Delaware
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02-0575232
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(State
or Other Jurisdiction of Incorporation or Organization)
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(I.R.S.
Employer Identification
Number)
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Part
I.
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Consolidated
Financial Information
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Item 1.
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Consolidated
Financial Statements (unaudited)
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3
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Consolidated
Balance Sheets as of March 31, 2009 (unaudited) and December 31,
20078(audited)
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3
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Consolidated
Statements of Operations for The Three-Month Periods ended March 31, 2009
and 2008 (unaudited)
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4
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Consolidated
Statements of Cash Flows for The Three-Month Periods ended March 31, 2009
and 2008 (unaudited)
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5
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Notes
to Unaudited Consolidated Financial Statements
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6
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Item 2.
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Management's
Discussion and Analysis of Consolidated Financial Condition and Results of
Operations
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14
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Item 3.
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Controls
and Procedures
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Part
II.
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Other
Information
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Item 1.
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Legal
Proceedings
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18
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Item 1A.
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Risk
Factors
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18
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Item 2.
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Unregistered
Sales of Equity, Securities and Use of Proceeds
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24
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Item 3.
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Defaults
Under Senior Securities
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24
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Item 4.
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Submission
of Matters to a Vote of Security Holders
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24
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Item 5.
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Other
Information
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24
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Item 6.
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Exhibits
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24
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Signatures
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25
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Exhibit Index
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26
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Certifications
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March
31, 2009
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December
31, 2008
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|||||||
ASSETS
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||||||||
CURRENT
ASSETS:
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||||||||
Cash
and cash equivalents
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$ | 22,732 | $ | 6,900 | ||||
Prepaid
expenses
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8,727 | 35,407 | ||||||
Total
Current Assets
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31,459 | 42,307 | ||||||
PROPERTY
AND EQUIPMENT-NET
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652,283 | 701,289 | ||||||
INTANGIBLE
ASSETS-NET
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158,351 | 206,608 | ||||||
DEPOSITS
|
161,168 | 185,293 | ||||||
Total
Non-Current Assets
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971,802 | 1,093,190 | ||||||
TOTAL
ASSETS
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$ | 1,003,260 | $ | 1,135,496 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||
CURRENT
LIABILITIES:
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||||||||
Accounts
payable and accrued expenses
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$ | 721,816 | $ | 511,472 | ||||
Deferred
revenue
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1,750 | 2,500 | ||||||
Due
to related parties
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292,304 | 309,070 | ||||||
Advance
from Investor
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45,000 | |||||||
Shares
to be issued
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45,000 | 45,000 | ||||||
Total
current liabilities
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1,105,870 | 868,042 | ||||||
LONG
TERM LIABILITIES:
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||||||||
Deferred
revenue
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9,640 | 9,891 | ||||||
Total
liabilities
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1,115,510 | 877,933 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT):
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||||||||
Common
stock, $0.0001 par value; 100,000,000
shares authorized; 34,438,313 shares issued and
outstanding as of March 31, 2009 and December 31,
2008.
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3,454 | 3,454 | ||||||
Treasury
Stock (100,000 shares)
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(10 | ) | (10 | ) | ||||
Additional
paid in capital
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77,515,508 | 77,466,062 | ||||||
Subscription
receivable
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(8,000 | ) | (8,000 | ) | ||||
Accumulated
deficit
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(77,625,089 | ) | (77,205,829 | ) | ||||
Translation
Adjustment
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1,886 | 1,886 | ||||||
Total
stockholders' equity/(deficit)
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(112,250 | ) | 257,563 | |||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$ | 1,003,260 | $ | 1,135,496 |
2009
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2008
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|||||||
NET
REVENUE
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$ | 2,425 | $ | 8,765 | ||||
COST
OF GOODS SOLD
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1,198 | 8,630 | ||||||
GROSS
PROFIT
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1,227 | 135 | ||||||
OPERATING
EXPENSES
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||||||||
Depreciation
and amortization
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97,668 | 108,306 | ||||||
Rent
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101,359 | 87,810 | ||||||
Salaries
and payroll taxes
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17,494 | 302,215 | ||||||
Professional
fees
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81,838 | 199,506 | ||||||
General
and administrative expenses
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120,569 | 2,948,951 | ||||||
Total
operating expenses
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418,928 | 3,646,788 | ||||||
LOSS
FROM OPERATIONS
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(417,701 | ) | (3,646,653 | ) | ||||
OTHER
INCOME (EXPENSE)
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||||||||
Interest
income
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41 | 724 | ||||||
Total
Other Income/(loss)
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41 | 724 | ||||||
LOSS
BEFORE INCOME TAXES
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(417,660 | ) | (3,645,929 | ) | ||||
INCOME
TAX
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1,600 | 2,520 | ||||||
NET
LOSS
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(419,260 | ) | (3,648,449 | ) | ||||
*BASIC
AND DILUTED WEIGHTED AVERAGE NUMBER OF
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||||||||
COMMON
STOCK OUTSTANDING
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34,438,313 | 34,240,951 | ||||||
BASIC
AND DILUTED NET LOSS PER SHARE
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$ | (0.01 | ) | $ | (0.11 | ) |
2009
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2008
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|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
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||||||||
Net
loss
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$ | (419,260 | ) | $ | (3,648,449 | ) # | ||
Adjustments
to reconcile net loss
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||||||||
to
net cash used in operating activities:
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||||||||
Depreciation
and amortization
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97,668 | 108,306 | ||||||
Issuance
of stock options for compensation
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49,446 | 2,786,657 | ||||||
(Increase)
decrease in current assets:
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||||||||
Inventory
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- | 532 | ||||||
Prepaid
expense
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26,680 | (58,516 | ) | |||||
Deposits
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24,125 | (118,013 | ) | |||||
Increase
(decrease) in current liabilities:
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||||||||
Accounts
payable and accrued expenses
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210,345 | (98,769 | ) | |||||
Deferred
Revenue
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(1,001 | ) | 597 | |||||
Net
cash used in operating activities
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(11,997 | ) | (1,027,654 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES
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||||||||
Purchase
of property and equipment
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- | (32,164 | ) | |||||
Purchase
of software
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(405 | ) | (66,037 | ) | ||||
Net
cash used in investing activities
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(17,171 | ) | (98,201 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
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||||||||
Advance
from stockholder
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45,000 | |||||||
Proceeds
from/payment to related parties
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(16,766 | ) | 6,977 | |||||
Proceeds
from stock subscription (for shares to be issued)
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45,000 | |||||||
Proceeds
from issuance of common stock for cash
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- | 946,000 | ||||||
Repurchase
treasury stock
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- | (50,000 | ) | |||||
Net
cash provided by financing activities
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28,234 | 941,000 | ||||||
NET
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
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15,832 | (177,878 | ) | |||||
CASH
& CASH EQUIVALENTS, BEGINNING BALANCE
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6,900 | 705,839 | ||||||
CASH
& CASH EQUIVALENTS, ENDING BALANCE
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$ | 22,732 | $ | 527,960 | ||||
SUPPLEMENTAL
DISCLOSURES:
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||||||||
Income
tax payments
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$ | 1,600 | $ | 2,520 | ||||
Interest
payments
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$ | - | $ | - |
2009
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2008
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|||||||
Equipment
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934,964 | 934,964 | ||||||
Furniture
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141,078 | 141,078 | ||||||
Leasehold
improvement
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89,768 | 89,768 | ||||||
Total
Property & Equipment
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1,165,810 | 1,165,810 | ||||||
Less
accumulated depreciation
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(513,527 | ) | (464,522 | ) | ||||
Net
Property & Equipment
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652,283 | 701,289 |
2009
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2008
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|||||||
Software
solutions
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547,317 | 546,912 | ||||||
Domain
name
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32,321 | 32,321 | ||||||
Total
Intangible Assets
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579,638 | 579,233 | ||||||
Less
accumulated amortization
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(421,287 | ) | (372,625 | ) | ||||
Net
Intangible Assets
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158,351 | 206,608 |
Amortization
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||||
2009:
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$ | 139,423 | ||
2010:
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$ | 18,828 |
2009
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2008
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|||||||
Rent
deposit – Mountain View
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$ | 105,065 | $ | 114,750 | ||||
Rent
deposit – Los Angeles
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2,189 | 2,189 | ||||||
Rent
deposit – Vietnam
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- | 10,000 | ||||||
Attorney
retainer deposit
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50,000 | 50,000 | ||||||
Other
deposits
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3,912 | 8,354 | ||||||
Total
deposits
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$ | 161,168 | $ | 185,293 |
March 31, 2009
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December 31, 2008
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|||||||
Accounts
payable
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$ | 595,586 | $ | 373,873 | ||||
Accrued
litigation
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72,000 | 72,000 | ||||||
Other
accrued expenses
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54,230 | 65,599 | ||||||
Total
accounts payable &
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||||||||
accrued
expenses
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$ | 721,816 | $ | 511,472 |
Future commitment
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Sublease Income
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Net Future Rent Expense
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||||||||||
2010
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$ | 91,706 | $ | 91,706 | $ | - | ||||||
2011
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$ | 94,294 | $ | 94,294 | $ | - | ||||||
2012
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$ | 19,754 | $ | 19.754 | $ | - |
2010:
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$ | 286,387 | ||
2011:
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$ | 296,656 | ||
2012:
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$ | 306,849 | ||
2013:
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$ | 271,575 | ||
Thereafter:
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$ | 52,700 |
Weighted
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||||||||||||
Average
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Aggregate
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|||||||||||
Exercise
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Intrinsic
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|||||||||||
Under Plan
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Price
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Value
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||||||||||
Balance, December 31, 2008
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5,383,999 | 0.97 | $ | 5,222,479 | ||||||||
Granted
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- | - | ||||||||||
Lapsed
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338,000 | 2.99 | ||||||||||
Exercised
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- | - | ||||||||||
Balance, March 31,
2009
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5,045,999 | 0.83 | $ | - |
Options
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||||||||||||||||||||
Outstanding
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|||||||||||||||||||
Weighted
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Options Exercisable
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|||||||||||||||||||
Average
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Weighted
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Weighted
|
||||||||||||||||||
Remaining
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Average
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Average
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||||||||||||||||||
Number
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Contractual
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Exercise
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Number
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Exercise
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||||||||||||||||
Outstanding
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Life
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Price
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Exercisable
|
Price
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||||||||||||||||
Options
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5,045,999 | 0.62 | $ | 0.83 | 4,873,602 | $ | 0.70 |
Weighted
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||||||||||||
Average
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Aggregate
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|||||||||||
Exercise
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Intrinsic
|
|||||||||||
Price
|
Value
|
|||||||||||
Balance, December 31,
2008
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750,000 | $ | 6.00 | $ | - | |||||||
Granted
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- | - | - | |||||||||
Exercised
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- | - | - | |||||||||
Balance, March 31,
2009
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750,000 | $ | 6.00 | $ | - |
Warrants
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||||||||||||||||||||
Outstanding
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||||||||||||||||||||
Weighted
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Warrants
Exercisable
|
|||||||||||||||||||
Average
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Weighted
|
Weighted
|
||||||||||||||||||
Remaining
|
Average
|
Average
|
||||||||||||||||||
Number
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Contractual
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||
Outstanding
|
Life
|
Price
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Exercisable
|
Price
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||||||||||||||||
Warrants
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750,000 | 0.73 | $ | 6.00 | 750,000 | $ | 6.00 |
·
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The
intrinsic value method, or APB Opinion No. 25, to account for our common
stock incentive awards; and
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·
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We
record an allowance for credit losses based on estimates of customers'
ability to pay. If the financial condition of our customers were to
deteriorate, additional allowances may be
required.
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·
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The
Company expects to apply the provisions of Statement of Position 97-2 as
well as SAB 101, to account for the sales of software and related services
that may be bundled with the software
license.
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·
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limit
shareholders' ability to elect or remove
directors;
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·
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delay
or prevent a change in the control;
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·
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impede
a merger, consolidation, take over or other transaction involving the
Company; or
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·
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discourage
a potential acquirer from making a tender offer or otherwise attempting to
obtain control of the Company.
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Item
2.
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Unregistered
Sales of Equity, Securities and Use of Proceeds. None
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Item 3.
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Defaults Under Senior
Securities. None
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Item 4.
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Submission of Matters to a Vote
of Security Holders. None
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Item 5.
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Other
Information. None
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Item
6.
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Exhibits.
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By: /s/ Benedict Van
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Benedict
Van
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Chief
Executive Officer
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Exhibit No.
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Exhibit
Description
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3.1
(1)
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Certificate
of Incorporation, as amended on July 24,
2001
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3.1
(5)
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Certificate
of Ownership and Merger of PeopleNet Name Change Subsidiary, Inc. with and
into PeopleNet International
Corporation
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3.2
(1)
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By-laws
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4.1
(1)
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2001
Stock Option Plan
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4.2
(1)
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2001
Non-Employee Director Stock Option
Plan
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4.3
(1)
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2001
Stock Incentive Plan
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10.1
(1)
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Agreement
between American Champion Media & American Champion Entertainment
dated as of July 10, 2001
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10.2
(1)
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Agreement
among ACEI, American Champion Media, ECapital Group & Anthony Chan,
dated as of June 20, 2001
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10.3
(1)
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Agreement
between American Champion Media & World Channel dated as of December
27, 2000
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10.4
(1)
|
Agreement
between American Champion Media & Brighter Child Interactive dated as
of September 30, 1999
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10.5
(1)
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Agreement
between American Champion Media & Prestige Toys Corp dated as of
October 13, 1999
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10.6
(2)
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Agreement
- Sale of Assets between ECapital Group & PeopleNet International
dated March 21, 2002
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10.7
(2)
|
Agreement
- Sale of Assets between PeopleNet Corporation & PeopleNet
International dated March 21, 2002
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10.8
(3)
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Lease
Agreement with CarrAmerica Techmart,
LLC
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10.9
(4)
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Agreement
and Plan of Merger with hereUare Communications, Inc., dated August 25,
2006
|
10.10
(6)
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Lease
Agreement with 1061 Terra Bella Associates,
LLC
|