Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-K
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x
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Annual
Report pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934:
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For
the fiscal year ended:
December 31,
2009
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Transition
report pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934:
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For
the transition period from:
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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
2
nd
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
o
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.
o
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
o
No
x
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
o
No
o
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.
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):
Yes
o
No
x
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” I Rule 12b-2 of the Exchange
Act.
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer (Do not check if a smaller reporting company)
o
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Smaller
reporting company
x
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As of
June 30, 2009, the aggregate market value of the registrant’s common stock held
by non-affiliates of the registrant was approximately $20,546.00, based on the
closing price of the registrant’s common stock of $0.001 per share on June 30,
2009.
On March
24, 2010, 35,156,081 shares of Invisa Common Stock, $0.001 par value, were
outstanding
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Page
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Part
I
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10
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Part
II
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10
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11
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11
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Item
7A
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Quantitative
and Qualitative Disclosures about Market Risk
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12
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13
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13
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14
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Part
III
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15
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17
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20
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21
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Part
IV
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22
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Financial
Statements
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F-1
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F-2
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F-3
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F-4
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F-5
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F-7
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27
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Index
to Exhibits
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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.
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 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 2
nd
Street, Suite 765, 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 2008 and 2009, 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 2009, 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.
During
fiscal year ended December 31, 2008, Magnetic Automation Corp. was our largest
customer, comprising approximately 21% of our total sales revenue for that
year. However, in 2009, Magnetic discontinued our product line, which
resulted in a reduction in direct sales to Magnetic. Currently,
Magnetic instructs their customers to contact us directly for the purchase of
our products. We believe that a significant portion of those sales
would have otherwise been made to Magnetic.
In 2009, Automatic Systems America was
our largest customer, responsible for 11% of our product
revenues. The sales to Automatic Systems in 2009 include a project
that Automatic Systems is administering for a large governmental end user and no
assurance can be given that we will continue to sell products to Automatic
Systems at the same level once the project is complete.
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
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.
Materials
and Manufacturing
All
components and parts are modified or manufactured by third parties to our
specifications 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 2008 or 2009.
Employees
We have
no full time employees. Our Chief Financial Officer, who is currently our
Acting President, serves in both capacities on a part-time 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, 2008 and
2009 we incurred no research and development expenses.
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, 2009, we sustained a net loss from operations
of $171,970, including a gain of $24,714 to reflect the favorable
settlement of certain debt. 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 2009 sales revenues satisfied approximately 51% of
our operational costs and expenses. During 2008 and 2009, we
funded our operations with funds borrowed under short 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, 2010. Unless
our sales increase significantly, we will need to raise additional capital to
fund our operating expenses beyond December 31, 2010. 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, 2010. 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.
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.
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 acting President and is available to the Company on a part time
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
and in some instances by shares of our common stock that were issued to secure
the promissory notes. 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 and approximately 49% of the common stock and potentially other shares
which give it significant influence on our ability to issue stock, get
financing, or consummate a business transaction.
None
In the February, 2010, we relocated our
operations to approximately 1,277 square feet of office space located at 1800
2
nd
Street in Sarasota, Florida. Our monthly base rental is approximately
$1,600. We rent the facilities pursuant to a lease which expires on
February 28, 2011.
None.
PART
II
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, 2009 there were
395 stockholders of record
of Invisa Common Stock.
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Quarter
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High
Bid
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Low
Bid
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First
Quarter 2008
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0.01
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0.01
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Second
Quarter 2008
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0.02
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0.01
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Third
Quarter 2008
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0.02
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0.01
|
|
Fourth
Quarter 2008
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0.02
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0.00
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|
First
Quarter 2009
|
0.00
|
0.00
|
|
Second
Quarter 2009
|
0.00
|
0.00
|
|
Third
Quarter 2009
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0.00
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0.00
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|
Fourth
Quarter 2009
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0.02
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0.02
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On March
15, 2010, 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 $0.022 per
share.
We
believe that there are presently approximately 6 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.
Dividend
Policy
With the
exception of our Series B Preferred Stock, 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.
With the exception of our Series B Preferred Stock, 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 is to base any dividend paid on a rate that varies with the prime interest
rate. The dividend may be paid in either stock or cash at the option
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
We issued
53,333,333 shares of our common stock in through 2008 to
collateralize several notes totaling $563,400 evidencing loans made to the
Company by a third party lender. The shares were deposited in an escrow
account and will only be delivered to such lender in the event of a default
under or non-payment of the notes. Upon full repayment of the notes, said shares
will be returned to the Company. The shares delivered to the escrow agent
as security for the notes are not being treated as outstanding and will only be
considered as being issued and outstanding if and when the shares are released
by the escrow agent and delivered to the lender as a result of a default under
the promissory notes and related security agreement. (Additionally,
see Note G to the accompanying financial statements.)
In 2008
the Company issued 2,667,361 shares of common stock for employee share-based
compensation and 7,047,594 shares for settlement of debt.
In 2009
the Company granted 375,000 shares of its common stock as compensation to its
Board members.
Not applicable
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 2008 and 2009 through revenues derived from the sale
of our SmartGate
®
brand
safety sensors and short-term debt financing. We are focusing our efforts on
increasing our sales of our products and reducing operating costs, where
possible. In March 2010 the company’s senior lender agreed to extend
the maturity date of the Senior Secured Promissory Notes and the related accrued
interest until March 1, 2012, and put it place a line of credit which we believe
is sufficient to finance our operations through December 31,
2010. (See Note J)-
.
Year
Ended December 31, 2008 Compared to the Year Ended December 31,
2009
Net Sales
- During the years
ended December 31, 2008 and 2009, product sales totaled $102,297and $147,589,
respectively. We had a gross profit of
$41,739
for the year ended December
31, 2008 and gross profit of $83,476
for the year ended December
31, 2009.
Gross margin
was 40 percent during 2008 and 57 percent during 2009. We attribute
the increase in our sales and gross margin in 2009 to an increase in the retail
price of our products as well as the success of our new marketing strategy of
targeting project work and municipalities while maintaining our current customer
relationships.
Selling, General and Administrative
Expenses
- During the years 2008 and 2009, selling, general and
administrative expenses totaled $256,999 and $219,533,
respectively. We were successful in decreasing our expenses in 2009
by reducing our insurance costs through lower premiums, decreasing our leasehold
costs and reducing professional services expenses.
Interest (expense) and other,
Net
- The interest expense during 2008 of $56,348 and during 2009 of
$62,202 relates primarily to financing costs and interest due to certain
stockholders under lines of credit to the Company. During 2008 and
2009, the Company settled certain debts for cash and stock resulting in the
extinguishment gain of $377,454 and $24,714, respectively.
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 decreased from net income of $18,096 and $0.00 in 2008 to
a net loss of $226,315 and ($0.00) in 2009.
Plan
of Development and Operations
We obtained funding of $262,730, in the
form of short-term debt financing in 2008, and an additional $69,370 in 2009,
which together with our cash from sales supported our
operations. We have extended the maturity of our short-term
debt to March 1, 2012, and put in place a line of credit which we believe is
sufficient to finance our operations through December 31, 2010. (See
Note J)-. 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, 2009, we had a cash and cash equivalents
totaling $157.
As of December 31, 2009, the Company
has borrowed $628,320 which includes $64,920 in interest payments due and owing
from its senior lender. The financing arrangements are set forth in a
series of Notes having similar terms but varying terms and maturity dates,
specifically (i) $128,320 in 2009, (ii) $100,000 in July 2008, (iii) $150,000 in
March 2008 and (iv) $250,000 prior to 2008. Each note bears interest
at 10 percent per annum and is secured by all of the assets of the
Company. Additionally, the Company has pledged an aggregate of
53,333,333 shares of its common stock, and has committed additional capital
stock, when available, as additional security for the notes. These
shares have been issued and are being held in escrow as additional collateral
against the notes. Upon full repayment of the notes, said
shares will be returned to the Company. The shares delivered to the
escrow agent as security for the notes are treated as issued on the stockholder
lists of the Company but will not be deemed outstanding unless the
shares are released by the escrow agent and delivered to the lender as a result
of a default or non payment under the promissory notes and related security
agreement.
In March 2010, as part of a restructure
of the senior debt of the Company, the senior lender agreed to extend the
maturity date of its $628,320 principal amount of notes and accrued interest to
March 1, 2012, through a series of note extension agreements. With
the exception of the extension of the maturity date to March 1, 2012, all of the
terms and provisions of the original notes remain in full force and effect,
including, without limitation all security thereon. The senior lender
also established a $150,000 line of credit to finance operations of the Company
through December 31, 2010. The revolving credit facility has similar
terms and provisions to the previous notes between the Company and the senior
lender and is due and payable on March 1, 2012.
The Company had negative working capital at December 31, 2009, totaling $584,313
including $157 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 line of $150,000 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,
2010. 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, 2010, 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.
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.
None
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 Acting President and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2009 and concluded that our
disclosure controls and procedures were effective as of December 31,
2009.
Management’s
Annual Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. The Company’s internal control system is designed
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. Because of inherent limitations,
a system of internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate due to
change in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Our management, including our Acting
President and Chief Financial Officer, conducted an evaluation of the
effectiveness of our internal control over financial reporting and concluded
that our internal control over financial reporting was effective as of December
31, 2009.
This Form 10-K 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
temporary rules of the SEC 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, 2009, 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.
None.
PART
III
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, 2009 are as follows:
|
|
|
|
|
Positions
and Offices Presently
|
|
Name
|
|
Age
|
|
Held
with the Company
|
|
Edmund
C. King
|
|
75
|
|
Director,
Acting President, Chief Financial Officer, Treasurer
|
|
Gregory
J. Newell
|
|
60
|
|
Director
|
|
John
E. Scates
|
|
53
|
|
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. Mr. King has served as Chief Financial Officer and Director of
SmartPlug, Inc. since November 2000 and Chief Financial Officer and Director of
FlashPoint International, Inc. since October 2001. From January 1992, Mr. King
has been a general partner of Trouver, an investment banking 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 CPA certificate 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.
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, 2009 we had no full
time employees. Our Chief Financial Officer, who also serves as our Acting
President, is employed on a part-time 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
.
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
4 meetings during 2009.
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 2009
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
Newell, Chairman
|
|
John
Scates
|
Board
Meetings and Independence
During
the year ended December 31, 2009, the Board of Directors of the Company
held
4
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 but during the 2009 fiscal
year each of our Directors were granted 125,000 shares, respectfully, of the
Company’s common stock.
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.
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 2008 and 2009. 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.
Our only
named executive officer at the end of fiscal 2009, Mr. Edmund King, 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
2009 but did receive 125,000 shares of the Company’s common stock.
However the Company charged $36,000 to operations for the value of his
services.
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 fiscal 2007 our
compensation decisions for our executive officers emphasized option grants which
we believe support our goals with regard to both retention and motivation of our
executive officers. 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 2009; however, a proforma amount of
$36,000 has been charged to operations and credited to additional paid in
capital.
Option
Grants.
N
o Options were granted
in fiscal year 2009.
Perquisites
.
Consistent
with our philosophy to preserve cash, we have sought to limit perquisites.
Perquisites paid to our named executive officers are discussed as footnotes to
the following Summary Compensation Table. Our current policy for paying medical
and dental insurance is not to pay insurance premiums. Our policy is not to pay
for life insurance, long-term and short-term disability insurances and
accidental death and dismemberment insurance. Our policy with regard to unused
vacation for our executive group is to pay at the base salary rate for vacation
not used during the calendar year of termination.
Change
in Control Severance Policy.
None.
REPORT
OF COMPENSATION COMMITTEE
The
Compensation Committee of the Board of Directors has reviewed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K and
discussed it with the Company’s management. Based on the Compensation
Committee’s review and discussions with management, the Compensation Committee
recommends to the Board of Directors that the Compensation Discussion and
Analysis be included in the Company’s Annual Report on Form 10-K for fiscal
2009.
|
|
|
|
John
E Scates, Chairman
Gregory
J Newell
|
|
DIRECTOR
COMPENSATION
FOR
THE THREE YEARS ENDED DECEMBER 31, 2009
|
Name
|
|
Fees
Earned
or
Paid in
Cash
($)
|
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 -
|
2007
|
----
|
----
|
20,000
|
----
|
----
|
----
|
----
|
|
|
2008
|
----
|
----
|
----
|
----
|
----
|
----
|
----
|
|
|
2009
|
----
|
1,000
|
----
|
----
|
----
|
----
|
----
|
|
Greg
Newell
-
|
2007
|
----
|
----
|
----
|
----
|
----
|
----
|
----
|
|
|
2008
|
----
|
----
|
----
|
----
|
----
|
----
|
----
|
|
|
2009
|
----
|
1,000
|
----
|
----
|
----
|
----
|
----
|
|
John
Scates
-
|
2007
|
----
|
----
|
----
|
----
|
----
|
----
|
----
|
|
|
2008
|
----
|
----
|
----
|
----
|
----
|
----
|
----
|
|
|
2009
|
----
|
1,000
|
----
|
----
|
----
|
----
|
----
|
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
|
1,200,000
|
|
2002
Plan
|
1,500,000
|
|
2003
Plan
|
1,500,000
|
|
2003A
Plan
|
3,500,000
|
|
2006
Plan
|
2,500,000
|
|
|
10,200,000
|
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, 2009, Invisa
had no options to purchase shares of common stock outstanding or
exercisable.
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.
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.
|
|
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, 2009 for:
|
|
•
|
each
person (or group of affiliated persons) known by us to beneficially own
more than 5% of our common stock;
|
|
|
•
|
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, 2009 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
|
|
Stephen
A. Michael
|
5%
Stockholder
|
3,939,261
|
10.08%
|
|
Michael
R. Ries (Trustee)
|
5%
Stockholder
|
1,864,584
|
5.04
|
|
Frank
A Ficarra (Trustee)
|
5%
Stockholder
|
1,864,584
|
5.04
|
|
Samuel
S Duffey
|
5%
Stockholder
|
5,082,740
(3)
|
12.63
|
|
Edmund
C. King
|
Acting
President, CFO, Director
|
1,201,772
(4)
|
3.31
|
|
Gregory
J. Newell
|
Director
|
328,565
|
0.93
|
|
John
E. Scates
|
Director
|
328,565
|
0.93
|
|
All
officers and directors as a group
|
|
1,858,902
|
5.02
%
|
|
(1)
|
Unless
otherwise provided herein all addresses are C/O Invisa, Inc., 1800 2
nd
Street, Suite 965 Sarasota, FL 34236. The address for Mr. Ries is 4837
Swift Road, Suite 210, Sarasota, Florida 34231; for Mr. Ficarra is 4837
Swift Road, Suite 210, Sarasota, Florida
34231;
|
|
(2)
|
The
percentage calculations are based on 35,156,081 shares that were
outstanding as of December 31, 2009 plus the respective
beneficial shares owned by each selling 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, 2009 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
4,528,666 shares held in the name of Friday Harbour and 554,074 in Mr.
Duffey’s name.
|
|
(4)
|
Includes
1,196,792 shares held in Mr. King’s name, and 5,000 shares held in the
name of the King Family Trust.
|
|
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
Other
than the compensation discussed herein, we had no items to disclose hereunder
for 2009 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, 2009 and on the date hereof
|
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
During
2009 and 2008, annual fees approved for the year-end audit and interim reviews
aggregated approximately
$32,000
for each year.
In addition, during
2009 and 2008 tax-related fees approved for compliance aggregated,
approximately, $4,000 and $4,000 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
Stark, Winter Schenkein & Co., LLP in and 2008 and 2009 and Kingery &
Crouse, PA in 2010. 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.
Effective
January 2010, Stark, Winter Schenkein & Co., LLP was replaced by Kingery
& Crouse, PA as the Company’s independent auditors.
PART
IV
|
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
(a) The
following documents are filed as part of this Report:
Exhibits
The
following exhibits are filed as part of, or incorporated by reference into, this
amendment to annual report on Form 10-K/A:
INDEX
TO EXHIBITS
|
ITEM
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 50,500
Units
|
|
|
|
|
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
|
|
|
|
|
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
11
|
Business
consulting agreement
|
|
|
|
|
10.44
11
|
Opinion
of counsel regarding legality of Common Stock
|
|
|
|
|
10.45
|
Consent
of Aidman, Piser and Company, PA
|
|
|
|
|
10.46
11
|
Consent
of Legal Counsel
|
|
|
|
|
10.47
11
|
Power
of Attorney relating to subsequent amendments
|
|
|
|
|
10.48
9
|
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
9
|
Warrant
Agreement dated October 10, 2006 by and between Invisa, Inc. and Ocean
Park Advisors, LLP
|
|
|
|
|
|
10.50
9
|
UCC
Financing Statements
|
|
|
|
|
|
|
10.51
9
|
Schedule
of Advances: Permitted Payments
|
|
|
|
|
|
|
10.52
10
|
Business
Consulting Agreement dated August 14, 2006 between Invisa, Inc. and John
Anderson
|
|
|
|
|
|
|
10.53
17
|
Carl
A. Parks Employment agreement
|
|
|
|
|
|
|
10.54
16
|
Forbearance
and Modification agreement dated July 27, 2007
|
|
|
|
|
|
|
10.55
16
|
Promissory
Note dated July 25, 2007
|
|
|
|
|
|
|
10.56
15
|
Promissory
Note dated March 6, 2007
|
|
|
|
|
|
|
10.57
16
|
Forbearance
and Modification Agreement
|
|
|
|
|
|
|
10.58
18
|
Audit
Committee Charter
|
|
|
|
|
|
|
10.59
18
|
Senior
Secured Promissory Note date March 28, 2008
|
|
|
|
|
|
|
10.60
18
|
Forbearance
and Modification Agreement dated March 28, 2008
|
|
|
|
|
|
|
10.61
18
|
Extension
of Promissory Note dated April 11, 2008
|
|
|
|
|
|
|
10.62
19
|
Senior
Secured Promissory Note dated July 1, 2008
|
|
|
|
|
|
|
10.63
19
|
Forbearance
and Modification Agreement dated June 1, 2008
|
|
|
|
|
|
|
10.64
20
|
Note
and Share Exchange Agreement dated July 31, 2008
|
|
|
|
|
|
|
10.65
20
|
Certificate
of Designations of Preferences and Rights dated December 22,
2008.
|
|
|
|
|
|
|
10.66
8
|
Senior
Secured Promissory Note dated March 24, 2010.
|
|
|
|
|
|
|
10.67
8
|
Senior
Secured Promissory Note (Line of Credit) dated March 24,
2010.
|
|
|
|
|
|
|
|
|
|
|
10.68
8
|
Note
Extension Agreement dated March 24, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.69
8
|
Note
Extension Agreement dated March 24, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.70
8
|
Note
Extension Agreement dated March 24, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.71
8
|
Note
Extension Agreement dated March 24, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.72
8
|
Note
Extension Agreement dated March 24, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.73
8
|
Terms
of Exchange dated January 11, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.74
8
|
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
8
|
Letter
Term Sheet and Consent Documents dated January 11, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.76
8
|
Share
Exchange Agreement dated January 11, 2010.
|
|
|
|
|
|
|
|
|
|
|
10.77
8
|
Property
Lease dated February 8, 2010.
|
|
|
|
|
|
|
|
|
|
|
31.1
8
|
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
8
|
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
8
|
Certification
Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
|
|
32.2
8
|
Certification
Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
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
|
Filed
herewith.
|
|
|
|
|
9
|
Previously
filed on October 10, 2006 with Invisa Form 8-K/A dated October 10, 2006
and are incorporated by reference.
|
|
10
|
Previously
filed on August 17, 2006 with Invisa Form 8-K dated August 14, 2006 and
are incorporated by reference.
|
|
|
|
|
11
|
Previously
filed on August 14, 2006 with Invisa Form S-8 dated August 14, 2006 and
are incorporated by reference
|
|
|
|
|
12
|
Previously
filed on April 14, 2007 with Invisa For 10-KSB and incorporated herein by
reference.
|
|
|
|
|
13
|
Previously
filed on August 1, 2007 with Invisa’s Form 8-K and incorporated
herein.
|
|
|
|
|
14
|
Previously
filed on July 26, 2007 with Invisa’s Form 8-K and incorporated
herein.
|
|
|
|
|
14
1
|
Code
of Business Conduct and Ethics and Compliance Program
|
|
|
|
|
15
|
Previously
filed on March 6, 2007 with Invisa’s Form 8-K and incorporated
herein.
|
|
|
|
|
16
|
Previously
filed on November 14, 2007 with Invisa Form 10-QSB and incorporated herein
by reference.
|
|
|
|
|
17
|
Previously
filed on April 18, 2007 with Invisa Form 10-KSB and incorporated herein by
reference.
|
|
|
|
|
18
|
Previously
filed on April 14, 2008 with Invisa Form 10-KSB and incorporated herein by
reference.
|
|
|
|
|
19
|
Previously
filed on July 30, 2008 with Invisa Form 8-K and incorporated herein by
reference.
|
|
|
|
|
20
|
Previously
filed on January 13, 2009 with Invisa Form 8-K and incorporated herein by
reference.
|
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:
March 31,
2010
|
By:
|
/s/ Edmund
C. King
|
|
|
Edmund
C. King
|
|
|
Acting
President
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
March
31
, 20010
|
By:
|
/s/ Edmund
C King
|
|
|
Edmund
C King
|
|
|
Chief
Financial Officer
|
NOW 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:
March 31
, 20010
|
/s/
Edmund C. King
|
|
|
Edmund
C. King, Acting President
|
|
|
|
|
|
/s/
Edmund C. King
|
|
|
Edmund
C. King, Chief Financial Officer, Director
|
|
|
|
|
|
/s/
Gregory J. Newell
|
|
|
Gregory
J. Newell, Director
|
|
|
|
|
|
/s/
John E. Scates
|
|
|
John
E. Scates, Director
|
Board of
Directors and Stockholders
Invisa,
Inc.
We have audited the accompanying
balance sheets of Invisa, Inc. (the “Company”) as of December 31, 2008 and 2009,
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 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, an audit 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, 2008 and 2009, 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
March
31, 2010
|
Invisa,
Inc.
|
|
December
31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
----
|
|
|
$
|
157
|
|
|
Accounts
receivable
|
|
|
6,498
|
|
|
|
6,187
|
|
|
Inventories
|
|
|
35,115
|
|
|
|
15,724
|
|
|
Prepaids
and other assets
|
|
|
5,366
|
|
|
|
5,158
|
|
|
Total
current assets
|
|
|
46,979
|
|
|
|
27,226
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture,
fixtures and equipment, net of $39,718 and $40,130, respectively of
accumulated depreciation
|
|
|
2,800
|
|
|
|
2,389
|
|
|
Total
assets
|
|
$
|
49,779
|
|
|
$
|
29,615
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Bank
overdraft
|
|
$
|
191
|
|
|
$
|
----
|
|
|
Accounts
payable, trade
|
|
|
118,410
|
|
|
|
98,108
|
|
|
Accrued
interest expense
|
|
|
30,377
|
|
|
|
92,376
|
|
|
Due
to stockholders and officers
|
|
|
105,334
|
|
|
|
105,334
|
|
|
Notes
Payable
|
|
|
494,030
|
|
|
|
----
|
|
|
Preferred
dividends payable
|
|
|
261,375
|
|
|
|
315,720
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
1,009,717
|
|
|
|
611,538
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable
|
|
|
----
|
|
|
|
563,400
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Deficit
|
|
|
|
|
|
|
|
|
|
Convertible
Preferred Stock, 5 million shares authorized ($0.001 par
value):
|
|
|
|
|
|
|
|
|
|
Series
A, 14,500 and 9,715, respectively, shares issued and
outstanding
|
|
|
798,500
|
|
|
|
798,500
|
|
|
Series
B, 10,000 and 9,000, respectively, shares issued and
outstanding
|
|
|
900,000
|
|
|
|
900,000
|
|
|
Series
C, 6,668 and 6,668, respectively, shares issued and
outstanding
|
|
|
654,907
|
|
|
|
654,907
|
|
|
Common
Stock; 95,000,000 shares authorized ($.001 par value), 34,781,081and
35,156,081, respectively, shares issued and outstanding
|
|
|
34,781
|
|
|
|
35,156
|
|
|
Additional
paid-in capital
|
|
|
31,975,470
|
|
|
|
32,016,025
|
|
|
Accumulated
deficit
|
|
|
(35,323,596
|
)
|
|
|
(35,549,911
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ deficit
|
|
|
(959,938
|
)
|
|
|
(1,145,323
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
49,779
|
|
|
$
|
29,615
|
|
See notes
to financial statements.
Invisa,
Inc.
|
|
|
Years
Ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
102,297
|
|
|
$
|
147,589
|
|
|
Other
operating revenues
|
|
|
----
|
|
|
|
----
|
|
|
|
|
|
102,297
|
|
|
|
147,589
|
|
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
|
60,558
|
|
|
|
64,113
|
|
|
Selling,
general and administrative expenses
|
|
|
256,999
|
|
|
|
219,533
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(215,260
|
)
|
|
|
(136,057
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
(expense)and other, net
|
|
|
(56,348
|
)
|
|
|
(62,202
|
)
|
|
Debt
extinguishment gain
|
|
|
377,454
|
|
|
|
24,714
|
|
|
Other
|
|
|
----
|
|
|
|
1,575
|
|
|
|
|
|
321,106
|
|
|
|
(35,913
|
)
|
|
Income
(Loss) before income
tax
|
|
|
105,846
|
|
|
|
(171,970
|
)
|
|
Income
tax
|
|
|
----
|
|
|
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
|
105,846
|
|
|
|
(171,970
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock dividends
|
|
|
(87,750
|
)
|
|
|
(54,345
|
)
|
|
Net
Income (Loss) applicable to Common Stockholders
|
|
$
|
18,096
|
|
|
$
|
(226,315
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss) per share applicable to Common Stockholders:
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average Common Stock shares outstanding:
Basic
and diluted
|
|
|
33,230,793
|
|
|
|
34,875,602
|
|
See notes
to financial statements.
Invisa,
Inc.
|
|
|
Convertible
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Additional
paid
–
in
capital
|
|
|
Accumulated
Deficit
|
|
|
Total
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
AT DECEMBER 31, 2007
|
|
|
24,500
|
|
|
$
|
2,277,000
|
|
|
|
25,066,126
|
|
|
$
|
25,066
|
|
|
$
|
31,797,807
|
|
|
$
|
(35,341,692
|
)
|
|
$
|
(1,241,820
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
share-based compensation
|
|
|
----
|
|
|
|
----
|
|
|
|
2,667,361
|
|
|
|
2,667
|
|
|
|
24,006
|
|
|
|
----
|
|
|
|
26,674
|
|
|
Pro
Forma officer compensation
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
35,500
|
|
|
|
----
|
|
|
|
35,500
|
|
|
Shares
issued for settlement of
debt
|
|
|
----
|
|
|
|
----
|
|
|
|
7,047,594
|
|
|
|
7,048
|
|
|
|
62,709
|
|
|
|
----
|
|
|
|
69,757
|
|
|
Contribution
to capital
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
55,448
|
|
|
|
----
|
|
|
|
55,448
|
|
|
Preferred
Stock Series B dividend
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
(87,750
|
)
|
|
|
(87,750
|
)
|
|
Preferred
Series C Stock (6,185 shares) issued for settlement of debt, dividends and
Preferred Series A and B Stock (4,785 shares and 1,000 shares,
respectively)
|
|
|
400
|
|
|
|
35,541
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
35,541
|
|
|
Preferred
Series C Stock issued for settlement of debt
|
|
|
483
|
|
|
|
40,866
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
40,866
|
|
|
Net
Income
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
105,846
|
|
|
|
105,846
|
|
|
BALANCE
AT DECEMBER 31, 2008
|
|
|
25,383
|
|
|
|
2,353,407
|
|
|
|
34,781,081
|
|
|
|
34,781
|
|
|
|
31,975,470
|
|
|
|
(35,323,596
|
)
|
|
|
(959,938
|
)
|
|
Pro
Forma officer compensation
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
36,000
|
|
|
|
----
|
|
|
|
36,000
|
|
|
Shares
issued for settlement of
debt
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
1,930
|
|
|
|
----
|
|
|
|
1,930
|
|
|
Preferred
Stock Series B dividend
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
(54,345
|
)
|
|
|
(54,345
|
)
|
|
Issuance
of Common Stock to Board Members
|
|
|
----
|
|
|
|
----
|
|
|
|
375,000
|
|
|
|
375
|
|
|
|
2,625
|
|
|
|
|
|
|
|
3,000
|
|
|
Preferred
Series C Stock issued for settlement of debt
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
Net
Income
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
----
|
|
|
|
(171,970
|
)
|
|
|
(171,970
|
)
|
|
BALANCE
AT DECEMBER 31, 2009
|
|
|
25,383
|
|
|
$
|
2,353,407
|
|
|
|
35,156,081
|
|
|
$
|
35,156
|
|
|
$
|
32,016,025
|
|
|
$
|
(35,549,911
|
)
|
|
$
|
(1,145,323
|
)
|
See notes
to financial statements.
Invisa,
Inc.
|
|
|
Years
Ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
105,846
|
|
|
$
|
(171,970
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
515
|
|
|
|
411
|
|
|
Share
Based Compensation and Proforma officer compensation
|
|
|
62,174
|
|
|
|
39,000
|
|
|
Debt
extinguishment gain
|
|
|
(377,454
|
)
|
|
|
(24,714
|
)
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
12,827
|
|
|
|
311
|
|
|
Inventories
|
|
|
(14,663
|
)
|
|
|
19,391
|
|
|
Prepaids
and other assets
|
|
|
(1,068
|
)
|
|
|
209
|
|
|
Accounts
payable, trade
|
|
|
(53,276
|
)
|
|
|
6,341
|
|
|
Accrued
expenses
|
|
|
----
|
|
|
|
61,999
|
|
|
Net
cash used in operating activities
|
|
|
(265,099
|
)
|
|
|
(69,022
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases
of furniture, fixtures and equipment
|
|
|
(103
|
)
|
|
|
----
|
|
|
Net
cash used in investing activities
|
|
|
(103
|
)
|
|
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from notes payable
|
|
|
262,730
|
|
|
|
69,370
|
|
|
Bank
overdraft
|
|
|
191
|
|
|
|
(191
|
)
|
|
Net
cash provided by financing activities
|
|
|
262,921
|
|
|
|
69,179
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash
|
|
|
(2,281
|
)
|
|
|
157
|
|
|
Cash
at beginning of period
|
|
|
2,281
|
|
|
|
----
|
|
|
Cash
(overdraft) at end of period
|
|
$
|
----
|
|
|
$
|
157
|
|
See notes
to financial statements.
Invisa,
Inc.
STATEMENTS
OF CASH FLOWS - CONTINUED
|
|
|
Year
Ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
37,132
|
|
|
$
|
203
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for Income Taxes
|
|
$
|
----
|
|
|
$
|
----
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
financing and investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
of liabilities for Common Stock
|
|
$
|
69,757
|
|
|
$
|
-----
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
dividends accrued as liabilities
|
|
$
|
87,750
|
|
|
$
|
54,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
of liabilities for Preferred Stock and dividends paid in Preferred
Stock
|
|
$
|
76,407
|
|
|
$
|
----
|
|
See
notes to financial statements.
Invisa,
Inc.
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 expense 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. Such amounts are occasionally
in excess of the maximum federally insured amounts.
Accounts
Receivable, Major Customer Information and Export Sales
Accounts
receivable are due primarily from companies in the gate manufacturing industry
located throughout the United States and the United Kingdom. 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 2008, Magnetic Automation Corp. was our largest
customer, comprising approximately 21% of our product revenues. During 2009,
Automatic Systems America was our largest customer, comprising approximately 11%
of our product revenues.
Inventories
Inventories
are stated at the lower of cost or market. Cost is determined using
an averaging method, which approximates
the first-in, first-out
method. Inventory consists principally of finished goods and raw
materials.
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
$515 and
$411 for 2008
and 2009 respectively.
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 2008 and 2009, 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, 2009, nor are any
significant amounts expected to occur subsequently. 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 assets 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.
Beginning
January 1, 2007, we adopted 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’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 2008 or
2009.
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, 2009 the preferred stock was convertible into 20,757,500
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.
Recent
Accounting Pronouncements
Recently
Issued Accounting Pronouncements
Adoption
of New Accounting Standards
Accounting
Standards Codification
In June 2009, the FASB issued
Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles (the “Codification”). This standard replaces
SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles,
and establishes only two levels of U.S. generally accepted accounting principles
(“GAAP”), authoritative and nonauthoritative. The FASB ASC has become the source
of authoritative, nongovernmental GAAP, except for rules and interpretive
releases of the SEC, which are sources of authoritative GAAP for SEC
registrants. All other nongrandfathered, non-SEC accounting literature not
included in the Codification will become nonauthoritative. This standard is
effective for financial statements for interim or annual reporting periods
ending after September 15, 2009. The adoption of the Codification changed
the Company’s references to GAAP accounting standards but did not impact the
Company’s results of operations, financial position or liquidity.
Participating
Securities Granted in Share-Based Transactions
Effective January 1, 2009, the
Company adopted a new accounting standard included in ASC 260, Earnings Per
Share (formerly FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”)
03-6-1, Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities). The new guidance
clarifies that non-vested share-based payment awards that entitle their holders
to receive nonforfeitable dividends or dividend equivalents before vesting
should be considered participating securities and included in basic earnings per
share. The Company’s adoption of the new accounting standard did not have a
material effect on previously issued or current earnings per share.
Business
Combinations and Noncontrolling Interests
Effective January 1, 2009, the
Company adopted a new accounting standard included in ASC 805, Business
Combinations (formerly SFAS No. 141(R), Business
Combinations). The new standard applies to all transactions or other
events in which an entity obtains control of one or more businesses.
Additionally, the new standard requires the acquiring entity in a business
combination to recognize all (and only) the assets acquired and liabilities
assumed in the transaction; establishes the acquisition-date fair value as the
measurement date for all assets acquired and liabilities assumed; and requires
the acquirer to disclose additional information needed to evaluate and
understand the nature and financial effect of the business combination. The
Company’s adoption of the new accounting standard did not have a material effect
on the Company’s consolidated financial statements.
Effective January 1, 2009, the
Company adopted a new accounting standard included in ASC 810, Consolidations
(formerly SFAS 160, Noncontrolling Interests in Consolidated Financial
Statements). The new accounting standard establishes accounting and
reporting standards for the noncontrolling interest (or minority interests) in a
subsidiary and for the deconsolidation of a subsidiary by requiring all
noncontrolling interests in subsidiaries be reported in the same way, as equity
in the consolidated financial statements. As such, this guidance has eliminated
the diversity in accounting for transactions between an entity and
noncontrolling interests by requiring they be treated as equity transactions.
The Company’s adoption of this new accounting standard did not have a material
effect on the Company’s consolidated financial statements.
Fair
Value Measurement and Disclosure
Effective January 1, 2009, the
Company adopted a new accounting standard included in ASC 820, Fair Value
Measurements and Disclosures (“ASC 820”) (formerly FASB FSP No 157-2, Effective
Date of FASB Statement No. 157), which delayed the effective date for
disclosing all non-financial assets and non-financial liabilities, except for
items that are recognized or disclosed at fair value on a recurring basis (at
least annually). This standard did not have a material impact on the Company’s
consolidated financial statements.
In April 2009, the FASB issued
new guidance for determining when a transaction is not orderly and for
estimating fair value when there has been a significant decrease in the volume
and level of activity for an asset or liability. The new guidance, which is now
part of ASC 820 (formerly FSP 157-4, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly), requires disclosure of the
inputs and valuation techniques used, as well as any changes in valuation
techniques and inputs used during the period, to measure fair value in interim
and annual periods. In addition, the presentation of the fair value hierarchy is
required to be presented by major security type as described in ASC 320,
Investments — Debt and Equity Securities . The provisions of the new standard
were effective for interim periods ending after June 15, 2009. The adoption
of the new standard on April 1, 2009 did not have a material on the
Company’s consolidated financial statements.
In April 2009, the Company
adopted a new accounting standard included in ASC 820, (formerly FSP 107-1 and
Accounting Principles Board (“APB”) 28-1, Interim Disclosures about Fair Value
of Financial Instruments). The new standard requires disclosures of
the fair value of financial instruments for interim reporting periods of
publicly traded companies in addition to the annual disclosure required at
year-end. The provisions of the new standard were effective for the interim
periods ending after June 15, 2009. The Company’s adoption of this new
accounting standard did not have a material effect on the Company’s consolidated
financial statements.
In August 2009, the FASB issued
new guidance relating to the accounting for the fair value measurement of
liabilities. The new guidance, which is now part of ASC 820, provides
clarification that in certain circumstances in which a quoted price in an active
market for the identical liability is not available, a company is required to
measure fair value using one or more of the following valuation techniques: the
quoted price of the identical liability when traded as an asset, the quoted
prices for similar liabilities or similar liabilities when traded as assets, or
another valuation technique that is consistent with the principles of fair value
measurements. The new guidance clarifies that a company is not required to
include an adjustment for restrictions that prevent the transfer of the
liability and if an adjustment is applied to the quoted price used in a
valuation technique, the result is a Level 2 or 3 fair value measurement. The
new guidance is effective for interim and annual periods beginning after
August 27, 2009. The Company’s adoption of the new guidance did not have a
material effect on the Company’s consolidated financial statements.
Derivative
Instruments and Hedging Activities
Effective January 1, 2009, the
Company adopted a new accounting standard included in ASC 815, Derivatives and
Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities, an amendment of SFAS No.133). The new accounting standard requires
enhanced disclosures about an entity’s derivative and hedging activities and is
effective for fiscal years and interim periods beginning after November 15,
2008. Since the new accounting standard only required additional disclosure, the
adoption did not impact the Company’s consolidated financial
statements.
Other-Than-Temporary
Impairments
In April 2009, the FASB issued
new guidance for the accounting for other-than-temporary impairments. Under the
new guidance, which is part of ASC 320, Investments — Debt and Equity Securities
(formerly FSP 115-2 and 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments), and other-than-temporary impairment is
recognized when an entity has the intent to sell a debt security or when it is
more likely than not that an entity will be required to sell the debt security
before its anticipated recovery in value. The new guidance does not
amend existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities and is effective for
interim and annual reporting periods ending after June 15, 2009. The
Company’s adoption of the new guidance did not have a material effect on the
Company’s consolidated financial statements.
Subsequent
Events
I
n May 2009,
the FASB issued new guidance for subsequent events. The new guidance, which is
part of ASC 855, Subsequent Events (formerly SFAS
No. 165, Subsequent Events) is intended to establish
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. Specifically, this guidance sets forth the period after
the balance sheet date during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events or transactions occurring after the balance sheet date
in its financial statements, and the disclosures that an entity should make
about events or transactions that occurred after the balance sheet date. The new
guidance is effective for fiscal years and interim periods ended after
June 15, 2009 and will be applied prospectively. The Company’s adoption of
the new guidance did not have a material effect on the Company’s consolidated
financial statements. The Company evaluated subsequent events through the date
the accompanying financial statements were issued, which was March 31,
2010.
Accounting
Standards Not Yet Effective
Accounting
for the Transfers of Financial Assets
In June 2009, the FASB issued
new guidance relating to the accounting for transfers of financial assets. The
new guidance, which was issued as SFAS No. 166, Accounting for Transfers of
Financial Assets, an amendment to SFAS No. 140, was
adopted into Codification in December 2009 through the issuance of
Accounting Standards Updated (“ASU”) 2009-16. The new standard eliminates the
concept of a “qualifying special-purpose entity,” changes the requirements for
derecognizing financial assets, and requires additional disclosures in order to
enhance information reported to users of financial statements by providing
greater transparency about transfers of financial assets, including
securitization transactions, and an entity’s continuing involvement in and
exposure to the risks related to transferred financial assets. The new guidance
is effective for fiscal years beginning after November 15, 2009. The
Company will adopt the new guidance in 2010 and is evaluating the impact it will
have to the Company’s consolidated financial statements.
Accounting
for Variable Interest Entities
In June 2009, the FASB issued
revised guidance on the accounting for variable interest entities. The revised
guidance, which was issued as SFAS No. 167, Amending FASB Interpretation
No. 46(R), was adopted into Codification in December 2009 through the
issuance of ASU 2009-17. The revised guidance amends FASB Interpretation
No. 46(R), Consolidation of Variable Interest Entities, in determining
whether an enterprise has a controlling financial interest in a variable
interest entity. This determination identifies the primary beneficiary of a
variable interest entity as the enterprise that has both the power to direct the
activities of a variable interest entity that most significantly impacts the
entity’s economic performance, and the obligation to absorb losses or the right
to receive benefits of the entity that could potentially be significant to the
variable interest entity. The revised guidance requires ongoing reassessments of
whether an enterprise is the primary beneficiary and eliminates the quantitative
approach previously required for determining the primary beneficiary. The
Company does not expect that the provisions of the new guidance will have a
material effect on its consolidated financial statements.
Revenue
Recognition
In October 2009, the FASB issued
ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The new standard changes
the requirements for establishing separate units of accounting in a multiple
element arrangement and requires the allocation of arrangement consideration to
each deliverable based on the relative selling price. The selling price for each
deliverable is based on vendor-specific objective evidence (“VSOE”) if
available, third-party evidence if VSOE is not available, or estimated selling
price if neither VSOE or third-party evidence is available. ASU 2009-13 is
effective for revenue arrangements entered into in fiscal years beginning on or
after June 15, 2010. The Company does not expect that the provisions of the
new guidance will have a material effect on its consolidated 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 1,500,000 shares of the Company’s
Common Stock at $1.00 per share. The Warrants 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
162,500 shares of Common Stock and Detachable Warrants to acquire up to
162,500 shares of the Company’s Common Stock at $1.00 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 is equal to 80% of the market price at the time of conversion,
subject to a floor of $0.50 per share and a ceiling of $1.17 per share.
During 2005, the floor was modified to $0.12 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 10,000 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 2,500,000 shares of the Company’s Common Stock
at $0.30 per share. The warrants expire on August 31, 2010 and are subject
to call by the Company upon the Common Stock trading at a price of $0.60,
a minimum trading volume of 60,000 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 666,667 shares of the Company’s Common Stock at
$0.16 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 equal to 80% of the market price at the time of conversion,
subject to a floor of $0.12 per share and a ceiling of $0.275 per
share.
|
The
Series B Preferred Stock and Series A Preferred Stock as amended 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.
In
2007, 20,000,000 and in 2008 an additional 33,333,333 shares of the
Company’s authorized but unissued common stock were delivered by the Company to
an escrow agent to hold as security for certain short term note obligations of
the Company. The aggregate 53,333,333 shares are not being treated as
outstanding and will only be considered as being issued and outstanding if and
when the shares are released by the escrow agent and delivered to the lender as
a result of a default under the promissory notes and related security
agreement.
In 2008 the Company issued 9,714,955
shares of Common stock in exchange for the redemption of 12,989,167 outstanding
warrants and options and settlement of certain debt totaling
$341,071.
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 C preferred stock is (i) non
voting, (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 $0.12 per common share at the option of the
holder and under certain conditions at the option of the Company.
In 2009 the Company’s Board authorized
the grant of 375,000 shares of its common stock to its Directors as
compensation. Value of the shares was based on the market price at
date of grant aggregated $3,000.
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.
|
|
|
Maximum
Shares
|
|
|
|
|
of
Common
Stock
|
|
|
Plan
|
|
which
can be
issued
|
|
|
2000
Plan
|
|
|
1,200,000
|
|
|
2002
Plan
|
|
|
1,500,000
|
|
|
2003
Plan
|
|
|
1,500,000
|
|
|
2003A
Plan
|
|
|
3,500,000
|
|
|
2006
Plan
|
|
|
2,500,000
|
|
|
|
|
|
10,200,000
|
|
Activity
with respect to the stock-based compensation plans is summarized as
follows:
|
|
Shares
|
Range
of
Exercise
Prices
|
Weighted-
average
Option
per
price per
share
|
|
Outstanding
at December 31, 2007
|
5,840,000
|
$0.11
|
$0.11
|
|
Options
Granted
|
----
|
----
|
----
|
|
Options
Canceled/Expired
|
(5,840,000)
|
$0.11
|
$0.11
|
|
Options
Outstanding at December 31, 2008 and 2009
|
----
|
----
|
----
|
Aggregate
intrinsic value of options outstanding at December 31, 2009 is
$0.00.
The total
intrinsic value of options exercised during 2008 and 2009 was $0.00 and $0.00,
respectively.
Activity
with respect to warrants for common stock is as follows:
|
|
Shares
|
Range
of
Exercise
Prices
|
Weighted-
average
Option
per
price per
share
|
|
Outstanding
at December 31, 2007
|
7,149,167
|
0.62
|
0.62
|
|
Warrants
canceled/expired
|
(7,149,167)
|
0.62
|
0.62
|
|
Outstanding
at December 31, 2008
|
----
|
|
----
|
As of
December 31, 2009, there was no unrecognized compensation cost related to
non-vested share-based compensation arrangements.
NOTE E -
COMMITMENT AND CONCENTRATIONS
Operating
Leases
In February 2010, the Company began
occupying space in a building in Sarasota, Florida under a lease with a one year
term expiring February 28, 2010, and annual lease payments of approximately
$23,208. Rent expense for the years ended December 31, 2008 and 2009, was $8,535
and $5,530, respectively.
Concentrations
During 2008, one customer
comprised approximately 21% of total sales revenue.
During
2009, one customer comprised approximately 11% of our total sales
revenue.
NOTE F -
DUE TO STOCKHOLDERS AND OFFICERS
Due to
stockholders and officers consists of the following at December 31, 2008 and
2009:
|
Monarch
Point Fund, Ltd
|
|
$
|
85,074
|
|
|
Edmund
C. King
|
|
|
20,260
|
|
|
Total
|
|
$
|
105,334
|
|
These
advances are due on demand and bear interest at 10% to Monarch Point Fund, Ltd.
and no interest is due on the remaining note of $20,260.
NOTE G -
LINES OF CREDIT
The
Company has four lines of credit with a private investor. The credit
facilities allow for advances up to $500,000, 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 53,333,333 shares of
the Company’s common stock which are held in escrow. Because the
credit facilities are not in default the shares are not treated as issued and
outstanding. At December 31, 2009, $563,400 is
outstanding. The Notes were due December 31, 2009, but under an oral
understanding had been held in abeyance while discussions are in progress for
anticipated additional financing under proposed terms consistent with the
existent notes. Accrued interest under these obligations totaled
$64,920 at December 31, 2009; interest expense was $56,348 and $62,202 during
2008 and 2009, respectively. (See Note J)
NOTE H –
GAIN ON THE SETTLEMENT OF DEBT
During
2008 and 2009 the Company recorded a gain on the settlement of debt as
follows:
|
Cash:
|
|
2008
|
|
|
2009
|
|
|
Amount
of debt settled
|
|
$
|
190,955
|
|
|
$
|
24,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
payments
|
|
|
(84,815
|
)
|
|
|
----
|
|
|
Gain
|
|
|
106,140
|
|
|
|
24,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock:
|
|
|
|
|
|
|
|
|
|
Amount
of debt settled
|
|
|
341,071
|
|
|
|
----
|
|
|
Fair
value of common shares issued
|
|
|
(69,757
|
)
|
|
|
----
|
|
|
Gain
|
|
|
271,314
|
|
|
|
----
|
|
|
|
|
$
|
377,454
|
|
|
$
|
24,714
|
|
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, 2008 or 2009.
Reconciliation
of the federal statutory income tax rate of 34.0% to the effective income tax
rate is as follows at December 31:
|
|
|
2008
|
|
2009
|
|
|
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
Company has a federal net operating loss carryforward of approximately $16.9
million as of December 31, 2009 which expire through 2029. 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.
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 no longer
subject to U.S. federal tax examinations for fiscal years prior to 2005, and we
are not subject to audits prior to the 2005 fiscal year for the state
jurisdiction.
NOTE
J: SUBSEQUENT EVENTS
In March 2010, the
Company’s senior lender agreed to extend the maturity dates of the outstanding
Senior Secured Promissory Notes aggregating $628,320 (including $64,920 accrued
interest) at December 31, 2009 until March 1, 2012. Terms and
provisions of the notes otherwise remained unchanged.
The Senior Lender also established a
$150,000 Revolving Line of Credit to finance operations of the Company through
December 31, 2010. The Revolving Line has similar terms and
provisions to the previous notes between the Company and the Senior Lender and
is due and payable March 1, 2012.
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.
F-15
Exhibit 10.66
SENIOR
SECURED PROMISSORY NOTE
|
$
128,319.10
|
March 24,
2010
|
|
Sarasota,
Florida
|
|
FOR VALUE
RECEIVED, the undersigned,
INVISA, INC.
, a Nevada
corporation (“
Borrower
”)
having an address at 1800 2
nd
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 2
nd
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 ONE
HUNDRED TWENTY EIGHT THOUSAND THREE HUNDRED NINETEEN United States Dollars and
TEN cents (U.S. $128,319.10), 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
”).
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 Obigations shall be due and payable on March 1, 2012
(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.
8. [Intentionally
Deleted]
9.
Security
.
This Promissory
Note shall be secured by (i) Seventeen Million, Sixty Six Thousand Six Hundred
Sixty Eight (17,066,668) shares of common stock of Borrower to be issued as of
the date hereof or when available, or the equivilant thereof, in a form of
preferred stock or other security to be designated by Borrower with
such terms and conditions as are acceptable to the Lender, 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.
(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
therefrom 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 therefor) 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 Agreeent, 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 limitiation, 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;
(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,
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
.
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 arms length transacton 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 affilates 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: __________________________
Name:
Edmund
C. King
Title:
Chief
Financial Officer
|
|
|
|
SENIOR
SECURED PROMISSORY NOTE
|
$
150,000.00
|
March 24,
2010
|
Sarasota,
Florida
FOR VALUE
RECEIVED, the undersigned,
INVISA, INC.
, a Nevada
corporation (“
Borrower
”)
having an address at 1800 2
nd
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 2
nd
Street, Suite 970 Sarasota, Florida 34236, or such other place as the Lender may
designate inwriting, the principal amount up to and not to exceed ONE HUNDRED
FIFTY THOUSAND United States Dollars (U.S. $150,000.00), 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
”). Any
principal amount of this Note paid or prepaid may be reborrowed prior to the
Maturity Date.
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 Obigations shall be due and payable on December 31, 2010 (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.
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 ($___________________) Dollars under this
Note.
9.
Security
.
This Promissory
Note shall be secured by (i) up to Twenty Million, (20,000,000) shares of common
stock of Borrower to be issued as of the date hereof or when available, or the
equivilant thereof, in a form of preferred stock or other security to be
designated by Borrower with such terms and conditions as are
acceptable to the Lender, 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.
(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
therefrom 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 therefor) 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 Agreeent, 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
limitiation, 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;
(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
“Accelleration”). 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 up to three (3)
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
.
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 arms length transacton 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 affilates 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.
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INVISA,
INC.
By: __________________________
Name:
Edmund
C. King
Title:
Chief
Financial Officer
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8
Exhibit
10.68
NOTE
EXTENSION AGREEMENT
This
Note Extension Agreement (this "Extension Agreement"), by and between Invisa,
Inc., a Nevada corporation, having a business at 1800 2
nd
Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian
Investors, Inc., a Delaware corporation, having an address at 1800 2
nd
Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of
this 17th day of March, 2010 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 February 28, 2007, in the
principal amount of up to One Hundred Fifty Thousand ($150,000.00) (the
“Note”),
WHEREAS, the Note is secured by (a)
an aggregate of Twenty Million (20,000,000) 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 August 28, 2007; 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 August 28,
2007 to March 1, 2012.
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.
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.
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INVISA,
INC.
|
CENTURIAN
INVESTORS, INC.
|
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Name:
|
Name:
|
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Title:
|
Title:
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2
Exhibit
10.69
NOTE
EXTENSION AGREEMENT
This
Note Extension Agreement (this "Extension Agreement"), by and between Invisa,
Inc., a Nevada corporation, having a business at 1800 2
nd
Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian
Investors, Inc., a Delaware corporation, having an address at 1800 2
nd
Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of
this 17th day of March, 2010 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 June 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, 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 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 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 June 1, 2008
to March 1, 2012.
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.
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.
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INVISA,
INC.
|
CENTURIAN
INVESTORS, INC.
|
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Name:
|
Name:
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Title:
|
Title:
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2
Exhibit
10.70
NOTE
EXTENSION AGREEMENT
This
Note Extension Agreement (this "Extension Agreement"), by and between Invisa,
Inc., a Nevada corporation, having a business at 1800 2
nd
Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian
Investors, Inc., a Delaware corporation, having an address at 1800 2
nd
Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of
this 17th day of March, 2010 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 Fifty Thousand ($150,000.00) (the
“Note”),
WHEREAS, the Note is secured by (a)
an aggregate of Twenty Million (20,000,000) 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 May 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 May 31, 2008
to March 1, 2012.
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.
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.
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INVISA,
INC.
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CENTURIAN
INVESTORS, INC.
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Name:
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Name:
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Title:
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Title:
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2
Exhibit
10.71
NOTE
EXTENSION AGREEMENT
This
Note Extension Agreement (this "Extension Agreement"), by and between Invisa,
Inc., a Nevada corporation, having a business at 1800 2
nd
Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian
Investors, Inc., a Delaware corporation, having an address at 1800 2
nd
Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of
this 17th day of March, 2010 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 25, 2007,
in the principal amount of up to Fifty Thousand ($50,000.00) (the
“Note”),
WHEREAS, the Note is secured by (a)
an aggregate of Six Million Six Hundred Sixty Six Thousand, Six Hundred Sixty
Six (6,666,666) 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 August 31, 2007; 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 August 31,
2007 to March 1, 2012.
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.
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.
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INVISA,
INC.
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CENTURIAN
INVESTORS, INC.
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Name:
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Name:
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Title:
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Title:
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2
Exhibit
10.72
NOTE
EXTENSON AGREEMENT
This
Note Extension Agreement (this "Extension Agreement"), by and between Invisa,
Inc., a Nevada corporation, having a business at 1800 2
nd
Street, Suite 965, Sarasota, Florida 34236 (the “Borrower”), and Centurian
Investors, Inc., a Delaware corporation, having an address at 1800 2
nd
Street Suite 970, Sarasota, Florida 34236 (the “Lender”) is entered into as of
this 17th day of March, 2010 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 November 9, 2007, in the
principal amount of up to Fifty Thousand ($50,000.00) (the “Note”),
WHEREAS, the Note is secured by (a)
an aggregate of Six Million Six Hundred Sixty Six Thousand, Six Hundred Sixty
Six (6,666,666) 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 December 31, 2007; 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 December 31,
2007 to March 1, 2012.
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.
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.
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INVISA,
INC.
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CENTURIAN
INVESTORS, INC.
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Name:
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Name:
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Title:
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Title:
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2
Exhibit
10.73
Terms
of Exchange
Invisa
Inc.
EXCHANGE
OF
SERIES
B PREFERRED STOCK FOR SHARES OF SERIES C PREFERRED STOCK
AND
CONSENT
SOLICITATION
THIS
EXCHANGE EXPIRES AT 9:00 A.M., E.S.T., ON JANUARY 28, 2010,
UNLESS
THE OFFER IS EXTENDED OR MODIFIED BY THE COMPANY.
Invisa,
Inc. (the "Company," "our," "we" or "us") is offering to exchange on a share for
share basis, upon the terms and subject to the conditions set forth in this
Terms of Exchange and in the related letters of transmittal and consent (the
"Exchange"), all of our outstanding Series B Preferred Stock, par value
$0.001 per share ("Series B Preferred Stock") for shares of Series C
Preferred Stock, par value $0.001 per share ("Series C Preferred Stock" and
together with Series B Preferred Stock, collectively hereinafter referred
to as the "Preferred Stock").
Concurrently
with the Exchange, we are soliciting consents (the "Consent Solicitation") from
holders of the Series B Preferred Stock to amend our Charter (the "Charter") to
modify the preferential terms of the Series B Preferred Stock, including
modifications to dividends and conversion, as described in this Terms of
Exchange ("Proposed Amendments").
If
successfully completed, in the Exchange and Consent Solicitation you will
receive one share of Series C Preferred Stock for each share of Series B
Preferred Stock exchanged. Any accumulated and unpaid dividends of
the Series B Preferred Stock presented for exchange by any Holder shall be paid
in equal shares of Series C Preferred Stock.
Furthermore,
holders representing a majority of the outstanding shares of Series B Preferred
Stock, voting as a single class, must also approve the Proposed Amendments in
order to affect the Proposed Amendments, which may be accomplished by submitting
executed letter(s) of transmittal and consent and exchanging your shares of
Series B Preferred Stock. You must validly exchange all shares of Series B
Preferred Stock that you own and deliver your consent to the Proposed Amendments
to the Charter to modify the terms of the Series B Preferred Stock in order to
participate in the Exchange and Consent Solicitation.
The Exchange and Consent Solicitation
will expire at 9:00 a.m., Eastern Standard Time, on January 28, 2010,
unless extended, modified or otherwise terminated by us. The term "expiration
date" means 9:00 a.m., Eastern Standard Time, on January 28, 2010, unless
we extend or modify the period of time for which the Exchange and Consent
Solicitation are open, in which case the term "expiration date" means the latest
time and date on which the Exchange and Consent Solicitation, as so extended,
expire.
The Exchange and Consent Solicitation
and the securities to be issued in the Exchange and Consent Solicitation have
not been approved or disapproved by the Securities and Exchange Commission (the
"SEC"), any state securities commission, or the similar commission or
governmental agency of any foreign jurisdiction, nor has the SEC, any state
securities commission, or the similar commission or governmental agency of any
foreign jurisdiction determined whether the information in this Terms of
Exchange is truthful or complete. None of the SEC, any state securities
commission or any similar commission or governmental agency of any foreign
jurisdiction has passed upon the merits or fairness of the Exchange and Consent
Solicitation, or passed upon the adequacy or accuracy of the disclosure
contained in this Terms of Exchange. Any representation to the contrary is a
criminal offense.
This
Terms of Exchange is being mailed to holders of the Series B Preferred Stock on
or around January 11, 2010.
There
are 9,000 shares of our Series B Preferred Stock and 6628 shares of our
Series C Preferred Stock outstanding, each of which has a liquidation
preference of $100.00 per share.
We
are seeking consents from holders of the Series B Preferred Stock to amend
certain provisions (collectively, the "Proposed Amendments") applicable to the
Series B Preferred Stock as described herein. The affirmative vote of
holders of outstanding shares of Series B Preferred Stock is necessary to
approve the Proposed Amendments modifying the preferential terms of the Series B
Preferred Stock. The holders representing a majority of the
outstanding shares of Series B Preferred Stock, voting as a single class, must
approve the Proposed Amendments which may be accomplished by submitting executed
letter(s) of transmittal and consent and validly exchanging your shares of
Series B Preferred Stock. If we do not receive the requisite consent from the
holders of the Series B Preferred Stock, the Company may or may not elect to
exchange the Series B Preferred Stock presented for exchange together with
accumulated and unpaid dividends on the Preferred Stock.
None
of our officers, employees, the Board, or any of our financial advisors is
making a recommendation to any holder of Preferred Stock as to whether you
should exchange shares in the Exchange and Consent Solicitation. You must make
your own investment decision regarding the Exchange and Consent Solicitation
based upon your own assessment of the value of the Series B Preferred Stock, the
effect of holding shares of the Series B Preferred Stock upon the approval of
the Proposed Amendments, your liquidity needs, your investment objectives and
any other factors you deem relevant.
In
order to exchange shares in the Exchange and Consent Solicitation, you must
consent to the Proposed Amendments by executing letters of transmittal and
consent. No meeting has been or is being held in conjunction with the
Consent Solicitation. Consents may only
be submitted on the terms set
forth herein.
Our
officers, directors and employees may solicit exchanges from holders of our
Preferred Stock and may answer inquiries concerning the Exchange and Consent
Solicitation, but they will not receive additional compensation for soliciting
exchanges or answering any such inquiries.
The
Company will act as its own agent for the Exchange and Consent
Solicitation.
Questions
related to the terms of the Exchange and Consent Solicitation and requests for
assistance or for additional copies of this Terms of Exchange, the letters of
transmittal and consent or any other documents may be directed to the Company
using its contact information set forth herein or by telephone at
(941) 870-3950. Beneficial owners may also contact their custodian for
assistance concerning the Exchange and Consent Solicitation.
SUMMARY
The Terms of Exchange and the
related letters of transmittal and consent each contain important information
that should be read carefully before any decision is made with respect to the
Exchange and Consent Solicitation. The following summary is qualified in its
entirety by the more detailed information appearing elsewhere in the Terms of
Exchange and the related letters of transmittal and consent.
Invisa,
Inc.
Invisa Inc.
is a corporation incorporated in Nevada. Our management has been
seriously challenged by the unprecedented economic turmoil. One
of our goals in this challenging market environment has been to align the costs
of our operations to our cash flows. The acceptance of this Exchange and Consent
Solicitation would reduce the Company's continuing obligation to pay or
accumulate quarterly dividends on the Series B Preferred Stock, thereby allowing
the Company to use or preserve cash for other purposes and would also allow the
Company to elect to pay accrued but unpaid dividends in kind. The aggregate
dividends on the outstanding Preferred Stock total approximately $ 300,533.00 as
of September 30, 2009.
We
believe the elimination of the Series B Preferred Stock and the related
dividends will give us the enhanced balance sheet flexibility to operate and
grow our business. We additionally believe that with an improved capital
structure there are multiple business opportunities we can pursue to enhance
stockholder value that have not previously been feasible.
If
the Exchange and Consent Solicitation is not approved, there may be a near-term
negative effect on our business, results of operations, and financial position,
including the potential inability to satisfy our liabilities and the long-term
dividend-related cash requirements of our Series B Preferred Stock. The Series B
Preferred Stock will remain issued and outstanding, and entitled to all of the
preferential rights associated with the Series B Preferred Stock, including the
right to receive accumulated dividends. If we do not successfully
complete the Exchange and Consent Solicitation, we currently cannot make
accumulated or future dividend payments on our Series B Preferred Stock, which
could adversely affect our business. Furthermore, the Preferred Stock is
entitled to receive $100.00 per share (before any payments are made to the
holders of our Common Stock and any other junior stock) upon any voluntary or
involuntary liquidation, dissolution or winding up of our affairs. However, if
the Proposed Amendments are not approved, upon any voluntary or involuntary
liquidation, dissolution or winding up of our affairs, the Series B Preferred
Stock will also continue to be entitled to any accumulated and unpaid dividends
(whether or not declared). Any liquidating distributions to capital stock are
subject to payments on outstanding indebtedness. The Series B Preferred Stock
will continue to rank senior to our Common Stock with respect to the payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding up and be entitled to a larger amount of our assets. Our ability to make
distributions to holders of Common Stock will remain limited.
The
Company cannot make any assurances that it will receive the requisite consents
of the holders of the Preferred Stock and that all the conditions will be met to
complete the Exchange and Consent Solicitation.
Summary
Description of the Exchange and Consent Solicitation
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The
Company
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Invisa, Inc.
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The
Preferred Stock Subject to
the
Exchange and Consent
Solicitation
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All
outstanding shares of our Series B Preferred Stock.
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The
Exchange
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We
are offering to exchange one share of Series B Preferred Stock for a
newly issued shares of Series C Preferred Stock, for any and all of
our shares of Series B Preferred Stock validly exchanged prior to the
expiration of the Exchange and Consent Solicitation.
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Consideration
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In
the Exchange and Consent Solicitation for each exchanged share of Series B
Preferred Stock, the holder will receive one share of newly issued Series
C Preferred Stock. Any accumulated and unpaid dividends shall
be converted into shares of Series C Preferred Stock at a rate of one
share for each $100.00 of accumulated and unpaid dividends at the time of
the exchange.
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Aggregate
Consideration
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Assuming
all shares of Preferred Stock are validly exchanged, we will cancel an
aggregate of 9000 shares of Series B Preferred Stock and issue an
aggregate of 9000 shares of Series C Preferred Stock, which does not
include accrued and unpaid dividends.
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Accumulated
and Unpaid
Dividends
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The
aggregate accumulated and unpaid dividends on the Series B Preferred Stock
as of September 30, 2009 is $300,533.00, which shall be converted into
approximately 3005 shares of Series C Preferred Stock as of the expiration
date. Additional dividends due and payable through December 31,
2009 shall be calculated and converted at the same rate.
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The
Consent Solicitation
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In
order to exchange shares in the Exchange and Consent Solicitation, holders
of our Series B Preferred Stock are required to consent (by executing the
letters of transmittal and consent) to amend the Charter to modify the
terms of the Series B Preferred Stock as set forth in
Annex A
.
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Expiration
of the Exchange
and
Consent Solicitation
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The
Exchange and Consent Solicitation will expire at 9:00 a.m., Eastern
Standard Time, on January 28, 2010, unless extended or earlier terminated
by us.
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You
should consider carefully all of the information set forth in this Terms
of Exchange before deciding whether to participate in the Exchange and
Consent Solicitation.
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Additional
Documentation;
Further
Information;
Assistance
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Any
requests for assistance concerning the Exchange and Consent Solicitation
and requests for additional copies of this Terms of Exchange and the
letters of transmittal and consent may be directed to the Company at the
following address and telephone number:
PO Box 49376, Sarasota, Fl 34230
941-870-3950
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QUESTIONS AND ANSWERS
ABOUT
THE
EXCHANGE AND CONSENT SOLICITATION
The following are
some questions regarding the Exchange and Consent Solicitation that you may have
as a holder of the Series B Preferred Stock and the answers to those questions.
We urge you to read carefully the entire Terms of Exchange, the related letters
of transmittal and consent, our annual report on Form 10-K for the year
ended December 31, 2008 (the "Annual Report") and our Quarterly Report on
Form 10-Q for the period ended September 30, 2009 (the "Quarterly Report").
Additional important information is contained in the remainder of the Terms of
Exchange.
What is the purpose of the Exchange
and Consent Solicitation?
One
of our goals in this challenging market environment has been to align the costs
of our operations to our cash flows. The acceptance of this Exchange and Consent
Solicitation would reduce the Company's continuing obligation to pay or
accumulate quarterly dividends on the Series B Preferred Stock and allow the
Company to pay accrued and unpaid dividends in kind, thereby allowing the
Company to use or preserve cash for other purposes and improve its balance
sheet. Currently, the aggregate dividends on the outstanding Preferred Stock
total approximately $300,533.00 as of September 30, 2009.
If
we receive the requisite approval from the holders of the Series B Preferred
Stock and the Exchange and Consent Solicitation is completed, then
contemporaneously with the closing we will pay all accumulated and unpaid
dividends on the Series B Preferred Stock through the issuance of additional
shares of Series C Preferred Stock. Those holders who do not exchange their
shares of Series B Preferred Stock, despite the completion of the Exchange and
Consent Solicitation, will not be paid any cumulated dividends on the Series B
Preferred Stock. Further, if the Exchange and Consent Solicitation is completed,
our obligation to pay future accumulated and unpaid dividends on any remaining
outstanding shares of Preferred Stock will be eliminated and future dividends,
if any, will be eliminated.
We
believe the significant reduction or elimination of the outstanding Series B
Preferred Stock and the elimination of the related dividends obligations will
give us the enhanced balance sheet flexibility to operate and grow our business.
We additionally believe that with an improved capital structure there are
multiple business opportunities we can pursue to enhance stockholder value that
have not previously been feasible.
If
the Exchange and Consent Solicitation is not approved, there may be a near-term
negative effect on our business, results of operations, and financial position,
including the potential inability to satisfy our liabilities and the long-term
dividend-related cash requirements of our Series B Preferred Stock and
obligations pursuant to the terms of our remaining trust preferred securities.
We currently have no present intention to pay accumulated or future dividends on
the Series B Preferred Stock.
What will I receive in the Exchange and Consent Solicitation if I exchange my
shares of Preferred Stock and they are accepted?
If
successfully completed, for every one share of Series B Preferred Stock
exchanged, you will receive one share of Series C Preferred
Stock. Additionally, any accrued and unpaid interest as of December
31, 2009, on the Series B Preferred Stock will be paid by the issuance of
additional Series C Preferred Stock.
When will I receive my Series C Preferred Stock?
If
all terms and conditions for completion of the Exchange and Consent Solicitation
are satisfied or waived, we will issue for all validly exchanged shares of
Series B Preferred Stock for shares of Series C Preferred Stock as set forth
herein promptly after the expiration date of the Exchange and Consent
Solicitation. Unless otherwise indicated on the Letter of Transmittal and
Consent, newly issued share certificates for Series C Preferred Stock shall be
delivered to the address of the Holder on the books and records of the
Company.
What are the conditions to the closing of the Exchange and Consent
Solicitation?
We
are not obligated to purchase any exchanged shares of Preferred Stock if (1)
there is any litigation regarding the Exchange and Consent Solicitation
challenging or seeking to make illegal, materially delay, restrain or prohibit
the Exchange and Consent Solicitation; or which would have a material adverse
effect on us; (2) the consummation of the Exchange and Consent Solicitation
would violate any law, rule or regulation applicable to us; (3) any law, rule,
regulation or governmental order becomes applicable to us that results, directly
or indirectly, in the consequences described under paragraph 1 above; or
(4) less than a majority of the outstanding shares of the Series B Preferred
Stock, voting as a single class are exchanged (and thereby consent to the
Proposed Amendments to our Charter) in the Exchange and Consent
Solicitation. We will, in our reasonable judgment, determine
whether each of the Exchange and Consent Solicitation conditions have been
satisfied and whether to waive any conditions that have not been
satisfied.
If the Exchange and Consent
Solicitation is NOT successfully completed, what will be the consequences to the
stockholders and the Company?
If
the Exchange and Consent Solicitation is not successfully completed, the Series
B Preferred Stock will remain issued and outstanding, and entitled to all of the
preferential rights associated with the Preferred Stock, including the right to
receive dividends. Given our current financial condition, we
currently cannot pay dividends on the Series B Preferred Stock if the Exchange
and Consent Solicitation is not successfully completed. If the Exchange and
Consent Solicitation is not successfully completed, the Series B Preferred Stock
will continue to rank senior to our Common Stock with respect to the payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding up and be entitled to a larger amount of our assets. Plus, our ability
to make distributions to holders of Common Stock will remain limited. Unless all
of the cumulative dividends due and owing on the Series B Preferred Stock are
paid in full, the Company will not be able to declare dividends or distributions
on the Common Stock of the Company in the future.
There
may be significant adverse consequences to the Company if the proposal to
approve the Proposed Amendments is not approved by the holders of Series B
Preferred Stock, including the potential inability to satisfy our liabilities
and the long-term dividend-related cash requirements of our Series B Preferred
Stock. The Company will continue to be obligated to pay accumulated dividends on
the Series B Preferred Stock.
In
light of the continuing economic turmoil, our ability to continue our operations
is dependent upon our ability to implement successfully our strategic
initiatives and acquire new operations that contribute sufficient additional
cash flow to enable us to meet our current and future expenses. Our future
financial performance and success are dependent in large part upon our ability
to implement our contemplated strategies successfully. To the extent that we are
not successful in reducing our payment obligations, we would be unlikely to be
able to continue our operations as planned, thereby requiring us to reduce our
operating costs and expenses so that our income can cover those costs. As a
result, we may not be able to accomplish our goals, rebuild our business, and,
given the limited opportunities available in the financial market, we may be
required to change our current plan of operations, which we cannot determine at
this time, but could include a wind down of the Company.
If I decide not to exchange my shares of Preferred Stock and the Exchange and
the Consent Solicitation is completed, how will the completion of the Exchange
and the Consent Solicitation affect my shares of Preferred Stock?
If
you decide not to exchange your shares of Preferred Stock and the Proposed
Amendments take effect, the Series B Preferred Stock will no longer accrue
dividends and any accrued and unpaid dividends may be satisfied by either (i)
cash, (ii) in Series B Preferred Stock or (iii) in common stock of the Company,
by the Company at its election. In addition, the Company may convert
your Series B Preferred Stock into common stock at its election at any time
after the Proposed Amendments take effect.
Am I required to exchange my shares
of Preferred Stock in order to receive the accumulated and unpaid dividends on
my shares of Preferred Stock?
No.
If the Exchange and Consent Solicitation is successfully completed, but you
choose not to exchange your shares of Series B Preferred Stock, you will still
be entitled to receive the accumulated and unpaid dividends on your shares of
Series B Preferred Stock until such time as the Proposed Amendments become
effective. However, the Company does not have adequate funds to pay
such dividends at this time and there can be no assurance that you will receive
payment on the accumulated and unpaid dividends in the future. In
addition, the Proposed Amendments will permit the Company to satisfy any
accumulated and unpaid dividends by issuing you additional shares of the Series
B Preferred Stock in lieu of a cash payment.
Will I receive accumulated and unpaid dividends if the Exchange and Consent
Solicitation is NOT successfully completed?
All dividends accrued as of the date of the Exchange shall remain an obligation
of the Company; however, the Company is not able to pay any of the accumulated
and unpaid dividends at this time and there can be no assurance that the Company
will have the monetary resources to pay such dividends in the
future.
When will the Exchange and Consent Solicitation expire?
The
Exchange and Consent Solicitation is currently scheduled to expire at
9:00 a.m., Eastern Standard Time, on January 28, 2010. We may,
however, extend the Exchange and Consent Solicitation from time to time as
necessary until all the conditions to the Exchange and Consent Solicitation have
been satisfied or waived.
Under what circumstances can
the Exchange and Consent Solicitation be extended?
We
may extend the Exchange and Consent Solicitation for any period at our sole
discretion to increase the time in which holders of the Series B Preferred Stock
may exchange their shares. We will also extend the expiration date of the
Exchange and Consent Solicitation if required by applicable law or
regulation. You should note that it is highly unlikely that the
period of time for the exchange would be later than January28,
2010.
What happens to my exchanged shares
if the Exchange and Consent Solicitation is terminated?
If the Exchange and Consent
Solicitation is terminated and you previously have exchanged shares, we will
return certificates for such shares of Series B Preferred Stock exchanged as
soon as practicable following the termination of the Exchange and Consent
Solicitation without expense to the exchanging stockholder.
How will I be notified if the Exchange and Consent Solicitation is extended,
amended or terminated?
If
the Exchange and Consent Solicitation is extended, amended or terminated, we
will promptly notify all holders of the Series B Preferred at the address of
record on the books of the Company.
Will I have to pay any fees or commissions for participating in the Exchange and
Consent Solicitation?
No.
May I exchange only a portion of the shares of Preferred Stock that I
hold?
No.
You must exchange all of your shares of Series B Preferred Stock to participate
in the Exchange and Consent Solicitation.
How do I exchange my shares of Preferred Stock?
If
you hold physical share certificates and are the record owner of your shares,
you must deliver the certificates representing your shares of Series B Preferred
Stock, together with completed letters of transmittal and consent and any other
documents required by the letters of transmittal and consent, to the Company, no
later than the time the Exchange and Consent Solicitation expires.
What is the Consent
Solicitation?
We
are soliciting consents from holders of the Series B Preferred Stock to amend
the Charter to modify the preferential terms of the Series B Preferred Stock
including modifications to dividend. Each share of Series B
Preferred Stock (equal to each $100.00 of liquidation preference) will be
entitled to one vote on the Consent Solicitation.
In
order to complete the purchase of the Series B Preferred Stock in the Exchange
and Consent Solicitation, we must receive the requisite approvals of the
Proposed Amendments from the holders of the Series B Preferred
Stock.
Do I have to deliver my consent in the Consent Solicitation in order to exchange
my shares of Series B Preferred Stock validly in the Exchange and Consent
Solicitation?
Yes.
You must consent to the Proposed Amendments in order to exchange your shares of
Series B Preferred Stock in the Exchange and Consent Solicitation. Your
participation in the Exchange and Consent Solicitation is conditioned on your
execution of a written consent approving the Proposed Amendments, and our
completion of the Exchange and Consent Solicitation is conditioned on obtaining
consents from the requisite number of holders of the Preferred Stock (voting
together as a single class) to the Proposed Amendments. There is no
record date for the Exchange and Consent Solicitation, and the holders of a
majority of the outstanding shares of Series B Preferred Stock as of the
expiration date will be required to consent to the Proposed Amendments pursuant
to the terms set forth herein.
What vote is required to approve the
Proposed Amendments?
Holders
representing a majority of the outstanding shares of Preferred Stock, voting as
a single class, must approve the Proposed Amendments in order to affect the
Proposed Amendments, which may be accomplished by submitting executed letter(s)
of transmittal and consent and validly exchanging your shares of Series B
Preferred Stock.
May
I deliver a consent to only some of the Proposed
Amendments?
No.
You must consent to all of the Proposed Amendments affecting the Series B
Preferred Stock you hold if you wish to validly exchange any of your shares of
Preferred Stock.
How do I deliver my consent to the
Proposed Amendments?
If
you are a record holder of shares of Preferred Stock, by submitting executed
letters of transmittal and consent and validly exchanging your shares of Series
B Preferred Stock, you will be consenting to all of the Proposed Amendments to
the terms of the Preferred Stock.
When
will the Proposed Amendments become effective?
If
we receive the requisite approval of the holders of the Series B Preferred Stock
and all other conditions are met, the Proposed Amendments will become effective
upon the filing by the Company of the Amendment to the Certificate of
Designation of the Series B Preferred Stock with the Secretary of State of the
State of Nevada (the “Amendment”) or at a later date and time
specified in the amendment. The Company intends to file the Amendment
promptly upon the earlier of receipt of a majority of the consents of the Series
B Preferred Stock or, after the expiration of the Exchange and Consent
Solicitation, but not later than January 31, 2009.
Are
you making a recommendation regarding whether I should exchange in the Exchange
and Consent Solicitation?
No.
You must make your own investment decision regarding the Exchange and Consent
Solicitation based upon your own assessment of the market value of the Series B
Preferred Stock, the effect of holding shares of Series B Preferred Stock if the
Proposed Amendments are approved, your liquidity needs, your investment
objectives and any other factors you deem relevant.
What are the tax consequences of the
transaction to me?
We
urge you to consult with your own tax advisor as to the particular tax
consequences to you of the Exchange and Consent Solicitation.
Does
the Company intend to remain a public company following the completion of the
Exchange and Consent Solicitation?
Yes.
We intend to remain a public company.
Whom do I call if I have any questions on how to exchange my shares of Preferred
Stock or consent to the Proposed Amendments, or any other questions relating to
the Exchange and Consent Solicitation?
Questions
related to the terms of the Exchange and Consent Solicitation and requests for
assistance, as well as for additional copies of this Terms of Exchange, the
letters of transmittal and consent or any other documents, may be directed to
the Company at its mailing address, PO Box 49376, Sarasota, Florida 34230 or by
telephone at (941) 870-3750.
Where can I find more information about Invisa, Inc.?
For
more information, see the Annual Report and the Quarterly Reports filed with the
Securities and Exchange Commission at
www.sec.gov
.
Page
10
Exhibit
10.74
AMENDED
AND RESTATED
CERTIFICATE
OF DESIGNATIONS OF PREFERENCES AND RIGHTS
OF
SERIES B
CONVERTIBLE PREFERRED STOCK
OF
INVISA,
INC.,
a Nevada
corporation
The
undersigned, Edmund C. King, certifies that:
1. He
is the duly acting President of Invisa, Inc., a corporation organized and
existing under the Corporation Code of the State of Nevada (the
"CORPORATION").
2.
Pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation of the
Corporation, and pursuant to the provisions of
the Corporations Code of the State
of Nevada, said Board of
Directors, pursuant to a meeting held on January
11, 2010, adopted a resolution amending and
restating the rights, preferences, privileges and
restrictions of, and the number of shares comprising, the
Corporation's Series B Convertible Preferred Stock, which
resolution is as follows:
RESOLVED, that
a series of Preferred Stock in the Corporation, having the rights,
preferences, privileges and restrictions, and the number
of shares constituting such series and the designation of such series,
authorized by the Board
of Directors of the Corporation pursuant to
authority given by the Corporation's Certificate of
Incorporation, be, and hereby is, amended and restated as set forth
below.
NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors hereby
amends and restates the
rights, preferences, privileges and restrictions relating
to, the Series B Preferred Stock as follows:
(a) Determination. The
series of Preferred Stock is hereby designated Series B Convertible Preferred
Stock (the "SERIES B PREFERRED STOCK").
(b)
Authorized Shares. The number of authorized shares constituting the Series B
Preferred Stock shall be Ten Thousand (10,000) shares of such
series.
(c) Dividends. On
or after January 1, 2010, the holder of the Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
any assets of the Corporation legally available therefor, such dividends as may
be declared from time to time by the Board of Directors. Nothing
herein shall obligate or require the Board of Directors to declare a dividend
for the Series B Preferred Stock on or after January 1, 2010. To the extent that
any dividends accrued prior to January 1, 2010 and remain outstanding, such
dividend may be paid in whole or in part by the delivery of (i) cash, (ii)
shares of Series B Preferred Stock valued at $100.00 per share or (iii) shares
of Common Stock at the Conversion Price (as hereinafter
defined). Payments of dividends with Series B Preferred
Stock may be made at any time and from time to time at the option of the
Company, in its sole discretion.
(d)
Liquidation Preference.
(i)
Preference upon Liquidation, Dissolution or Winding Up. In the event of any
dissolution or winding up of the Corporation, whether voluntary or
involuntary, holders of each outstanding share
of Series B Preferred Stock
shall be entitled to
be paid first out of
the assets of the Corporation available
for distribution to shareholders, whether
such assets are capital, surplus or earnings, an amount equal to
$100.00 (the "SERIES B PURCHASE PRICE") per share of Series B
Preferred Stock held (as adjusted for any
stock splits, stock dividends or recapitalizations of the
Series B Preferred Stock) and any declared but unpaid dividends on
such share, before any payment shall be made to the holders of the Common Stock,
or any other stock of the Corporation ranking junior to
the Series B Preferred Stock with regard to any distribution of assets upon
liquidation, dissolution or winding up of the
Corporation. The holders of the Series B Preferred Stock shall be
entitled to share ratably, in accordance
with the respective preferential amounts payable on such stock, in any
distribution which is not sufficient to pay in full the aggregate of the amounts
payable thereon. If, upon
any liquidation, dissolution or winding up of
the Corporation, the assets to
be distributed to the holders of
the Series B Preferred Stock shall be insufficient to permit payment
to such shareholders of
the full preferential amounts aforesaid, then all of the assets of
the Corporation available for distribution to
shareholders shall be distributed to the holders of Series B
Preferred Stock. Each holder of the Series B Preferred
Stock shall be entitled to receive that portion of the assets available for
distribution as the number of outstanding shares of Series B Preferred Stock
held by such holder bears to the total number of shares of Series B Preferred
Stock. Such payment shall constitute payment in full to the holders
of the Series B Preferred Stock upon the liquidation, dissolution or winding up
of the Corporation. After such payment shall have been made in full, or funds
necessary for such payment shall have been set aside by the Corporation in trust
for the account of the holders of Series B Preferred Stock, so as to be
available for such payment, such holders of Series B Preferred Stock shall be
entitled to no further participation in the distribution of the assets of the
Corporation.
(ii) Consolidation,
Merger and Other Corporate Events. A consolidation or
merger of the Corporation (except into or with
a subsidiary or affiliated corporation) or a sale,
lease, mortgage, pledge, exchange, transfer
or other disposition of all or substantially all of the assets of the
Corporation or any reclassification of the stock of
the Corporation (other than a change in
par value or from no par to par, or from par to no par or
as the result of an event described in subsection (iv), (v), (vi) or
(viii) of paragraph (f)), shall be regarded as
a liquidation, dissolution or
winding up of the affairs of the Corporation within the
meaning of this paragraph (d), provided, however, in the case of
a merger, if (a) the Corporation is
the surviving entity, (b) the
Corporation's shareholders hold
a majority of the shares of
the surviving entity, and (c) the Corporation's directors
hold a majority of the seats on the board of directors of
the surviving entity, then
such merger shall not be regarded as a
liquidation, dissolution or winding up within the meaning of this
paragraph (d). In no event shall the issuance of new classes of
stock, whether senior, junior or on a parity with the
Series B Preferred Stock, or any stock splits, or the
issuance of common stock in connection with an acquisition of the securities,
assets or business of another company, joint ventures, merger of a subsidiary
and employee stock options be deemed a "reclassification, merger or
consolidation" under or otherwise limited by the terms
hereof.
(iii)
Distribution of Cash and Other Assets. In the event of a
liquidation, dissolution or winding up of
the Corporation resulting in the
availability of assets other than cash
for distribution to the holders of the Series B
Preferred Stock, the holders of the Series B Preferred
Stock shall be entitled to a distribution of
cash and/or assets equal to the value of the
liquidation preference stated in subsection (i)
of this paragraph (d), which valuation shall be made solely by the
Board of Directors, and provided that such Board of Directors was acting in good
faith, shall be conclusive.
(iv) Distribution to Junior Security Holders. After the
payment or distribution to the holders of the Series B
Preferred Stock of the
full preferential amounts aforesaid, the
holders of Series B Preferred Stock shall have
no further rights in respect at
such Series B Stock which shall become null and
void, and the holders of the Common Stock
then outstanding, or any other stock
of the Corporation ranking as to
assets upon liquidation, dissolution or winding
up of the Corporation junior to the Series B Preferred
Stock, shall be entitled to receive ratably all of the
remaining assets of the Corporation.
(v) Preference;
Priority. References to
a stock that is "SENIOR" to, on a
"PARITY" with or "JUNIOR" to other stock as
to liquidation shall refer, respectively, to rights of priority of
one series or class of stock over another in the distribution of
assets on any liquidation, dissolution or winding up of
the Corporation. The Series B Preferred Stock shall be
senior to the Common Stock of the Corporation and junior to any
subsequent series of Preferred Stock issued by the
Corporation.
(e)
Voting Rights. Except as otherwise required by law, the holder of
shares of Series B Preferred Stock shall not have the
right to vote on matters that come before the shareholders.
(f) Conversion
Rights. The holders of Series B Preferred Stock will have the
following conversion rights:
(i)
Right to Convert. Subject to and
in compliance with the provisions of this paragraph (f),
any issued and outstanding shares of Series B
Preferred Stock shall, upon election in the discretion of the
Corporation, be automatically converted by the Corporation, at any time or from
time to time into fully paid and non-assessable shares of
Common Stock at the conversion rate in effect at the time of conversion,
determined as provided herein (the “Conversion
Shares”); provided, that a holder of Series
B Preferred Stock may at any given time be required to
convert up to that number of shares of Series
B Preferred Stock so that, upon conversion, the
aggregate beneficial ownership of the Corporation's Common Stock
(calculated pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of such holder and all
persons affiliated with such holder is not more than 9.99% of the
Corporation's Common Stock then outstanding (the “Conversion
Threshold”).
(ii) Mechanics
of Conversion. Upon the determination by the Corporation that any
holder has fallen below the Conversion Threshold, the Corporation may
automatically convert such number of shares of the Series B Preferred Stock
which may equal, but shall not exceed the Conversion Threshold, by the
conversion of such number of Series B Preferred Stock, that equals such number
of Common Stock as such holder shall be entitled. Such conversion
shall be automatically completed upon issuance by the Corporation of written
Notice of Conversion mailed by regular US mail to the address of the record
Holder of the Series B Preferred Stock as reflected on the books of the transfer
agent or if no transfer agent the records of the Corporation (the “Notice of
Conversion”). In issuing the Notice of Conversion and effecting the conversion,
the Corporation may rely upon the records of the Company’s transfer agent, or if
no transfer agent upon the Corporation’s books and records, as final and
absolute proof of the identity of holder of record of the shares of Series B
Preferred stock, the number of shares of Series B Preferred stock owned and the
address of the Holder. Immediately upon issuance of such Notice of Conversion,
the Holder shall be treated as a common stockholder for all purposes and such
Holder shall have no continuing interest in or claim to Series B Preferred
stock. Upon Notice of Conversion by the Corporation , the Holder
shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or
of any transfer agent for the Common Stock, and
the Corporation shall give written notice to the transfer agent to convert the
same and shall state therein the number of shares of Series B Preferred Stock
being converted. Thereupon, the Corporation shall promptly issue and
deliver to the record Holders address as reflected on the books of the transfer
agent, or if no transfer agent the Corporation’s books, a certificate or
certificates for the number of shares of Common Stock to which Holder shall be
entitled, not to exceed the Conversion Threshold and, if applicable, a
certificate or certificates for the number of shares of Series B Preferred Stock
existing immediately after an automatic conversion. The effectiveness
of the Conversion shall not be affected by Holder’s failure to surrender or
deliver the certificates for the Series B Preferred shares to the Corporation;
however, Corporation shall have no obligation to deliver certificates for
Conversion Shares until such surrender and delivery has been completed by
Holder. Should it occur that a Holder of Series B Preferred stock transfers or
assign shares of Series B Preferred stock without giving the transfer agent or
the Corporation proper notice, the Holder shall be liable for any damage to the
Corporation resulting therefrom and any Conversion Shares issued or to be issued
to Holder based on the incorrect information on the Corporations books or the
books of its transfer agent shall be voidable by the Corporation.
(iii) Conversion
Price. The number of shares into which one share of Series B
Preferred Stock shall be convertible shall be determined
by dividing the Series B Purchase Price by $0.12 ( hereinafter, the “Conversion
Price”)
(iv
) Adjustment for Stock Splits and
Combinations. If the Corporation shall at any time, or from time to
time after the date shares of the Series B Preferred Stock are first issued (the
"ORIGINAL ISSUE DATE"), effect a subdivision of the
outstanding Common Stock, the Conversion Price in
effect immediately prior thereto shall
be proportionately decreased, and
conversely, if the Corporation shall at any time or from time to time
after the Original Issue Date combine
the outstanding shares of Common Stock, the
Conversion Price then in effect immediately before the combination
shall be proportionately increased. Any adjustment under this
paragraph (f)(iv) shall become effective at
the close of business on the
date the subdivision or combination becomes
effective.
(v)
Adjustment for Certain Dividends and Distributions. In the event the Corporation
at any time, or from time to time after the Original Issue Date, shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such
event the Conversion Price then in effect shall
be decreased as of the time of such
issuance or, in the event such a record date shall have
been fixed, as of the close
of business on
such record date, by multiplying the
Conversion Price then in effect by a fraction:
(A)
the numerator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date; and
(B)
the denominator of which shall be
the total number of shares of
Common Stock issued
and outstanding immediately prior to the time of
such issuance or the close
of business on such record date plus
the number of shares of
Common Stock issuable in payment of such
dividend or distribution; provided, however, if
such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on
such record date and thereafter, the
Conversion Price shall be adjusted pursuant to
this paragraph
(f)(v) as of the time of actual payment of such dividends or
distributions.
(vi)
Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Original
Issue Date shall make or issue, or fix a record date for
the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of
the Corporation other than shares of
Common Stock, then and in each such
event provision shall be made so that
the holders of such Series B Preferred Stock shall receive
upon conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had
their Series B Preferred Stock been
converted into Common Stock on the date of such event and
had thereafter, during the period from the date of such event to
and including the conversion
date, retained such securities receivable by
them as aforesaid during such period giving application to all
adjustments called for during such period under
this paragraph (f) with respect to the rights
of the holders of the Series B Preferred Stock.
(vii) Adjustment for Reclassification Exchange or
Substitution. If the Common Stock issuable upon the
conversion of the Series B Preferred Stock shall be changed into the
same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
or stock dividend provided for above, or a reorganization, merger, consolidation
or sale of assets provided for elsewhere in
this paragraph (f)), then and in each such
event the holder of each share of Series B Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and
property receivable upon such reorganization,
reclassification or other change, by holders of the number
of shares of Common
Stock into which such shares
of Series
B Preferred Stock might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
(viii) Reorganization,
Mergers, Consolidations or Sales of Assets. If
at any time or from time to time there shall be
a capital reorganization of the
Common Stock (other than
a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this paragraph (f) or
a merger or consolidation of
the Corporation with or into another
corporation, or the sale of all
or substantially all of the Corporation's
properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision
shall be made so that the holders of the Series
B Preferred Stock shall thereafter be
entitled to receive upon conversion of such Series B
Preferred Stock, the number of shares of stock or
other securities or property of the Corporation or of the successor
corporation resulting from such merger
or consolidation or sale, to which a holder of
Common Stock deliverable upon conversion would have been
entitled on such
capital reorganization, merger, consolidation
or sale. In any such case, appropriate adjustment shall be
made in the application of the provisions of
this paragraph (f) with respect to the rights
of the holders of the Series B Preferred Stock after the
reorganization, merger, consolidation or sale to the end
that the provisions of this paragraph (f) (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series B Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(ix) Sale
of Common Stock
or Securities Convertible Into Common Stock. In
the event the Corporation sells or issues Common Stock or other
securities convertible into
or exercisable for Common Stock at a
per share price, exercise price or conversion price lower
than the Conversion Price then in effect (other than
in connection with an acquisition of
the securities, assets
or business of another company, licensing, partnership, technology
transfer, marketing alliance, joint ventures or employee, director,
officer, or consultant issuances or stock options), the Conversion Price shall
be subject to weighted average anti-dilution adjustments.
(x) Certificate
of Adjustment. In each case of an adjustment or readjustment of the
Conversion Price or the securities issuable upon conversion of the
Series B Preferred Stock, the Corporation shall compute
such adjustment or readjustment in
accordance herewith and the Corporation's
Chief Financial Officer shall prepare
and sign a certificate showing such adjustment
or readjustment, and shall mail such certificate by first class mail,
postage prepaid, to each registered holder of
the Series B Preferred Stock at the holder's address as shown in the
Corporation's books. The certificate shall set forth such
adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based.
(xi)
Notices of Record Date. In the event of (A) any taking by
the Corporation of a record of the holders of any class or series of
securities for the purpose of determining the
holders thereof who are entitled to receive
any dividend or other distribution or (B) any reclassification or
recapitalization of the capital stock of
the Corporation, any merger or
consolidation
of the Corporation or any transfer of all or substantially all of the
assets of the Corporation to any other corporation, entity or person, or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to
each holder of Series B Preferred Stock at least 10
days prior to the
record date specified therein, a
notice specifying (1) the date on which any such record is to be
taken for the purpose
of such dividend or distribution and
a description of such dividend or
distribution, (2) the date on which any such
reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding
up is expected to become effective and (3) the time, if any is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares, of Common Stock (or
other securities) for securities or other property deliverable upon
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.
(xii)
Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall round the shares up to the nearest whole
number.
(xiii) Reservation
of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep
available not less than the aggregate number of authorized but
unissued shares sufficient to effect the conversion of all then outstanding
shares of Series B Preferred Stock and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares
of Series B Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to
increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(xiv)
Notices. Any notice required by the provisions of this paragraph (f) to be given
to the holders of shares of Series B Preferred Stock shall be deemed given (A)
if deposited in the United States mail, postage prepaid, or (B) if given by any
other reliable or generally accepted means (including by facsimile or by a
nationally recognized overnight courier service), in each case addressed to each
holder of record at his address (or facsimile number) appearing on the books of
the Corporation.
(xv)
Payment of Taxes. The Corporation will pay all transfer taxes and
other governmental charges that may be imposed in respect of the issue or
delivery of shares of Common Stock
upon conversion of shares of Series B Preferred
Stock.
(g)
No Re-issuance of Preferred Stock. Except as otherwise expressly permitted
herein with respect to dividends, any shares of Series B Preferred Stock
acquired by the Corporation by reason of purchase, conversion or otherwise shall
be canceled, retired and eliminated from the shares of Series B Preferred Stock
that the Corporation shall be authorized to issue. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series
of Preferred Stock subject to the
conditions and restrictions on issuance set forth in the Articles of
Incorporation or
in any certificate of designation creating a series of
Preferred Stock or any similar stock or as otherwise required by
law.
(h)
Severability. If any right, preference or limitation of the Series B
Preferred Stock set forth herein is
invalid, unlawful or incapable of being enforced by
reason of any rule, law
or public policy, all other rights,
preferences and limitations set forth herein
that can be given effect without the invalid, unlawful
or unenforceable right, preference or
limitation shall nevertheless remain in full force
and effect, and
no right, preference or
limitation herein shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
3. The number of authorized shares of Preferred Stock of the
Corporation is 5,000,000 and the number of
shares of Series B Preferred Stock, 9,000 of which has been issued and
outstanding, is 10,000.
The undersigned declares under penalty
of perjury that the matters set out in
the foregoing Certificate are true of his
own knowledge. Executed at Sarasota, Florida on this 11th day of
January, 2010.
Print
Name: Edmund C. King
Title: Acting
President and Chief Financial Officer
7
Exhibit
10.75
January
11, 2010
To
Our Series B Preferred Stockholders:
During
the past few years, we have been seriously challenged by the unprecedented
turmoil in the U.S. domestic economy. One of our goals in this
challenging market environment has been to align the costs of our operations to
our cash flows. We believe the elimination of the Series B Preferred Stock (the
“Series B Stock”) and the related dividends by exchanging the remaining
outstanding Series B Stock for a recently created Series C Preferred Stock on a
share for share basis (hereinafter, the “Exchange”) will help us achieve our
goal of enhanced balance sheet flexibility which is instrumental to operate and
grow our business. We are confident that with an improved capital structure,
there are multiple business opportunities we can pursue to enhance stockholder
value that would not have been previously feasible. More importantly,
our continued efforts to improve our balance sheet will position the Company to
benefit in the anticipated economic recovery.
If we
cannot effectuate the Exchange of at least a majority of the Series B Holder,
the continued accrual of dividends of the outstanding Series B Stock will
continue to have a negative effect on the Company's business, results of
operations, and financial position, including the potential inability to satisfy
our liabilities and our cash requirements related to long-term dividend and
interest obligations.
Our
Board of Directors (the "Board") took into account a number of factors in its
decision to effectuate the Exchange, including the lack of liquidity and
marketability of the Series B Stock and the present value of these the
securities in a liquidation scenario. The Board's objective in its analysis was
to further the best interests of stockholders and, toward that end, the Board
would encourage the fullest participation in the Exchange by our Series B
Stockholders.
The
success of the Exchange not only requires that the Series B Stock be surrendered
and exchanged for Series C Stock, but also a valid consent from each Series B
Stockholder to amend the Certificate of Designation to eliminate any further
accrual of dividends, unless otherwise declared by the Company. The
Certificate of Designation will also provide that the Company may satisfy its
obligations with respect to accrued but unpaid dividends either (a) in cash
payment, (b) by issuance of additional Series B Stock or (c) in common stock of
the Company. Under the terms of the Exchange, you may not exchange
your Series B Stock for Series C Stock without also consenting to the proposed
amendment to the Series B Preferred Stock Certificate of Designation, a revised
copy of which is provided herewith.
The
documents enclosed with this letter provide you with important information
regarding the Exchange, the terms of the Exchange and the consent, procedures
for exchanging your shares.
Thank
you for your ongoing support of and continued interest in Invisa, Inc.
Sincerely,
LETTERS
OF TRANSMITTAL AND CONSENT
Exchange
of Series B Preferred Stock, par value $0.001 per share, for Series C Preferred
Stock, par value $0.001 per share, on a share for share basis and Consent to
Amendments to the Certificate of Designation of the Series B Preferred
Stock
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The
instructions contained within this LETTERS OF TRANSMITTAL and Consent
should be read carefully before being completed. This LETTERS
OF TRANSMITTAL and Consent is only to be used by record holders of the
Series B Preferred Stock.
DESCRIPTION
OF SERIES B PREFERRED STOCK TENDERED BY
HOLDER
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Name(s)
and Address(es of Registered Holder(s)
(Please
fill in, if blank)(1)
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Share
Certificate(s) and Share(s) Tendered
(Please
attach additional signed list, if
necessary)
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Series B
Preferred
Stock
Share
Certificate
Number(s)
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Total
Number of
Shares
of Series B Preferred Stock Represented by
Share
Certificate(s)
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Number
of Shares of Series B Preferred Stock Tendered
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(1)
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The
names and addresses of the registered Holder of the Series B
Preferred Stock should be printed, if not already printed above, exactly
as they appear on the share certificates to be exchanged
hereby.
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(2)
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Unless
otherwise indicated, all Series B Preferred Stock represented by
Share Certificates delivered to the Company will be deemed to have been
exchanged. The LETTERS OF TRANSMITTAL requires that Holders submit all
shares they own for exchange, and the Company is entitled to reject
partial submissions. See Instruction 4 and
5.
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Check here
if share certificates have been lost or mutilated.
Ladies
and Gentlemen:
The
undersigned hereby acknowledges that he or she has received and read the Terms
of Exchange, dated January 11, 2009 (the "Term Sheet"), of the Company and this
Letter of Transmittal and Consent (the "Consent"), which together constitutes
the terms and conditions upon which the Company shall exchange (the "Exchange")
all of the Company's outstanding Series B Preferred Stock, $0.001 par value
per share (together with all accrued and unpaid interest, the "Series B
Preferred Stock") for Series C Preferred Stock, $0.001par value per share
("Series C Preferred Stock," and collectively with the Series B
Preferred Stock, the "Preferred Stock"), upon the terms and subject to the
conditions specified in the Term Sheet. The Company is also soliciting consents
(the "Consent Solicitation") from holders of the Series B Preferred Stock (each,
a "Holder" and collectively, the "Holders") to amend our charter (the "Charter")
to modify the terms of the Series B Preferred Stock to, among other things,
terminate future dividends (the “Proposed Amendments”).
Holders
who desire to exchange their shares of Series B Preferred Stock for Series
C Preferred Stock are required to consent to the Proposed Amendments. The
execution and delivery of this Consent will constitute a Holder's consent to the
Proposed Amendments. A Holder of shares of Series B Preferred Stock may not
exchange Series B Preferred Stock without delivering its consent to the
Proposed Amendments with respect to all shares of Series B Preferred Stock
owned by such Holder.
The
Company reserves the right, at any time or from time to time, to extend the time
to Exchange the Series B Preferred Stock, in which event the term "Expiration
Date" shall mean the latest time and date that the Company will honor the
exchange requests of the Holders. The Company shall notify the
Holders of the Series B Preferred Stock of any extension as promptly as
practicable.
None
of the Company's board of directors (the "Board"), the officers or employees of
the Company, or any of the Company's financial advisors is making a
recommendation to any Holder of Series B Preferred Stock as to whether you
should exchange your shares for Series C Preferred Stock. You must make your own
investment decision regarding the Exchange based upon your own assessment of the
market value of the Series B Preferred Stock, the effect of holding shares
of the Preferred Stock upon approval of the Proposed Amendments, your liquidity
needs, your investment objectives and any other factors you deem relevant.
Upon
acceptance by the Company and subject to the terms and conditions herein set
forth, the undersigned hereby submits its shares of Series B Preferred
Stock set forth in the box above entitled "Description of Series B
Preferred Stock" to be exchanged for shares of Series C Preferred Stock in
accordance herewith.
The
undersigned understands that the Company is also soliciting consents from
Holders of the Series B Preferred Stock to approve the Proposed Amendments.
The undersigned understands and agrees that exchange of shares of the Series B
Preferred Stock requires that the Holder execute and deliver a written consent
approving the Proposed Amendments with respect to the shares of Series B
Preferred Stock. The undersigned further understands that Holders of
shares of Series B Preferred Stock may not exchange shares of Series B Preferred
Stock without executing and delivering a written consent to the Proposed
Amendments to the Company.
The
undersigned understands that, if successfully completed, the undersigned will
receive one share of Series C Preferred Stock for each share of Series B
Preferred Stock exchanged.
Capitalized
terms used but not defined herein have the meaning given to them in the Term
Sheet.
The
undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to, sell, assign and transfer the Series B
Preferred Stock exchanged hereby and to grant the consent and the power of
attorney set forth herein, (ii) the undersigned is exchanging all and not
less than all of the Series B Preferred Stock owned by the undersigned, and
(iii) when exchanged, the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company.
The
undersigned further represents and warrants that the undersigned has read and
agrees to all of the terms and conditions the Exchange. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, successors and assigns of the undersigned. This exchange and
authorization to consent are irrevocable and once the Series B Preferred
Stock submitted to and accepted by the Company for exchange such submission may
not be withdrawn, nor the corresponding consent be revoked. The undersigned
understands that, if the Company receives the requisite approvals of the
Proposed Amendments from the Holders of the Series B Preferred Stock, the
Company intends to execute and file Amendment to the Certificate of Designation
immediately thereafter and that, once effective, such amendments will be binding
upon each Holder of each series of Series B Preferred Stock, whether or not such
Holder consents.
Subject
to, and effective upon, the acceptance of the requisite documents by the
Company, the undersigned hereby tenders, sells, assigns and transfers to or upon
the order of the Company, all right, title and interest in and to the shares of
Series B Preferred Stock exchanged hereby and releases and discharges the
Company from any and all claims the undersigned may have now, or may have in the
future, arising out of, or related to, the shares of Series B Preferred
Stock. The undersigned hereby acknowledges that it has reviewed the Proposed
Amendment, a draft of which has been provided herewith, and consents to and
approves the Proposed Amendments, as described herein and in the Term Sheet,
acknowledges receipt of the Term Sheet, the terms of which are incorporated
herein by reference, and revokes any proxy heretofore given with respect to the
Proposed Amendments. The undersigned hereby irrevocably constitutes and appoints
the Company as its agent and attorney-in-fact, with full power and authority in
its name, place and stead, with respect to the exchanged shares of Series B
Preferred Stock, with full power of substitution, such power of attorney being
deemed to be an irrevocable power to effectuate the exchange of the Series B
Preferred Stock for newly issued shares of Series C Preferred Stock as
contemplated herein and to do and perform each and every act and thing whether
necessary or desirable to be done, as fully as the undersigned might or could do
if personally present at a meeting of stockholders of the Company or otherwise.
That the foregoing power of attorney shall terminate upon the consummation of
the exchange of the Preferred stock as contemplated
herein.
The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company to be necessary or desirable to complete (i) the
sale, assignment and transfer of the Series B Preferred Stock exchanged
hereby and the issuance of the Series C Preferred Stock in exchange therefore,
(ii) the execution and delivery of the written consent to approve the
Proposed Amendments. All authority conferred or agreed to be conferred herein
and every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned.
THE UNDERSIGNED, BY COMPLETING THE
ABOVE "DESCRIPTION OF SERIES B PREFERRED STOCK " BOX AND SIGNING THIS LETTER,
WILL BE DEEMED TO HAVE EXCHANGED THEIR DESIGNATED SHARES OF SERIES B PREFERRED
STOCK AS SET FORTH IN SUCH BOX ABOVE.
BY EXCHANGING SHARES OF SERIES B
PREFERRED STOCK IN ACCORDANCE HEREWITH, THE UNDERSIGNED ALSO CONSENTS TO AND
APPROVES THE PROPOSED AMENDMENTS.
IMPORTANT
PLEASE
SIGN HERE
This
Letter of Transmittal and Consent must be signed by the Holder(s) of the shares
of Series B Preferred Stock being exchanged exactly as his, her, its or
their name(s) appear(s) on certificate(s) for such shares of Series B
Preferred Stock. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of such
person's authority to so act. See Instruction 5.
Signature(s)
of Holders
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Dated:
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Name(s)
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Capacity
(full title)
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Address
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Area
Code and Telephone Number
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PLEASE
READ THE INSTRUCTIONS ON THE FOLLOWING PAGES CAREFULLY BEFORE COMPLETING THE
EXCHANGE AND CONSENT FORM
INSTRUCTIONS
FOR COMPLETING THE EXCHANGE AND CONSENT FORM
1.
Signatures.
Signatures
of all holders of the Series B Preferred must be presented to effectuate the
exchange and consent contemplated hereunder in accordance with Section 5
below. The Company may, in its sole and exclusive discretion,
request additional documentation as it deems necessary to consummate the
transactions contemplated hereby.
2.
Delivery of
this Consent and Consent and Certificates for Series B Preferred Stock or
Book-Entry Confirmations; Guaranteed Delivery
Procedures.
This Letters of Transmittal and
Consent is to be used by each Holder of the Series B Preferred Stock and
submitted with the physical delivery of the original share certificate
representing the B Preferred Stock being exchanged by such
Holder. All documentation shall be delivered by certified, return
receipt requested or overnight mail or courier service to the Company at PO Box
49376, Sarasota, Fl 34230, such documents to be received by the Company on or
before the Expiration Date.
3.
Consenting
to the Proposed Amendments.
By exchanging your
shares of Series B Preferred Stock in accordance with the procedures
described herein, you also consent to and approve the Proposed Amendments,
acknowledge receipt of the Term Sheet and revoke any proxy heretofore given with
respect to the Proposed Amendments. You irrevocably constitute and appoint the
Company as your agent and attorney-in-fact, with full power and authority in
your name, place and stead, with full knowledge that the Company, as your true
and lawful representative, attorney-in-fact and agent with respect to the
exchanged shares of Series B Preferred Stock, with full power of
substitution, such power of attorney being deemed to be an irrevocable power
coupled with an interest, to transfer the exchanged Series B Preferred
Stock on the account books and records of the Company the shares of
Series B Preferred Stock tendered, consent to and approve the Proposed
Amendments on your behalf, and to do and perform each and every act and
thing whether necessary or desirable to be done, as fully as you might or could
do if personally present at a meeting of stockholders of the Company or
otherwise.
4.
No
Partial Exchange Accepted.
If fewer than all the
shares represented by any certificate of Series B Preferred Stock delivered
to the Company presented for exchange or if fewer than all of the shares of
Preferred Stock owned by a Holder are exchanged, the Company will be entitled to
reject in its entirety any exchange requested by such Holder. All Series B
Preferred Stock represented by certificates delivered to the Company will be
deemed to have been tendered.
5.
Signatures
on this Consent and Consent; Stock Powers and
Endorsements.
If this Letter of Transmittal and
Consent is signed by the registered Holder(s) of the shares of Series B
Preferred Stock referred to herein, the signature(s) must correspond with the
name(s) as written on the face of the share certificates without alteration,
enlargement or any change whatsoever.
If
any of the shares of Series B Preferred Stock exchanged are held of record
by two or more persons, all such persons must sign the Letter of Transmittal and
Consent.
If
any of the shares of Series B Preferred Stock tendered are registered in
different names or different share certificates, it will be necessary to
complete, sign and submit as many separate Letters of Transmittals and Consents
as there are different registrations or share certificates.
The
Holder must either properly endorse the share certificates for shares of
Series B Preferred Stock exchanged or transmit a separate properly
completed stock power with this Letter of Transmittal and Consent, in either
case, executed exactly as the name(s) of the Holder(s) appear(s) on such shares
of Series B Preferred Stock, with the signature on the endorsement or stock
power guaranteed by an Eligible Institution, unless such certificates or stock
powers are executed by an Eligible Institution. See Instruction 1.
If
this Letter of Transmittal and Consent is signed by a person other than the
registered Holder(s) of the Series B Preferred Stock tendered hereby,
certificates must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered Holder(s) appear(s)
on the certificates for such Series B Preferred Stock.
If
either the Letter of Transmittal and Consent or any certificate or stock power
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Company and the Depositary of the authority of such persons
to act must be submitted.
Endorsements
on share certificates for Series B Preferred Stock and signatures on stock
powers provided in accordance with this Instruction 5 by Holders not
executing this Letter of Transmittal and Consent must be guaranteed by an
Eligible Institution. See Instruction 1.
6.
Special
Issuance and Special Delivery Instructions.
Holders submitting their shares for exchange should indicate in the applicable
box or boxes the name and address to which the shares of Series C Preferred
Stock are to be issued or sent, if different from the name and address of the
Holder signing this Letter of Transmittal and Consent. In the case of issuance
in a different name, the taxpayer identification or social security number of
the person named must also be indicated. If no instructions are given, the
shares of Series C Preferred Stock will be returned to the Holder of the shares
of Series B Preferred Stock exchanged.
7.
Transfer
Taxes.
The Company will pay all transfer taxes, if
any, applicable for the exchange of the Preferred
Stock.
8.
Requests for
Assistance or Additional Copies.
Any questions or
requests for assistance and additional copies of the Term Sheet, this Letter of
Transmittal and Consent or other information concerning the exchange of the
Series B Preferred should be directed to the Company at PO Box 49376, Sarasota,
Fl 34230, (941) 870-3950.
9.
Irregularities.
All
questions as to the form of documents and the validity, eligibility (including
the time of receipt), acceptance for the exchange of the Series B Preferred
Stock will be determined by the Company, in its sole discretion, and its
determination will be final and binding. The Company reserves the absolute right
to reject any and all exchange of Series B Preferred Stock that it shall
determine are not in proper form or the acceptance of or purchase for which may,
in the opinion of the Company's counsel, be unlawful. The Company also reserves
the absolute right to waive any defect or irregularity in any exchange of any
shares of Series B Preferred Stock. No exchange of shares of Series B
Preferred Stock will be deemed to have been made until all defects and
irregularities in the exchange of such shares have been cured or waived. Neither
the Company nor any other person authorized to act on behalf of the Company will
be under any duty to give notice of any defect or irregularity in exchanges of
shares of Series B Preferred Stock, nor shall any of them incur any
liability for failure to give any such notice. The Company's interpretation of
the terms of conditions of the Terms of Exchange and Letter of Transmittal and
Consent will be final and binding.
10.
Inadequate
Space.
If the space provided in the above
"Description of Series B Preferred Stock" box is inadequate, the number of
shares of Series B Preferred Stock and any other required information
should be listed on a separate signed schedule and attached to this Letter of
Transmittal and Consent.
11.
Lost,
Destroyed or Stolen Certificates.
If any
certificate(s) representing shares of Series B Preferred Stock have been
lost, stolen or destroyed, please contact the Company at PO Box 49376, Sarasota,
Fl 34230, (941) 870-3950. The Holder may need to complete an Affidavit of Loss
with respect to the lost certificate(s) (which will be provided by the Company)
and payment of an indemnity bond premium fee may be required.
Any
questions and requests for assistance may be directed to the Company at the
address and telephone numbers set forth below. Additional copies of the Term
Sheet and the Letter of Transmittal and Consent may be obtained from the Company
at PO Box 49376, Sarasota, Fl 34230, (941) 870-3950..
Exhibit
10.76
SHARE
EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT
(the "
Agreement
") is entered into
as of January 11, 2010, by and between Invisa, Inc., a Nevada corporation (the
"
Company
"), and the
shareholder set forth on the signature page hereto. (hereinafter “
Holder
”)
RECITALS
WHEREAS,
as of the date
hereof, the Holder is the owner of record of ____shares of Series B Preferred
Stock. (
the “Series B
Shares
”); and
WHEREAS,
the Company and the
Holder desire to exchange the Series B Shares for shares of Series C
Convertible Preferred Stock, of the Company (the "
Series C Preferred
Stock
").
NOW, THEREFORE,
in
consideration of the foregoing recitals and the mutual promises hereinafter set
forth, and intending to be legally bound thereby, the parties hereto agree as
follows:
1. Definitions.
The
following terms used in this Agreement shall have the following meanings (unless
otherwise expressly provided herein):
"
Entity
" shall mean any
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
cooperative, foundation, society, political party, union, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization or entity.
"
Governmental Body
" shall mean
any: (a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction; (b) federal, state,
local, municipal or foreign government (including any agency, department,
bureau, division, or other administrative body thereof); or
(c) governmental or quasi-governmental authority of any
nature.
"
Person
" shall mean any
individual, Entity or Governmental Body.
"
Proceeding
" shall mean any
action, suit, litigation, arbitration, or investigation (including any civil,
criminal or administrative) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or any arbitrator or arbitration
panel.
2. Exchange.
Subject to the terms and conditions set forth in this Agreement,
effective at the Closing, the Holder will transfer and convey to the
Company the Series B Shares held by the Holder. In
consideration of the transfer and conveyance of Series B Shares referred to in
the immediately preceding sentence, at the Closing, the Company shall issue
and deliver to the Holder and the Holder shall accept and receive from the
Company, the whole number of fully paid and non-assessable shares of
Series C Preferred Stock set forth opposite such Holder name on the
signature page hereto.
3. Closing
and Delivery.
3.1 Closing.
The
closing of the Exchange (the "
Closing
") shall take place,
at the offices of the Company on such date and time as the parties shall agree
but not later January 28, 2010 (the "
Closing Date
").
3.2 Delivery.
Subject
to the terms and conditions hereof, upon the surrender of the certificate or
certificates representing the Series B Shares, the Company shall issue and
deliver to Holder such number of Series C Preferred Stock at the Closing,
indicated on the signature page hereto by the delivery of a certificate or
certificates evidencing the shares of the Series C Preferred Stock to which
Holder is entitled, free and clear of all liens, claims, and encumbrances
(collectively, an "
Encumbrance
").
4. Representations
and Warranties of the Holder.
Holder
hereby represents and warrants to the Company as follows:
4.1 Requisite
Power; Authorization; Binding Obligations.
Holder
has all requisite power and authority to execute and deliver this Agreement and
to carry out the provisions of this Agreement. All action on Holder's part
necessary for the authorization, execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the performance of all
obligations of Holder hereunder has been or will be taken prior to the Closing.
This Agreement, when executed and delivered, will be valid and binding
obligations of Holder enforceable against it in accordance with their terms,
except as limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, and (b) general principles of equity that restrict the
availability of equitable remedies.
4.2 Investment
Representations.
Holder understands that neither
the shares of the Series C Preferred Stock, nor the Common Stock to which it is
convertible into, have been registered under the Securities Act of 1933, as
amended (the "Securities Act"). Holder also understands that the shares of
Series C Preferred Stock are being offered pursuant to an exemption from
registration contained in the Securities Act based in part upon such Holder's
following representations and warranties:
(a)
Holder Bears
Economic Risk.
Holder has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Holder understands that it must bear the economic risk of this
investment indefinitely unless the shares of Series C Preferred Stock are
registered pursuant to the Securities Act, or an exemption from registration is
available. Holder understands that the Company has no present intention of
registering the shares of Series C Preferred Stock or any shares of its Common
Stock to which it converts. Holder also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow such Holder to
transfer all or any portion of the shares of Series C Preferred Stock under the
circumstances, in the amounts or at the times Holder might propose.
(b)
Acquisition
for Own Account.
Holder is acquiring the shares
of Series C Preferred Stock for its own account for investment only, and not
with a view towards their distribution.
(c)
Holder Can
Protect Its Interest.
Holder represents that by
reason of its, or of its management's, business or financial experience, Holder
has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Holder is aware of no
publication of any advertisement in connection with the transactions
contemplated in this Agreement.
(d)
Accredited or
Regulation S Eligible Investor.
Holder is an
"accredited investor" within the meaning of Regulation D under the
Securities Act, or is not a "U.S. Person" within the meaning of
Regulation S under the Securities Act.
(e)
Company
Information.
Holder has had an opportunity to
discuss the Company's business, management and financial affairs with directors,
officers and management of the Company and has had the opportunity to review the
Company's operations and facilities and public filings. Holder has also had the
opportunity to ask questions of and receive answers from the Company and its
management regarding the terms and conditions of this investment.
4.3 Ownership
of Series B Shares.
Holder represents that the
Series B Shares held by Holder are owned of record and beneficially by Holder,
free and clear of any Encumbrances, and Holder has the full and unrestricted
right, power and authority to transfer such holdings to the
Company.
5. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to each Holder as of the date of this
Agreement and the Closing Date as follows:
5.1 Requisite
Power; Authorization; Binding Obligations.
The
Company has all requisite power and authority to execute and deliver this
Agreement and to carry out the provisions of this Agreement. All corporate
action on the part of the Company, its officers, directors and Holder necessary
for the authorization, execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the performance of all
obligations of the Company hereunder has been or will be taken prior to the
Closing. This Agreement, when executed and delivered, will be valid and binding
obligations of the Company enforceable against it in accordance with their
terms, except as limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (b) general principles of equity that
restrict the availability of equitable remedies.
5.2 Valid
Issuance.
When issued at the Closing in accordance
with the provisions of this Agreement and the Certificate of Designation, the
shares of Series C Preferred Stock will be duly authorized, validly issued,
fully paid and non-assessable, will be delivered free and clear of any
Encumbrances, and will have the rights, preferences, privileges and restrictions
set forth in the Certificate of Designation; provided, however, that such shares
of Series C Preferred Stock may be subject to restrictions on transfer under
state or federal securities laws or as otherwise required by such laws at the
time a transfer is proposed.
6. Conditions
to Closing.
6.1 Conditions
to Obligation of Each Holder.
Each Holder's
obligation to accept the issuance of the shares of Series C Preferred Stock and
to deliver the Series B Shares at the Closing is subject to the satisfaction, at
or prior to the Closing Date, of the following conditions:
(a)
Performance
of Obligations.
The Company shall have performed
all obligations and conditions herein required to be performed or observed by it
on or prior to the Closing Date.
(b)
Representations
and Warranties True.
The representations and
warranties made by the Company in Section 5 hereof shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
(c)
Execution of the Exchange Documents
and Consent.
Holder shall have executed and delivered all
documentation required in connection with the exchange of the Series B Shares,
including, but not limited, the Letter of Transmission and Consent as set forth
in the Terms of Exchange (the “Exchange Documents”), all of which being
previously delivered to
Holder.
6.2 Conditions
to Obligations of the Company.
The Company's
obligation to issue and deliver the shares of Series C Preferred Stock for the
Series B Shares at the Closing is subject to the satisfaction, at or prior to
the Closing Date, of the following conditions:
(a)
Performance
of Obligations.
Each Holder shall have performed
all obligations and conditions herein required to be performed or complied with
by it on or prior to the Closing Date.
(b)
Representations
and Warranties True.
The representations and
warranties made by each Holder in Section 4 hereof shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
(c)
Receipt of Exchange
Documents.
The Company shall have received fully executed
Exchange Documents from Holder, in such form as required by the Company in its
sole discretion.
7. Miscellaneous.
7.1 Governing
Law.
This Agreement shall be construed in
accordance with, and governed in all respects by, the internal laws of the State
of Nevada (without giving effect to principles of conflicts of
laws).
7.2 Survival.
The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by Holder and the closing of the transactions
contemplated hereby. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
7.3 Successors
and Assigns; Assignment.
Each and all of the
covenants, terms, provisions, and agreements contained in this Agreement shall
be binding upon and inure to the benefit of the parties hereto and, to the
extent permitted by this Agreement, their respective successors and assigns.
Neither the Company nor Holder may assign their respective rights or obligations
under this Agreement (by operation of law or otherwise) to any Person without
the prior written consent of the parties.
7.4 Entire
Agreement.
This Agreement and the exhibits hereto,
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof, and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
7.5 Severability.
In
the event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to entities or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue to
be valid and enforceable to the fullest extent permitted by law.
7.6 Amendment.
This
Agreement may not be amended, modified, altered or supplemented without the
written consent of the Company and Holder.
7.7 Waiver.
(a) No
failure on the part of any Person to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any Person in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No
Person shall be deemed to have waived any claim arising out of this Agreement,
or any power, right, privilege or remedy under this Agreement, unless the waiver
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Person; and any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
7.8 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day;
(c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the addresses set forth below:
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If to
the Company:
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Invisa, Inc.,
PO Box 49376, Sarasota, FL 34230
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(941)
870-3950
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If to
Holder:
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At the address
set forth following the signature below.
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7.9 Remedies
Cumulative; Specific Performance.
The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties hereto agree that: (a) in the event of any breach or threatened
breach by any party of any covenant, obligation or other provision set forth in
this Agreement, the other parties shall be entitled (in addition to any other
remedy that may be available to it) to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (ii) an injunction restraining
such breach or threatened breach; and (b) such other parties shall not be
required to provide any bond or other security in connection with any such
decree, order or injunction or in connection with any related action or
Proceeding.
7.10 Further
Assurances.
Each
party hereto shall execute and/or cause to be delivered to each other party
hereto such instruments and other documents, and shall take such other actions,
as such other party may reasonably request (prior to, at or after the Closing)
for the purpose of carrying out or evidencing any of the transactions
contemplated hereby.
7.11 Construction;
Interpretation.
For purposes of this Agreement,
whenever the context requires: the singular number shall include the plural, and
vice versa; the masculine gender shall include the feminine and neuter genders;
the feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
(b) The
parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
(c) All
monetary amounts referenced herein are denominated in United States
Dollars.
(d) As
used in this Agreement, the words "include" and "including," and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words "without limitation."
(e) Except
as otherwise indicated, all references in this Agreement to "
Sections
" and "
Exhibits
" are intended to
refer to Sections of this Agreement and Exhibits to this Agreement.
7.12 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date set forth in the
first paragraph hereof.
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INVISA,
INC.
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HOLDER
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By:_____________________
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By:_________________________
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Name:
______________________
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Title:________________________
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Address:
____________________
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Telephone:
___________________
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SSN:
_________________________
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7
CERTIFICATIONS
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
annual 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
small business issuer as of and for the periods presented in this
report;
4.
The small business 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 small business 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 small business issuer, including its 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 small business 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 small business issuer’s internal control over
financial reporting that occurred during the small business issuer’s most recent
quarter (the small business issuer’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the small business issuer’s internal control over financial
reporting.
5.
The small business issuer’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer’s auditors and the audit
committee of the small business 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 small business 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 small business issuer’s
internal control over financial reporting.
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Dated: March
31, 2010
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/s/
Edmund C.
King
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Acting
President
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CERTIFICATIONS
I, Edmund
C. King, Chief Financial Officer, 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
annual 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 small business issuer as of and for the
periods presented in this report;
4.
The small business 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 small business 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 small business issuer, including its 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 small business 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 small business issuer’s internal control over
financial reporting that occurred during the small business issuer’s most recent
quarter (the small business issuer’s fourth quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the small business issuer’s internal control over financial
reporting.
5.
The small business issuer’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer’s auditors and the audit
committee of the small business 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 small business 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 small business issuer’s
internal control over financial reporting.
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Dated: March
31, 2010
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/s/
Edmund C.
King
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Edmund C. King, Chief Financial
Officer
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EXHIBIT
32.1
INVISA,
INC.
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”) on Form 10-K
for the period ending December 31, 2009 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Edmund C. King, Acting
President and Acting Chief Operating Officer of the Company, certify, pursuant
to 18 U.S.C. ss. 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 results of operations of the Company.
/s/
Edmund C.
King
________________________________
Edmund C.
King
Acting
President
March 31,
2010
EXHIBIT
32.2
INVISA,
INC.
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”) on Form 10-K
for the period ending December 31, 2009 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. ss. 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.
/s/
Edmund C. King
__________________________________
Edmund C.
King
Chief
Financial Officer
March 31, 2010