x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended April 30, 2011 | |
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from __________ to __________.
|
|
Commission file number: 0-9483 |
SPARTA COMMERCIAL SERVICES, INC.
|
(Exact name of registrant as specified in its charter)
|
NEVADA
|
30-0298178
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
462 Seventh Ave, 20th Floor, New York, NY
|
10018
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Common Stock, par value $0.001
|
(Title of class)
|
Large accelerated filer
o
|
Accelerated filer
o
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
x
|
Page
|
||
PART I
|
||
Item 1.
|
3
|
|
Item 1A.
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12
|
|
Item 1B.
|
16
|
|
Item 2.
|
16
|
|
Item 3.
|
16
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|
Item 4.
|
16
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|
PART II
|
||
Item 5.
|
17
|
|
Item 6.
|
18
|
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Item 7.
|
19
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Item 7A.
|
24
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Item 8.
|
25
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Item 9.
|
54
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Item 9A.
|
54
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Item 9B.
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54
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PART III
|
||
Item 10.
|
55
|
|
Item 11.
|
57
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Item 12.
|
60
|
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Item 13.
|
63
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Item 14.
|
63
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|
Item 15.
|
64
|
|
66
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·
|
prevent the introduction or reintroduction of stolen motor vehicles into interstate commerce;
|
·
|
protect states, consumers (both individual and commercial), and other entities from fraud;
|
·
|
reduce the use of stolen vehicles for illicit purposes including funding of criminal enterprises; and
|
·
|
provide consumer protection from unsafe vehicles.
|
·
|
Retail installment sales contracts and leases;
|
·
|
Municipal leasing of equipment;
|
·
|
Private label programs for manufacturers and distributors;
|
·
|
Ancillary products and services, such as private label GAP coverage; and
|
·
|
Remarketing of repossessed vehicles and off-lease vehicles.
|
·
|
Fair Debt Collection Practices Act. The Fair Debt Collection Practices Act and applicable state law counterparts prohibit us from contacting customers during certain times and at certain places, from using certain threatening practices and from making false implications when attempting to collect a debt.
|
·
|
Truth in Lending Act. The Truth in Lending Act requires us and the dealers we do business with to make certain disclosures to customers, including the terms of repayment, the total finance charge, and the annual percentage rate charged on each contract.
|
·
|
Consumer Leasing Act. The Consumer Leasing Act applies to any lease of consumer goods for more than four months. The law requires the seller to disclose information such as the amount of initial payment, number of monthly payments, total amount for fees, penalties for default, and other information before a lease is signed.
|
·
|
The Consumer Credit Protection Act of 1968. The Act required creditors to state the cost of borrowing in a common language so that the consumer can figure out what the charges are, compare costs, and shop for the best credit deal.
|
·
|
Equal Credit Opportunity Act. The Equal Credit Opportunity Act prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age, or marital status. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection.
|
·
|
Fair Credit Reporting Act. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency.
|
·
|
Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters.
|
·
|
Soldiers' and Sailors' Civil Relief Act. The Soldiers' and Sailor's Civil Relief Act requires us to reduce the interest rate charged on each loan to customers who have subsequently joined, enlisted, been inducted or called to active military duty, if requested to do so.
|
·
|
Electronic Funds Transfer Act. The Electronic Funds Transfer Act prohibits us from requiring our customers to repay a loan or other credit by electronic funds transfer ("EFT"), except in limited situations that do not apply to us. We are also required to provide certain documentation to our customers when an EFT is initiated and to provide certain notifications to our customers with regard to preauthorized payments.
|
·
|
Telephone Consumer Protection Act. The Telephone Consumer Protection Act prohibits telephone solicitation calls to a customer's home before 8 a.m. or after 9 p.m. In addition, if we make a telephone solicitation call to a customer's home, the representative making the call must provide his or her name, our name, and a telephone number or address at which our representative may be contacted. The Telephone Consumer Protection Act also requires that we maintain a record of any requests by customers not to receive future telephone solicitations, which must be maintained for five years.
|
·
|
Bankruptcy. Federal bankruptcy and related state laws may interfere with or affect our ability to recover collateral or enforce a deficiency judgment.
|
·
|
Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the creation of a Bureau of Consumer Financial Protection. The impact on the Company of the newly-created agency is unknown at this time as the agency is yet to be formed.
|
High
|
Low
|
|||||||
Fiscal Year 2011
|
||||||||
First quarter (May 1, 2010 – July 31, 2010)
|
$ | 0.03 | $ | 0.01 | ||||
Second quarter (August 1, 2010 – October 31, 2010)
|
$ | 0.03 | $ | 0.02 | ||||
Third quarter (November 1, 2010 – January 31, 2011)
|
$ | 0.03 | $ | 0.01 | ||||
Fourth quarter (February 1, 2011 – April 30, 2011)
|
$ | 0.03 | $ | 0.01 | ||||
Fiscal Year 2010
|
||||||||
First quarter (May 1, 2009 - July 31, 2009)
|
$ | 0.10 | $ | 0.05 | ||||
Second quarter (August 1, 2009 - October 31, 2009)
|
$ | 0.09 | $ | 0.04 | ||||
Third quarter (November 1, 2009 - January 31, 2010)
|
$ | 0.06 | $ | 0.01 | ||||
Fourth quarter (February 1, 2010 - April 30, 2010)
|
$ | 0.04 | $ | 0.01 |
·
|
seeking additional credit facilities from institutional lenders;
|
·
|
seeking institutional investors for equity investments in our company; and
|
·
|
initiating negotiations to secure short term financing through promissory notes or other debt instruments on an as needed basis.
|
Page
|
||
26
|
||
27
|
||
28
|
||
29
|
||
30
|
||
31 – 53
|
||
April 30, 2011
|
April 30, 2010
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
10,786
|
$
|
11,994
|
||||
RISC loan receivables, net of reserve of $45,015 and $132,000, respectively (NOTE D)
|
855,278
|
1,761,474
|
||||||
Motorcycles and other vehicles under operating leases, net
(NOTE B)
|
231,564
|
305,265
|
||||||
Interest receivable
|
9,239
|
26,772
|
||||||
Purchased Portfolio (NOTE F)
|
24,544
|
33,559
|
||||||
Accounts receivable
|
66,387
|
98,322
|
||||||
Inventory (NOTE C)
|
13,126
|
14,622
|
||||||
Property and equipment, net of accumulated depreciation of $176,677 and $163,824, respectively (NOTE E)
|
14,570
|
27,423
|
||||||
Deferred Expenses
|
138,405
|
-
|
||||||
Goodwill
|
10,000
|
-
|
||||||
Restricted cash
|
64,686
|
146,333
|
||||||
Other Assets
|
-
|
3,628
|
||||||
Deposits
|
48,967
|
48,967
|
||||||
Total assets
|
$
|
1,487,553
|
$
|
2,478,358
|
||||
LIABILITIES AND DEFICIT
|
||||||||
Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
1,133,721
|
794,811
|
||||||
Senior Secured Notes Payable (NOTE F)
|
974,362
|
2,010,989
|
||||||
Notes Payable Net of Beneficial Conversion Feature of $52,272 and 0 respectively (NOTE G)
|
1,377,065
|
864,399
|
||||||
Loans payable-related parties (NOTE H)
|
386,760
|
383,760
|
||||||
Other liabilities
|
75,409
|
20,513
|
||||||
Derivative Liabilities
|
484,301
|
- | ||||||
Deferred revenue
|
2,250
|
7,650
|
||||||
Total liabilities
|
4,433,868
|
4,082,121
|
||||||
Deficit:
|
||||||||
Preferred Stock, $.001 par value; 10,000,000 shares authorized of which 35,850 shares have been
designated as Series A convertible preferred stock, with a stated value of $100 per share,
125 shares issued and outstanding, respectively
|
12,500
|
12,500
|
||||||
Preferred Stock B, 1,000 shares have been designated as Series B redeemable preferred stock,
$0.001 par value, with a liquidation and redemption value of $10,000 per share, 157 shares
issued and outstanding, respectively
|
-
|
-
|
||||||
Preferred Stock C, 200,000 shares have been designated as Series C redeemable, convertible preferred,
$0.001 par value, with a liquidation and redemption value of $10 per share, 0 and 42,000 shares issued
and outstanding as of April 30, 2011 and 2010, respectively
|
-
|
42
|
||||||
Common stock, $.001 par value; 740,000,000 shares authorized, 479,104,770 and 392,782,210 shares issued
and outstanding as of April 30, 2011 and 2010, respectively
|
479,105
|
392,782
|
||||||
Common stock to be issued, 73,899,200 and 23,967,965 respectively
|
73,899
|
23,967
|
||||||
Preferred Stock B to be issued, 25.34 and 9.64 shares, respectively
|
-
|
-
|
||||||
Additional paid-in-capital
|
33,430,502
|
31,470,653
|
||||||
Subscriptions receivable, Preferred Stock Series B
|
(2,118,309
|
)
|
(2,118,309
|
)
|
||||
Accumulated deficit
|
(35,114,801
|
)
|
(31,385,400
|
)
|
||||
Total deficiency in stockholders' equity
|
(3,237,104
|
)
|
(1,603,763
|
)
|
||||
Noncontrolling Interest
|
290,789
|
-
|
||||||
Total deficit
|
(2,946,315
|
)
|
(1,603,763
|
)
|
||||
Total Liabilities and deficiency in stockholders’ equity
|
$
|
1,487,553
|
$
|
2,478,358
|
Year Ended
|
||||||||
April 30,
|
||||||||
2011
|
2010
|
|||||||
Revenue
|
||||||||
Rental Income, Leases
|
$
|
112,465
|
$
|
190,035
|
||||
Interest Income, Loans
|
240,923
|
443,026
|
||||||
Other
|
160,380
|
80,302
|
||||||
Total revenue
|
513,768
|
713,363
|
||||||
Operating expenses:
|
||||||||
General and administrative
|
2,795,137
|
2,519,592
|
||||||
Depreciation and amortization
|
92,394
|
702,388
|
||||||
Total operating expenses
|
2,887,531
|
3,221,980
|
||||||
Loss from operations
|
(2,373,763
|
)
|
(2,508,616
|
)
|
||||
Other expense:
|
||||||||
Interest expense and financing cost, net
|
521,232
|
1,587,562
|
||||||
Amortization of debt discount
|
230,644
|
45,000 | ||||||
Change in derivative liability
|
538,228
|
-
|
||||||
Total other expenses
|
1,290,104
|
1,632,562
|
||||||
Net loss
|
$
|
(3,663,867
|
)
|
$
|
(4,141,178
|
)
|
||
Net Loss attributed to noncontrolling interest
|
92,211
|
-
|
||||||
Preferred dividend
|
(157,746
|
)
|
(97,175
|
)
|
||||
Net loss attributed to common stockholders
|
$
|
(3,729,401
|
)
|
$
|
(4,238,353
|
)
|
||
Basic and diluted loss per share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||
Basic and diluted loss per share attributed to
|
||||||||
common stockholders
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||
Weighted average shares outstanding
|
436,097,734
|
300,447,151
|
Common Stock
|
|||||||||||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock
|
Series B Preferred Stock
|
Series C Preferred Stock
|
Common Stock
|
to be issued
|
Additional | ||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Subscriptions
Receivable
|
Deferred
Compensation
|
Paid in
Capital
|
Accumulated
Deficit
|
Non-controlling
Interest
|
Total
|
||||||||||||||||||||||||||||||||
Balance, April 30, 2009
|
125 | $ | 12,500 | 170,730,063 | $ | 170,729 | 16,735,453 | $ | 16,735 | $ | 20,820,671 | $ | (27,147,046 | ) | $ | (6,126,409 | ) | ||||||||||||||||||||||||||||||
Cancellation of shares
|
(400 | ) | (0 | ) | 0 | - | |||||||||||||||||||||||||||||||||||||||||
correction
|
18,927 | 18,927 | |||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion discount
|
45,000 | 45,000 | |||||||||||||||||||||||||||||||||||||||||||||
Sale of Preferred Stock B
|
15 7 |
-
|
1,320,000 | 1,320,000 | |||||||||||||||||||||||||||||||||||||||||||
Preferred Stock C issued for accounts payable
|
42,000 | 42 | 419,958 | 420,000 | |||||||||||||||||||||||||||||||||||||||||||
Sale of Stock
|
7,301,908 | 7,301 | 3,596,067 | 3,596 | 214,102 | 224,999 | |||||||||||||||||||||||||||||||||||||||||
Shares issued upon warrant exercise
|
31,566,176 | 31,566 | 2,086,743 | 2,118,309 | |||||||||||||||||||||||||||||||||||||||||||
Subscriptions receivable
|
(2,118,309 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued upon conversion of preferred | 10,733,974 | 10,734 | (10,733,980 | ) | (10,733 | ) | 1 | ||||||||||||||||||||||||||||||||||||||||
Shares issued for financing cost
|
4,320,000 | 4,320 | 409,265 | 409 | 221,651 | 226,380 | |||||||||||||||||||||||||||||||||||||||||
Shares issued for accrued interest
|
200,000 | 200 | (200,000 | ) | (200 | ) | - | ||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of notes and interest | 152,948,452 | 152,950 | 14,660,160 | 14,660 | 5,371,384 | 5,538,994 | |||||||||||||||||||||||||||||||||||||||||
Stock compensation recorded
|
5,500,000 | 5,500 | (500,000 | ) | (500 | ) | 155,000 | 160,000 | |||||||||||||||||||||||||||||||||||||||
Shares issued for settlement of accounts payable
|
2,815,371 | 2,815 | 163,939 | 166,754 | |||||||||||||||||||||||||||||||||||||||||||
Employee options expense
|
76,289 | 76,289 | |||||||||||||||||||||||||||||||||||||||||||||
Warrant compensation
|
367,239 | 367,239 | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued for accrued payroll
|
6,666,666 | 6,666 | 93,334 | 100,000 | |||||||||||||||||||||||||||||||||||||||||||
Reclassification of loan receivable related to Preferred B redemption |
(2,118,309
|
) |
(2,118,309
|
) | |||||||||||||||||||||||||||||||||||||||||||
Redemption of Preferred B stock
|
- | ||||||||||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock
|
- | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock B issued for dividend payable
|
96,416 | 96,416 | |||||||||||||||||||||||||||||||||||||||||||||
Net Loss
|
(4,238,353 | ) | (4,238,353 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance, April 30, 2010
|
125 | 12,500 | 157 |
-
|
42,000 | 42 | 392,782,210 | 392,781 | 23,966,965 | 23,967 | (2,118,309 | ) | - | 31,470,653 | (31,385,399 | ) | (1,603,764 | ) | |||||||||||||||||||||||||||||
Preferred Dividend
|
157,746
|
157,746 | |||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion discount
|
311,494
|
311,494
|
|||||||||||||||||||||||||||||||||||||||||||||
Reclassification of warrant liability
|
25,027
|
25,027 | |||||||||||||||||||||||||||||||||||||||||||||
Sale of Stock
|
30,065,289 | 30,063 | 44,931,990 | 44,932 | 629,261 | 704,256 | |||||||||||||||||||||||||||||||||||||||||
Shares issued for financing cost
|
5,311,000 | 5,311 | 395,000 | 395 | 121,222 | 126,928 | |||||||||||||||||||||||||||||||||||||||||
Shares issued for conversion of notes & interest | 23,226,473 | 23,227 | 4,649,905 | 4,649 | 344,018 | 371,894 | |||||||||||||||||||||||||||||||||||||||||
Stock Compensation
|
19,060,000 | 19,060 | (44,660 | ) | (44 | ) | 281,115 | 300,131 | |||||||||||||||||||||||||||||||||||||||
Shares issued for settlement of accounts payable
|
1,330,856 | 1,331 | (6,336 | ) | (5,005 | ) | |||||||||||||||||||||||||||||||||||||||||
Conversion of Series C Preferred Stock | (42,000 | ) | (42 | ) | 7,328,820 | 7,329 | (7,287 | ) | - | ||||||||||||||||||||||||||||||||||||||
Employee options expense
|
103,589 | 103,589 | |||||||||||||||||||||||||||||||||||||||||||||
Subsidiary's preferred series A issued for cash | 197,000 | 197,000 | |||||||||||||||||||||||||||||||||||||||||||||
Subsidiary's preferred series B issued for cash | 165,000 | 165,000 | |||||||||||||||||||||||||||||||||||||||||||||
Subsidiary's common stock issued for purchase of Cyclechex, LLC | 6,000 | 6,000 | |||||||||||||||||||||||||||||||||||||||||||||
Subsidiary's Preferred B stock to be issued | 15,000 | 15,000 | |||||||||||||||||||||||||||||||||||||||||||||
Net Loss
|
(3,729,402
|
) |
(92,211)
|
(3,821,613
|
) | ||||||||||||||||||||||||||||||||||||||||||
Balance April 30, 2011
|
125 | S | 12,500 | 157 | - | - | - | 479,104,648 | $ | 479,105 | 73,899,200 | $ | 73,899 | $ | (2,118,309 | ) | - | $ |
33, 430,502
|
$ | ( 35,114,801 | ) |
290,789
|
$ | (2,946,315 | ) |
Year end
|
Year end
|
|||||||
April 30, 2011
|
April 30, 2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net Loss
|
$
|
(3,663,867
|
)
|
$
|
(4,141,178
|
)
|
||
Adjustments to reconcile net loss to net cash used in
|
||||||||
operating activities:
|
||||||||
Depreciation and Amortization
|
92,394
|
702,387
|
||||||
Allowance for loss reserves
|
(93,200
|
)
|
69,431
|
|||||
Amortization of debt discount
|
230,644
|
45,000
|
||||||
Equity based compensation
|
403,720
|
336,288
|
||||||
Stock based finance cost
|
126,928
|
593,619
|
||||||
Change in derivative liabilities
|
538,228
|
-
|
||||||
(Increase) decrease in operating assets and liabilities:
|
||||||||
Inventory
|
1,496
|
(2,108
|
)
|
|||||
Interest receivable
|
17,533
|
22,387
|
||||||
Accounts receivable
|
17,520
|
(80,423
|
)
|
|||||
Prepaid expenses and other assets
|
(11,772
|
)
|
(3,628
|
)
|
||||
Restricted cash
|
81,647
|
202,530
|
||||||
Purchased Portfolio
|
9,015
|
39,076
|
||||||
Increase (decrease) in:
|
||||||||
Accounts payable and accrued expenses
|
229,885
|
(288,649
|
)
|
|||||
Net cash used in operating activities
|
(2,019,830
|
)
|
(2,505,268
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Net liquidation of leased vehicles
|
79,917
|
370,386
|
||||||
Net Liquidation of RISC contracts
|
993,180
|
1,589,776
|
||||||
Net cash provided by investing activities
|
1,073,097
|
1,960,162
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Net proceeds from sale of common stock
|
724,086
|
224,999
|
||||||
Sale of preferred stock
|
-
|
1,320,000
|
||||||
Sale of subsidiary preferred stock, net of non-controlling interest
|
377,000
|
-
|
||||||
Net Payments to senior lender
|
(1,036,627
|
)
|
(1,683,849
|
)
|
||||
Net Proceeds from convertible notes
|
878,067
|
744,800
|
||||||
Net Loan proceeds from other related parties
|
3,000
|
5,500
|
||||||
Net cash provided by financing activities
|
945,526
|
611,450
|
||||||
Net Increase (decrease) in cash
|
(1,208
|
)
|
66,343
|
|||||
Unrestricted cash and cash equivalents, beginning of period
|
$
|
11,994
|
(54,349
|
)
|
||||
Unrestricted cash and cash equivalents , end of period
|
$
|
10,786
|
$
|
11,995
|
||||
Cash paid for:
|
||||||||
Interest
|
$
|
211,628
|
$
|
357,303
|
||||
Income taxes
|
$
|
1,961
|
$
|
4,897
|
||||
Non-Cash Investing and Funding Activities (Note O)
|
·
|
Level 1 —
Quoted prices for identical instruments in active markets. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain securities that are highly liquid and are actively traded in over-the-counter markets.
|
·
|
Level 2 —
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets.
|
·
|
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurements. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques based on significant unobservable inputs, as well as management judgments or estimates that are significant to valuation.
|
Leasehold improvements
|
3 years
|
Furniture and fixtures
|
7 years
|
Website costs
|
3 years
|
Computer Equipment
|
5 years
|
2011
|
2010
|
|||||||
Motorcycles and other vehicles
|
$
|
459,099
|
$
|
540,623
|
||||
Less: accumulated depreciation
|
(217,885
|
)
|
(219,492
|
)
|
||||
Motorcycles and other vehicles, net of accumulated depreciation
|
241,214
|
321,131
|
||||||
Less: estimated reserve for residual values
|
(9,650
|
)
|
(15,865
|
)
|
||||
Motorcycles and other vehicles under operating leases, net
|
$
|
231,564
|
$
|
305,266
|
Year ending April 30,
|
||||
2012
|
$
|
29,462
|
||
2013
|
28,827
|
|||
2014
|
7,573
|
|||
Total
|
$
|
65,862
|
April 30,
|
April 30,
|
|||||||
2011
|
2010
|
|||||||
Gross balance of repossessions in inventory
|
$
|
14,138
|
$
|
51,749
|
||||
Allowance for losses on repossessed inventory
|
(1,012
|
)
|
(37,127
|
)
|
||||
Net repossessed inventory
|
$
|
13,126
|
$
|
14,622
|
2011
|
2010
|
|||||||
Computer equipment, software and furniture
|
$
|
191,247
|
$
|
191,247
|
||||
Less: accumulated depreciation
|
(176,677
|
)
|
(163,824
|
)
|
||||
Net property and equipment
|
$
|
14,570
|
$
|
27,423
|
(a)
|
The Company finances certain of its leases through a third party. The repayment terms are generally one year to five years and the notes are secured by the underlying assets. The weighted average interest rate at April 30, 2011 is 10.33%.
|
(b)
|
On October 31, 2008, the Company purchased certain loans secured by a portfolio of secured motorcycle leases (“Purchased Portfolio”) for a total purchase price of $100,000. The Company paid $80,000 at closing, $10,000 in April 2009 and agreed to pay the remaining $10,000 upon receipt of additional Purchase Portfolio documentation. Proceeds from the Purchased Portfolio started accruing to the Company beginning November 1, 2008.
|
Year ended April 30,
|
Amount
|
|||
2012
|
$
|
527,142
|
||
2013
|
363,927
|
|||
2014
|
83,293
|
|||
2015
|
-
|
|||
2016
|
-
|
|||
Total Due
|
$
|
974,362
|
Notes Payable
|
April 30,
2011
|
April 30,
2010
|
||||||
Convertible notes (a)
|
$
|
839,938
|
$
|
280,000
|
||||
Notes payable (b)
|
60,000
|
100,000
|
||||||
Bridge loans (c)
|
206,000
|
161,000
|
||||||
Collateralized note (d)
|
220,000
|
220,000
|
||||||
Convertible note (e)
|
103,399
|
103,399
|
||||||
Subtotal
|
1,429,337
|
864,399
|
||||||
Less, Debt discount
|
(52,272
|
)
|
-
|
|||||
Total
|
$
|
1,377,065
|
$
|
864,399
|
(a)
|
As of April 30, 2011, the Company had outstanding convertible unsecured notes with an original aggregate principal amount of $839,938, which accrue interest at rates ranging from 8% to 15% per annum. The majority of the notes are convertible into shares of common stock, at the Company’s option, ranging from $0.012 to $0.021 per share
|
(b)
|
As of April 30, 2010, the Company had outstanding unsecured notes with an original principal amount of $100,000, which accrue interest ranging from 6% to 15% per annum. In July 2010, $80,000 of these notes were purchased by a third party who exchanged the notes with the Company for new convertible notes all of which are current and are included in (a) above. The remaining $20,000 note is current but is accruing interest at a default rate of 15% and is also accruing penalty shares at the rate of 20,000 shares per month and this note has been reclassified as a Bridge loan (see c). During the fiscal year ended April 30, 2011, the Company sold to seven accredited investors a total of $95,000 two month loans bearing interest at 12% and issued a total of 850,000 shares of restricted common stock valued at $22,500 as inducements for the loans. All of the loans have been extended to May 1, 2011. The Company will issue an additional 850,000 shares of restricted common stock for such extensions. In December 2010, two of the note holders converted a total of $35,000 principal amount of notes into 7 shares of the Series B preferred stock of the Company’s subsidiary, Specialty Reports, Inc., and converted the interest on the notes into 104,450 shares of the Company’s common stock.
|
(c)
|
During the year ended April 30, 2007, the Company sold to five accredited investors bridge notes in the aggregate amount of $275,000. The bridge notes were originally scheduled to expire on various dates through November 30, 2006, together with simple interest at the rate of 10%. The notes provided that 100,000 shares of the Company's unregistered common stock are to be issued as “Equity Kicker” for each $100,000 of notes purchased, or any prorated portion thereof. The Company had the right to extend the maturity date of notes for 30 to 45 days, in which event the lenders were entitled for “additional equity” equal to 60% of the “Equity Kicker” shares. In the event of default on repayment by the Company, the notes provided for a 50% increase in the “Equity Kicker” and the “Additional Equity” for each month, as penalty, that such default has not been cured, and for a 20% interest rate during the default period. The repayments, in the event of default, of the notes are to be collateralized by certain security interest. The maturity dates of the notes were subsequently extended to various dates between December 5, 2006 to September 30, 2009, with simple interest rate of 10%, and Additional Equity in the aggregate amount of 165,000 unregistered shares of common stock to be issued. Thereafter, the Company was in default on repayment of these notes. During the year ended April 30, 2009, $99,000 of these loans was repaid and during 2010, $15,000 of these notes and accrued interest thereon was converted into approximately 463,000 shares of the Company’s common stock. The holders of the remaining notes agreed to contingently convert those notes plus accrued interest into approximately 8,000,000 shares of the Company’s common stock upon the Company’s ability to meet all conditions precedent to begin drawing down on a senior credit facility.
In July 2010, the Company sold to an accredited investor a one week 10%, $25,000 note and issued 25,000 shares of its restricted common stock as inducement for the note. The note is convertible at the holder’s option into shares of common stock at $0.005 per share. In the event the note is not paid when due, the interest rate is increased to twenty percent until the note is paid in full and the Company is required to issue 50,000 shares of common stock per month until the note is paid in full. During the quarter ending July 31, 2010 one $20,000 note (which was classified as Notes Payable (see b above) was reclassified as a Bridge Loan) and is accruing interest at a default rate of 15% and is also accruing penalty shares at the rate of 20,000 shares per month. All of these notes have been extended to May 1, 2011.
|
(d)
|
During the year ended April 30, 2009, the Company sold a secured note in the amount of $220,000. The note bore 12.46% simple interest. The note matured on January 29, 2010 and has been extended to September 1, 2011 and is secured by a second lien on a pool of motorcycles. In July 2010, the note holder agreed to convert the note and all accrued interest thereon into approximately 12,000,000 shares of the Company’s common stock upon the Company demonstrating that it can meet all conditions precedent to begin drawing down on a senior credit facility.
As of April 30, 2011, the balance outstanding was $220,000 since the Company has not met the conditions to precedent to convert the note to common shares.
|
(e)
|
On September 19, 2007, the Company sold to one accredited investor for the purchase price of $150,000 securities consisting of a $150,000 convertible debenture due December 19, 2007, 100,000 shares of unregistered common stock, and 400,000 common stock purchase warrants. The debentures bear interest at the rate of 12% per year compounded monthly and are convertible into shares of the Company's common stock at $0.0504 per share. The warrants may be exercised on a cashless basis and are exercisable until September 19, 2007 at $0.05 per share. In the event the debentures are not timely repaid, the Company is to issue 100,000 shares of unregistered common stock for each thirty day period the debentures remain outstanding. The Company has accrued interest and penalties as per the terms of the note agreement. In May 2008, the Company repaid $1,474 of principal and $3,526 in accrued interest. Additionally, from April 26, 2008 through April 30, 2009, a third party to the note paid, on behalf of the Company, $41,728 of principal and $15,272 in accrued interest on the note, and the note holder converted $3,399 of principal and $6,601 in accrued interest into 200,000 shares of our common stock. This note has been extended to May 1, 2011.
|
·
|
issued 27,876,378 shares of its common stock upon the conversion of $341,241 of notes and interest payable, 4,649,910 of the shares were classified as to be issued,
|
·
|
issued 5,231,293 shares of common stock which had been accrued in the prior fiscal year,
|
·
|
sold and issued 74,997,279 shares of common stock for $724,086 and issued three year warrants to purchase 12,974,290 shares of common stock at $0.07 per share. 44,931,990 of the shares were classified as to be issued,
|
·
|
is
sued, pursuant to notes and penalty provi
s
ions of notes, 5,706,000 shares of unregistered common stock, valued at $126,928, 395,000 of the shares were classified as shares to be issued
,
|
·
|
issued to members of its Advisory Council, three consultants, and pursuant to three consulting agreements a total of 19,060,000 shares of its common stock valued at $297,480, 1,000,000 of the shares had been accrued in the prior year,
|
·
|
issued, pursuant to prior agreements with two creditors, 1,402,356 shares of common stock and cancelled 71,500 shares which had been issued in the prior fiscal year to another creditor,
|
·
|
issued to stock options, exercisable at $0.025 per share until May 12, 2015, subject to vesting at the rate of 20% on the grant date, 40% on May 12, 2011, and 40% on May 12, 2011, to the following officers and directors: Anthony Havens, 6,672,500 options; Kristian Srb, 2,465,000 options; Richard Trotter, 4,016,250 options; Jeffrey Bean, 956,250 options; Anthony Adler, 3,995,000 options; and Sandra Ahman, 3,145,000 options,
|
·
|
issued to four employees under the Company’s 2005 Stock Incentive Compensation Plan options to purchase a total of 2,150,000 shares of common stock at $0.022 per share until December 1, 2018, subject to vesting at the rate of 40% on the grant date, 20% on December 1, 2011, 20% on December 1, 2012 and 20% on December 1, 2013,
|
·
|
issued 7,328,820 shares of common stock upon the conversion of all of the outstanding shares of the Company’s Series C Preferred Stock,
|
·
|
the Company’s majority owned subsidiary, Specialty Reports, Inc., sold 39.4 shares of its Series A Preferred stock to twelve accredited investors for $197,000. The Series A Preferred stock does not pay a dividend. Each share has a liquidating value of $5,000 and is redeemable by Specialty Reports at any time after one year. Each share is convertible at the holder’s option at any time into either 2,632 shares of Specialty Reports, Inc common stock, or 277,778 shares of Sparta Commercial Services common stock, and, Specialty Reports, Inc. sold 35 shares of its Series B Preferred stock to eight accredited investors for $180,000. The Series B Preferred stock does not pay a dividend. Each share has a liquidating value of $5,000 and is redeemable by Specialty Reports at any time after one year. Each share is convertible at the holder’s option at any time into either 2,222 shares of Specialty Reports, Inc common stock, or 200,000 shares of Sparta Commercial Services common stock.
|
Amount
|
||||
Balance at May 1, 2010
|
$
|
-
|
||
Issuance of Series A Preferred Stock
|
197,000
|
|||
Issuance of Series B Preferred Stock
|
165000
|
|||
Series B Preferred Stock to be issued
|
15,000
|
|||
Issuance of SRI Common stock for purchase of Cyclechex, LLC
|
6,000
|
|||
Noncontrolling interest’s share of losses
|
(92,211
|
)
|
||
Balance at April 30, 2011
|
$
|
290,789
|
Fair Value at
|
Fair Value Measurement Using
|
|||||||||||||||
April 30,
|
||||||||||||||||
2011
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Derivative liability
|
$
|
484,301
|
-
|
-
|
$
|
484,301
|
||||||||||
$
|
484,301
|
-
|
-
|
$
|
484,301
|
April 30,
|
||||||||
2011
|
2010
|
|||||||
Noncurrent:
|
||||||||
Net operating loss carry forward
|
$
|
7,815,196
|
$
|
6,807,978
|
||||
Valuation allowance
|
(7,815,196
|
)
|
(6,807,978
|
)
|
||||
Net deferred tax asset
|
$
|
-
|
$
|
-
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||
Number
Outstanding
|
Weighted Average
Remaining Contractual
Life (Years)
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
||||||||||||||
28,725,000
|
3.19
|
$
|
0.06
|
10,435,100
|
$
|
0.12
|
Number
of Shares
|
Weighted Average
Price
Per Share
|
|||||||
Outstanding at April 30, 2009
|
6,025,000
|
$
|
0.24
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Canceled or expired
|
(525,000
|
)
|
0.27
|
|||||
Outstanding at April 30, 2010
|
5,500,000
|
$
|
0.23
|
|||||
Granted
|
23,400,000
|
0.025
|
||||||
Exercised
|
-
|
-
|
||||||
Canceled or expired
|
(175,000
|
)
|
0.605
|
|||||
Outstanding at April 30, 2011
|
23,225,000
|
$
|
0.06
|
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual Life
(Years)
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||
$
|
0.15
|
7,057,574
|
1.16
|
$
|
0.15
|
7,057,574
|
$
|
0.15
|
||||||||||||||
$
|
0.11
|
250,000
|
2.06
|
$
|
0.11
|
250,000
|
$
|
0.11
|
||||||||||||||
$
|
0.07
|
23,097,633
|
2.20
|
$
|
0.07
|
23,097,633
|
$
|
0.07
|
||||||||||||||
$
|
0.066
|
500,000
|
1.51
|
$
|
0.066
|
250,000
|
$
|
0.066
|
||||||||||||||
$
|
0.05
|
1,575,000
|
1.66
|
$
|
0.05
|
1,575,000
|
$
|
0.05
|
||||||||||||||
$
|
0.0438
|
1,632,833
|
1.76
|
$
|
0.0438
|
1,632,833
|
$
|
0.0438
|
||||||||||||||
$
|
0.017
|
1,798,295
|
4.71
|
$
|
0.017
|
1,798,295
|
$
|
0.017
|
||||||||||||||
35,911,335
|
1.95
|
$
|
0.08
|
35,661,335
|
$
|
0.08
|
Number
of
Shares
|
Weighted
Average
Price Per
Share
|
|||||||
Outstanding at April 30, 2009
|
6,407,814
|
$
|
0.108
|
|||||
Granted
|
17,236,444
|
$
|
0.102
|
|||||
Exercised
|
-
|
$
|
-
|
|||||
Canceled or expired
|
(350,000
|
)
|
$
|
0.061
|
||||
Outstanding at April 30, 2010
|
23,294,278
|
$
|
0.10
|
|||||
Granted
|
14,772,594
|
$
|
0.06
|
|||||
Exercised
|
-
|
$
|
-
|
|||||
Canceled or expired
|
(2,155,537
|
)
|
$
|
0.18
|
||||
Outstanding at April 30, 2011
|
35,911,335
|
$
|
0.07
|
2011
|
2010
|
|||||||
Significant assumptions (weighted-average):
|
||||||||
Risk-free interest rate at grant date
|
1.37
|
%
|
1.42
|
%
|
||||
Expected stock price volatility
|
332
|
%
|
281
|
%
|
||||
Expected dividend payout
|
-
|
|||||||
Expected option life-years
|
3 yrs
|
3 yrs
|
April 30, 2012
|
$312,565
|
To November 1, 2012
|
$184,947
|
·
|
issued 21,250,000 stock options to six officers and directors, exercisable at $0.025 per share until May 12, 2015, subject to vesting at the rate of 20% on the grant date, 40% on May 12, 2011, and 40% on May 12, 2011. The vested and unvested options were initially valued at $409,790.
|
·
|
issued to four employees under the Company’s 2005 Stock Incentive Compensation Plan options to purchase a total of 2,150,000 shares of common stock at $0.022 per share until December 1, 2018, subject to vesting at the rate of 40% on the grant date, 20% on December 1, 2011, 20% on December 1, 2012 and 20% on December 1, 2013. The vested and unvested options were initially valued at $42,961.
|
·
|
in connection with the sale of common stock, issued three year warrants to purchase 12,974,299 shares of its common stock at $0.07 per share, to six accredited investors. The warrants have been valued at $340,521.
|
·
|
issued five warrants to purchase an aggregate of 1,798,295 shares of common stock to a consultant. The warrants have been valued at $105,235.
|
·
|
issued, pursuant to notes and penalty provi
s
ions of notes, 5,706,000 shares of unregistered common stock, valued at $116,788, 395,000 of the shares were classified as shares to be issued.
|
·
|
issued to members of its Advisory Council,
three consultants, and pursuant to three consulting agreements a total of 19,060,000 shares of its common stock valued at $279,785, 1,000,000 of the shares had been accrued in the prior year.
|
·
|
issued 4,000,000 shares of unregistered common stock valued at $230,000 and 2,000,000 shares of registered stock valued at $100,000 to two consulting firms.
|
·
|
issued 4,220,000 shares of unregistered common stock valued at $234,820 and accrued 180,000 shares of unregistered common stock valued at $8,400 to five individuals pursuant to the terms and provisions of their loans.
|
·
|
accrued 180,000 shares of unregistered common stock valued at $12,400 to two individuals as an inducement for loans.
|
·
|
three note holders converted $153,884 principal amount of notes plus accrued interest thereon into 26,857,060 shares of the Company’s common stock,
|
·
|
two individuals purchased 7,400,000 shares of the Company’s restricted common stock for $37,000,
|
|
·
|
the Company issued 500,000 shares of restricted common stock in consideration of a loan extension,
|
·
|
the Company issued 1,305,339 shares of restricted common stock as payment for $16,750 in consulting services,
|
|
·
|
sold to an investor a $45,000, nine month, 8% note, convertible at the note holder’s option at a variable conversion price such that during the period during which the note is outstanding, convertible at 58% multiplied by the average of the three lowest closing bid prices for the common stock during the ten trading day period ending one trading day prior to the submission date of the conversion notice by the note holder to the Company,
|
|
·
|
2,679,000 shares valued at $33,596 were issued pursuant to terms of various notes, and
|
|
·
|
12,439,343 shares listed as to be issued at April 30, 2011 were issued.
|
●
|
lack of documented policies and procedures;
|
|
●
|
we have no audit committee;
|
|
●
|
there is a risk of management override given that our officers have a high degree of involvement in our day to day operations.
|
|
●
|
there is no effective separation of duties, which includes monitoring controls, between the members of management.
|
Name
|
Age
|
Position
|
||
Anthony L. Havens
|
57
|
Chief Executive Officer, President, and Chairman
|
||
Kristian Srb
|
56
|
Director
|
||
Jeffrey Bean
|
58
|
Director
|
||
Anthony W. Adler
|
71
|
Executive Vice President and Principal Financial Officer
|
||
Richard P. Trotter
|
68
|
Chief Operating Officer
|
||
Sandra L. Ahman
|
48
|
Vice President, Secretary and Director
|
Name and Principal Position
|
Year
|
Salary
($)(a)
|
Bonus
($)
|
Stock
Awards
($)(b)
|
Option
Awards
($)(b)(c)
|
All Other
Compensation
($)(d)
|
Total
($)
|
|||||||
Anthony L. Havens
|
2011
|
280,000
|
89,514
|
0
|
128,671
|
11,005
|
509,190
|
|||||||
Chief Executive Officer
|
2010
|
280,000
|
0
|
0
|
0
|
0
|
280,000
|
|||||||
Anthony W. Adler
|
2011
|
185,000
|
0
|
0
|
77,039
|
0
|
262,039
|
|||||||
Executive Vice President and
Principal Financial Officer
|
2010
|
185,000
|
0
|
0
|
141,280
|
0
|
326,280
|
|||||||
Richard P. Trotter
|
2011
|
200,000
|
0
|
0
|
77,448
|
0
|
277,448
|
|||||||
Chief Operating Officer
|
2010
|
200,000
|
0
|
0
|
0
|
0
|
200,000
|
(a)
|
For Mr. Adler, includes accrued; unpaid net salary of $112,286 and $80,627 at year end 2011 and 2010, respectively, and $19,539 in salary and $30,461 in unreimbursed business expenses foregone in exchange of 3,333,333 shares of common stock in fiscal 2010. For Mr. Trotter, includes accrued; unpaid net salary of $152,279 and $116,419 at year end 2011 and 2010, respectively, and $8,763 in salary and $41,237 in unreimbursed business expenses foregone in exchange of 3,333,333 shares of common stock in fiscal 2010.
|
(b)
|
Represents the stock-based compensation recognized in accordance with ASC 718. Stock-based awards are valued at the fair value on the grant date using a Black-Scholes model. Assumptions made in the valuation of stock-based awards are discussed in Note M to the consolidated financial statements.
|
(c)
|
On May 12, 2010, the Company issued stock options to its key executives, exercisable at $0.025 per share until May 12, 2015, subject to vesting at the rate of 20% on the grant date, 40% on May 12, 2011, and 40% on May 12, 2012, of which 6,672,500 options were issued to Mr. Havens, 3,995,000 options were issued to Mr. Adler, and 4,016,250 options were issued to Mr. Trotter.
|
(d)
|
This column reports the total amount of perquisites and other benefits provided, if such total amount exceed $10,000. In fiscal 2011, for Mr. Havens, this includes $11,005 for garage rental.
|
·
|
a change in voting power, due to a person becoming the beneficial owner of 50% or more of the voting power of our securities and our largest stockholder;
|
·
|
during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors, including later approved directors, ceasing to constitute a majority of the board;
|
·
|
a merger or consolidation of our company with a third party, after which our stockholders do not own more than 50% of the voting power; or
|
·
|
a sale of all or substantially all of our assets to a third party.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||
Name
|
Number of
securities
underlying
unexercised
options
(#)
Exercisable
|
Number of
securities
underlying
unexercised
options
(#)
Unexercisable
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number of
shares or units
of stock that
have not vested
(#)
|
Market value
of shares or
units of stock
that have
not vested
($)
|
|||||||||||||||
Anthony L. Havens (1)
|
1,334,500 | 5,338,000 | 0.025 |
5/12/2015
|
- | - | |||||||||||||||
Anthony W. Adler (2)
|
4,000,000 | - | 0.1914 |
9/21/2011
|
|||||||||||||||||
Anthony W. Adler (1)
|
799,000 | 3,196,000 | 0.025 |
5/12/2015
|
- | - | |||||||||||||||
Richard P. Trotter (1)
|
803,250 | 3,213,000 | 0.025 |
5/12/2015
|
- | - | |||||||||||||||
Richard P. Trotter (3)
|
175,000 | - | 0.605 |
4/29/2012
|
- | - | |||||||||||||||
Richard P. Trotter (3)
|
175,000 | - | 0.605 |
4/29/2013
|
- | - | |||||||||||||||
Richard P. Trotter (3)
|
175,000 | - | 0.605 |
4/29/2014
|
- | - |
(1)
|
Granted pursuant to an option agreement dated May 12, 2010. The options are exercisable, subject to vesting, for a period of five years from the grant date at $0.025 per share.
|
(2)
|
Granted pursuant to an option agreement dated September 22, 2006. The options are exercisable for a period of five years from the vesting date at $0.1914 per share.
|
(3)
|
Granted pursuant to an option agreement dated April 29, 2005.
|
Name
|
Fees earned
or paid in cash
($)
|
Stock
awards
($)(a)
|
Option
awards
($)(a)
|
All other
compensation
($)
|
Total
($)
|
|||||||||||||||
Jeffrey Bean
|
0 | 0 | 18,440 | – | 18,440 | |||||||||||||||
Kristian Srb
|
0 | 0 | 47,534 | – | 47,534 |
(a)
|
Represents the stock-based compensation recognized in accordance with ASC 718. Stock-based awards are valued at the fair value on the grant date using a Black-Scholes model. Assumptions made in the valuation of stock-based awards are discussed in Note M to the consolidated financial statements.
|
(b)
|
On May 12, 2010, the Company issued to stock options, exercisable at $0.025 per share until May 12, 2015, subject to vesting at the rate of 20% on the grant date, 40% on May 12, 2011, and 40% on May 12, 2012, as follows: 956,250 options to Mr. Bean; and 2,465,000 options to Mr. Srb.
|
Plan category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights (a)
|
Weighted-average exercise
price of outstanding options,
warrants and rights (b)
|
Number of securities
remaining available for
future issuance under
equity compensation plan
|
|||||||||
Equity compensation plans
approved by securities holders
|
2,450,000 | $ | 0.03 | 6,050,000 | ||||||||
Equity compensation plans not
approved by security holders
|
32,031,128 | $ | 0.06 | 6,125,192 | ||||||||
Total
|
34,481,128 | $ | 0.06 | 12,175,192 |
(a)
|
For purposes of the table, does not include shares issued and outstanding pursuant to the Company’s 2009 Consultant Stock Plan, nor 100,000 shares vested pursuant to a restricted stock grant.
|
(b)
|
Calculation excludes shares issued pursuant to stock grants.
|
Name (a)
|
Number of Shares
Beneficially Owned
|
Percentage of Class
Beneficially Owned
|
||||||
Anthony L. Havens (1)
|
32,936,750 | 6.8 | ||||||
Kristian Srb (2)
|
34,750,550 | 7.2 | ||||||
Jeffrey Bean (3)
|
1,119,850 | 0.2 | ||||||
Anthony W. Adler (4)
|
10,730,333 | 2.2 | ||||||
Richard P. Trotter (5)
|
6,393,083 | 1.3 | ||||||
Sandra L. Ahman (6)
|
2,467,865 | .5 | ||||||
All current directors and named officers as a group (6 in all)
|
88,398,431 | 18.2 |
(a)
|
Unless indicated otherwise, the address for each person named in the table is c/o Sparta Commercial Services, Inc., 462 Seventh Ave, 20th Floor, New York, NY 10018.
|
(1)
|
Mr. Havens' minor son owns approximately 2,000,000 shares of common stock in a trust account. Mr. Havens is not the trustee for his son's trust account, and does not have the sole or shared power to vote or direct the vote of such shares. Mr. Havens disclaims beneficial ownership of such shares held in his son's trust account.
|
|
Includes1,334,500 vested options, and 2,669,000 options subject to vesting on May 12, 2011, exercisable at $0.025 per share until May 12, 2015.
|
(2)
|
Includes 62,500 shares of common stock held by Mr. Srb's minor daughter, for which Mr. Srb may be deemed to have beneficial ownership of such shares. Includes 493,000 vested options, and 986,000 options subject to vesting on May 12, 2011, and exercisable at $0.025 per share until May 12, 2015.
|
(3)
|
Includes 500,000 vested stock options, exercisable at $0.12 per share until October 23, 2011, and 191,250 vested options, and 382,500 options subject to vesting on May 12, 2011, exercisable at $0.025 per share until May 12, 2015.
|
(4)
|
Includes 4,000,000 vested stock options, exercisable at 0.1914 per share until September 22, 2011, and 3,333,333 shares held by
The Anthony W. Adler Irrevocable Trust, dated October 1, 2009
. Includes 799,000 vested options, and 1,598,000 options subject to vesting on May 12, 2011, exercisable at $0.025 per share until May 12, 2015.
|
(5)
|
Includes 125,000 vested shares, of which only 25,000 of such vested shares have been issued to date, 525,000 vested stock options, exercisable at $0.605 per share and expiring at the rate of 175,000 on each of April 29, 2012, 2013, and 2014, and 3,333,333 shares held by The Richard and Kay Trotter Trust Established March 18, 2009. Includes 803,250 vested options, and 1,606,500 options subject to vesting on May 12, 2011, exercisable at $0.025 per share until May 12, 2015.
|
(6)
|
Includes 629,000 vested options, and 1,258,000 options subject to vesting on May 12, 2011, exercisable at $0.025 per share until May 12, 2015.
|
Exhibit Number
|
Description of Exhibit
|
|
3(i)(1)
|
Articles of Incorporation of Tomahawk Oil and Minerals, Inc. (Incorporated by reference to Exhibit 3(i) (1) of Form 10-KSB filed on August 13, 2004)
|
|
3(i)(2)
|
Certificate of Amendment of Articles of Incorporation, November 1983 (Incorporated by reference to Exhibit 3(i) (2) of Form 10-KSB filed on August 13, 2004)
|
|
3(i)(3)
|
Certificate of Amendment of Articles of Incorporation for name change, August 2004 (Incorporated by reference to Exhibit 3(i) of Form 8-K filed on August 27, 2004)
|
|
3(i)(4)
|
Certificate of Amendment of Articles of Incorporation for increase in authorized capital, September 2004 (Incorporated by reference to Exhibit 3(i) of Form 8-K filed on September 17, 2004)
|
|
3(i)(5)
|
Certificate of Amendment of Articles of Incorporation for decrease in authorized capital, December 2004 (Incorporated by reference to Exhibit 3(i) of Form 8-K filed on December 23, 2004)
|
|
3(i)(6)
|
Certificate of Designation for Series A Redeemable Preferred Stock, December 2004 (Incorporated by reference to Exhibit 3(i) of Form 8-K filed on January 4, 2005)
|
|
3(i)(7)
|
Certificate of Designation for Series B Preferred Stock (Incorporated by reference to Exhibit B to Preferred Stock Purchase Agreement, dated as of July 29, 2009 (see Exhibit 10.21 below)
|
|
3(i)(8)
|
Certificate of Amendment of Articles of Incorporation for increase in authorized capital, September 21, 2009 (Incorporated by reference to Exhibit 3(i)(8) of Form S-1 filed on October 2, 2010)
|
|
3(i)(9)
|
Certificate of Designations of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 5.03(i) of Form 8-K filed on November 19, 2009)
|
|
3(ii)(1)
|
By-laws (Incorporated by reference to Exhibit 3(ii) (1) of Form 10-KSB filed on August 13, 2004)
|
|
3(ii)(2)
|
By-laws Resolution (Incorporated by reference to Exhibit 3(ii) (2) of Form 10-KSB filed on August 13, 2004)
|
|
3(ii)(3)
|
Board of Directors Resolutions amending By-laws (Incorporated by reference to Exhibit 3(ii) of Form 10-QSB filed on December 15, 2004)
|
|
10.1
|
Lease for office facilities (Incorporated by reference to Exhibit 10 of Form 10-QSB filed on December 15, 2004)
|
|
10.2+
|
Form of Employment Agreement with Anthony Havens (Incorporated by reference to Exhibit 10.4 of Form 10-KSB filed on August 13, 2004)
|
|
10.3+
|
Employment Agreement with Richard Trotter (Incorporated by reference to Exhibit 10 of Form 8-K filed on October 29, 2004)
|
|
10.4+
|
Option Agreement with Richard Trotter (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on May 5, 2005)
|
|
10.5+
|
Employment Agreement with Anthony W. Adler (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on October 2, 2006)
|
|
10.6+
|
Stock Option Agreement with Jeffrey Bean, dated October 23, 2006 (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on October 24, 2006)
|
|
10.7+
|
2005 Stock Incentive Compensation Plan (Incorporated by reference to Exhibit 4 of Form 10-KSB filed on August 13, 2004)
|
|
10.8
|
2010 Consultant Stock Plan (Incorporated by reference to Exhibit 99.1 of Form S-8 filed on May 12, 2010)
|
|
10.9
|
Master Loan and Security Agreement - Motor Vehicles (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on July 28, 2005)
|
|
10.10
|
Master Loan and Security Agreement (Installment Sale Contract) (Incorporated by reference to Exhibit 10.2 of Form 8-K filed on July 28, 2005
|
|
10.11
|
Form of Loan Agreement, December 2005 (Incorporated by reference to Exhibit 10.1 of Form 10-QSB filed on March 22, 2006)
|
|
10.12
|
Form of Promissory Note (Incorporated by reference to Exhibit 10.3 of Form 10-QSB filed on December 18, 2006)
|
|
10.13
|
Form of Promissory Note (Incorporated by reference to Exhibit 10.4 of Form 10-QSB filed on December 18, 2006)
|
|
10.14
|
Form of Convertible Debenture (Incorporated by reference to Exhibit 10.1 of Form 10-QSB filed on December 21, 2007)
|
|
10.15
|
Preferred Stock Purchase Agreement, dated as of July 29, 2009, by and among Sparta Commercial Services, Inc. and Optimus Capital Partners, LLC (Incorporated by reference to Exhibit 10.1 of Form 8-K filed on July 30, 2009)
|
|
10.16
|
Motorcycle Lease Warehousing Master Lease Funding Agreement dated September 28, 2010 between registrant and Vion Operations LLC (Incorporated by reference to Exhibit 10 of Form 8-K filed on September 29, 2010)
|
|
10.17
|
Motorcycle Lease Warehousing Master Services Agreement dated September 28, 2010 between registrant and Vion Operations LLC (Incorporated by reference to Exhibit 10.2 of Form 8-K filed on September 29, 2010)
|
|
11
|
Statement re: computation of per share earnings is hereby incorporated by reference to Part II, Item 8 of this report
|
|
14.1* | Code of Ethics | |
21.1* | List of Subsidiaries | |
23.1*
|
||
31.1*
|
||
31.2*
|
||
32.1*
|
||
32.2*
|
SPARTA COMMERCIAL SERVICES, INC.
|
|||
|
By:
|
/s/ Anthony L. Havens | |
Anthony L. Havens | |||
Chief Executive Officer | |||
Date: August 15, 2011 |
By:
|
/s/ Anthony L. Havens
|
||
Anthony L. Havens
|
|||
Chief Executive Officer, President
|
|||
and Chairman of the Board
|
|||
Date: August 15, 2011
|
|||
By:
|
/s/ Anthony W. Adler
|
||
Anthony W. Adler
|
|||
Executive Vice President, and
|
|||
Interim Principal Financial Officer
|
|||
Date: August 15, 2011
|
|||
By:
|
/s/ Sandra L. Ahman
|
||
Sandra L. Ahman
|
|||
Vice President and Director
|
|||
Date: August 15, 2011
|
|||
By:
|
/s/ Kristian Srb
|
||
Kristian Srb
|
|||
Director
|
|||
Date: August 15, 2011
|
|||
By:
|
/s/ Jeffrey Bean
|
||
Jeffrey Bean
|
|||
Director
|
|||
Date: August 15, 2011
|
(1)
|
To confidentially or anonymously report any ethics concern, including violations of this Code or concerns about questionable accounting or auditing matters, employees should contact the Ethics, Accounting and Auditing Helpline through one of the following methods:
|
|
·
|
By telephone, at 1-203-263-2476
|
|
·
|
By email to C. K. Harley, Esq. at ckharley@sbcglobal.net
|
|
·
|
By U.S. mail, at Sparta Ethics, Accounting and Auditing Helpline, c/o C.K. Harley, Esq., 392 Rail Tree Hill Rd., P.O. Box 264, Woodbury, CT 06798
|
(2)
|
To report suspected criminal activity, employees should contact the Fraud Hotline through one of the following methods:
|
|
·
|
Phone: (203) 263-2476
|
|
·
|
Email: Fraud_Hotline@Sparta.com
|
|
·
|
Fax: (203) 263-2477
|
|
·
|
Mail: Sparta’s Fraud Hotline, c/o C.K. Harley, Esq., 392 Rail Tree Hill Rd., P.O. Box 264, Woodbury, CT 06798
|
|
·
|
Fraud (e.g. identity theft, mortgage loan fraud, check fraud, wire fraud or credit card fraud)
|
|
·
|
Insider abuse such as bribery, embezzlement, misuse of position or self-dealing
|
|
·
|
Money laundering
|
|
·
|
Violations of the Bank Secrecy Act
|
|
·
|
Computer intrusion
|
(3)
|
To report employment-related concerns (discrimination, harassment, compensation matters, etc.), employees should contact their Employee Relations representative by contacting S. Ahman at (212) 239-2666 x 206.
|
1.
|
I have reviewed this report on Form 10-K for the fiscal year ended April 30, 2011 of Sparta Commercial Services, 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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.
|
/s/ Anthony L. Havens
|
||
Anthony L. Havens
|
||
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-K for the fiscal year ended April 30, 2011 of Sparta Commercial Services, 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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.
|
/s/ Anthony W. Adler
|
||
Anthony W. Adler
|
||
Principal Financial Officer
|
(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 results of operations of the Company.
|
/s/ Anthony L. Havens
|
||
Anthony L. Havens
|
||
Chief Executive Officer
|
(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 results of operations of the Company.
|
/s/ Anthony W. Adler
|
||
Anthony W. Adler
|
||
Principal Financial Officer
|