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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Santeon Group Inc (PK) | USOTC:SANT | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.11035 | 0.027 | 0.10 | 0.00 | 17:23:43 |
x
|
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2012
|
o
|
Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period From ________ to ________
|
Delaware
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01-0623010
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer Identification Number)
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Large accelerated filer
o
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Accelerated filer
o
|
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
x
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– the strength of the United States economy
– changes in the securities markets
– legislative or regulatory changes
– the loss of key personnel
|
– technological changes
– changes in customer habits
– our ability to manage these and other risks
– our ability to deliver products and services on time
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Class of Shares
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Authorized
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Issued and
Outstanding
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Authorized but unissued
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|||||||||
Common Stock
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700,000,000 | 475,991,691 | 224,008,309 | |||||||||
Preferred Stock
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50,000,000 | - | 50,000,000 | |||||||||
Class of Shares
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Authorized
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Issued and Outstanding
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Authorized but unissued
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|||||||||
Common Stock
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50,000,000 | 1,189,899 | 48,810,101 | |||||||||
Preferred Stock
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50,000,000 | - | 50,000,000 | |||||||||
·
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Decrease time of development and gain earlier return on investment;
|
·
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Increase stakeholders’ involvement by enhancing the team’s ownership;
|
·
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Improve planning and prioritization of features;
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·
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Build flexibility and adaptation to change; and
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·
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Improve transparency and tracking of progress.
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·
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Focusing on large enterprise customers;
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·
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Partnering with prime government contractors; and
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·
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Selling or licensing our products both directly and through indirect sales channels.
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•
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general economic and business conditions;
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•
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the overall demand for software systems and services;
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•
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general political developments; and
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•
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currency exchange rate fluctuations.
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•
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general economic conditions in each country or region;
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•
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fluctuations in currency exchange rates and related impacts to our operating results;
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•
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political unrest, terrorism and the potential for other hostilities, particularly in the Middle East;
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•
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public health risks, particularly in areas in which we have significant operations;
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•
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longer payment cycles and difficulties in collecting accounts receivable; and
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•
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difficulties in transferring funds from or converting currencies in certain countries.
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Period
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High
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Low
|
|||||
2012
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First Quarter
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$5.76
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$2.80
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||||
Second Quarter
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$8.40
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$2.76
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|||||
Third Quarter
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$4.00
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$1.32
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|||||
Fourth Quarter
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$4.00
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$1.20
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|||||
2011
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First Quarter
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$5.60
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$2.80
|
||||
Second Quarter
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$5.00
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$2.40
|
|||||
Third Quarter
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$3.60
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$1.40
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|||||
Fourth Quarter
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$3.20
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$2.00
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Plan Category
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Number of securities to be issued upon exercise of outstanding options, warrants and rights
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Weighted average exercise price of outstanding options, warrants and rights
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Number of securities remaining available for future issuance
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|||||||||
Equity compensation plans approved by security holders
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--
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--
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--
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|||||||||
Equity compensation plans not approved by security holders
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--
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--
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--
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|||||||||
Individual Compensation Arrangements
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--
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--
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--
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1.
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Issued 6,250 shares of common stock to a certain senior employee of the Company pursuant to an employment agreement that was valued at $22,500.
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2.
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Certificated the previously authorized and issued shares of common stock as follows:
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a.
|
200,000 shares of common stock to the shareholders of Santeon, Inc. in connection with the Merger Transaction consummated in May 2010;
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b.
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25,000 shares of common stock to the shareholders of X2A Consulting LLC in connection with the Merger Transaction consummated in April 2010;
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c.
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968 shares of common stock to investors for cash valued at $227,000;
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d.
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188,169 shares of common stock as stock-based compensation valued at $87,250, which included the 6,250 shares of common stock valued at $22,500 as disclosed in item #1 above;
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e.
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11,973 shares of common stock for services rendered valued at $42,750; and
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f.
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4,977 shares of common stock as loan repayments valued at $21,590.
|
3.
|
Received into treasury 7,322 shares of returned common stock originally valued at $18,750 that were issued to a vendor of the Company for services rendered in a previous period. The vendor returned the common stock to the Company for no consideration and the Company recorded $18,750 as other income as there is no further obligation from the Company.
|
4.
|
Received into treasury 438 shares of returned common stock originally valued at $175 that were previously issued pursuant to a stock subscription agreement put in place in 2006. Prior to the Merger Transaction in 2010, the party to the subscription agreement returned the common stock to the Company to settle the unpaid portion of the subscription receivable and cancelled the remaining portion of the subscription agreement. There is no further obligation on the part of the Company or the subscriber with respect to the stock subscription agreement.
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5.
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Repurchased 8,478 shares of common stock from a former officer and employee of the Company pursuant to a settlement agreement for cash valued at $20,000.
|
1.
|
117,548 shares of common stock were physically certificated during 2011 to Santeon, Inc.’s shareholders in connection with the Merger Transaction that occurred in 2010.
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2.
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87,218 shares of common stock were issued for cash to certain investors for $205,000 in cash during the period from January to May 2011. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
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3.
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34,346 shares of common stock were issued to a former officer of the Company as stock-based compensation for services rendered during 2010.
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4.
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17,857 shares of common stock were issued as stock-based compensation to the Company’s Acting Chief Financial Officer pursuant to a consulting agreement and were valued at $68,119. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
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5.
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3,125 shares of common stock were issued in December 2011 to a certain individual as payment of interest expense in lieu of cash pursuant to a short-term loan agreement between the Company and the lender, which shares are valued at $8,250. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
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6.
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6,016 shares of common stock were issued to a certain senior employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $17,088. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
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7.
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7,500 shares of common stock were issued to a former employee of the Company as compensation pursuant to an employment agreement and were valued at $15,000.
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8.
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486 shares of common stock were issued to a former employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $1,750.
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·
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Recent Developments
|
·
|
Results of Operations—an analysis of the Company’s consolidated results of operations, for the two years presented in the consolidated financial statements
|
·
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Liquidity and Capital Resources—an analysis of the effect of the Company’s operating, financing and investing activities on the Company’s liquidity and capital resources
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·
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Off-Balance Sheet Arrangements—a discussion of such commitments and arrangements
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·
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Critical Accounting Policies and Estimates—a discussion of accounting policies that require significant judgments and estimates
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·
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New Accounting Pronouncements—a summary and discussion of the Company’s plans for the adoption of relevant new accounting standards relevant
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2012
|
2011
|
|||||||
Revenues
|
$ | 4,276,488 | $ | 2,245,389 | ||||
Cost of revenues
|
2,269,426 | 1,355,873 | ||||||
Gross Profit
|
2,007,062 | 889,516 | ||||||
Total operating expenses
|
1,875,077 | 1,372,529 | ||||||
Income (loss) from operations
|
131,985 | (483,013 | ) | |||||
Other income & expenses
|
53,004 | 8,549 | ||||||
Gain (loss) from foreign currency transactions
|
826 | (869 | ) | |||||
Income (loss) before tax
|
185,815 | (475,333 | ) | |||||
Income tax (benefit) expense
|
- | - | ||||||
Net income (loss)
|
$ | 185,815 | $ | (475,333 | ) |
Name
|
Age
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Position
|
Dr. Ashraf M. Rofail
|
46
|
Chairman of the Board and Chief Executive Officer
|
Dr. Ahmed Sidky
|
33
|
Executive Vice President and Director
|
Mr. Ashraf Yacoub
|
47
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Independent Director
|
Mr. Mark Guirgis
|
44
|
Executive Vice President, Chief Financial Officer
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–
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to oversee the quality and integrity of the financial statements and other financial information we provide to any governmental body or the public;
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–
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to oversee the independent auditors’ qualifications and independence;
|
–
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to oversee the performance of our independent auditors;
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–
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to oversee our systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the board have established or will establish in the future;
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–
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to establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and other auditing matters and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
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–
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to provide an open avenue of communication among the independent auditors, financial and senior management, the internal auditing department, and the board, always emphasizing that the independent auditors are accountable to the audit committee; and
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–
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to perform such other duties as are directed by the board.
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–
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any breach of the director’s duty of loyalty to us or to our shareholders;
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–
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acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
|
–
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unlawful payment of dividends or unlawful stock repurchases or redemptions; and
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–
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any transaction from which the director derived an improper personal benefit.
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Other Cash
|
Equity Compensation ($)
|
Fringe
|
|||||||||||||||||||||||||||
Salary ($)
|
Bonus ($)
|
Compensation
(1)
|
RSU's
|
Options
|
Other
|
Sub-total
|
Benefits ($)
|
Total ($)
|
|||||||||||||||||||||
Dr. Ahraf M. Rofail
|
2012
|
$ | 230,577 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 10,057 | $ | 240,634 | ||||||||||
2011
|
180,000 | - | 182,263 | - | - | - | - | 16,598 | 378,861 | ||||||||||||||||||||
Dr. Ahmed Sidky
|
2012
|
173,077 | - | - | - | - | - | - | 11,608 | 184,685 | |||||||||||||||||||
2011
|
180,000 | - | - | - | - | - | - | 16,598 | 196,598 | ||||||||||||||||||||
Mark Guirgis
|
2012
|
158,846 | - | - | - | - | - | - | 14,553 | 173,399 | |||||||||||||||||||
2011
|
47,375 | - | - | - | - | 68,119 | 68,119 | 4,292 | 119,786 | ||||||||||||||||||||
Wessam Micheal
|
2012
|
116,115 | - | - | - | - | - | - | 10,057 | 126,172 | |||||||||||||||||||
2011
|
24,000 | - | - | - | - | - | - | 2,475 | 26,475 |
(1)
|
In the 2011 SEC Form 10-K that was filed on August 16, 2012, the cash compensation of $182,263 paid to Dr. Ashraf M. Rofail during 2011 was incorrectly reported as “Other Equity Compensation”; it should have been presented as “Other Cash Compensation” as revised and presented above.
|
·
|
Initial term of three (3) years, with automatic three (3) year renewal periods unless previously terminated or notice is provided 90 days in advance;
|
·
|
Initially base salary of $180,000 annually beginning on the date on which the merger closed;
|
·
|
Reimbursement for the use of a mobile phone;
|
·
|
A car allowance;
|
·
|
Health insurance benefits for employee and family;
|
·
|
Eligibility for equity compensation plans as afforded to other executives of the Company.
|
·
|
Base salary of $175,000 per year;
|
·
|
Cash bonus equal to 25% of his base salary, subject to Company performance and Board approval;
|
·
|
Participation in all equity compensation award programs in accordance with his executive role, scope of responsibility and contributions to the Company;
|
·
|
Participation in all standard employee benefits;
|
·
|
Termination provision: either party may terminate the temporary employment agreement with 45 days notice.
|
·
|
In the event that the Company provides Mr. Guirgis with a notice of termination, the Company agrees to the following:
|
o
|
The Company will continue to pay Mr. Guirgis his bi-weekly salary at that time for a period of six months (the “Severance Period”) after the last day of service with the Company;
|
o
|
During the Severance Period, Mr. Guirgis will continue to enjoy all customary benefits, including health and retirement benefits;
|
o
|
All unvested equity awards will fully and immediately vest on the last day of service with the Company.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unex-ercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
Equity Incentive Options Exercise Price ($)
|
Equity Incentives Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
|
||||||||||||||||||||||
Dr. Ahraf M. Rofail
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Dr. Ahmed Sidky
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Mark Guirgis
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Wessam Micheal
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Fees Earned or Paid in Cash ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
Nonqualified Deferred Compensation Earnings ($)
|
All Other Compensation ($)
|
Total ($)
|
|||||||||||||||||||||||||
CURRENT DIRECTORS
|
|||||||||||||||||||||||||||||||
Dr. Ashraf M. Rofail
|
2012
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Dr. Ahmed Sidky
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Ashraf Yacoub
|
2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Year Ended
December 31,
2012
|
Year Ended
December 31,
2011
|
|||||||
Audit Fees
(1)
|
$ | 75,000 | $ | 66,855 | ||||
Audit Related
(2)
|
- | - | ||||||
Tax
(3)
|
19,000 | - | ||||||
All Other Fees
(4)
|
- | - | ||||||
$ | 94,000 | $ | 66,855 |
1.
|
Financial Statements
|
–
|
Report of Independent Registered Public Accounting Firm
|
|
–
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
–
|
Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011
|
|
–
|
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2012 and 2011
|
–
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
|
|
–
|
Notes to Consolidated Financial Statements
|
2.
|
Financial Statement Schedules
|
Other schedules and exhibits are omitted because the required information either is not applicable or is shown in the financial statements or the notes thereto.
|
3.
|
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the U.S. Securities and Exchange Commission.
|
Exhibit Number
|
Exhibit Title
|
2.1
|
Plan and Agreement of Merger by and between SI Acquisition Corp. and Santeon Inc. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
|
10.4
|
Employment Agreement between Registrant and Ahmed Sidky. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
|
10.5
|
Employment Agreement between Registrant and Ashraf M. Rofail. (Incorporated by reference to our Current Report on Form 8-K filed on May 18, 2010)
|
10.6 *
|
Retention Bonus Agreement between Registrant and Ashraf M. Rofail.
|
31.1 *
|
Certification as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002
|
31.2 *
|
Certification as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.
|
32.1 *
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2 *
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.* | Interactive Data Files |
SANTEON GROUP INC.
|
|||
By:
|
/s/ Ashraf M. Rofail
|
||
Dr. Ashraf M. Rofail
|
|||
Chairman and CEO
|
|||
/s/ Dr. Ashraf M. Rofail
|
|||
Chairman of the Board and CEO (principal executive officer)
|
|||
/s/ Mark Guirgis
|
|||
Executive Vice President, Chief Financial Officer and Principal Accounting Officer
|
|||
/s/ Ahmed Sidky
|
|||
Executive Vice President and Director
|
|||
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
F-3
|
|
Consolidated Statements of Operations for the years ended December 31, 2012 and 2011
|
F-4
|
|
Consolidated Statements of Changes in Stockholders’ Deficit for the years ended
December 31, 2012 and 2011
|
F-5
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011
|
F-6
|
|
Notes to Consolidated Financial Statements
|
F-7 to F-19
|
2012
|
2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 183,785 | $ | 16,960 | ||||
Accounts receivable
|
796,466 | 581,479 | ||||||
Other current assets
|
25,578 | 15,160 | ||||||
Total current assets
|
1,005,829 | 613,599 | ||||||
Property and equipment, net
|
20,364 | 18,746 | ||||||
Software assets, net
|
281,212 | 394,887 | ||||||
Total non-current assets
|
301,576 | 413,633 | ||||||
Total Assets
|
$ | 1,307,405 | $ | 1,027,232 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 1,107,345 | $ | 861,879 | ||||
Notes payable - related party
|
- | 97,033 | ||||||
Notes payable
|
120,509 | 241,500 | ||||||
Total current liabilities
|
1,227,854 | 1,200,412 | ||||||
Long term liabilities:
|
||||||||
Notes payable
|
83,166 | - | ||||||
Total long term liabilities
|
83,166 | - | ||||||
Stockholders' deficit:
|
||||||||
Preferred stock, par value $0.001, 50,000,000 shares authorized: 0 shares issued and outstanding as of December 31, 2012 and 2011, respectively
|
- | - | ||||||
Common stock, par value $0.001, 50,000,000 shares authorized; 1,201,137 and 679,050 shares issued as of December 31, 2012 and 2011, respectively and 1,184,899 and 679,050 shares outstanding as of December 31, 2012 and 2011, respectively
|
1,185 | 679 | ||||||
Common stock to be issued
|
10,000 | 484,590 | ||||||
Additional paid in capital
|
1,518,726 | 1,021,967 | ||||||
Treasury Stock, at cost, 16,238 and 0 shares as of December 31, 2012 and
2011, respectively
|
(38,925 | ) | - | |||||
Accumulated deficit
|
(1,494,601 | ) | (1,680,416 | ) | ||||
Total stockholders' deficit
|
(3,615 | ) | (173,180 | ) | ||||
Total Liabilities and Stockholders' Deficit
|
$ | 1,307,405 | $ | 1,027,232 |
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Revenues
|
$ | 4,276,488 | $ | 2,245,389 | ||||
Cost of revenue
|
2,269,426 | 1,355,873 | ||||||
Gross Profit
|
2,007,062 | 889,516 | ||||||
Operating expenses:
|
||||||||
General, selling and administration
|
1,869,261 | 1,367,669 | ||||||
Depreciation and amortization
|
5,816 | 4,860 | ||||||
Total operating expenses
|
1,875,077 | 1,372,529 | ||||||
Income (loss) from operations
|
131,985 | (483,013 | ) | |||||
Other Income (Expenses):
|
||||||||
Interest expense
|
(20,192 | ) | (37,949 | ) | ||||
Gain on forgiveness of debt
|
56,540 | 56,498 | ||||||
Gain (loss) from foreign currency transactions
|
826 | (869 | ) | |||||
Other income (expense)
|
16,656 | (10,000 | ) | |||||
Total other income
|
53,830 | 7,680 | ||||||
Income (loss) before provision for income taxes
|
185,815 | (475,333 | ) | |||||
Provision for income tax expense (benefit)
|
- | - | ||||||
Net income (loss)
|
$ | 185,815 | $ | (475,333 | ) | |||
Net income (loss) per common share, basic and diluted
|
$ | 0.16 | $ | (0.41 | ) | |||
Weighted average number of common shares outstanding, basic and diluted
|
1,196,616 | 1,147,518 |
Common Shares To Be
|
Additional
|
Total
|
||||||||||||||||||||||||||||||||||
Common stock
|
Issued
|
Paid in
|
Treasury stock
|
Accumulated
|
Shareholders'
|
|||||||||||||||||||||||||||||||
Shares
|
Par Value
|
Shares
|
Amount
|
Capital
|
Shares
|
Amount
|
Deficit
|
Deficit
|
||||||||||||||||||||||||||||
Balance, December 31, 2010
|
519,656 | $ | 520 | 382,748 | $ | 285,542 | $ | 905,967 | - | $ | - | $ | (1,205,083 | ) | $ | (13,054 | ) | |||||||||||||||||||
- | ||||||||||||||||||||||||||||||||||||
Common stock issued to Santeon, Inc.'s shareholders in connection with the reverse acquisition on May 12, 2010
|
117,548 | 117 | (117,548 | ) | (4,702 | ) | 4,585 | - | - | - | - | |||||||||||||||||||||||||
Common stock sold for cash
|
- | - | 87,218 | 208,000 | (3,000 | ) | - | - | - | 205,000 | ||||||||||||||||||||||||||
Stock-based compensation
|
41,846 | 42 | (2,500 | ) | (12,500 | ) | 114,415 | - | - | - | 101,957 | |||||||||||||||||||||||||
Common stock to be issued for accrued interest
|
- | - | 3,125 | 8,250 | - | - | - | - | 8,250 | |||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | (475,333 | ) | (475,333 | ) | |||||||||||||||||||||||||
Balance, December 31, 2011
|
679,050 | $ | 679 | 353,043 | $ | 484,590 | $ | 1,021,967 | - | $ | - | $ | (1,680,416 | ) | $ | (173,180 | ) | |||||||||||||||||||
Common stock certificated to Santeon, Inc. shareholders in connection with Merger Transaction in May 2010
|
200,000 | 200 | (200,000 | ) | (8,000 | ) | 7,800 | - | - | - | - | |||||||||||||||||||||||||
Common stock certificated to X2A consulting, LLC shareholders in connection with acquisition in April 2010
|
25,000 | 25 | (25,000 | ) | (88,000 | ) | 87,975 | - | - | - | - | |||||||||||||||||||||||||
Common stock certificated for cash
|
91,968 | 92 | (91,968 | ) | (227,000 | ) | 226,908 | - | - | - | - | |||||||||||||||||||||||||
Common stock certificated as stock-based compensation
|
188,169 | 188 | (14,125 | ) | (87,250 | ) | 109,562 | - | - | - | 22,500 | |||||||||||||||||||||||||
Common stock certificated for services rendered
|
11,973 | 12 | (11,973 | ) | (42,750 | ) | 42,738 | - | - | - | - | |||||||||||||||||||||||||
Common stock certificated for loan repayment
|
4,977 | 5 | (4,977 | ) | (21,590 | ) | 21,585 | - | - | - | - | |||||||||||||||||||||||||
Repurchase and cancellation of common stock
|
(16,238 | ) | (16 | ) | - | - | 191 | 16,238 | (38,925 | ) | - | (38,750 | ) | |||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | - | 185,815 | 185,815 | |||||||||||||||||||||||||||
Balance, December 31, 2012
|
1,184,899 | $ | 1,185 | 5,000 | $ | 10,000 | $ | 1,518,726 | 16,238 | $ | (38,925 | ) | $ | (1,494,601 | ) | $ | (3,615 | ) |
Year ended December 31,
|
||||||||
2012
|
2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | 185,815 | $ | (475,333 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
135,790 | 134,527 | ||||||
Other income
|
(19,155 | ) | - | |||||
Gain on forgiveness of debt
|
(56,540 | ) | (56,498 | ) | ||||
Common stock issued for stock-based compensation
|
22,500 | 101,957 | ||||||
Common stock to be issued for interest expense
|
- | 8,250 | ||||||
Bad debt expenses
|
- | 6,423 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(214,986 | ) | (546,801 | ) | ||||
Other current assets
|
(10,419 | ) | (6,377 | ) | ||||
Accounts payable and accrued expenses
|
315,911 | 605,353 | ||||||
Net cash provided by (used in) operating activities
|
358,916 | (228,499 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(7,434 | ) | (12,427 | ) | ||||
Purchase of acquired software
|
(16,299 | ) | - | |||||
Net cash used in investing activities
|
(23,733 | ) | (12,427 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from sale of common stock
|
- | 205,000 | ||||||
Purchases of treasury stock
|
(20,000 | ) | - | |||||
Proceeds from issuance of notes payable - related party
|
- | 72,033 | ||||||
Repayment of notes payable-related party
|
(97,033 | ) | (40,000 | ) | ||||
Repayment of notes payable
|
(51,325 | ) | (6,500 | ) | ||||
Net cash (used in) provided by financing activities
|
(168,358 | ) | 230,533 | |||||
Net increase (decrease) in cash
|
166,825 | (10,393 | ) | |||||
Cash, beginning of the year
|
16,960 | 27,353 | ||||||
Cash, end of the year
|
$ | 183,785 | $ | 16,960 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Income tax paid
|
$ | - | $ | - | ||||
Interest paid
|
$ | 6,335 | $ | - | ||||
Supplemental disclosures for non-cash investing and financing activities:
|
||||||||
Conversion of accrued interest to note payable
|
$ | 13,500 | $ | - |
Note 1
|
Significant Accounting Policies
|
Note 2
|
Liquidity
|
Note 3
|
Property, Plant and Equipment
|
2012
|
2011
|
|||||||
Computer equipment
|
$ | 37,477 | $ | 34,918 | ||||
Furniture and fixtures
|
13,824 | 13,824 | ||||||
Telephone equipment
|
5,494 | 619 | ||||||
Total property and equipment
|
56,795 | 49,361 | ||||||
less:
Accumulated depreciation
|
(36,431 | ) | (30,615 | ) | ||||
Property and equipment, net
|
$ | 20,364 | $ | 18,746 |
Note 4
|
Software and Software Under Development
|
2012
|
2011
|
|||||||
Software, net of accumulated amortization of $378,700 and $250,689 at December 31, 2012 and 2011, respectively
|
$ | 261,356 | $ | 389,368 | ||||
Acquired software, net of accumulated amortization of $54,285 and $52,322 at December 31, 2012 and 2011, respectively and accumulated impairment of $243,667 at December 31, 2012 and 2011.
|
19,856 | 5,519 | ||||||
Software assets, net
|
$ | 281,212 | $ | 394,887 | ||||
Note 5
|
Accounts Payable and Accrued Liabilities
|
2012
|
2011
|
|||||||
Trade payables
|
$ | 400,920 | $ | 313,205 | ||||
Accrued compensation
|
532,621 | 316,340 | ||||||
Accrued interest
|
7,014 | 66,864 | ||||||
Other accrued expenses
|
166,790 | 165,470 | ||||||
Total accounts payable and accrued expenses
|
$ | 1,107,345 | $ | 861,879 |
Note 6
|
Notes Payable
|
2012
|
2011
|
|||||||
15.00% Secured Promissory Note due July 2007
|
$ | 45,000 | $ | 45,000 | ||||
2.00% Unsecured Convertible Promissory Note due March 2015
|
158,675 | 196,500 | ||||||
$ | 203,675 | $ | 241,500 |
Note 7
|
Income Taxes
|
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Current income tax expense (benefit)
|
||||||||
Federal
|
$ | 98,071 | $ | (138,711 | ) | |||
State
|
11,422 | (16,156 | ) | |||||
Total
|
109,493 | (154,867 | ) | |||||
Deferred income tax (benefit)
|
||||||||
Federal
|
(34,253 | ) | (21,777 | ) | ||||
State
|
(3,991 | ) | (2,536 | ) | ||||
Total
|
(38,244 | ) | (24,313 | ) | ||||
Utilization of net operating loss carryover
|
(71,249 | ) | - | |||||
Change in valuation allowance
|
- | 179,180 | ||||||
Provision for income tax (benefit)
|
$ | - | $ | - |
Years Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred tax assets:
|
||||||||
Federal net operating loss carry-forward
|
$ | 650,552 | $ | 748,624 | ||||
State net operating loss carry-forward
|
75,770 | 87,193 | ||||||
Others
|
714 | 1,256 | ||||||
Total deferred tax assets
|
727,036 | 837,073 | ||||||
Less: valuation allowance
|
(649,936 | ) | (721,729 | ) | ||||
Net long-term deferred tax assets
|
77,100 | 115,344 | ||||||
Deferred tax liabilities:
|
||||||||
Software and software development
|
(72,600 | ) | (109,765 | ) | ||||
Fixed assets
|
(4,500 | ) | (5,579 | ) | ||||
Long-term deferred tax liabilities
|
(77,100 | ) | (115,344 | ) | ||||
Net deferred tax asset (liabilities)
|
$ | - | $ | - |
Note 8
|
Capital Stock
|
1.
|
Issued 6,250 shares of common stock to a certain senior employee of the Company pursuant to an employment agreement that was valued at $22,500.
|
2.
|
Certificated the previously authorized and issued shares of common stock as follows:
|
a.
|
200,000 shares of common stock to the shareholders of Santeon, Inc. in connection with the Merger Transaction consummated in May 2010;
|
b.
|
25,000 shares of common stock to the shareholders of X2A Consulting LLC in connection with the Merger Transaction consummated in April 2010;
|
c.
|
968 shares of common stock to investors for cash valued at $227,000;
|
d.
|
188,169 shares of common stock as stock-based compensation valued at $87,250, which included the 6,250 shares of common stock valued at $22,500 as disclosed in item #1 above;
|
e.
|
11,973 shares of common stock for services rendered valued at $42,750; and
|
f.
|
4,977 shares of common stock as loan repayments valued at $21,590.
|
3.
|
Received into treasury 7,322 shares of returned common stock originally valued at $18,750 that were issued to a vendor of the Company for services rendered in a previous period. The vendor returned the common stock to the Company for no consideration and the Company recorded $18,750 as other income as there is no further obligation from the Company.
|
4.
|
Received into treasury 438 shares of returned common stock originally valued at $175 that were previously issued pursuant to a stock subscription agreement put in place in 2006. Prior to the Merger Transaction in 2010, the party to the subscription agreement returned the common stock to the Company to settle the unpaid portion of the subscription receivable and cancelled the remaining portion of the subscription agreement. There is no further obligation on the part of the Company or the subscriber with respect to the stock subscription agreement.
|
5.
|
Repurchased 8,478 shares of common stock from a former officer and employee of the Company pursuant to a settlement agreement for cash valued at $20,000.
|
1.
|
117,548 shares of common stock were physically certificated during 2011 to Santeon, Inc.’s shareholders in connection with the Merger Transaction that occurred in 2010.
|
2.
|
87,218 shares of common stock were issued for cash to certain investors for $205,000 in cash during the period from January to May 2011. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
|
1.
|
34,346 shares of common stock were issued to a former officer of the Company as stock-based compensation for services rendered during 2010.
|
2.
|
17,857 shares of common stock were issued as stock-based compensation to the Company’s Acting Chief Financial Officer pursuant to a consulting agreement and were valued at $68,119. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
|
3.
|
3,125 shares of common stock were issued in December 2011 to a certain individual as payment of interest expense in lieu of cash pursuant to a short-term loan agreement between the Company and the lender, which shares are valued at $8,250. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
|
4.
|
6,016 shares of common stock were issued to a certain senior employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $17,088. These shares were not physically certificated until after 2011 and are presented as common shares to be issued.
|
5.
|
7,500 shares of common stock were issued to a former employee of the Company as compensation pursuant to an employment agreement and were valued at $15,000.
|
6.
|
486 shares of common stock were issued to a former employee of the Company as payment of his unpaid compensation pursuant to an employment agreement and were valued at $1,750.
|
Note 9
|
Commitments and Contingent Liabilities
|
Year ended December 31,
|
||||
2013
|
$ | 72,444 | ||
2014
|
81,673 | |||
2015
|
86,255 | |||
2016
|
64,533 | |||
2017
|
67,119 | |||
Thereafter
|
34,669 | |||
Total
|
$ | 406,693 |
Note 10
|
Related Party Transactions
|
Note 11
|
Subsequent Events
|
1 Year Santeon (PK) Chart |
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