurance coverage or one that is meritless and/or unsuccessful, could adversely affect our cash available for other purposes, such as research and development. In addition, the existence of a product liability claim could affect the market price of our common stock. Also, certain vendors may require minimum product liability insurance coverage as a condition precedent to purchasing or accepting products for retail distribution. Product liability insurance coverage includes various deductibles, limitations and exclusions from coverage, and in any event might not fully cover any potential claims. Failure to satisfy such insurance requirements could impede our ability or our distributors or licensees ability to achieve broad retail distribution of our proposed products, which could have a material adverse effect on us.

 

We may not be able to effectively protect our intellectual property rights, the foundation of our business, which could harm our business by making it easier for our competitors to duplicate our services.

 

We regard certain aspects of our products, processes, services and technology as proprietary. We have taken steps to protect them with patents, copyrights, trademarks, restrictions on disclosure and other methods. Despite these precautions, we cannot be certain that third parties will not infringe or misappropriate our proprietary rights or that third parties will not independently develop similar products, services and technology. Any infringement, misappropriation or independent development could cause us to cease operations.

 

We have issued patents and have filed patent applications with respect to various aspects of our technology. The pending patent applications may not be issued to us, and if issued, may not protect our intellectual property from competition, which could seek to design around or invalidate these patents. Our failure to adequately protect our proprietary rights in our products, services and technology could harm our business by making it easier for our competitors to duplicate our services. We may have to resort to litigation to enforce our intellectual property rights, protect our trade secrets, determine the validity and scope of the proprietary rights of others, or defend ourselves from claims of infringement, invalidity or unenforceability. Litigation may be expensive and divert resources even if we win. This could adversely affect our business, financial condition and operating results such that it could cause us to reduce or cease operations.

 

Other parties may assert that our technology infringes on their Intellectual property rights, which could divert management time and resources and possibly force our Company to redesign our technology.

 

Technology-based companies, such as ours, have the potential to be involved in litigation related to allegations of patent infringement. Although we have no knowledge of any such claims, from time to time, third parties may assert patent, copyright and other intellectual property rights to technologies that are important to us. While there currently are no outstanding infringement claims pending by or against us, we cannot assure you that third parties will not assert infringement claims against us in the future, that assertion by such parties will not result in costly litigation, or that they will not prevail in any such litigation. In addition, we cannot assure you that we will be able to license any valid and infringed patents from third parties on commercially reasonable terms or, alternatively, be able to redesign products on a cost-effective basis to avoid infringement. Any infringement claim or other litigation against or by us could have a material adverse effect on us and could cause us to reduce or cease operations.

 

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We may not be able to keep up with rapid technological changes, which could render our products less competitive or obsolete.

 

Changes in technology, changes in customer requirements and preferences, introduction of products and services embodying new or different technologies and the emergence of new industry standards and practices could render our existing technology and products less competitive or obsolete. Our future success will depend on our ability to enhance and improve the responsiveness, functionality, accessibility and features of our technology and products. We expect that our marketplace will require extensive technological upgrades and enhancements to accommodate many of the new products and services that we anticipate will be added to our marketplace. We cannot assure you that we will be able to expand and upgrade our technology and systems, or successfully integrate new technologies or systems we develop in the future, to accommodate such increases in a timely manner.

 

We may not be able to increase sales or if we succeed in increasing sales and revenue, we may not be able to effectively manage the growth necessary to execute our business plan, which could adversely affect the quality of our operations and our costs.

 

In order to successfully execute our business plan, we must significantly increase our sales and revenue. Additionally, we will need to increase the number of strategic partners, manufacturers, dealers, distributors and customers that use our products. Lack of growth in sales and revenue will require that we continue to access financing which will subject us to the risks attendant thereto. On the other hand, if we succeed in increasing sales and revenue, the resulting growth will place significant strain on our systems and resources. In the event of growth, we may not be able to maintain the quality of our operations, control our costs, continue complying with all applicable regulations and expand our internal management, technical information and accounting systems in order to support our desired growth. We cannot be sure that we will manage our growth effectively, and our failure to do so could cause us to reduce or cease operations.

 

We are thinly staffed.

 

We have no full time employees. Our Chief Financial Officer is also serving as our Chief Executive Officer and is available to the Company on a part time consulting basis. We also engage consultants and contract piece workers as necessary. Unless additional employees are hired, the limited size of our staff could restrict the level and/or nature of our business operations.

 

We have promissory notes payable that are secured by all of our assets and default under these notes could result in the loss of our assets .

 

In order to fund our operations, we have entered into promissory notes payable that are secured by all of our assets. We currently do not have the available cash or other financing resources to pay the interest or principal there under. Default under these promissory notes could result in the loss of all of our assets and business opportunity. The Senior Lender has liens on all of our assets.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

In the February, 2012, we entered into a new lease agreement for our operations to rent approximately 2,000 square feet of office space located at 1800 2nd Street in Sarasota, Florida. Our monthly base rental is $642. We rent the facilities pursuant to a lease which expires on February 28, 2013.

 

ITEM 3. LEGAL PROCEEDINGS

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our Common Stock trades on the NASD OTC BB under the symbol INSA.OB. The following table sets forth the range of high and low bids to purchase our Common Stock during the last two fiscal years. Such prices represent quotations between dealers, without dealer markup, markdown, or commissions, and may not represent actual transactions.

 

As of December 31, 2012 there were 396 stockholders of record of Invisa Common Stock.

 

Quarter   High Bid     Low Bid  
                 
First Quarter 2011   $ 0.19     $ 0.19  
Second Quarter 2011   $ 0.12     $ 0.12  
Third Quarter 2011   $ 0.22     $ 0.22  
Fourth Quarter 2011   $ 0.30     $ 0.27  
First Quarter 2012   $ 0.15     $ 0.15  
Second Quarter 2012   $ 0.15     $ 0.15  
Third Quarter 2012   $ 0.18     $ 0.18  
Fourth Quarter 2012   $ 0.27     $ 0.27  

 

On February 20, 2013, the closing bid and closing ask prices for shares of our Common Stock in the over-the-counter market, as reported by NASD.OTC.BB was $0.27 per share.

 

We believe that there are presently approximately five (5) market makers for our Common Stock. When stock is traded in the public market, characteristics of depth, liquidity and orderliness of the market may depend upon the existence of market makers as well as the presence of willing buyers and sellers. We do not know if these or other market makers will continue to make a market in our Common Stock. Further, the trading volume in our Common Stock has historically been both sporadic and light.

 

Currently, the payment by the Company of dividends on its capital stock rests within the sole discretion of its Board of Directors. The payment of dividends will depend upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. The Company has not been required to or declared any cash dividends since its inception, and has no present intention of paying any cash dividends on its capital stock in the foreseeable future. Our policy with regard to the Series B Preferred Stock was to base any dividend paid on a rate that varies with the prime interest rate. The dividend was payable in either stock or cash at the option of the Company. In January 2010, the Company restated its Series B Stock to eliminate any further accrual of dividends and provide that the Company may satisfy its obligation with respect to the accrued but unpaid dividends at that date either (a) in cash, (b) by issuance of additional shares of its Series B Stock or (c) by issuance of Common Stock of the Company.

 

Transfer Agent

 

The Transfer Agent for the Common Stock of the Company is Continental Stock Transfer and Trust Company 17 Battery Place, New York, NY 10004.

 

Recent Sales of Unregistered Securities

 

During November 2010 the Company issued 6,818,182 shares of Common Stock in exchange for $300,000 of outstanding debt owed to our Senior Lender. The shares were issued to the Senior Lender which we believe to be a knowledgeable investor pursuant to an exemption from registration under the Securities Act.(See Note G to the accompanying Financial Statements)

 

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During April 2011, 110,000 shares of Common stock were granted to the three directors and certain consultants and valued at $0.10 per share (the market price at the date of grant). The Company charged the fair value of $11,000 to operations. In addition, in January 2012, 155,000 shares of Common stock were authorized for grant to the three directors and certain consultants and valued at $0.20 per share (the market price at the date of issue). The Company charged the fair value of $38,750 to operations during 2011.

 

In January 2012 100,000 common shares were granted to a consultant for services. These shares were valued at $0.25 per share (the market price on the date of the grant) and the Company charged $25,000 to operations.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this filing. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements. The cautionary statements made herein should be read as being applicable to all related forward-looking statements in this Annual Report on Form 10-K.

 

Background of our Company

 

We manufacture and sell sensors using the Company’s patented InvisaShield™ presence-sensing technology in the safety market. We market our line of safety sensors under the name of SmartGate ® brand safety sensors used in or with parking barrier gates to protect life and property. All of our sales revenues are derived from the sale of our SmartGate safety sensors.

 

We financed our operations in 2011 and 2012 through revenues derived from the sale of our SmartGate ® brand safety sensors and short-term and long-term debt financing. We are focusing our efforts on increasing our sales of our products and reducing operating costs, where possible. In December 2011 the company’s Senior Lender agreed to extend the maturity date of the Senior Secured Promissory Notes and the related accrued interest until March 31, 2015, and put in place a line of credit which we believe is sufficient to finance our operations through December 31, 2013. (See Note G - to the accompanying financial statements)

 

Year Ended December 31, 2011 Compared to the Year Ended December 31, 2012

 

Net Sales - During the years ended December 31, 2011 and 2012, product sales totaled $98,782and $37,956 respectively. We had a gross profit of $52,365 for the year ended December 31, 2011 and gross profit of $17,222 for the year ended December 31, 2012. Gross margin was 53 percent during 2011 and 45 percent during 2012. We attributed the decrease in our sales in 2012 to reductions in sales to significant customers.

 

Selling, General and Administrative Expenses - During the years 2011 and 2012, selling, general and administrative expenses totaled $289,970 and $237,185, respectively. The decrease in expense is attributable a reduction of Directors and Officers expenditures.

 

Interest (expense) and other, Net - The interest expense during 2011 of $80,695 and during 2012 of $67,550 relates primarily to financing costs and interest due to certain stockholders under lines of credit to the Company. During 2011 and 2012, the Company wrote off certain debts resulting in the extinguishment gain of $2,418 and $30,147, respectively. (See Note H to the accompanying Financial Statements.)

 

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Net Income (Loss) applicable to Common Stockholders and Net Income (Loss) Per Share applicable to Common Stockholders - The Company’s net income (loss) applicable to Common Stockholders and net income (loss) per share applicable to Common Stockholders for these periods increased from a net loss of $315,882 and $(0.02) in 2011 to a net loss of $257,366 and ($0.02) in 2012.

 

Plan of Development and Operations

 

We obtained funding of $128,800, in the form of short-term and long-term debt financing in 2011, and an additional $170,353 in 2012, which together with our cash from sales supported our operations. We have extended the maturity of our short-term debt to March 31, 2015, and have in place a line of credit which we believe is sufficient to finance our operations through December 31, 2013. (See Note G – to accompanying financial statements). In addition, we will explore other business opportunities such as licensing and business combinations as they may arise.

 

Liquidity and Capital Resources

 

At December 31, 2012, we had a cash and cash equivalents totaling $1,015.

 

The Company has six credit facilities with its Senior Lender totaling $1,203,319 under which $987,951 has been borrowed at December 31, 2012. The Senior Lender has also established a revolving line of credit to finance operations of the Company totaling $200,000 at December 31, 2012 which is available to the Company. Terms of the Lines of Credit include due date of March 31, 2015 with interest accruing at ten percent per annum and all of the Company’s assets being pledged as security. (See Note G – to accompanying financial statements).

 

The Company had negative working capital at December 31, 2012, totaling $55,462 including $1,015 in cash and cash equivalents. To finance planned operations through at least the next 12 months, we will rely upon our sales revenues and the $200,000 line of credit established by our Senior Lender. We believe that the line of credit facility and our sales revenue will be sufficient to finance our operations through December 31, 2013. However, we will continue to explore other avenues of financing, such as licensing of our product and/or our technology and potential strategic or business relationships or combinations, and to a lesser degree private equity and debt financing.

 

While we are confident that the current funding and sales revenue available to us will be sufficient to finance our operations through December 31, 2013, it is important to note that additional funding, if needed, may not be available when required or it may not be available on acceptable terms. Should we require additional funding, we may need to reduce or refocus our operations or obtain funds through arrangements that would be less attractive to us or which may require us to relinquish rights to certain or potential markets, either of which could have a material adverse effect on our business, financial condition and results of operations.

 

Recent Accounting Pronouncements

 

The Company does not believe that recently issued accounting pronouncements will have a material impact on its financial statements.

 

Critical Accounting Policies and Estimates

 

Use of Estimates

 

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates.

 

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

 

Not applicable.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The Financial Statements of the Company and the accompanying notes thereto, and the Report of Independent Registered Certified Public Accounting Firm are included as part of this Form 10-K beginning on Page F-1.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Acting President, Chief Financial Officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

 

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2012 and concluded that our disclosure controls and procedures were effective as of December 31, 2012.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with United States generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this assessment, and on those criteria, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2012.

 

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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

Changes in Internal Controls over Financial Reporting

 

During the quarter ended December 31, 2012, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d–15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The Company’s Directors are elected at the Annual Meeting of Stockholders and hold office until their successors are elected and qualified. The Company’s officers are appointed annually by the Board of Directors and serve at the pleasure of the Board. There are no family relationships between any of the officers, directors or significant employees of the Company.

 

The directors, executive officers, and significant employees of the Company at December 31, 2012 are as follows:

 

Name   Positions and Offices Presently Held with the Company
     
Edmund C. King   Director, Chief Executive Officer, Chief Financial Officer, Treasurer
Gregory J. Newell   Director
John E. Scates   Director

 

EDMUND C. KING has served as our Chief Financial Officer and Director since February 9, 2000. In 2007, Mr. King began serving as our Acting President. Until October 1, 1991, Mr. King was a partner in Ernst & Young, an international accounting and consulting firm. While at Ernst & Young, Mr. King was that firm’s Southern California senior healthcare partner and prior to that directed the Southern California healthcare practice for Arthur Young & Company, one of the predecessor firms of Ernst & Young. During his 30 years with Ernst & Young, Mr. King counseled clients in structuring acquisitions and divestitures; advised on the development of strategic plans; directed the preparation of feasibility studies; assisted with operational and financial restructuring; directed and supervised audits of client financial statements; and provided expert witness testimony and technical SEC consultation. Commencing in 1999, Mr. King became a financial consultant to SmartGate, L.C. that we acquired in February 2000. From January 1992, Mr. King has been a general partner of Trouver, an investment and financial consulting partnership. Mr. King is also a member of the Board of Directors of LTC Properties, Inc., an NYSE listed real estate investment trust. Mr. King is a graduate of Brigham Young University, having served on the National Advisory Council of that school’s Marriott School of Management, and has completed a Harvard University management course sponsored by Ernst & Young. Mr. King also has served as Chairman of the HFMA’s Long-Term Care Committee (Los Angeles Chapter) and is a past member of the National Association of Corporate Directors. He holds a CPA certificate (inactive) in the state of California.

 

Mr. King was nominated to serve our Board of Directors shortly after our Company was formed. As part of his experience in public accounting and, then, later as a financial advisor, Mr. King was involved in the issues of a newly formed public company and also in the raising of capital in various industries. The Board of Directors believed this background and experience would be a beneficial fit with the Company’s needs and would provide the company with an experienced individual to analyze the Company’s operations.

 

Ambassador GREGORY J. NEWELL has served as a Director of the Company since June 13, 2002. Ambassador Newell is an international business development strategist and former: U.S. Ambassador; U. S. Assistant Secretary of State; and White House Commissioned Officer, having served under four U.S. Presidents. From 1992 to the present, Ambassador Newell has served as President of International Commerce Development Corporation in Provo, Utah, an international business-consulting firm. From 1989 to 1991, Ambassador Newell served as President and International Development Strategist of Dow, Lohnes & Albertson International, a subsidiary of one of Washington, D.C.’s oldest and largest law firms. Ambassador Newell was U.S. Ambassador to Sweden from 1985 to 1989. Prior to that he was U.S. Assistant Secretary of State for International Organizational Affairs serving as the senior U.S. government official responsible for the formulation and execution of U.S. multilateral foreign policy in 96 international organizations including the United Nations, where he served as senior advisor to the 37th, 38th, 39th and 40th United Nations General Assemblies. He served as Director of Presidential Appointments and Scheduling and Special Assistant to President Ronald Reagan and Staff Assistant to President Gerald R. Ford. Ambassador Newell has also served on the boards of the Landmark Legal Foundation, Sutherland Institute and the Swedish-American Chamber of Commerce.

 

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Mr. Newell was nominated to serve our Board of Directors at a time when the Company was attempting to expand its market presence. His background includes an emphasis on marketing activities in government as well as private industry. As a result, he provides not only knowledge of product and service marketing but also brings business insight into the governmental regulatory environment.

 

JOHN E. SCATES , a garage door industry engineer and consultant, was appointed to the Company’s Board of Directors on June 27, 2002. From June 1997 to the present, Mr. Scates has been President and Owner of Scates, Inc., a product design and failure analysis consultancy in Carrollton, Texas. From May 1993 to May 1997, Mr. Scates served as Manager of Research and Development for Windsor Door, Little Rock, Arkansas. From February 1985 to May 1993, Mr. Scates served as Manager of Structures at Overhead Door R & D/engineering, Dallas, Texas. Mr. Scates earned a BS Degree in Mechanical Engineering, Summa Cum Laude from Texas A & M University in 1979. Mr. Scates is licensed as a Professional Engineer in Texas, Florida and North Carolina.

 

Mr. Scates was nominated to serve on our Board of Directors at such time when we were seeking to expand our product offerings. He is knowledgeable of the powered gate industry and brings experience in research and manufacturing. 

 

Significant Employees

 

At December 31, 2012 we had no full time employees. Our Chief Financial Officer, who also serves as our Chief Executive Officer, is employed on a part-time consulting basis. We support operations by using consultants and contract piece workers as required.

 

Compensation Committee and Compensation of Directors

 

Messrs., Newell and Scates serve on the Compensation Committee, which determines the compensation amounts to be paid to our directors, officers and employees.

 

Report of the Audit Committee

 

The Audit Committee is composed of two independent directors and operates under a written charter adopted by the Board of Directors. A copy of the Audit Committee Charter (as amended) is filed herewith as exhibit 10.58. As described above, the Audit Committee is responsible for appointing and replacing our independent accountants; reviewing the results and scope of the independent accountants’ audit and the services provided by the independent accountants; reviewing compliance with legal and regulatory requirements; evaluating our audit and internal control functions; and ensuring the integrity of our financial statements. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

 

The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of our accounting principles, and such other matters as are required to be discussed with the Committee in accordance with the standards of the Public Company Accounting Oversight Board (United States). In addition, the Audit Committee has discussed with the independent auditors the auditors’ independence from management and the Company, including the matters in the written disclosures required by the Independence Standards Board and considered compatibility of non-audit services with the auditors’ independence.

 

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The Audit Committee discussed with our independent auditors the overall scope and plans for their audit. The Committee meets with the independent auditors, with and without management present, to discuss the results of their examination, and the overall quality of our financial reporting. The Audit Committee held (four) telephonic meetings during 2012.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors, and the Board approved, that the audited financial statements be included in our Annual Report on Form 10-K for the 2012 fiscal year for filing with the Securities and Exchange Commission. The Audit Committee and the Board of Directors have also recommended the selection of our independent auditors.

 

THE AUDIT COMMITTEE

 
Gregory J. Newell, Chairman
John E. Scates

 

Board Meetings and Independence

 

During the year ended December 31, 2012, the Board of Directors of the Company held 6 (six) telephonic meetings. Each director attended at least 75% of the aggregate of (1) the total number of meetings of the Board (held during the period for which he has been a director) and (2) the total number of meetings held by all committees of the Board on which he served (during the periods that he served).

 

Compliance with Section 16(a) of the Exchange Act

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers to send reports of their ownership of the equity securities of the Company and of changes in such ownership to the SEC. SEC regulations also require the Company to identify in this Annual Report on Form 10-K any person subject to this requirement who failed to file any such report on a timely basis, including the following: Edmund C. King, John E. Scates and Gregory J Newell.

 

Code of Ethics

 

Our board of directors has adopted a Code of Business Conduct and Ethics and Compliance Program which is applicable to Invisa, Inc. and to all our directors, officers and employees, including Invisa, Inc.’s principal executive officer and principal financial officer, principal accounting officer or comptroller, or other persons performing similar functions.

 

A copy of the Company’s Code of Ethics may be obtained free of charge by making the request to the Company in writing.

 

Director Compensation

 

We do not have a formal plan for compensating our directors. During the 2011 fiscal year each of our Directors were granted 25,000 shares of the Company’s common stock for their services. Also in January of 2012, each Director was granted 30,000 shares of the Company’s common stock applicable to the year 2011. Mr King does not have employment agreements and works on a part time basis for the Company. Mr. King received no salary and no other cash compensation for fiscal years 2011 and 2012.

 

Our bylaws provide for us to indemnify our directors and officers to the extent permitted by Nevada law, with respect to actions taken by them on our behalf. We maintain a policy of directors’ and officers’ liability insurance for this purpose.

 

Compensation Committee Interlocks and Insider Participation

 

We have no interlocking director relationships. None of our executive officers is a member of the Compensation Committee of any company in which any director or executive officer is a member of our board of directors.  

 

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ITEM 11. EXECUTIVE COMPENSATION

 

Compensation Discussion & Analysis

 

Overview.

 

This Compensation Discussion and Analysis is intended to describe the material factors underlying the compensation policies and decisions of the Company with regard to compensation paid to our executive officers in 2011 and 2012. The Compensation Committee oversees the Company’s executive compensation in accordance with its Charter and recommends to the Board of Directors compensation for the named executive officers. The Compensation Committee receives input and recommendations when requested from our executive officers.

 

During 2011 two additional executive officers (John Zappala, as President; Elizabeth Henson, as Vice President of Operations) were authorized. Mr. Edmund King, our CEO and CFO, does not have a written employment agreement and works on a part-time basis for the Company. Mr. King received no salary or other cash compensation during fiscal 2011 or 2012. However the Company charged $36,000 to operations for the value of his services in each of these years. Mr. Zappala's contract with the Company expired in April of 2012 and he received cash compensation of $5,500 prior to its expiration. Ms. Henson received cash consulting fees of $49,000 in 2012. In addition, Mr. Zappala, according to his contract, was granted 100,000 shares to be received upon completion and approval of a market survey and Ms. Henson received Common stock grants totaling 30,000 shares for service in 2011.

 

Our compensation philosophy for our executive officers has been shaped by our lack of long-term financing and our severe shortage of operating capital. Accordingly, our compensation decisions and particularly our approach to allocating compensation between cash and non-cash elements of the compensation package reflect our goal to preserve cash whenever possible. In making our compensation decisions, we strive to be aware of the level of compensation which is paid to executive officers of various companies that we consider to be comparable to us in size. Our goal is for the compensation paid to our named executive officers to be at or below the fiftieth percentile of the companies that we have identified as being comparable companies.

 

Base Salaries .

 

Mr. King did not receive any base salary in fiscal 2011 or 2012; however, an amount of $36,000 has been charged to operations and credited to additional paid in capital in each of these years.

 

Option Grants.

 

No Options were granted in fiscal years 2011 or 2012.

 

Perquisites .

 

Consistent with our philosophy to preserve cash, we have sought to limit perquisites. Perquisites paid to our named executive officers are discussed as footnotes to the following Summary Compensation Table. Our current policy for paying medical and dental insurance is not to pay insurance premiums. Our policy is not to pay for life insurance, long-term and short-term disability insurances and accidental death and dismemberment insurance. Our policy with regard to unused vacation for our executive group is to pay at the base salary rate for vacation not used during the calendar year of termination.

 

Change in Control Severance Policy.

 

None.

 

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REPORT OF COMPENSATION COMMITTEE

 

The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed it with the Company’s management. Based on the Compensation Committee’s review and discussions with management, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for fiscal 2012.

 

THE COMPENSATION COMMITTEE

 

John E. Scates, Chairman

Gregory J. Newell

 

 DIRECTOR COMPENSATION

FOR THE THREE YEARS ENDED DECEMBER 31, 2012

 

Name  

Fiscal

Year

  Fees
Earned or
Paid in
Cash ($) 		  Stock
Awards
($) 		  Option
Awards
($) 		  Non-Equity
Incentive
Plan
Compensation
($) 		  Change in Pension
Value and Non Qualified
Deferred Compensation
Earnings ($) 		  All Other
Compensation
($) 		  Total
($)
                                                                 
Edmund C. King     2010       —       —       —       —       —       —       —  
      2011       —       9,975       —       —       —       —       9,975  
      2012       —       —       —       —       —       —       —  
                                                                 
Greg Newell     2010       —       —       —       —       —       —       —  
      2011       —       9,975       —       —       —       —       9,975  
      2012       —       —       —       —       —       —       —  
                                                                 
John Scates     2010       —       —       —       —       —       —       —  
      2011       —       9,975       —       —       —       —       9,975  
      2012       —       —       —       —       —       —       —  

 

Employment Agreements with Executives

 

We have no written employment agreements .

 

Equity Incentive Plans

 

We have five stock plans as listed below:

 

Plan   Shares
Authorized
for Issuance
     
2000 Plan   240,000
2002 Plan   300,000
2003 Plan   300,000
2003A Plan   700,000
2006 Plan   500,000
    2,040,000

 

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All of the Plans have been approved by the Board of Directors and all, except for the 2006 Plan, have been approved by the Shareholders. All of the plans authorize awards of incentive stock options or non-qualified stock options to employees, directors, and consultants of our company and affiliates. The purposes of the Plans are as follows: to encourage and enable employees, directors, and consultants to acquire a proprietary interest in the growth and performance of our company; to generate an increased incentive for key employees and directors to contribute to our future success and prosperity, thus enhancing the value of our company for the benefit of our stockholders; and to enhance the ability of our company to attract and retain key employees and directors who are essential to progress, growth, and profitability.

 

The Plans are administered by the Compensation Committee of our Board (the “Administrator”). All members of our Compensation Committee are non-employee directors and outside directors, as defined in the Plans. Subject to the limitations set forth in the Plans, the administrator has the authority to grant options, to determine the purchase price of the shares of our common stock covered by each option, to establish the term of each option, to determine the number of shares of our common stock to be covered by each option, to establish vesting schedules, to designate options as incentive stock options or non-qualified stock options, and to determine the persons to whom grants are to be made.

 

The Administrator establishes the option exercise price, which in the case of incentive stock options, must be at least the market price (as such term is defined in the Plans) of our common stock on the date of the grant or, with respect to optionees who own at least 10% of the total combined voting power of all classes of our stock (a “10% Stockholder”), 110% of the market price on the date of the grant.

 

Options granted under the Plans are generally not transferable by the optionee except by will or the laws of descent and distribution, or pursuant to written agreement approved by the administrator relating to any non-qualified stock options in any manner authorized under applicable law. Except as provided in the applicable stock option agreement, options must be exercised within 90 days of termination for any reason other than disability, retirement, or death, within one year of termination by disability or retirement, or by a designated beneficiary within two years of death.

 

Except as provided to the contrary in the option agreement, options granted under the Plans vest in one-third annual increments, beginning on the grant date of the option. In no event may an incentive stock option be granted more than 10 years from the effective date of the plan or be exercised after either the expiration of 10 years from the grant date, or five years from the grant date in the case of a 10% Stockholder.

 

Incentive stock options may not vest for the first time with the respect to any optionee in a calendar year with a market price exceeding $100,000. Any option grants that exceed that amount shall be automatically treated as non-statutory stock options.

 

The Plans may be suspended, terminated, modified, or amended by our board, but no such suspension, termination, modification, or amendment may adversely affect the terms of any option previously granted without the consent of the affected optionee, and any amendment will be subject to stockholder approval to the extent required by applicable law, rules, or regulations.

 

We, from time to time, grant to our directors, executive officers and employees options to purchase our common stock under the Plans. As of December 31, 2012, Invisa had no options to purchase shares of common stock outstanding or exercisable.

 

401(k) Savings Plan

 

We do not have a 401(k) savings plan.

 

Limitation of Liability and Indemnification of Officers and Directors; Insurance

 

Our Officers and Directors are indemnified to the fullest extent provided by Nevada law.

 

We maintain a policy of directors’ and officers’ liability insurance to indemnify our directors and officers with respect to actions taken by them on our behalf.

 

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Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in such Act and is therefore unenforceable.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth the beneficial ownership of shares of our common stock as of December 31, 2012 for:

 

  • each person (or group of affiliated persons) known by us to beneficially own more than 5% of our common stock;
  • each of our directors;
  • each named executive officer; and
  • all of our directors and executive officers as a group.

 

Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of shares beneficially owned by a person listed below and the percentage ownership of such person, shares of common stock underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of December 31, 2012 are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.

 

Except as otherwise noted below, and subject to applicable community property laws, the persons named have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

 

Name and Address of Beneficial Owner (1)   Reporting Status  

Aggregate

Number of Shares

Beneficially

Owned (2)

  Percentage
of Shares
Beneficially
Owned
                     
Centurian Investors, Inc.   5% Stockholder     6,818,182       32.41 %
Stephen A. Michael   5% Stockholder     787,853       5.25  
Samuel S. Duffey   5% Stockholder     1,015,949       6.67  
Edmund C. King   CEO, CFO, Director     295,359       2.04  
Gregory J. Newell   Director     120,713       0.84  
John E. Scates   Director     120,713       0.84  
Elizabeth A. Henson   VP of Operations     55,000       0.39  
All officers and directors as a group         591,785       3.99  

______________ 

(1) Unless otherwise provided herein all addresses are c/o Invisa, Inc., 1800 2nd Street, Suite 965 Sarasota, FL 34236.
(2) The percentage calculations are based on 14,214,398 shares that were outstanding as of December 31, 2012 plus the respective beneficial shares owned by each stockholder. Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission and includes voting power and/or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of December 31, 2012 are deemed outstanding for computing the number, and the percentages of outstanding shares beneficially owned by the person holding such options, but are not deemed outstanding for computing the percentage beneficially owned by any other person.
(3) Includes 905,734 shares held in the name of Friday Harbour and 110,215 in Mr. Duffey’s name.
(4) Includes 239,359 shares held in Mr. King’s name, and 1,000 shares held in the name of the King Family Trust.

 

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Other than the compensation discussed herein, we had no items to disclose hereunder for 2012 except Mr. King had loaned $20,124 to the Company during 2007 and an additional $136 in 2008 aggregating $20,260. The loans were not secured and are interest free; they remain outstanding and unpaid at December 31, 2012 and on the date hereof.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

During 2011 and 2012, annual fees approved for the year-end audit and interim reviews aggregated approximately $25,000 and $25,000. In addition, during 2011 and 2012 tax-related fees approved for compliance aggregated, approximately, $3,000 and $2,750 respectively.

 

The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit services, provided by Kingery & Crouse, PA in 2011 and 2012. Consistent with the Audit Committee’s responsibility for engaging the Company’s independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee approves proposed services and fee estimates for these services. The Audit Committee chairperson or its designee has been designated by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee. Services approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and the Audit Committee reviews services and fees for the year at each such meeting.

 

 

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PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)   Exhibits

 

The following exhibits are filed as part of, or incorporated by reference into, this annual report on Form 10-K:

 

Exhibit No.   Description
     
2.1 1   Agreement of Merger and Plan of Reorganization dated 2/25/02 by and among SmartGate Inc., SmartGate/RadioMetrix Acquisition Corp. and Radio Metrix Inc., Letter of Clarification, and Amendment dated as of April 24, 2003
10.1 1   Quarterly Revenue Based Payment Agreement by and among the Company and Stephen A. Michael, Spencer Charles Duffey Irrevocable Trust u/a/ d July 29, 1998, Elizabeth Rosemary Duffey Irrevocable Trust u/a/d July 29, 1998, Robert T. Roth, William W. Dolan dated as of February 25, 2002; and Amendment dated as of April 24, 2003
10.2 1   Promissory Note, Security Agreement, and Escrow Agreement - Re: Daimler Capital Partners, Ltd. - loan and stock options; Stock Option Agreement with Daimler Capital Partners, Ltd. - October 28, 2002; Stock Option Agreement with Daimler Capital Partners, Ltd. - February 28, 2003
10.3 1   Form of Plan 2003 Option Agreement with Joseph F. Movizzo - May 13, 2003 (including form of Letter of Investment Intent)
10.4 1   Consulting Agreement - March 2003 between Crescent Fund, Inc. and the Company
10.5 1   Agreement dated as of April 24, 2003 between Alan A. Feldman and the Company
10.6 1   Financing Agreement dated as of May 9, 2003 between BarBell Group, Inc. and the Company
10.7 1   Series 2003A 7% Convertible Note Due June 9, 2004, dated May 9, 2003 from the Company to BarBell Group, Inc.
10.8 1   Investment Agreement dated as of May 9, 2003 between BarBell Group, Inc. and the Company
10.9 1   Warrant to Purchase Shares of Common Stock dated as of May 9, 2003, issued by the Company to BarBell Group, Inc.
10.10 1   Registration Rights Agreement dated as of May 9, 2003 between the Company and BarBell Group, Inc.
10.11 1   Broker-Dealer Placement Agent Selling Agreement - May 2003 between Capstone Partners LC and the Company
10.12 2   Amended and Restated Regulation S Subscription Agreement - July 22, 2003 between Capstone Partners LC and the Company
10.13 2   Amended and Restated Regulation S Subscription Agreement - July 22, 2003 executed by Nautilus Technologies, Ltd. - subscribing for 125,000 Units
10.14 2   Amended and Restated Regulation S Subscription Agreement - July 22, 2003 executed by GM Capital Partners, Ltd. - subscribing for nit
10.15 2   Amended and Restated Regulation S Subscription Agreement - July 22, 2003 executed by Kallur Enterprises, Ltd. - subscribing for 50,000 Units
10.16 2   Publicity Agreement - July 2003 between Capital Financial Media, Inc. and the Company
10.17 2   Consulting Agreement - July 2003 between National Financial Communications Corp. and the Company
10.18 2   Agreement - July 2003 between Brooks Houghton & Company, Inc. and the Company
10.19 2   Non-Exclusive Financial Advisor Agreement - July 2003 between Source Capital Group, Inc. and the Company
10.20 2   Consulting Agreement - July 2003 between Patrick W.H. Garrard d/b/a The Garrard Group of West Redding, CT and the Company
10.21 2   Investment Agreement Modification I dated as of July 21, 2003 by and among Invisa, Inc. and BarBell Group, Inc.
10.22 2   Joint Development Agreement - July 2003 between Dominator International Ltd. And SmartGate, L.C.
10.23 3   Engagement Agreement dated September 9, 2003 between G.M. Capital Partners, Ltd and Invisa, Inc.
10.24 4   Employment Agreement dated November 6, 2003 between Herb Lustig and Invisa, Inc.
10.25 4   Severance Agreement dated November 13, 2003 between Samuel S. Duffey and Invisa, Inc.
10.26 4   Agreement dated November 13, 2003 between Invisa, Inc. and the Duffey related shareholders

 

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Exhibit No.   Description
     
10.27 5   SDR Metro Inc. letter extension agreement
10.28 5   SDR Metro Inc. confirmation letter agreement
10.29 5   Severance Agreement dated January 26, 2004 between Stephen A. Michael and Invisa, Inc.
10.30 5   Consulting Agreement dated January 26, 2004 between Stephen A. Michael and Invisa, Inc.
10.31 5   Severance Agreement dated December 31, 2003 between William W. Dolan and Invisa, Inc.
10.32 5   Agreement dated February 11, 2004 between The Video Agency, Inc. and Invisa, Inc.
10.33 5   Employment Agreement dated March 2004 between Charles Yanak and Invisa, Inc.
10.34 5   2003-A Employee, Director, Consultant and Advisor Stock Compensation Plan.
10.35 5   First Amendment to Invisa, Inc., 2003 Incentive Plan Date As of November 6, 2003
10.36 5   Stock Option Agreement for Herb M. Lustig dated November 6, 2003
10.37 6   Subscription Agreement for issuance of 22,000 shares of Series A Convertible Preferred Stock and Common Stock Warrants
10.38 6   Registration Rights Agreement
10.39 6   Warrants to Purchase Common Stock (Mercator Momentum Fund, LP, Mercator Advisory Group, LLC, and Monarch Pointe Fund, Ltd.)
10.40 6   Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock.
10.41 7   Marketing Agreement between Aurelius Consulting Group and Invisa, Inc.
10.42 7   Lease Agreement among HAR-WAL ASSOCIATES, INC. and WR-I ASSOCIATES, LTD. and Invisa, Inc. dated September dated September 23, 2004
10.43 10   Business consulting agreement
10.44 10   Opinion of counsel regarding legality of Common Stock
10.45 5   Consent of Aidman, Piser and Company, PA
10.46 10   Consent of Legal Counsel
10.47 1   Power of Attorney relating to subsequent amendments
10.48 8   Promissory note agreements dated October 10, 2006 by and between Invisa, Inc. and M.A.G. Capital, LLC; Mercator Momentum Fund III, LP and Monarch Pointe Fund, Ltd. Borrowing Certificates and Forms of Assignments
10.49 8   Warrant Agreement dated October 10, 2006 by and between Invisa, Inc. and Ocean Park Advisors, LLP
10.50 8   UCC Financing Statements
10.51 8   Schedule of Advances: Permitted Payments
10.52 9   Business Consulting Agreement dated August 14, 2006 between Invisa, Inc. and John Anderson
10.53 13   Carl A. Parks Employment agreement
10.54 12   Forbearance and Modification agreement dated July 27, 2007
10.55 12   Promissory Note dated July 25, 2007
10.56 11   Promissory Note dated March 6, 2007
10.57 12   Forbearance and Modification Agreement
10.58 14   Audit Committee Charter
10.59 14   Senior Secured Promissory Note date March 28, 2008
10.60 14   Forbearance and Modification Agreement dated March 28, 2008
10.61 14   Extension of Promissory Note dated April 11, 2008
10.62 15   Senior Secured Promissory Note dated July 1, 2008
10.63 15   Forbearance and Modification Agreement dated June 1, 2008
10.64 16   Note and Share Exchange Agreement dated July 31, 2008
10.65 16   Certificate of Designations of Preferences and Rights dated December 22, 2008.
10.66 17   Senior Secured Promissory Note dated March 24, 2010.
10.66 18   Articles of amendment to the articles of incorporation of Invisa, Inc.
10.67 17   Senior Secured Promissory Note (Line of Credit) dated March 24, 2010.

 

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Exhibit No.   Description
     
10.68 17   Note Extension Agreement dated March 24, 2010.
10.69 17   Note Extension Agreement dated March 24, 2010.
10.70 17   Note Extension Agreement dated March 24, 2010.
10.71 17   Note Extension Agreement dated March 24, 2010.
10.72 17   Note Extension Agreement dated March 24, 2010.
10.73 17   Terms of Exchange dated January 11, 2010.
10.74 17   Amended and Restated Certificate of Designations of Preferences and Rights of Series B of Convertible Preferred Stock of Invisa, Inc. dated January 11, 2010.
10.75 17   Letter Term Sheet and Consent Documents dated January 11, 2010.
10.76 17   Share Exchange Agreement dated January 11, 2010.
10.77 17   Property Lease dated February 8, 2010.
10.78 18   John F Zappala Consulting Agreement dated April 18, 2011
10.79 19   John F Zappala Consulting Agreement dated April 18, 2011
10.80 20   Press Release announcing appointment of John F Zappala as of April 18, 2011
10.81 21   Note Extension Agreement (note 4) dated December 31, 2011
10.82 21   Note Extension Agreement (note 5) dated December 31, 2011
10.83 21   Note Extension Agreement (note 6) dated December 31, 2011
10.84 21   Note Extension Agreement (note 7) dated December 31, 2011
10.85 21   Senior Secured Promissory Note (note 8) dated December 31, 2011
10.86 21   Senior Secured Line of Credit Promissory Note (note 9) dated December 31, 2012
10.87 *   Senior Secured Promissory Note (note 10 ) dated December 31, 2012
10.88 *   Note Extension Agreement (note 4) dated December 31, 2012
10.89 *   Note Extension Agreement (note 5) dated December 31, 2012
10.90 *   Note Extension Agreement (note 6) dated December 31, 2012
10.91 *   Note Extension Agreement (note 7) dated December 31, 2012
10.92 *   Note Extension Agreement (note 9) dated December 31, 2012
10.93 *   Note Extension Agreement (note 8) dated December 31, 2012
14 1   Code of Business Conduct and Ethics and Compliance Program
31.1 *   Chief Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *   Chief Financial Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 *   Certification Pursuant to 18 U.S.C. Section 1350.
32.2 *   Certification Pursuant to 18 U.S.C. Section 1350.
101.INS *   XBRL Instance Document **
101.SCH *   XBRL Taxonomy Extension Schema Document **
101.CAL *   XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF *   XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB *   XBRL Taxonomy Extension Label Linkbase Document **
101.PRE *   XBRL Taxonomy Extension Presentation Linkbase Document **

______________ 

* Filed herewith.
** In accordance with Rule 406T of Regulation S-T, this information is deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
1 Previously filed on June 23, 2003 with Invisa’s Form 10-KSB for the year ended December 31, 2002 and are incorporated by reference.

 

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2 Previously filed on August 1, 2003 with Invisa’s Form 10-QSB for the quarter period ended June 30, 2003 and are incorporated by reference.
3 Previously filed on September 17, 2003 with Invisa’s Form 8-KA (Amendment No. 1) dated September 9, 2003 and is incorporated by reference.
4 Previously filed on November 14, 2003 with Invisa’s Form 8-K dated November 6, 2003 and are incorporated by reference.
5 Previously filed on April 14, 2004 with Invisa Form 10-KSB for the year ended December 31, 2003 and incorporated herein by reference.
6 Previously filed on August 18, 2004 with Invisa Form 10-QSB and incorporated herein by reference.
7 Previously filed on February 7, 2005 with Invisa Form 10-KSB for the year ended December 31, 2004 and incorporated herein by reference.
8 Previously filed on October 10, 2006 with Invisa Form 8-K/A dated October 10, 2006 and are incorporated by reference.
9 Previously filed on August 17, 2006 with Invisa Form 8-K dated August 14, 2006 and are incorporated by reference.
10 Previously filed on August 14, 2006 with Invisa Form S-8 dated August 14, 2006 and are incorporated by reference
11 Previously filed on March 6, 2007 with Invisa’s Form 8-K and incorporated herein.
12 Previously filed on November 14, 2007 with Invisa Form 10-QSB and incorporated herein by reference.
13 Previously filed on April 18, 2007 with Invisa Form 10-KSB and incorporated herein by reference.
14 Previously filed on April 14, 2008 with Invisa Form 10-KSB and incorporated herein by reference.
15 Previously filed on July 30, 2008 with Invisa Form 8-K and incorporated herein by reference.
16 Previously filed on January 13, 2009 with Invisa Form 8-K and incorporated herein by reference.
17 Previously filed on March 31, 2010 with Invisa Form 10-K and incorporated herein by reference.
18 Previously filed on January 14, 2011 with Invisa Form 8-K and incorporated herein by reference.
19 Previously filed on April 22, 2011 with Invisa Form 8-K and incorporated herein by reference.
20 Previously filed on May 2, 2011 with Invisa Form 8-K and incorporated herein by reference.
21 Previously filed on March 30, 2012 with Invisa Form 10-K and incorporated herein by reference.

 

Financial Statement Schedules

 

None.

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  INVISA, INC.
     
     
Dated:  February 21, 2013 By:   /s/ Edmund C. King
  Edmund C. King
  Chief Executive Officer

 

     
     
Dated:  February 21, 2013 By:   /s/ Edmund C. King
  Edmund C. King
  Chief Financial Officer

 

 

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KNOW ALL PERSONS BY THESE PRESENTS , that each of the undersigned hereby constitutes and appoints Edmund C. King as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and on his behalf to sign, execute and file this annual report on Form 10-K and any or all amendments without limitation to this annual report, and to file the same, with all exhibits thereto and any and all documents required to be filed with respect therewith, with the Securities and Exchange Commission or any regulatory authority, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises in order to effectuate the same as fully to all intents and purposes as he might or could do if personally present, hereby ratifying and confirming all that such attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done.

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Dated: February 21, 2013 /s/ Edmund C. King
  Edmund C. King, Chief Executive Officer
   
   
Dated: February 21, 2013 /s/ Edmund C. King
  Edmund C. King, Chief Financial Officer, Director
   
   
Dated: February 21, 2013 /s/ Gregory J. Newell
  Gregory J. Newell, Director
   
   
Dated: February 21, 2013 /s/ John E. Scates
  John E. Scates, Director

 

 

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Report of Independent Registered Certified Public Accounting Firm

 

 

Board of Directors and Stockholders

Invisa, Inc.

 

We have audited the accompanying balance sheets of Invisa, Inc. (the “Company”) as of December 31, 2011 and 2012, and the related statements of operations, stockholders’ (deficit), and cash flows for the years then ended. 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 audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits 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, audits of its internal control over financial reporting. Our audits 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 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 audits provide 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 Invisa, Inc. as of December 31, 2011 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

/s / Kingery & Crouse, PA

 

Kingery & Crouse, PA

Certified Public Accountants

Tampa, Florida

February 21, 2013

 

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INVISA, INC.

 

BALANCE SHEETS

 

    December 31,  
    2011     2012  
ASSETS                
                 
Current assets:                
Cash and cash equivalents   $ 589     $ 1,015  
Accounts receivable     5,038       5,756  
Inventories     13,569       18,741  
Prepaid expenses and other current assets     3,707       3,447  
Total current assets     22,903       28,959  
Total assets   $ 22,903     $ 28,959  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
Current liabilities:                
Accounts payable, trade   $ 99,458     $ 64,161  
Due to stockholders and officers     20,260       20,260  
Total current liabilities     119,718       84,421  
Long-term debt     750,232       987,951  
Stockholders’ Deficit                
Convertible Preferred Stock: 5,000,000 shares authorized ($100 par value):                
Series A, 9,715 shares issued and outstanding     798,500       798,500  
Series B, 2,702 shares issued and outstanding     270,160       270,160  
Series C, 16,124 shares issued and outstanding     1,600,467       1,600,467  
Common Stock: 95,000,000 shares authorized ($.001 par value):                
13,959,398 and 14,214,398, shares issued and outstanding     13,959       14,214  
Additional paid-in capital     32,458,972       32,519,717  
Accumulated deficit     (35,989,105 )     (36,246,471 )
                 
Total stockholders’ deficit     (847,047 )     (1,043,413 )
                 
Total liabilities and stockholders’ deficit   $ 22,903     $ 28,959  

 

See notes to financial statements.

 

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  INVISA, INC.

 

STATEMENTS OF OPERATIONS

 

    Years Ended December 31,  
    2011     2012  
                 
Net Sales   $ 98,782     $ 37,956  
Costs and expenses:                
Cost of goods sold     46,417       20,734  
Selling, general and administrative expenses     289,970       237,185  
Loss from operations     (237,605 )     (219,963 )
Other income (expense):                
Interest (expense) and other, net     (80,695 )     (67,550 )
Debt extinguishment gain     2,418       30,147  
      (78,277 )     (37,403 )
(Loss) before income tax     (315,882 )     (257,366 )
Income tax     —       —  
Net (Loss)   $ (315,882 )   $ (257,366 )
                 
Net (Loss) per share applicable to Common Stockholders:                
Basic and diluted   $ (0.02 )   $ (0.02 )
                 
Weighted average Common Stock shares outstanding:                
Basic and diluted     13,932,275       14,214,398  

 

See notes to financial statements.

 

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INVISA, INC.

 

STATEMENTS OF STOCKHOLDERS’ (DEFICIT)

 

    Convertible           Additional                
   

Preferred Stock

    Common Stock     paid-in     Accumulated          
    Shares     Amount     Shares     Amount    

capital

   

Deficit

    Total  
                                                         
BALANCE AT DECEMBER 31, 2010     28,541     $ 2,669,127       13,849,398     $ 13,849     $ 32,373,332     $ (35,673,223 )   $ (616,915 )
                                                         
Contributed Officer compensation     —       —       —       —       36,000       —       36,000  
Issuance of and subscriptions for Common Stock for Directors/Officers & Consultants     —       —       110,000       110       49,640       —       49,750  
Net Loss     —       —       —       —         —         (315,882 )     (315,882 )
BALANCE AT DECEMBER 31, 2011     28,541     2,669,127       13,959,398     13,959     32,458,972     (35,989,105 )   (847,047 )
                                                         
Contributed Officer compensation     —       —       —       —         36,000       —       36,000  
Issuance of and subscriptions for Common Stock for Directors/Officers & Consultants     —       —       255,000       255       24,745       —       25,000  
Net Loss     —       —       —       —       —       (257,366 )     (257,366 )
BALANCE AT DECEMBER 31, 2012     28,541     $ 2,669,127       14,214,398     $ 14,214     $ 32,519,717     $ (36,246,471 )   $ (1,043,413 )

 

See notes to financial statements.

 

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INVISA, INC.

 

STATEMENTS OF CASH FLOWS

 

    Years Ended December 31,  
    2011     2012  
                 
Cash flows from operating activities:                
Net (loss)   $ (315,882 )   $ (257,366 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Interest added to Note Payable – Related Party     80,695       67,366  
Contributed Officer Compensation     36,000       36,000  
Directors/Officers & Consultants stock compensation     49,750       25,000  
Debt extinguishment gain     (2,418 )     (30,147 )
Changes in operating assets and liabilities:                
(Increase) decrease in accounts receivable     1,251       (718 )
(Increase) decrease in inventories     4,298       (5,171 )
(Increase) decrease in prepaid expenses and other current assets     2,088       260  
Increase (decrease) in accounts payable, trade     12,402       (5,151 )
Net cash used in operating activities     (131,816 )     (169,927 )
Cash flows from investing activities:     —       —  
Cash flows from financing activities:                
Proceeds from notes payable     128,800       170,353  
Bank overdraft     —       —  
Net cash provided by financing activities     128,800       170,353  
Net increase (decrease) in cash     (3,016 )     426
Cash at beginning of year     3,605       589  
Cash at end of year   $ 589     $ 1,015  

 

See notes to financial statements.

 

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INVISA, INC.

 

STATEMENTS OF CASH FLOWS - CONTINUED

 

    Years Ended December 31,  
    2011     2012  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                
Cash paid for interest   $ —     $ —  
Cash paid for Income Taxes   $ —     $ —  

 

See notes to financial statements.

 

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INVISA, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

 

NOTE A –DESCRIPTION OF ORGANIZATION AND BUSINESS

 

Invisa, Inc., (the “Company” or “Invisa”) is an enterprise that incorporates safety system technology and products into automated closure devices, such as parking gates, sliding gates, overhead garage doors and commercial overhead doors. Invisa has also demonstrated production-ready prototypes of security products for the museum and other markets. The Company is currently manufacturing and selling powered closure safety devices.

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalents at a major commercial bank.

 

Accounts Receivable, Major Customer Information

 

Accounts receivable are due primarily from companies in the gate manufacturing industry primarily located throughout the United States. Credit is extended based on an evaluation of the customers’ financial condition and, generally, collateral is not required. Account balances are evaluated for collectability based on the condition of the customers’ credit including repayment history and trends and relative economic and business conditions. Bad debts have not been significant. During 2011 two customers comprised 37% of our sales. During 2012 three customers comprised 49% of our sales.

 

Inventories

 

The Company’s inventory is stated at the lower of cost or market using an averaging method which approximates the first-in, first-out method. The inventory has been evaluated for obsolescence and whether quantities on hand exceed quantities which can reasonably be expected to be sold in the near term. Obsolete inventory is written off and excess quantities which are not expected to be sold in the near term are either written off or classified as a long-term asset.

 

Furniture, Fixtures and Equipment

 

Furniture, fixtures, and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives, principally five years. Leasehold improvements are amortized over the term of the lease or the estimated useful lives, whichever is shorter. Depreciation expense was $0 for 2011 and 2012. At December 31, 2012, all furniture, fixtures and equipment was fully depreciated.

 

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Revenue

 

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

 

Product sales under fixed price arrangements are recognized as revenue upon shipment of product (when title transfers to the purchaser) and collectability is assured. Other operating revenues relate to services and are recorded when services are complete.

 

Shipping costs

 

Shipping and handling costs are included in cost of sales in the accompanying statements of operations.

 

Research and Development Costs

 

Research and development costs consist of direct costs that are associated with the development of the Company’s technology. These costs are expensed as incurred. During the years 2011 and 2012, the Company did not incur research and development expense.

 

Advertising Costs

 

The Company’s policy is to expense advertising costs as incurred.

 

Warranty Costs

 

The Company warrants its products for ninety days. Estimated warranty costs are recognized in the period product is shipped. However, there have been no significant warranty costs incurred through December 31, 2012. Accordingly, no warranty liability has been recognized for any period presented.

 

Income Taxes

 

The Company follows ASC 740 Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax asset to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

 

The Company follows ASC 740-10-05 Accounting for Uncertainty in Income Taxes . The Interpretation prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

 

Financial Instruments

 

The Company has adopted FASB ASC 820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

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  • Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
     
  • Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
     
  • Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, notes payable and due to stockholders. The carrying amounts of these financial instruments approximate their fair value, due to the short-term nature of these items and the use of market rates of interest. The carrying value of the Company’s long-term debt approximates fair value based on the terms and conditions of similar debt instruments.

 

Derivative Financial Instruments

 

The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risk that may affect the fair values of its financial instruments. However, certain other financial instruments, such as warrants and embedded conversion features that are indexed to the Company’s common stock, are classified as liabilities when either (a) the holder possesses rights to net cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

 

Impairment of Long-Lived Assets

 

The Company evaluates the recoverability of its long-lived assets or asset groups, annually; or whenever adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related asset may be less than previously anticipated. If the net book value of the related asset exceeds the undiscounted future cash flows of the asset, the carrying amount would be reduced to the present value of its expected future cash flows and an impairment loss would be recognized. There were no impairments in 2011 or 2012.

 

Income (Loss) per Share

 

Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti dilutive.

 

At December 31, 2011 and 2012 the Preferred stock was convertible into 4,448,545 shares of common stock, which has not been considered in the calculation of diluted loss per share since the effect would be anti-dilutive.

 

Equity-Based Compensation

 

The Company accounts for stock based compensation in accordance with ASC 718 Stock Compensation. This Statement requires that the cost resulting from all share-based transactions be recorded in the financial statements. The Statement establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.

 

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Recent Accounting Pronouncements

 

The Company does not believe that recently issued accounting pronouncements will have a material impact on its financial statements.

 

NOTE C – COMMON AND PREFERRED STOCK

 

In September 2004, the Company issued 22,000 shares of Series A Convertible Preferred Stock in the face amount of $2,200,000 for $1,937,000 (net of $263,000 transaction expenses) which was paid in the respective amounts of $1,158,200 and $778,800 at closing. Additionally, the transaction included:

 

  • Issuance of Detachable Warrants to acquire up to 300,000 shares of the Company’s Common Stock at $1.00 per share. The Warrants were to expire on August 16, 2007. The terms of these Warrants were revised in August 2007 to extend the expiration date to August 2010 however the warrants were cancelled in 2008.
     
  • In addition to the transaction costs referred to above, the Company granted 32,500 shares of Common Stock and Detachable Warrants to acquire up to 32,500 shares of the Company’s Common Stock at $5.00 per share to a broker. The term of the Warrants was three years.
     
  • The Preferred Stock is non-voting, entitled to dividends only when, or if, declared by the Board of Directors and has preference over the Common Stock in the event of the Company’s liquidation. The Preferred Stock is convertible into Common Stock at the option of the holder. The conversion price was equal to 80% of the market price at the time of conversion, subject to a floor of $2.50 per share and a ceiling of $5.85 per share. During 2005, the exercise price was modified to $0.60 per share as an inducement to execute the Series B Convertible Preferred Stock transaction discussed below.

 

The Company accounted for the host instrument as equity under the ASC guidance and accounted for both the beneficial conversion feature and the warrants as equity as well.

 

In August 2005, the Company issued 2,000 shares of Series B Convertible Preferred Stock in the face amount of $1,000,000 for $878,000 (net of $122,000 transaction expenses) which was paid in the respective amounts of $378,000 and $500,000 at closing. Additionally, the transaction included:

 

  • Detachable warrants to acquire up to 500,000 shares of the Company’s Common Stock at $15.00 per share. The warrants expired on August 31, 2010 and were subject to call by the Company upon the Common Stock trading at a price of $3.00, a minimum trading volume of 12,000 shares for 20 consecutive days and the registration statement being effective.
     
  • In addition to the transaction costs referred to above, the Company granted warrants to acquire up to 133,334 shares of the Company’s Common Stock at $0.80 per share to a broker. The term of the warrants was three years.
     
  • The Preferred Stock is non-voting and is entitled to receive dividends at an annual rate equal to the lower of the Prime Rate plus 3.5% or 9%. The dividend may either be paid in cash or registered shares of the Company’s Common Stock, subject to certain limitations. The Preferred Stock is convertible into Common Stock at the option of the holder. The conversion price is $0.60 per share par value.

 

The Series B Preferred Stock and Series A Preferred Stock as amended to permit the Company, in its discretion, to redeem part or all of the outstanding Preferred A and B Stock at 125 percent of par value per share until August 2007 and thereafter at 150 percent of par value, plus any accrued dividends.

 

The Company accounted for the host instrument as equity under ASC guidance and accounted for both the beneficial conversion feature and the warrants as equity as well.

 

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In 2008 the Company also issued 6,205 shares of its Series C Convertible Preferred stock in exchange for 4,785 and 1,000 shares, respectively of its Series A and Series B Convertible Preferred stock. In addition, the Company issued 483 shares of its Preferred C stock for settlement of debt. The Series C preferred stock is (i) nonvoting, (ii) entitled to receive dividends, when, and/if declared by the Board of Directors, (iii) senior to the common stock in liquidation and (iv) convertible into common stock at $0.60 per common share at the option of the holder and under certain conditions at the option of the Company.

 

In January 2010, the Company commenced an exchange offer, which remains open, of Series B Preferred Stockholders to convert their shares into shares of Series C Preferred Stock. In conjunction with the January 2010 offer, the Company has restated its Series B Stock Certificate of Designation to eliminate any further accrual of dividends and provide that the Company may satisfy its obligation with respect to accrued but unpaid dividends either (a) in cash, (b) by issuance of its additional Series B Stock or (c) by issuance of common stock of the Company.

 

During 2010 the Company converted $70,160 of accrued dividends into 702 shares of Series B preferred stock and $245,560 of accrued dividends into 2,456 shares of Series C preferred Stock. In addition the Company converted 7,000 shares of Series B preferred stock with a value of $700,000 into 7,000 shares of Series C preferred stock.

 

During January 2011 the Company affected a one for five reverse stock split. All share and per share amounts have been retroactively restated to reflect this split. In addition, the conversion price of the outstanding preferred stock adjusted to $0.60 per common share.

 

In April 2011, 110,000 shares of Common stock were granted to the three directors and certain consultants and valued at $0.10 per share (the market price at the date of grant). The Company charged the fair value of $11,000 to operations.

 

In January 2012, 155,000 shares of Common stock were granted to the three directors and certain consultants and valued at $0.20 per share (the market price at the date of grant) for services rendered in 2011. The Company charged the fair value of $38,750 to operations in 2011. In addition, in January 2012 100,000 common shares were granted to a consultant for services. These shares were valued at $0.25 per share (the market price on the date of the grant) and $25,000 was charged to operations.

 

During 2011 and 2012 an officer contributed services with a fair value of $36,000 to the company which was charged to operations during the respective years.

 

NOTE D – STOCK OPTION AND WARRANT ACTIVITY

 

The Company has five stock-based compensation plans which provides for the granting of options to purchase the Company’s Common Stock to employees, directors, consultants and advisors. The options granted are subject to a vesting schedule as set forth in each individual option agreement.

 

Plan   Maximum Shares
of Common Stock
Which Can Be Issued
     
2000 Plan   240,000
2002 Plan   300,000
2003 Plan   300,000
2003A Plan   700,000
2006 Plan   500,000
    2,040,000

 

There was no activity with respect to the stock-based compensation plans during 2011 or 2012 and no options outstanding at December 31, 2012.

 

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NOTE E – COMMITMENT AND CONCENTRATIONS

 

Operating Leases

 

In February 2012, the Company’s lease expired and we began occupying a larger space in a building in Sarasota, Florida under a lease with a one-year term expiring February 28, 2013, and annual lease payments of approximately $7,700. Rent expense for the years ended December 31, 2011 and 2012, was $9,271and $7,315, respectively.

 

Concentrations

 

During 2011, two customers comprised approximately 37% of our total sales revenue

 

During 2012, three customers comprised approximately 49% of our total sales revenue.

 

NOTE F – DUE TO STOCKHOLDERS AND OFFICERS

 

Due to stockholders and officers consists of the following at December 31, 2011 and 2012:

 

Edmund C. King   20,260
         

These advances are due on demand and do not bear interest.

 

NOTE G – LINES OF CREDIT

 

The Companies credit facilities with its senior lender was revised on December 31, 2012, The credit facilities allow for advances up to $1,203,319 that bear interest at 10% and have a first security interest in all of the Company’s assets. Additionally, the credit facilities are secured by a security interest in 31,413,333 shares of the Company’s common stock which are held in reserve by the Company. Because the credit facilities are not in default the shares are not treated as issued and outstanding.

 

At December 31, 2012, $987,951 was outstanding under these credit facilities. During 2012, $67,366 of interest was added to the debt and $170,353 in advances from the Revolving Line of Credit (see below) was added to the debt. The Notes are due on March 31, 2015. Interest expense related to these loans was $80,695 and $67,366 during 2011 and 2012, respectively. The accrued interest is due and payable on March 31, 2015.

 

In addition, on December 31, 2012, the Company established a new Revolving Line of Credit totaling $200,000 with its Senior Lender to finance operations of the Company. This new line, bears interest at 10% per annum and is due on March 31, 2015. The line has terms and provisions similar to the notes described above. The line is also secured by a security interest in 5,333,333 shares in the Company’s common stock. During 2012 the Company received advances aggregating $170,353 which was added to the credit facility discussed above.

 

During 2011 the Company received advances aggregating $128,800 which was added to the credit facility discussed above.

 

As of December 31, 2012 the entire $200,000 balance of the line is available to the Company.

 

NOTE H – GAIN ON THE SETTLEMENT OF DEBT

 

During 2011 and 2012 the Company recorded a gain on the settlement of debt as follows:

 

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    2011 *     2012  
                 
Amount of debt settled/written off   $ 2,418     $ 30,147  
Cash payments     —       —  
Gain   $ 2,418     $ 30,147  
______________                
*   The debt was written off pursuant to the expiration of the statute of limitations of the State of Florida.  

 

NOTE I – INCOME TAXES

 

Deferred taxes are recorded for all the tax effects of existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there was no net deferred tax benefit or expense for the years ended December 31, 2011 or 2012.

 

Reconciliation of the federal statutory income tax rate of 34.0% to the effective income tax rate is as follows at December 31:

 

    2011     2012  
                 
Federal statutory income tax rate     (34.0 )%     (34.0 )%
State income taxes, net of federal tax benefit     (3.5 )%     (3.5 )%
Deferred tax asset valuation allowance     37.5 %     37.5 %
      -0- %     -0- %

 

ASC guidance requires that a deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. As a result the Company recorded a valuation allowance with respect to all the Company’s deferred tax assets. The change in the valuation allowance was approximately $50,000 during 2012.

 

The Company has a federal net operating loss carry forward of approximately $17 million as of December 31, 2012, which expires through 2032. Under Section 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a “loss corporation”, as defined, there are annual limitations on the amount of the net operating loss and other deductions, which are available to the Company. The Company has not determined the impact of these limitations at this time. The principal difference between the net operating loss and the accumulated deficit for financial statement purposes results principally from stock based compensation and other non-cash expenses.

 

Since inception, we have been subject to tax by both federal and state taxing authorities. Until the respective statutes of limitations expire, we are subject to income tax audits in the jurisdictions in which we operate. We are subject to U.S. federal tax examinations for fiscal years commencing in 1998 as a result of its NOL carryforward.

F- 13

 

EXHIBIT 10.87

 

SENIOR SECURED PROMISSORY NOTE

 

$ 225,000.00 December 31 st , 2012

Sarasota, Florida

 

FOR VALUE RECEIVED, the undersigned, INVISA, INC. , a Nevada corporation (“ Borrower ”) having an address at 1800 Second Street, Suite 965 Sarasota, Florida, 34236 promises to pay to the order of Centurian Investors, Inc, a Delaware corporation (“ Lender ”), having an office at 1800 Second Street, Suite 970 Sarasota, Florida, 34236, or such other place as the Lender may designate in writing, the principal amount up to and not to exceed TWO HUNDRED TWENTY FIVE THOUSAND United States Dollars (U.S. $225,000.00), to the extent advanced hereunder and then outstanding, with interest on the unpaid principal balance from the date of this Senior Secured Promissory Note (this “ Promissory Note ”), until paid, at the Interest Rate (as hereinafter defined) provided herein.

 

1. Rate of Interest . The outstanding principal balance of this Promissory Note shall bear interest at ten percent (10%) per annum (the “ Interest Rate ”).

 

2. Date and Time of Payment . The outstanding principal balance of this Promissory Note, together with all accrued and unpaid interest, shall be paid in full on earlier to occur of (a) the Maturity Date or (b) the date of termination of this Promissory Note, whether by its terms, by prepayment, or by acceleration. All amounts outstanding hereunder shall constitute Borrower’s obligations hereunder, and such obligations include without limitation all principal, interest (including all interest which accrues after the commencement of any case or proceeding by or against Borrower in bankruptcy whether or not allowed in such case or proceeding), expenses, attorneys’ fees and any other sum chargeable to Borrower hereunder and owing to Lender under this Promissory Note (all such obligations and all other obligations of Borrower under this Promissory Note ,(the “ Obligations ”). No principal amount of this Note paid or prepaid may be reborrowed.

 

3. Default Rate . Notwithstanding Section 1 , after the occurrence of any Event of Default and for so long as such Event of Default continues, and in any event from and after the Maturity Date, all principal, interest and other amounts payable under this Promissory Note shall bear interest until paid in full at a rate of interest equal to four percent (4%) above the per annum rate otherwise applicable hereunder (the “ Default Rate ”).

 

4. Computation of Interest . Interest on the principal amount hereof and all other Obligations shall be computed on the basis of a 360-day year, and shall be charged for the actual number of days elapsed during any month or other accrual period.

 

5. Manner of Payment . All payments by Borrower in respect of any Obligations shall be made without deduction, defense, set off or counterclaim, free and clear of all taxes delivered to Lender.

 

6. Maturity . To the extent not sooner due and payable in accordance with this Promissory Note, the Obligations shall be due and payable on March 31st, 2015 (the “ Maturity Date ”).

 

7. Application of Payments . All payments shall be applied to amounts then due and payable in the following order: (a) to Lender’s costs and expenses reimbursable in connection herewith; (b) to interest accrued on the outstanding principal balance of this Promissory Note; (c) to the principal amount hereof; and (d) to all other Obligations, or in such other manner as Lender shall determine in its sole and exclusive discretion.

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8. Procedure for Borrowing and Use of Proceeds . The proceeds of this Promissory Note shall be funded in multiple advances (each, an “ Advance ”) by Lender to Borrower in the amounts and on such dates as determined by Lender based on requests from Borrower. Borrower shall give Lender notice requesting that Lender make an Advance in accordance herewith specifying (a) the Borrowing Date, (b) the amount requested and (c) a detailed, itemized list of the use of such Advance. Upon receipt of such notice from Borrower, Lender shall determine, in its sole and exclusive discretion, whether it shall make such amount available to Borrower on the Borrowing Date. Upon each Advance, Lender shall record each Advance on Schedule I to this Promissory Note. For purposes of this Section 8, the Borrowing Date shall mean any business day specified in the notice pursuant to this Section 8 as a date on which Borrower requests Lender to make a loan hereunder. The obligation of Lender to make each subsequent Advance following the initial Advance hereunder is subject to the Lenders approval of the loan request made by Borrower in accordance with this Section 8 and shall be funded in the sole and exclusive discretion of Lender. As of the date hereof, Borrower has received an aggregate Advance of Two Hundred Twenty One Thousand Nine Hundred and Thirteen ($221,913.00) Dollars under this Note.

 

9. Security . This Promissory Note shall be secured by (i) Six Million (6,000,000) shares of common stock of Borrower to be issued as of the date hereof and held in escrow and a continuing first priority security interest in all of Borrower’s right, title, and interest in and to, all property of Borrower (collectively, the “ Collateral ”), as more specifically set forth in the Security Agreement executed by Borrower in favor of Lender dated as of February 28, 2007. (the “Security Agreement”).

 

10. Priority This Promissory Note shall be a senior obligation of Borrower, and for so long as this Promissory Note shall be outstanding, (i) Borrower shall be prohibited from incurring any and all future indebtedness without the prior written consent of Lender and (ii) any and all future indebtedness approved by Borrower in writing shall be deemed subordinate and inferior to, all respective right, title and interest of Lender, in, to and under this Promissory Note, this Security Agreement and any and all documents and instruments evidencing, securing or otherwise relating to this Promissory Note.

 

11. Representations and Warranties . Borrower makes the following representations and warranties to Lender, which representations and warranties shall be true, correct, and complete as of the date hereof and shall survive the execution and delivery of this Promissory Note.

(a) Due Organization and Qualification . Borrower is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any jurisdiction where it is required to be so qualified, and has all requisite power and authority to (i) own its assets and carry on its business, and (ii) execute, deliver and perform its Obligations.

(b) Due Authorization; No Conflict . The execution, delivery, and performance by Borrower of this Promissory Note has been duly authorized by all necessary action on the part of Borrower. This Promissory Note has been duly executed and delivered by Borrower. The execution, delivery, and performance by Borrower of this Promissory Note and the consummation of the transactions contemplated hereby, do not and will not (i) violate in any material respect any provision of federal, state, provincial or local law or regulation applicable to Borrower, its organizational documents, or any order, judgment, or decree of any court or other governmental authority, (ii) conflict with, result in a breach or termination of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Borrower, (iii) result in or require the creation or imposition of any lien of any nature whatsoever upon any properties or assets of Borrower, other than liens or security interests in favor of Lender, or (iv) require any approval of any of Borrower’s stockholders or any approval or consent of any other person or entity, other than consents or approvals that have been obtained and that are still in force and effect. The execution, delivery, and performance by Borrower of this Promissory Note do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any governmental authority, other than consents or approvals that have been obtained and that are still in force and effect. This Promissory Note when executed and delivered by Borrower will be the legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its term, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(c) No Litigation . No litigation, investigation or proceeding of or before any arbitrator or government authority is (i) pending or, to the knowledge of Borrower, threatened with respect to this Promissory Note or the Collateral or any of the transactions contemplated hereby or (ii) pending or, to the knowledge of Borrower, threatened by or against Borrower, its properties or revenues which, if adversely determined, would have a material adverse effect on its business, operations, property or financial condition, when taken as a whole.

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(d) No Default . Borrower is not in default under or with respect to any contractual obligation and no event of default has occurred or is continuing with respect to Borrower.

(e) Taxes . Borrower has filed or caused to be filed all tax returns required to be filed by it and has paid all taxes due and payable on said returns or on any assessments made against Borrower or any of its property. All other taxes, fees or other charges on Borrower or any of its property by any governmental authority have been paid and no tax liens have been filed.

 

12. Covenants of Borrower. As of the date hereof and so long as the Obligations hereunder shall be outstanding:

(a) Borrower will preserve and keep in force and effect, its corporate existence and all licenses and permits necessary to the proper conduct of its business;

(b) Borrower will promptly pay and discharge, all lawful taxes, assessments, charges or levies imposed upon Borrower, or upon or in respect of all or any part of the property or business of Borrower, all trade accounts payable in accordance with usual and customary business terms and all claims for work, labor or materials, which if unpaid might become a lien or charge upon any property of Borrower; provided , Borrower shall not be required to pay such tax, assessment, charge, levy, account payable or claim if (i) the validity, applicability or amount thereof is being contested in good faith by appropriate action or proceeding which will prevent the forfeiture or sale of any property of Borrower, and (ii) Borrower shall set aside on its books, reserves deemed by it to be adequate with respect thereto;

(c) Borrower will promptly comply with all laws, ordinances or governmental rules and regulation to which it is subject, the violations of which would materially or adversely affect its properties, business, prospects, profits or condition or would result in any material lien or charge upon any property of Borrower;

(d) Borrower will maintain, preserve and keep its properties which are used or useful in the conduct of its business in good repair and working order;

(e) Borrower will not create, assume or incur or in any manner become liable with respect of any indebtedness except this Promissory Note and any indebtedness of Borrower incurred prior to the date hereof.

(f) Borrower will not create or incur any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (a “Lien”) on its or its property or assets, whether now owned or hereinafter acquired, or upon any income or profits there from except(i) Liens for property taxes and assessments or levies and liens that are not yet due and payable;(ii) Liens of or resulting from any judgment or award, the time for appeal or petition for rehearing of which shall not have expired or in respect of which the Company shall in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured; or(iii) Liens or priority claims (A) incidental to the conduct of business, (B) created by any material agreement of Borrower entered into prior to and currently in effect as of the date hereof or (C) the ownership or lease of properties and assets and not in connection with the borrowing of money, provided , in each case, the obligation secured is not overdue, or if overdue, is being contested in good faith by appropriate actions or proceedings and provided , further that Borrower shall have received the prior written consent of Lender to any Lien described in (A) or (C) above; or

 

13. Events of Default; Remedies; Acceleration . (a) The occurrence of any one or more of the following events (regardless of the reason therefore) shall constitute an “ Event of Default ” hereunder:(i) Borrower fails to make any payment of outstanding principal balance of this Promissory Note, or interest thereon, or any of the other Obligation when due and payable;

(ii) Any representation or warranty of Borrower made in this Promissory Note, the Security Agreement, or any other document made by or on behalf of Borrower in connection herewith and the transactions contemplated hereby proves to have been false or incorrect in any material respect or Borrower shall fail to comply in all respects with any covenant herein or therein;

(iii) Borrower shall violate any provision of this Promissory Note, the Security Agreement or any other document made by or on behalf of Borrower in connection herewith and the transactions contemplated hereby, including, without limitation, failure to comply with the terms and provisions of Section 8 of this Promissory Note;

(iv) A case or proceeding is commenced against Borrower seeking a decree or order (i) under Title 11 of the United States Bankruptcy Code (11 U.S.C. §§101 et seq. , as amended, and any successor statute, the “ Bankruptcy Code ”), or any other applicable federal, state or foreign bankruptcy or other similar law, rule or regulation, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or for any substantial part of Borrower’s assets, or (iii) ordering the winding-up or liquidation of the affairs of s Borrower, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or a decree or order granting the relief sought in such case or proceeding shall be entered by a court of competent jurisdiction;

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(v) Borrower, without the prior written consent of Lender (A) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, rule or regulation, (B) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or for any substantial part of Borrower’s assets, (C) makes an assignment for the benefit of creditors, (D) takes any action in furtherance of any of the foregoing; or (E) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due;

(vi) If this Promissory Note, the Security Agreement, or any financing statement, document or other instrument executed, delivered or filed in connection herewith or with the security interest granted to Lender hereunder, shall, for any reason, fail or cease to create a valid and perfected lien on or security interest in any or all of the Collateral or the Collateral shall be compromised, encumbered or, in the case of the common stock, invalid, cancelled or otherwise rescinded;

(vi) If Borrower shall default on any material obligations of Borrower or an event of default shall occur with respect to any material agreement of Borrower, whether such agreement shall be in effect or effective subsequent to this Promissory Note. (b) Immediately upon the occurrence of any Event of Default, all of the Obligations of Borrower hereunder shall become immediately due and payable to Lender and the Obligations shall thereafter accrue interest at the Default Rate from the date of any Event of Default until such Obligations are paid in full (an “Acceleration”). Promptly upon the occurrence of an Acceleration, Lender shall send Borrower written notice of the date upon which the Acceleration is effective and the names of two (2) representatives of Lender (“Lender Nominees”) to be immediately appointed to the Board of Directors of Borrower (the “Default Notice”). The Lender Nominees shall be appointed to the Board of Directors of Borrower not less than five days following the date of the Default Notice. Except with respect to an Event of Default under Section 13(a)(iv) and (v), Borrower shall have forty five (45) days (the forty fifth day hereinafter being the “Final Payment Date”) from the date of the Default Notice to pay Lender the total amount of the Obligations due and owning under this Promissory Note. In the event that Borrower shall fail to satisfy in full all of the outstanding Obligations under this Promissory Note on or before the Final Payment Date, then Lender may (i) proceed to protect and enforce Lender’s rights by suit in equity, action at law and/or other appropriate proceeding, either for specific performance of any covenant or condition contained in this Promissory Note, the Security Agreement, or in any instrument or document delivered to Lender pursuant to this Promissory Note , or in aid of the exercise of any power granted in this Promissory Note or any such instrument or document, and (ii) proceed to enforce payment of the Obligations in such manner as Lender may elect, including the foreclosure of the Collateral in accordance with the terms of the Security Agreement, and to realize upon any and all rights of Lender hereunder. Upon the occurrence of any Event of Default under Section 13(a)(iv) and (v), Lender shall have a right to immediately enforce its rights hereunder and proceed against or foreclose upon the Collateral without regard to the 45 day period set forth in this Section 13(b) To the extent not prohibited by applicable law which cannot be waived, all of Lender’s rights hereunder shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under applicable law or in equity, and no exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election or acquiescence by it.(c) In the event that the Obligations hereunder shall be paid in full by or on behalf of Borrower, after the Acceleration of this Promissory Note but prior to the Final Payment Date, then this Promissory Note shall be deemed paid in full, Lender shall promptly release any lien of Lender on the Collateral, and each Lender Nominee shall immediately resign from the Board of Directors of Borrower.

 

14. Certain Rights and Waivers . To the extent not prohibited by the provisions of applicable law, Borrower hereby expressly waives: (a) all presentments, demands for performance, notices of nonperformance (except to the extent required by this Note), protests, notices of protest and notices of dishonor; (b) any requirement of diligence or promptness on the part of Lender in the enforcement of its rights under this Note; (c) any and all notices of every kind and description which may be required to be given by any statute or rule of law; and (d) any defense (other than indefeasible payment in full) which it may now or hereafter have with respect to its liability under this Note.

 

15. Assignments . Borrower may not assign or transfer any of its rights or obligations hereunder without the express, written consent of Lender. Any such purported assignment or transfer by Borrower without the express, written consent of Lender shall be null and void ab initio .

 

4
 

 

16. Costs and Expenses . Borrower agrees to pay all costs and expenses of Lender, including without limitation all fees and disbursements of counsel, advisors, consultants, examiners and appraisers for Lender, in connection with (a) the issuance of this Promissory Note and advancement of principal amount hereunder (which fees and disbursements associated with the origination of this Promissory Note shall not exceed $3,500.00), (b) any enforcement (whether through negotiations, legal process or otherwise) of this Promissory Note, (c) any workout or restructuring of this Promissory Note during the pendency of one or more Events of Default, (d) any bankruptcy case or proceeding of Borrower or any appeal thereof, and (e) upon the occurrence and during the continuance of an Event of Default, any efforts to verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral.

 

17. CHOICE OF LAW .THE VALIDITY OF THIS NOTE, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE BORROWER AND LENDER WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA,WITHOUT REFERENCE TO CONFLICTS OF LAW PRINCIPLES EXCEPT TO THE EXTENT NECESSARY TO ENFORCE THIS CHOICE OF LAW PROVISION.

 

18. Notices . All communications hereunder shall be in writing and shall be deemed to be duly given and received (a) upon delivery if delivered personally or upon confirmed transmittal if by facsimile, (b) on the next Business Day if sent by overnight courier, or (c) four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, in each case to the appropriate notice address or facsimile number.

 

19. Independent Arms Length Transaction . It is understood and agreed that this Promissory Note, the Security Agreement and the transactions contemplated hereby and thereby were negotiated in an arm’s length transaction separate and distinct from any other transaction or contractual obligations and are independent of any transaction or transactions between Borrower, on the one hand, and Lender and any of its affiliates or related entitles on the other hand. Borrower further agrees that the contractual obligations of Borrower hereunder are in no way dependent or conditioned upon any other agreements, contracts or transactions whatsoever unless expressly stated herein.

 

IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of the date first written above.

 

 

INVISA, INC.

By: /s/Edmund C King

  Name: Edmund C. King
  Title: Chief Executive Officer
  Date: December 31, 2012

5
 

 

 

 

EXHIBIT 10.88

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Promissory Note, dated March 28, 2008, in the principal amount of up to One Hundred Thousand ($100,000.00) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Thirteen Million, Three Hundred Thirty Three Thousand, Three Hundred Thirty Four (13,333,334) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 27, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on December 31, 2008; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 31, 2013 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

1
 

 

7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/ Edmund C. King Name:/s/ Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

3
 

EXHIBIT 10.89

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Promissory Note, dated July 1, 2008, in the principal amount of up to One Hundred Thousand ($100,000.00) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Thirteen Million, Three Hundred Thirty Three Thousand Thirty Four (13,333,334) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 27, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on September 30, 2008; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 1, 2013 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

1
 

 

7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/ Edmund C King Name: Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

3
 

EXHIBIT 10.90

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Promissory Note, dated March 24, 2010, in the principal amount of up to One Hundred Twenty Eight Thousand Three Hundred Nineteen and Ten Cent0073 ($128,319.10) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Seventeen Million Sixty Six Thousand Six Hundred Sixty Eight (17,066,668) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 28, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on March 1, 2012; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 1, 2013 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

1
 

 

7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/Edmund C King Name: /s/Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

2
 

EXHIBIT 10.91

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Promissory Note, dated March 24, 2010, in the principal amount of up to Two Hundred Thousand ($200,000.00) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Twenty Six Million, Six Hundred Sixty Six Thousand, Six Hundred Sixty Seven (26,666,667) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 28, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on March 1, 2012 ; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 1, 2013 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

1
 

 

7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/Edmund C King Name: Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

2
 

EXHIBIT 10.92

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Line of Credit Promissory Note, dated December 31, 2011, in the principal amount of up to Two Hundred Thousand ($200,000.00) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Twenty Six Million, Six Hundred Sixty Six Thousand, Six Hundred Sixty Seven (26,666,667) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 28, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on March 1, 2014 ; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 31, 2014 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

1
 

 

7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/Edmund C King Name: Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

2
 

EXHIBIT 10.93

 

NOTE EXTENSION AGREEMENT

 

This Note Extension Agreement (this "Extension Agreement"), by and between Invisa, Inc., a Nevada corporation, having a business at 1800 2nd Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian Investors, Inc., a Delaware corporation, having an address at 1800 2nd Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of this 31th day of December, 2012 and shall be effective as of the date hereof (the “Effective Date”).

 

RECITALS:

 

WHEREAS, Borrower is indebted to Lender pursuant to that certain Promissory Note, dated December 31, 2011 in the principal amount of up to Two Hundred Thousand ($200,000.00) (the “Note”),

 

WHEREAS, the Note is secured by (a) an aggregate of Twenty Six Million, Six Hundred Sixty Six Thousand, Six Hundred Sixty Seven (26,666,667) shares of common stock of Borrower and (b) a first priority lien on all of the assets of Borrower as more specifically described in the Note and that certain General Security Agreement, dated February 28, 2007 (the “Security Agreement” the Notes and the Security Agreement, together with all documents executed in connection therewith being hereinafter referred to collectively as the “Loan Documents”); and

 

WHEREAS, the outstanding principal balance, together with accrued and unpaid interest, of the Note was due and payable on March 31, 2014 ; and

 

WHEREAS, Lender has periodically agreed to forebear with respect to certain provisions of the Notes; and

 

WHEREAS, Borrower has requested and Lender agreed to extend the maturity date of the Note, upon the terms and subject to the provisions set forth herein.

 

NOW THEREFORE, for ten ($10.00) Dollars, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Terms used herein which are defined in the Loan Documents shall have the same meanings when used herein unless otherwise provided herein.

 

2. The Note is hereby amended to extend the Maturity Date of the Note from March 1, 2014 to March 31, 2015.

 

3. Lender shall attach an executed copy of this Amendment to the original Note and all references hereafter to the Note shall be as amended hereby.

 

4. No right of Lender with respect to the loan evidenced by the Loan Documents or any agreement, security agreement, financing statements or other documents, executed or delivered in connection therewith are or will be in any manner, released, destroyed, diminished or otherwise adversely affected by this Agreement, except as expressly provided herein.

 

5. Borrower understands and agrees that the remaining provisions of the Note shall remain in full force and effect without any changes or modification except as expressly stated herein.

 

6. The provisions set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to, or waiver or modification of, any other term or condition of the Loan Documents, or (b) except as expressly set forth herein, prejudice any right or rights which the Lender may now have or may have in the future under or in connection with the Loan Documents or any of the other documents referred to therein. Except as expressly modified hereby or by express written amendments thereof, the terms and provisions of the Loan Documents or any other documents or instruments executed in connection with any of the foregoing are and shall remain in full force and effect. In the event of a conflict between this Agreement and any of the foregoing documents, the terms of this Agreement shall be controlling. The representations and warranties made in each Loan Document are true and correct in all material respects on and as of the date of this Agreement.

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7. None of the provisions of this Agreement shall inure to the benefit of Borrower or any person other than Lender. Consequently, Borrower shall not be, and no person other than the Lender shall be, entitled to rely upon or raise a claim or defense, in any manner whatsoever, the failure of Lender to comply with the provisions of this Agreement. Lender shall not incur any liability to Borrower or any other person for any act or omission whatsoever.

 

8. This Agreement and the documents referred to herein represent the entire understanding of the parties hereto regarding the subject matter hereof and supersede all prior and contemporaneous oral and written agreements of the parties hereto with respect to the subject matter hereof.

 

9. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts and all of such counterparts shall together constitute one and the same instrument. Complete sets of counterparts shall be lodged with the Borrower and the Lender.

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first written above and shall be effective as of the Effective Date.

 

 

 

INVISA, INC. CENTURIAN INVESTORS, INC.
Name: /s/Edmund C King Name: Howard R Curd

Title: Chief Executive Officer

Date: December 31, 2012

Title: Chief Executive Officer

Date: December 31, 2012

 

 

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EXHIBIT 31.1

 

 

CERTIFICATION

 

I, Edmund C. King, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Invisa, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of and for the periods presented in this report;

 

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.

 

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.  

 

     
 Date:   February 21, 2013   /s/  Edmund C. King
    Edmund C. King
    Chief Executive Officer

EXHIBIT 31.2

 

 

CERTIFICATION

 

I, Edmund C. King, certify that:

 

1. I have reviewed this Annual Report on Form 10-K of Invisa, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of and for the periods presented in this report;

 

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting.

 

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. 

 

     
 Date:   February 21, 2013   /s/  Edmund C. King
    Edmund C. King
    Chief Financial Officer

Exhibit 32.1

 

 

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

In connection with the Annual Report of Invisa, Inc. (the “Company” or “Invisa”) on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edmund C. King, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

     
 Date:   February 21, 2013   /s/  Edmund C. King
    Edmund C. King
    Chief Executive Officer

Exhibit 32.2  

 

  Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

In connection with the Annual Report of Invisa, Inc. (the “Company” or “Invisa”) on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edmund C. King, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

     
 Date:   February 21, 2013   /s/  Edmund C. King
    Edmund C. King
    Chief Financial Officer