UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10
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K
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(Mark
One)
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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, 2008
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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 __________________ to
__________________________.
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Commission
File Number: 333-143645
POWERSAFE
TECHNOLOGY CORP.
(Exact
name of registrant as specified in its charter)
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Delaware
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98-0522188
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(State
or other jurisdiction
of
incorporation)
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(IRS
Employer
Identification
No.)
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1400
Coney Island Avenue, Brooklyn, NY 11230
(Address
of principal executive offices)
(718)
951-8021
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
None
Securities
registered pursuant to Section 12(g) of the Exchange Act:
Common
Stock, $0.0001 par value
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 Section 15(d) of the
Act. Yes
o
No
x
Check
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 registrant 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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
o
No
x
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of 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.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer
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Accelerated
filer
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Non-accelerated
filer
(Do
not check if a smaller reporting company)
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Smaller
reporting
company
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x
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes
o
No
x
The
aggregate market value of the voting and non-voting common stock held by
non-affiliates computed by reference to the closing sales price of the common
stock as of June 30, 2009 was $2,645,160.
As of
October 21, 2009, there were 9,072,761 shares of common stock
outstanding.
Documents
Incorporated By Reference:
None
TABLE
OF CONTENTS
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Page
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PART
I
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Item
1
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Business
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1
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Item
1A
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Risk
Factors
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9
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Item
1B
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Unresolved
Staff Comments
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9
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Item
2
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Properties
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9
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Item
3
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Legal
Proceedings
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10
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Item
4
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Submission
of Matters to a Vote of Security Holders
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10
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PART
II
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Item
5
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Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
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10
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Item
7
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Management’s Discussion and Analysis of Financial
Condition and Results of Operation
s
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12
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Item
8
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Financial Statements and Supplementary
Data
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14
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Item
9
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Changes
in and Disagreements with Accountants on Accounting and financial
Disclosure
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15
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Item
9A(T)
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Controls
and Procedures
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15
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PART
III
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Item
10
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Directors, Executive Officers and Corporate
Governance
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16
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Item
11
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Executive Compensation
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17
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Item
12
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Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
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20
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Item
13
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Certain Relationships and Related Transactions,
and Director Independence
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Item
14
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Principal Accountant Fees and
Services
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SIGNATURES
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PART
I
As
used in this Annual Report on Form 10-K, references to the "Company," "we,"
"our" or "us" refer to the Registrant, unless the context otherwise indicates,
and "ATI" refers to Amplification Technologies, Inc., our wholly owned
subsidiary.
Forward
Looking Statements
This
Annual Report on Form 10-K contains forward-looking information. Forward-looking
information includes statements relating to future actions, future performance,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other such matters. The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking
information to encourage companies to provide prospective information without
fear of litigation so long as that information is identified as forward-looking
and is accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
projections. Forward-looking information may be included in this Annual Report
on Form 10-K or may be incorporated by reference from other documents filed with
the Securities and Exchange Commission (the "SEC") by us. You can find many of
these statements by looking for words including, for example, "believes,"
"expects," "anticipates," "estimates" or similar expressions in this Annual
Report on Form 10-K or in documents incorporated by reference in this Annual
Report on Form 10-K. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information or future
events.
We
have based the forward-looking statements relating to our operations on
management's current expectations, estimates and projections about us and the
industry in which we operate. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that we cannot
predict. In particular, we have based many of these forward-looking statements
on assumptions about future events that may prove to be inaccurate. Accordingly,
our actual results may differ materially from those contemplated by these
forward-looking statements. Any differences could result from a variety of
factors, including, but not limited to general economic and business conditions,
competition, and other factors.
Item 1. Business
Our
History
We
were incorporated in Delaware on February 5, 2007. Prior to our
acquisition of ATI, as described below, we intended to engage in the manufacture
and distribution of a multiple outlet power box. We own the technology and
patent for a new and improved multiple outlet power box. Such patent, entitled
the “Power Outlet Box with Special Protection Logic,” was approved and granted
by the United States Patent and Trademark Office on January 13, 1998 and was
acquired by us on March 26, 2007. On such date, we entered into a Patent
Transfer and Sale Agreement with Leonard Liner, pursuant to which Mr. Liner
assigned to us all of his right, title, and interest in the patent and other
intellectual property rights related thereto. We paid $9,000 for the patent and
other intellectual property rights related thereto.
Subsequently,
we encountered difficulties in developing the prototype and effectuating a
business of the outlet power box. On March 31, 2008, immediately prior to the
execution and delivery of the Merger Agreement discussed below, our stockholders
entered into a stock purchase agreement (the “Purchase Agreement”) pursuant to
which, among other things, all of our issued and outstanding shares were sold to
investors for an aggregate purchase price of $625,000. Prior to the
consummation of the transactions contemplated by the Purchase Agreement, two of
our former officers and directors and majority stockholders, each returned
4,000,000 shares for cancellation, reducing the number of issued and outstanding
shares from 15,075,000 to 7,075,000 shares. Approximately 1,925,617
shares, or 27.2% of the issued and outstanding shares, were acquired by Jack N.
Mayer, our President, Treasurer and a director, of which 253,282 were paid to
Mr. Mayer as consideration for his involvement in organizing the transaction and
300,000 shares were purchased by Mr. Mayer’s wife.
On
March 31, 2008, our wholly owned subsidiary, Powersafe Acquisition Corp., a
Delaware corporation (“Acquisition Corp.”), entered into a merger agreement with
ATI, a Delaware corporation (the “Merger Agreement”), pursuant to which
Acquisition Corp. merged with and into ATI, with ATI being the surviving entity
and our wholly owned subsidiary. As described below, upon the closing of the
merger, all of the issued and outstanding shares of common stock of ATI, other
than the stock held by stockholders who properly demand appraisal rights of
their shares, were exchanged for shares of our common stock. Half of the shares
issued in the merger to each stockholder of ATI were subject to transfer
restrictions until December 1, 2008 and the other half were subject to transfer
restrictions until January 15, 2009. Since the closing had not taken
place by December 31, 2008, on January 27, 2009, the parties amended the Merger
Agreement, to extend the date after which the parties may elect to terminate the
Merger Agreement from December 31, 2008, to April 30, 2009, and to modify the
exchange ratio to provide that, upon closing, ATI stockholders would receive
one-half of a share of our common stock in exchange for one share of
ATI. The parties also modified the lock-up provision to provide that
half of the exchange shares issued to stockholders of ATI would be
non-transferable (with certain limited exceptions) until October 15, 2009, and
the other half until December 1, 2009. In addition, the parties also modified
the liquidation damages provisions of the Merger Agreement.
On
February 17, 2009, we acquired all of the issued and outstanding shares of ATI,
we issued approximately 6,620,000 shares of our common stock to the former
common stockholders of ATI, 43,458 shares of Series A Convertible Preferred
Stock to the former holders of Series A Convertible Preferred Stock of ATI,
21,808 shares of non-convertible Series B Preferred Stock to the former holders
of Series B Preferred Stock of ATI and assumed the obligation to issue up to
680,000 shares of common stock reserved for issuance to satisfy option awards
and similar obligations.
History
of ATI
ATI
is a Delaware corporation which was formed on May 13, 2002. ATI’s
predecessor, Quantum Photonics LLC, a New York limited liability company, was
formed on October 5, 2000, to commercialize certain proprietary technology, and
merged into ATI on August 2, 2002. APMTI LLC, a Russian limited liability
company based in Moscow Russia, was formed on May 13, 2004, and is a wholly
owned subsidiary of ATI.
Our
Business
Following
our acquisition of all of the capital stock of ATI on February 17, 2009, our
business consists primarily of developing ATI. ATI has invented an extremely
sensitive photodetector technology that it believes has significant performance
and cost advantages over traditional technology and is positioned as a next
generation solid state technology for low level light
detection. ATI's platform semiconductor technology, which allows
amplification of weak signals without introducing additional noise in the
amplification process, is in principle applicable to, and has been patented to
encompass, detection of signals other than light, and thus could in principle be
used to create biological, radiological, electrical, and chemical sensors. ATI
was issued a U.S. patent titled “High Sensitivity, high resolution detection of
signals” in April 2005 and was granted another patent in August
2006. Over $9 million has been invested in ATI to date. In addition,
ATI has received over $750,000 in government grants.
ATI
intends to develop its technology and market its products for use in current and
next generation low level light detection systems at the component
level. Its technology and products will be marketed for existing
applications for low light level detection as well as for use in new
applications and detection systems.
We
believe that the current market for devices for the detection of very low levels
of light is in the range of $300 million annually and growing. We believe that
the ultimate market that may be addressed by ATI's products over a period of
years is in the multi-billion dollar range.
Currently,
detection and amplification of low level light signals is usually accomplished
using Photomultiplier Tubes (“PMT”), and to a much lesser extent Avalanche
Photodiodes (“APD”). PMTs, which are vacuum tubes, have been the standard
solution since the 1950's. Their disadvantages include that they are not solid
state, require high voltage and are bulky, fragile and sensitive to magnetic
fields. They also have limitations in certain operational areas of speed and
recovery. APDs disadvantages when used to detect signal strength include that
they introduce excess noise (unwanted signals or distortion) in the
amplification process, and have limited abilities to increase the strength
(amplitude) of the signal (gain). APDs are much more effective when used only to
detect the existence or absence of a signal, but not its strength, known as
Geiger mode. However, in Geiger mode, APDs cannot be operated continuously, and
require “dead time” before they recover to sense the presence or absence of the
next signal. ATI's key patented technology, called Discrete Amplification
(“DA”), allows the manufacture of semiconductor devices that provide high gain
with very low noise, operate continuously in a “non gated” mode and feature a
relatively wider wavelength spectrum in which a key measure of detection
performance, Photon Detection Efficiency (“PDE”) attains desirable
levels.
Effective
detection of low levels of light involves the conversion of photons to electrons
(detection) and the subsequent multiplication of the weak electronic signal to a
usable level (amplification).
While
ATI's invention also concerns the photodetection process, the primary innovation
is in the way electron amplification is conducted. ATI's technology
permits a high degree of gain without introducing appreciable
noise. The foundation of the technology is a relatively new principle
of independent amplification of each of the electrons that comprise a signal,
transformation (amplification) of each such electron into a charge packet, and
subsequent registration of these charge packets. The amplification is
done using the process of controlled avalanche that allows the attainment of
high levels of amplification without adding significant noise to the
signal.
We
believe this technology to be broadly applicable and not restricted to the
amplification of signals generated by light. ATI believes that its
technology can be used for creating chemical, biological and other types of
sensors, and affords ATI potential access to a broad range of
markets. The technology is universal in that it can be realized on a
wide range of semiconductor materials and integrated into numerous semiconductor
sensors, transducers, and detectors. It is implemented using standard
technological and fabrication processes of semiconductor electronics. These
processes have high yield, thus creating the potential for high volume
manufacturing of low-cost devices. While we expect to compete primarily on
performance, we expect that ultimately our cost of manufacturing will also
provide an advantage.
Initially,
ATI implemented its technology on silicon, which is the material generally used
in detection of light in the visible wavelength spectrum. In August 2008, in
connection with the completion of phase II of a NASA Small Business Innovative
Research (SBIR) grant, ATI announced that it successfully extended its
technology from silicon to an InGaAs/InP material system, and from visible light
wavelengths into the near infrared spectrum and produced the first high gain
solid state photomultipliers for near infrared (NIR) wavelengths of 1000-1700
nm. The performance of these devices far exceeds the performance of any
available solid state photodetector in the NIR wavelength range. The
measured devices have a gain of over 200,000x and other desirable operating
characteristics in areas such as timing resolution and PDE. In the first half of
2009, ATI began marketing and shipping NIR prototypes, and to a much lesser
extent silicon based prototypes for scientific instrumentation, aerospace and
defense applications. In the past four months we have shipped over $60,000 of
product. In the past, ATI has sold experimental silicon devices to NASA/JPL and
NIST for research applications.
ATI
believes its devices to be of very high interest to researchers in a broad range
of commercial and defense related fields including medical imaging, homeland
security, biomedical, optical communication, night vision, spectroscopy,
instrumentation, aerospace, light detection and ranging (“Lidar”) and astronomy.
In particular its NIR devices have generated considerable interest among a
number of government related entities who have suggested approaches for ATI to
get additional funding to continue developing its technology.
ATI's
team includes 10 PhDs in Moscow, Russia, and the United States. They have
done pioneering work, and have world leading expertise, in the field of sensors
and photo-detectors.
We
currently estimate that within the next 12 months we will have capital
requirements of approximately $3,250,000 in order to effectuate our business
plan. To help meet those requirements we will be seeking equity
capital.
We
also intend to apply for more government grants and to participate in joint
projects with other entities that already have either internal or government
funding committed. However, there can be no assurance that we will be successful
in raising the capital we require, obtaining grants or other government funding
or finding suitable joint venture partners to effectuate our business
plan.
Plan
of Operations
Our
products include both silicon devices for the visible spectrum and InGaAs/InP
devices for the near infrared (“NIR”). We have marketed these devices to various
research labs in both university and commercial environments. Applications being
researched include positron emission topography ("PET") medical imaging systems,
Lidar, night vision, and spectroscopy. We currently expect to continue to seek
to work with researchers over the next 12 months and to participate in joint
projects with other entities that already have either internal or government
funding committed.
We
have exhibited and presented technical papers in various industry conferences to
promote our company and our products. We currently plan on continuing these
marketing efforts over the next 12 months. Based on customer feedback and our
ongoing research activities, we will seek to improve the design and operational
characteristics of our products with each new fabrication run. We
will seek to expand the sales of our products from research applications to
commercial device usage. If the various research labs currently evaluating our
products complete their evaluations, and find our product to work effectively,
we believe that they will use our products in the next generation design of
their devices.
For
our silicon product, ATI is initially targeting the existing markets for PMTs
and APDs. Developing a detector chip for PET medical imaging systems which
currently use PMTs is one of our priorities. We have done some preliminary
testing with an established manufacturer of PET systems, and expect to do
additional testing with that and other manufacturers when the next silicon
device fabrication run, currently expected later in 2009, is completed. We have
also been working with a research group at a premier medical school that focuses
mainly on the development of novel instrumentation for high resolution PET. They
have written to us that they feel the next revision of our devices will be
suitable for the next generation high resolution, high performance PET
detectors. In near infrared, our devices afford new capabilities that we
anticipate will allow the development of new uses, and only to a much lesser
extent will we be targeting the replacement of competing devices.
We
currently expect to complete a new fabrication run of silicon devices before the
end of 2009 that will have somewhat improved characteristics and will provide
larger area devices that are required for medical imaging and many other
applications and use those devices to generate greater customer interest. We
seek to test and implement certain new designs in another set of runs currently
anticipated to be completed in the second quarter of 2010 that we believe will
give us silicon devices that are commercial quality and have the potential to be
market leaders in their space. We expect over time to need to optimize our
devices for specific applications. We currently anticipate commencing a limited
fabrication run of our NIR product by November 2009 that we expect will
offer some performance improvement as well as contain small arrays of
devices.
Creating
detector arrays with multiple elements (detectors) in one single chip (die) is a
critical goal in expanding markets for our devices. In early 2010 we currently
expect to commence another NIR fabrication run that will involve more thoroughly
improved designs and detector arrays.
We
plan to take early steps in seeking to use our technology in fields other than
traditional light detection, in particular mass spectroscopy and biological
applications. We expect to use academic researchers to help us evaluate these
potential applications.
ATI
currently has only modest internal sales and marketing capabilities. We plan to
supplement those by seeking distribution agreements for overseas markets that we
cannot effectively cover.
Plans
to Acquire Plant and Equipment in the next 12 months
ATI
intends to continue to outsource the manufacturing of its products. We plan on
expanding our internal measurement and testing capabilities over the next 12
months at a cost of approximately $100,000. We expect to move our offices and
will likely need to invest in leasehold improvements that should not exceed
$20,000.
Potential
Applications for ATI's Technology
We
believe that ATI's proprietary technology allows the creation of a
semiconductor-based sensitive photo-detector that has performance parameters
similar to those of a PMT but with all of the advantages of a solid state
semiconductor device. We expect that systems using PMTs will largely
seek to migrate to solid state technology over the coming years.
Potential
applications for ATI's technology include:
Nuclear
Imaging Detector / Medical Instrumentation
(PET
scanners, gamma cameras, computed tomography ("CT") scanners, etc.)
Currently,
almost all commercial PET systems and virtually all gamma cameras utilize
PMTs. APDs have not been utilized because of their poor performance
and the high cost of the quantity of APDs needed to cover the detection
area.
We
estimate the current size of the market for sensitive photo-detectors used in
medicine to be over $100 million a year, and believe the market is growing
rapidly, as new diagnostic devices are developed and insurance reimbursement for
PET and other scan procedures becomes standard for many diagnoses. If
the cost of the equipment were lower, we believe that there would be further
growth in this market. We believe detector modules to be the single
most expensive element of large scanners. We will seek to have our
high performance detectors ultimately replace the PMT-based modules, leading to
the overall expansion of the market, although there can be no assurance that we
will successfully develop detectors with the specifications required in order to
replace the PMT-based modules that are the industry standard today.
Our
detectors are unaffected by magnetic fields, making it possible in theory to
combine MRI and PET scanners in a single instrument. The medical
community has long sought a device that has the ability to combine these two
imaging modalities, and one major PET manufacturer has filed a patent covering
aspects of such a combined device. By providing this capability with our device,
we believe that we have the opportunity to make inroads in this
market.
We
also believe that our technology has the potential to enable better
discrimination among various types of body tissue in next generation CT
scanners. Although we believe that the CT scanner market appears to be much
larger than the PET market, we are not focused on the CT market at this
time.
Scientific
Instrumentation
Numerous
scientific applications require detecting very low levels of
light. Our technology has several advantages in applications such as
fluorescence detection, time of flight measurements, spectroscopy, and others,
because of wide spectral response, low noise and fast response speeds of ATI's
devices.
Biochip
Devices
While
biochips were first developed for genome analysis and are playing a major role
in gene identification in human DNA, their applications are expanding into other
areas such as toxicological, protein, and biochemical research and
diagnostics. They can also be used for rapid detection of biological
and chemical agents in biological and chemical warfare. Our
technology can accommodate multi-element detector arrays with internal
amplification, making the technology suitable for biochip devices.
Biochips
could be useful in environmental monitoring, public health, and homeland
security applications such as diagnosis of infectious diseases in minutes rather
than days, rapid identification of crime suspects and on-the-spot categorization
of biological warfare agents. Examples of potential commercial
products include small portable kits for testing for microorganisms in dairy
products or for food pathogens such as E. coli and salmonella.
The
overall biochip market is estimated to be in excess of $500 million and is
projected to grow substantially for several years. Our technology may have the
potential to contribute to the growth of this market and create low-cost
electronic sensor devices for consumer use.
Chemical
Lab-on-a-Chip and Analytical Instruments
Small
inexpensive sensor arrays could replace current analytical laboratories in many
applications. They could be portable and provide analytical results
almost immediately. Significant advancements have already been made
in this field. Our technology has the potential to create even more
sensitive and cheaper chemical lab-on-a-chip devices. In addition to traditional
chemical analysis, examples of applications include breath alcohol testing and
pipeline leak monitoring.
Environmental
Monitoring - Light Detection and Ranging
We
hope that vacuum tubes currently utilized in LIDAR applications could be
replaced by rugged, solid-state devices based on ATI's technology. Due to its
high sensitivity, the operation of a photo-detector based on the technology will
be less susceptible to particle interference. The emergence of low-cost
detectors with superior performance could lead to the substantial growth of this
market. We have begun shipping our devices in 2009 to research labs targeting
this application.
Security
Devices
The
ability to sense very weak sub-nanosecond impulses is valuable in many security
applications. Our technology has the potential to create the most
sensitive security devices compared with conventional APDs and APD arrays,
including active pixel arrays for automatic monitoring.
Competition
Our main
competitors are the existing PMT and APD manufacturers such as
Hamamatsu Photonics K.K. (Japan), PerkinElmer Inc. (US), Photonis , SensL
(Ireland), ET Enterprises Limited (UK), and RMD (US) and smaller specialty
manufacturers. In addition, Hamamatsu, SensL, and some smaller
companies have developed silicon based photodetectors (“SiPM”s) to compete
with PMTs , that compete directly with our product. PerkinElmer has
recently announced that it has licensed SiPM technology from the Max Plank
Institute, and Philips, a major multinational and a manufacturer of PET
scanners, recently announced the development of new digital SiPM technology.
Unlike ATI’s technology, SiPM technology is based primarily on unpatented
technology that is in the public domain. We believe that a design
release currently planned for the second quarter of 2010 will result in
improvements to the dark count, which is the signal from the detector in the
dark (with no illumination on the detector), and dynamic range, the time
required for the detector to detect larger numbers of photons, which in effect
lowers the reset time (the time required for the detector to detect the next
signal) of our devices, making them suitable for the majority of applications
and having the potential to make them leaders in their field. There are
measurable characteristics of our device such as timing resolution, dynamic
range, voltage and temperature stability, that we feel make it inherently better
than our competitors for many applications. Zecotek, a Canadian venture company,
has also introduced a competing product. We believe that it does not currently
present a substantial competitive threat.
In NIR,
the available vacuum devices are extremely expensive, have very low PDE, and do
not in our view present a serious competitive challenge. To our knowledge, there
is no comparable product that competes with ours in the solid state market. We
believe that our device could replace Geiger mode InGaAs/InP APDs and intend to
pursue this opportunity. The market for these devices is small and served by a
few small firms. While we hope to compete in the large InGaAs telecom market
someday, we do not anticipate doing so in the near future due to the expensive
major long term research that would be required.
Competitive
Advantages
We
believe that ATI's key competitive advantages are its unique intellectual
property and its scientific team.
In
April 2005 ATI was issued its cornerstone patent, U.S. Patent No. 6,885,827
titled "High Sensitivity, high resolution detection of signals." A
continuation patent, U.S. Patent No. 7,085,502 with the same title, was granted
in August 2006. Both these patents expire in July 2022. ATI has filed
an additional patent application and a provisional patent application, and plans
to file additional patent applications to further protect its intellectual
property. International patent applications have been filed as well, and ATI has
received a patent from the European Patent Office corresponding to its first US
patent.
Employees
ATI
currently has 26 full-time employees and four part-time employees, including 21
full-time and 4 part-time employees in Moscow, Russia, 5 full-time employees in
New York and one full-time and one part-time consultant in New
York. ATI expects that its US based staff will grow over time and
that it will reduce staff in Moscow, Russia, over the coming
months. ATI will make full use of its highly qualified and
relatively inexpensive overseas technical team for its R&D
activities. It is expected that the Company will continue to use an
outsourcing model both in the United States and overseas, and will require only
limited manufacturing personnel for the foreseeable future.
Item
1A. Risk Factors
A smaller
reporting company, as defined in Item 10 of Regulation S-K, is not required to
provide the information required by this item.
Item
1B. Unresolved Staff Comments
There are
no unresolved staff comments.
Item 2. Description of Property.
ATI’s
leases approximately 1,500 square feet of office space at 1400 Coney Island
Avenue, Brooklyn, New York, which we use for our corporate offices, for monthly
rent of $3,000 pursuant to a three-year lease which expires in July
2010. ATI’s obligations under the lease are guaranteed by our
President, Jack Mayer. ATI’s wholly owned subsidiary, APMTI LLC,
leases approximately 225 square meters of office/commercial space in Moscow,
Russia, for a monthly rent of approximately $7,000 pursuant to a one-year lease
agreement which expires in January 2010.
Item
3. Legal Proceedings
There are
no pending legal proceedings to which the Company is a party or in which any
director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. The Company's property is not the subject of any pending
legal proceedings.
Item
4. Submission of Matters to a Vote of Security Holders
No matter
was submitted to a vote of the security holders, through the solicitation of
proxies or otherwise, during the fiscal year ended December 31,
2008.
PART
II
Item 5. Market For Registrant’s
Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
Market
Information
Our
common stock was quoted on the Over-The-Counter (“OTC”) Bulletin Board from
October 10, 2007, to October 2008, under the ticker symbol PWSF.OB. In October
2008, our ticker symbol was changed to PSFT.OB. Since May 2009, we
have been quoted on the “pink sheets” under the ticker symbol
PSFT. Prior to April 2008, there was no active market for our common
stock. The table below sets forth the range of quarterly high and low closing
bids for our common stock since October 2007, as reported by the OTC Bulletin
Board and on the “pink sheets”, as applicable. These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions:
|
Year
|
Quarter
Ended
|
|
High
|
|
|
Low
|
|
|
2007
|
December
31
|
|
$
|
-
|
|
|
$
|
-
|
|
|
2008
|
March
31
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
June
30
|
|
$
|
1.53
|
|
|
$
|
0.75
|
|
|
|
September
30
|
|
$
|
1.20
|
|
|
$
|
0.90
|
|
|
|
December
31
|
|
$
|
1.00
|
|
|
$
|
0.66
|
|
|
2009
|
March
31
|
|
$
|
0.68
|
|
|
$
|
0.35
|
|
|
|
June
30
|
|
$
|
0.61
|
|
|
$
|
0.56
|
|
|
|
September 30
|
|
.57
|
|
|
$
|
.45
|
|
|
|
October
1 thru October 20
|
|
.55
|
|
|
|
.54
|
|
Holders
As of
October 21, 2009, there were approximately 85 holders of record of our
common stock.
Dividends
We
have not declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance its operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers
relevant.
Securities
Authorized for Issuance Under Equity Compensation Plans
As of
December 31, 2008, we did not issue any equity securities under any equity
compensation plan.
2009
Stock Option Plan
On
March 11, 2009, our board of directors adopted a 2009 Stock Option Plan (the
“Plan”). The purpose of the Plan is to provide an incentive to retain directors,
officers, consultants and employees of our company whose services are considered
valuable. An aggregate of 2,000,000 shares of common stock have been reserved
for issuance under the Plan. Under the Plan, we are authorized to issue
incentive stock options intended to qualify under Section 422 of the Internal
Revenue Code and non-qualified stock options. The Plan is administered by our
board of directors. As of October 21, 2009, options to purchase an aggregate of
678,398 shares of common stock were outstanding and 1,321,602 shares of common
stock remain available for issuance under the Plan.
Recent
Sales of Unregistered Securities;
All
numbers are adjusted for the reverse split which became effective October 2,
2008.
In
July 2008, we sold 10,754 shares of common stock to an officer and to a
consultant of ATI for $10,000 cash.
At each
quarter end from September 2008, through June 2009, we issued 2,500 shares of
common stock, or 10,000 shares in aggregate, to our director Dr. Zentman,
pursuant to our agreement to retain him as a director.
At June
30, 2009, we issued 2,500 and 3,334 shares of common stock to Mr. Leibov
and Mr. Weinreb, respectively, pursuant to our agreements
to retain them as directors.
In the
second quarter of 2009, we issued an aggregate of 6,194 units consisting of one
share of our Series D1 convertible preferred and 100 warrants to buy one share
of common stock at $0.75 expiring October 31, 2010, to service providers to the
Company and ATI, in exchange for the cancellation of payables of $205,620. We
also issued 267 such units to Dr. Zentman in lieu of $16,000 of director’s fees,
and 2,500 units to Mr. Mayer for the conversion of advances of
$150,000.
Also in
the second quarter of 2009, we sold 1,078 units consisting of one share
of our Series D convertible preferred and 100 warrants to purchase a share
of common stock at $0.75 expiring October 31, 2010, to two accredited
investors for $70,020.
In the
third quarter of 2009, we sold to three accredited investors an aggregate of
1,920 units consisting of one share of our Series D2 convertible preferred
and 100 warrants to purchase a share of common stock at $0.50
expiring June 30, 2011 (or 30 days after the underlying common stock is
registered, whichever is later), for $96,000. We also issued an aggregate of
263,250, and 740 such units, to our directors Mr. Leibov, Mr. Weinreb, and Dr.
Zentmanin lieu of director and consulting fees of $13,150, $12,500 and $37,000,
respectively, and 9,800 and 300 units to Mr. Mayer and Dr. Zentman in conversion
of advances to the Company of $490,000 and $15,000 respectively.
Purchases
of equity securities by the issuer and affiliated purchasers
We
did not repurchase any shares of our common stock during the fiscal year ended
December 31, 2008.
Item 7. Management’s
Discussion
and Analysis of Financial Condition and Results of
Operations
.
The
following discussion should be read in conjunction with our consolidated
financial statements and notes thereto included in this Annual Report. All
information presented herein is based on our fiscal years ended December 31,
2008, and 2007.
As of
December 31, 2008, and 2007, we had current assets of $15,431 and $3,405,
respectively. We believe that such funds will not be sufficient to effectuate
our plans with respect to our business over the next twelve months. We will need
to seek additional capital for the purpose of financing our
efforts.
Results
of Operations
Sales
We
had no sales for the years ended December 31, 2008, and December 31,
2007.
General
and administrative expenses
Our
general and administrative expenses increased by $185,729 or 395% from $46,972
for the year ended December 31, 2007, to $232,701 for the year ended December
31, 2008. The increase was primarily attributable to an increase in professional
fees from $37,916 for the year ended December 31, 2007, to $119,078 in the year
ended December 31, 2008, and the following expenses which did not exist for the
year ended December 31, 2007 – public relations ($37,859), director fees
($32,925), investor relations ($27,134) and insurance costs
($11,721).
Net
Loss
The
net loss for the Company increased from $46,972 for the year ended December 31,
2007, to $232,587 for the year ended December 31, 2008. The 395% increase was
directly a result of the increase in general and administrative
expenses.
Liquidity
and Capital Resources
The
Company currently has approximately $2,500 cash available. As of
December 31, 2008, the Company had $11,866 cash available in an escrow account.
In connection with the change of control described in Item 1 of this Report,,
the new stockholders of the Company contributed $1,360,000 of capital to the
Company. The Company used $1,310,227 of the funds to purchase non-convertible
Series C Preferred Stock issued by ATI. The Series C Preferred Stock of ATI had
a 2% monthly pay in-kind dividend, restrictive covenants including a prohibition
on funded debt, and the issuance of securities which are senior or pari passu to
the Series C Preferred, were redeemable by ATI on February 14, 2009, and were
cancelled as part of the merger.
Going
Concern
The
Company has incurred a net loss of $232,587 as of December 31, 2008. The Company
has incurred significant losses and had negative cash flow from operations since
February 5, 2007 (date of inception) and has an accumulated deficit of $279,559
at December 31, 2008. As of December 31, 2008, the Company was in the
development stage, and had not established any source of revenue to cover its
operating costs These and other factors caused our auditors to raise substantial
doubt about the Company’s ability to continue as a going concern.
There
can be no assurance that sufficient funds will be generated during the next
twelve months or thereafter from the Company’s current operations, or that funds
will be available from external sources such as debt or equity financings or
other potential sources. The lack of additional capital could force the Company
to curtail or cease operations and would, therefore, have a material adverse
effect on its business. Furthermore, there can be no assurance that any such
required funds, if available, will be available on attractive terms or that they
will not have a significant dilutive effect on the Company’s existing
stockholders.
The
Company has undertaken further steps as part of a plan to improve operations
with the goal of sustaining our operations for the next twelve months and beyond
to address our lack of liquidity by raising additional funds, either in the form
of debt or equity or some combination thereof. The Company is currently seeking
to issue Series D2 Convertible Preferred Stock. However, there can be no
assurance that the Company can successfully accomplish these steps and or
business plans, and it is uncertain that the Company will be able to obtain
additional financing.
There
can be no assurance that any additional financings will be available to the
Company on satisfactory terms and conditions, if at all. In the event we are
unable to continue as a going concern, we may elect or be required to seek
protection from our creditors by filing a voluntary petition in bankruptcy or
may be subject to an involuntary petition in bankruptcy.
Critical
Accounting Policies and Estimates
Financial
Reporting Release No. 60, published by the SEC, recommends that all companies
include a discussion of critical accounting policies used in the preparation of
their financial statements. While all these significant accounting policies
impact our consolidated financial condition and results of operations, we view
certain of these policies as critical. Policies determined to be critical are
those policies that have the most significant impact on our consolidated
financial statements and require management to use a greater degree of judgment
and estimates. Actual results may differ from those estimates.
We
believe that given current facts and circumstances, it is unlikely that applying
any other reasonable judgments or estimate methodologies would cause a material
effect on our consolidated results of operations, financial position, or
liquidity for the periods presented in this Annual Report.
General
The
Company’s Consolidated Financial Statements are prepared in accordance with U.S.
generally accepted accounting principles, which require management to make
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, net revenue and expenses, and the disclosure of contingent assets
and liabilities. Management bases its estimates on historical experience and on
various other assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Senior management has discussed the development, selection and
disclosure of these estimates with the Company’s Board of Directors.
Management believes that the accounting estimates employed and the resulting
balances are reasonable; however, actual results may differ from these estimates
under different assumptions or conditions.
An
accounting policy is deemed to be critical if it requires an accounting estimate
to be made based on assumptions about matters that are highly uncertain at the
time the estimate is made, if different estimates reasonably could have been
used, or if changes in the estimate that are reasonably possible could
materially impact the consolidated financial statements. Management believes the
following critical accounting policies reflect the significant estimates and
assumptions used in the preparation of the Consolidated Financial
Statements.
Basis
of Presentation
The
financial statements have been prepared on the going concern basis, which
assumes the realization of assets and liquidation of liabilities in the normal
course of operations. If we were not to continue as a going concern, we would
likely not be able to realize on our assets at values comparable to the carrying
value or the fair value estimates reflected in the balances set out in the
preparation of the financial statements. There can be no assurances that we will
be successful in generating additional cash from equity or other sources to be
used for operations. The financial statements do not include any
adjustments relating to the recoverability of assets and classification of
assets and liabilities that might be necessary should the Company be unable to
continue as a going concern.
Off
Balance Sheet Arrangements
We do
not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to
investors.
Item 8. Financial
Statements and Supplementary
Data.
The
Company’s audited financial statements for the periods ended December 31, 2008,
and 2007, are attached hereto as pages F-1 through F-18.
Item
9. Changes In and Disagreements with Accountants on Financial
Disclosure
The
disclosure under this Item was previously reported on a Current Report on Form
8-K filed with the SEC on May 20, 2009.
Item
9A(T). Controls and Procedures
EVALUATION
OF DISCLOSURE CONTROLS
Mr.
Mayer, President, our principal executive officer and principal financial and
accounting officer, carried out an evaluation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15(d)-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer’s management, including its principal executive and
principal financial officers, or person performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure. Based on our evaluation, Mr. Mayer concluded that our
disclosure controls and procedures were not effective, as of the end of the
period covered by this report, in ensuring that material information that we are
required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission rules and forms.
Management’s
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over financial reporting
is a process to provide reasonable assurance regarding the reliability of our
financial reporting for external purposes in accordance with generally accepted
accounting principles. Internal control over financial reporting includes
policies and procedures that: (i) pertain to maintaining records that in
reasonable detail accurately and fairly reflect our transactions; (ii) provide
reasonable assurance that transactions are recorded as necessary for preparation
of our financial statements and that receipts and expenditures of company assets
are made in accordance with management authorization; and (iii) provide
reasonable assurance that unauthorized acquisition, use or disposition of
company assets that could have a material effect on our financial statements
would be prevented or detected on a timely basis. Because of its inherent
limitations, internal control over financial reporting is not intended to
provide absolute assurance that a misstatement of our financial statements would
be prevented or detected.
Our
management assessed the effectiveness of the Company’s internal control of
financial reporting as of December 31, 2008. Based on the assessment performed,
management believes that as of December 31, 2008, the Company’s internal control
over financial reporting was not effective. Additionally, based on
management’s assessment, the Company determined that there were material
weaknesses in its internal control over financial reporting as of December 31,
2008. Such weaknesses are described as follows:
|
a.
|
The
Company failed to meet the requirements to perform an assessment of
internal control over financial reporting. Under the definition
of disclosure controls and procedures provided in Rule 13a-15(e),
effective controls and procedures would ensure that information required
to be disclosed by the registrant is recorded, processed, summarized, and
reported within the time periods specified by the SEC’s rules and
forms. As such, the Company failed in its compliance with the
reporting requirements of the SEC’s rules and forms. The
Company will remedy this matter at the earliest possible
opportunity.
|
|
b.
|
Management
of the Company has not implemented policies or procedures required to
achieve a sufficient segregation of duties. Management is aware
of the risks associated with the lack of segregation of duties due to the
fact that there is only one person currently dealing with general
administrative and financial matters. Although management
will periodically reevaluate this situation, at this point it considers
that the risks associated with such lack of segregation of duties and the
potential benefits of adding employees to segregate such duties are not
cost justified.
|
|
c.
|
The
Company does not have a financial expert. Although management
will periodically reevaluate this situation, at this point it is not
considering adding a financial expert to the
board.
|
Attestation
Report of the Registered Public Accounting Firm
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the company to provide only management's report in this
annual report.
Changes
in Internal Controls
During
the fiscal quarter ended December 31, 2008, there have been no changes in our
internal control over financial reporting that have materially affected or are
reasonably likely to materially affect our internal controls over financial
reporting.
PART
III
Item 10. DIRECTORS
, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.
Directors
and Executive Officers
The
following table sets forth certain information regarding the members of our
board of directors and its executive officers as of October 21,
2009.
|
Name
|
|
Age
|
|
Positions
and Offices Held
|
|
Jack
N. Mayer
|
|
56
|
|
President,
Treasurer and Director
|
|
Samuel
Zentman
|
|
64
|
|
Director
and Secretary
|
|
Steven
Zvi Weinreb
|
|
56
|
|
Director
|
|
Mikhail
Leibov
|
|
59
|
|
Director
|
Our
directors hold office until the next annual meeting of our stockholders, or
until their successors are duly elected and qualified. Set forth below is a
summary description of the principal occupation and business experience of each
of our directors and executive officers for at least the last five
years.
Jack
N. Mayer, has served as President, Treasurer and as a director since March 31,
2008. Mr. Mayer has been a hedge fund portfolio manager and analyst with Gabriel
Capital Corp. and associated entities for over 20 years, specializing in complex
bankrupt and distress situations. Mr. Mayer is a director of Gyrotron Technology
Inc., and a co-founder and director of MET Tech Inc. Mr. Mayer co-founded
Quantum Photonics, ATI’s predecessor, in 2000. Mr. Mayer
has a Masters in Mathematics from Columbia University.
Samuel
M. Zentman, PhD., has served as a director since June 19, 2008. Dr. Zentman has
been a director of Acorn Energy, Inc. since November 2004. From 1980 until 2006,
Dr. Zentman was president and chief executive officer of a privately-held
textile firm, where he also served as vice president of finance and
administration from 1978 to 1980. Dr. Zentman currently serves as director of
Hinson-Hale Medical Technologies, a privately held supplier of highly engineered
textiles for demanding medical applications, and Coreworx, an engineering
project control software company and a subsidiary of Acorn Energy. He has served
as chairman of the board of Torah U’Mesorah and is a member of its Executive
Committee. Dr. Zentman has a Ph.D in Mathematics.
Steven
Zvi Weinreb has served as a director since March 12, 2009. Mr. Weinreb is
currently a partner in WK Holdings, a real estate holding company located in
Lakewood New Jersey. From September 1979 to January 2006, Mr. Weinreb
was the Chief Executive Officer of Vitarroz Corporation, a Hispanic food
distribution company located in Jersey City, New Jersey.
From
October 1999 to December 2004, Mr. Weinrib was also the Chief Executive Officer
of American Rice, Inc., one of the largest rice milling and marketing companies,
located in Houston, Texas. Mr. Weinreb holds a Masters Degree in
Talmudic Law from Beth Hatalmud and is an ordained Rabbi.
Mikhail
Leibov has served as a director since April 1, 2009. Mr. Leibov served as
Chairman and President of IDT Telecom from December 2006 through April 2008,
where he managed several divisions and offices in almost 30 countries. Mr.
Leibov founded Corbina Telecom, one of the largest telecom carriers in Russia,
in 1995 and was its Chief Executive Officer and Chairman until 1995. During Mr.
Leibov’s stewardship Corbina Telecom grew from a startup into a far-flung
enterprise offering a range of services throughout major markets in Russia and
was sold at successively higher prices three times, ultimately for over $300
million. Previously he launched several startups and led the teams at IBM,
AT&T and Prodigy that developed some of the largest real time database
systems and key components of the Internet, including the first Web-based
e-commerce system. Mr. Leibov has a Masters of Science degree in Mathematics and
Applied Computer Science from Moscow University.
Other
than Mr. Leibov’s son being married to Mr. Mayer’s daughter, there are no
familial relationships among any of our directors or officers. None of our
directors or executive officers is a director of any other U.S. reporting
companies except as indicated above.
Significant
Employee
Avery
Kornbluth, has served as Chief Operating Officer of ATI since August 2009. Prior
thereto, Mr. Kornbluth was Chief Technology Officer of MAP International, a
start-up company that provided banking and financial services in third world
countries. Prior to joining MAP in 2008, Mr. Kornbluth held various positions at
IDT Corp. from December 1999 through April 2008, most recently as Chief
Technology Officer where he managed a staff of over 300 people and was
responsible for leading all aspects of IDT’s technology portfolio including MIS
(back office software development), Engineering and Operations (network and
switching services), Platform Development (front end products and services), and
the Program Management office. Mr. Kornbluth also held the position of Executive
Vice President, Commercial Operations from February 2006 to July 2007, and
Senior Vice President Engineering and Technology Services, from December 1999 to
February 2006 at IDT. Before IDT, Mr. Kornbluth worked for more than
fourteen years on Wall Street in a variety of technology roles, including Chief
Technology Officer at Furman Selz Trust Company, and Vice President of
Technology at Lehman Brothers.
Audit
Committee and Expert
We do
not have an audit committee or an audit committee financial expert. Our
corporate financial affairs are simple at this stage of development and each
financial transaction can be viewed by any officer or director at will. The
policy of having no committee will change if the constitution of one such
becomes necessary as a result of growth of the company or as mandated by public
policy.
Section
16(a) Beneficial Ownership Reporting Compliance
Our
directors, officers, and 10% stockholders were not subject to the requirements
of Section 16 of the Exchange Act during our most recent fiscal year or prior
fiscal years.
Code of
Ethics
We do
not currently have a Code of Ethics applicable to our principal executive,
financial, and accounting officers.
Potential
Conflicts of Interest
Since
we do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our board of directors. Thus, there is a potential conflict of
interest in that our directors have the authority to determine issues concerning
management compensation, in essence their own, and audit issues that may affect
management decisions. We are not aware of any other conflicts of interest with
any of our executives or directors.
Item 11.
Executive Compensation
Summary
Compensation
No
compensation was paid or earned during the fiscal years ended December 31, 2008,
and December 31, 2007 to any of our officers for services rendered to us in
their capacity as officers.
Employment
Agreements
We do
not currently have employment agreements with any of our officers.
Outstanding
Equity Awards
There
were no equity incentive plan awards outstanding as of December 31, 2008, for
any of our officers.
Compensation
of Directors
The
following table sets forth certain information regarding the compensation paid
to our directors during the fiscal year ended December 31, 2008.
|
Name
|
|
Fees
Earned or Paid in Cash
|
|
Stock
Awards ($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
Jack
N. Mayer
|
|
0
|
|
0
|
|
0
|
|
Einat
Krasney
|
|
0
|
|
0
|
|
0
|
|
Mordecai
Schwartz
|
|
0
|
|
0
|
|
0
|
|
Samuel
M. Zentman
|
|
$29,025
|
|
$3,900(1)
|
|
|
|
(1)
|
Represents
the grant of 5,000 shares of our common stock, based upon the grant date
fair value calculated in accordance with FAS 123(R), Share Based Payments.
Our policy and assumptions made in the valuation of share based payments
are contained in Note 6 to our financial
statements.
|
In
connection with his appointment to our board of directors on March 12, 2009,
Steven Zvi Weinreb is entitled to receive $1,000 and 834 shares of our common
stock per month for his services as a director. Mr. Weinreb is also
entitled to $500 for each half day of work beyond the scope of customary
services provided as a director.
In
connection with his appointment to our board of directors on April 1, 2009,
Mikhail Leibov is entitled to receive 834 shares of our common stock per month
for his services as a director will be compensated at the rate of $100 per hour
for director and consulting services.
In
connection with his appointment to our board of directors on June 19, 2008,
Samuel Zentman is entitled to receive $1,000 and 834 shares of our common stock
per month for his services as a director. Mr. Zentman is also
entitled to $500 for each half day of work beyond the scope of customary
services provided as a director.
Other
than as described above, we do not pay compensation to our
directors.
Item 12. Secu
rity Ownership Of Certain Beneficial Owners And
Management And Related Stockholder Matters.
The
following table sets forth information as of October 21, 2009, regarding the
number of shares of our common stock beneficially owned by: (i) each person or
entity known to us to be the beneficial owner of more than 5% of our common
stock, (ii) each Named Executive Officer, (iii) each director, and (iv) all of
our directors and executive officers as a group. Except as otherwise indicated,
each of the stockholders named below has sole voting and disposition power with
respect to such shares of common stock.
Information
relating to beneficial ownership of common stock by our principal stockholders
and management is based upon information furnished by each person using
"beneficial ownership" concepts under SEC rules. Under these rules, a person is
deemed to be a beneficial owner of a security if that person has or shares
voting power, which includes the power to vote or direct the voting of the
security, or investment power, which includes the power to vote or direct the
voting of the security. The person is also deemed to be a beneficial owner of
any security of which that person has a right to acquire beneficial ownership
within 60 days. Under the SEC rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he or she may not have any pecuniary
beneficial interest.
Except
as otherwise indicated, the address of each of the stockholders listed below is:
c/o Powersafe Technology Corp., 1400 Coney Island Avenue, Brooklyn, New York
11230.
Beneficial
Ownership Table
|
Name
and Address of Beneficial Owner
|
|
Number
of Shares of Common Stock
Beneficially
Owned or Right to Direct Vote
|
|
Percent
of Common Stock Beneficially
Owned
or Right to Direct Vote (1)(2)
|
|
|
|
|
|
|
|
Jack
N. Mayer
Samuel
Zentman
Steven
Zvi Weinreb
Mikhail
Leibov
Einat
Krasney (7)
All
directors and executive officers as a group (4 persons)
|
|
6,432,595
(3)
465,697(4)
155,485
(5)
55,100
(6)
0
7,108,877
|
|
58.4%
4.9%
1.7%
*
0%
62.0%
|
* less
than 1%
(1)
Based upon 9,072,761 shares outstanding as of October 21,
2009.
(2)
Beneficial ownership is determined in accordance with the rules of the SEC. In
computing the number of shares beneficially owned by a stockholder and the
percentage ownership of that stockholder, shares of common stock issuable upon
the exercise of stock options or warrants or the conversion of other securities
held by that stockholder that are currently exercisable or convertible, or are
exercisable or convertible within 60 days, are deemed to be issued and
outstanding. These shares, however, are not deemed outstanding for the purposes
of computing percentage ownership of each other stockholder.
(3)
Includes (i) 7,956 shares and preferred stock which is currently convertible
into an aggregate of 12,854 shares of common stock, held in trusts for benefit
of Mr. Mayer’s children, of which Mr. Mayer is co-trustee and shares voting and
dispositive power, and additional preferred stock which is currently convertible
into an aggregate of 59,002 shares of common stock held in trusts for benefit of
Mr. Mayer’s children, of which Mrs. Mayer is co-trustee and shares voting and
dispositive power, (ii) 5,000 shares held by Dr. Joseph Mayer, Mr. Mayer’s
father, for whom Mr. Mayer has power-of-attorney, (iii) 15,000 shares owned by a
family trust and held in a brokerage account for which Mr. Mayer has trading
authority, (iv) 196,500 shares held jointly with Mr. Mayer’s wife, of which Mr.
Mayer shares voting and dispositive power, (v) options to purchase an aggregate
of 187,500 shares of common stock which are currently exercisable, (vi)
preferred stock which is currently convertible into an aggregate of 1,660,915
shares of common stock, (vii) 796,391 shares of common held in self directed
IRA’s, (viii) 3,333 owned by a daughter of Mr. Mayer and held in a joint
brokerage account with Mr. Mayer, and (ix) preferred stock which is currently
convertible into an aggregate of 27,504 shares of common stock held by a family
partnership of which Mr. Mayer is a General Partner.
(4)
Includes (i) warrants to purchase an aggregate of 130,700 shares of
common stock which are currently exercisable, and (ii) preferred stock which is
currently convertible into an aggregate of 215,997 shares of common
stock.
(5)
Includes (i) warrants to purchase an aggregate of 25,000 shares of
common stock which are currently exercisable, and (ii) preferred stock which is
currently convertible into an aggregate of 25,000 shares of common
stock.
(6)
Includes (i) warrants to purchase an aggregate of 26,300 shares of common
stock which are currently exercisable, and (ii) preferred stock which is
currently convertible into an aggregate of 26,300 shares of common
stock.
(7)
Ms. Krasney resigned from our company on March 31, 2008.
Item 13. Certain
Relationships and Related Transactions, and
Director Independence
On
April 1, 2008, we purchased non-convertible Series C Preferred stock issued by
ATI for $1,310,227. The Series C Preferred stock of ATI had a 2%
monthly pay in kind dividend, restrictive covenants including a prohibition on
funded debt and the issuance of securities which are senior or pari passu to the
Series C Preferred stock, and was retired as part of our merger with ATI. Jack
Mayer, President, Treasurer, director and principal stockholder of our company,
was the controlling stockholder of ATI.
On
February 17, 2009, we acquired all of the capital stock of ATI. In consideration
for the acquisition of all of the issued and outstanding shares of ATI, we
issued or became obligated to issue approximately 6,620,000 shares of our common
stock to the common stockholders of ATI, including 3,274,336 shares to Mr. Mayer
and Mrs. Mayer, 43,458 shares of Series A Convertible Preferred Stock to the
former holders of Series A Convertible Preferred Stock of ATI, including 33,317
shares to Mr. Mayer, 21,808 shares of non-convertible Series B
Preferred Stock to the former holders of Series B Preferred Stock of ATI,
including 19,520 shares to Mr. Mayer, and up to 680,000 options to option
holders of ATI, including 187,500 options to Mr. Mayer.
Since
December 2008, Jack Mayer, President, Treasurer, director and principal
stockholder of our company has advanced approximately $1,000,000 to the
Company.
On
April 9, 2009, Mr. Mayer converted $150,000 of such advances into 2,500 shares
of our Series D-1 convertible preferred stock (convertible into 250,000 shares
of our common stock) and warrants to purchase 250,000 shares of our common stock
at $ 0.75 per share. On September 9, 2009, Mr. Mayer converted an additional $
490,000 of such advances into 9,800 shares of our Series D2 convertible
preferred stock (convertible into 980,000 shares of our common stock) and
warrants to purchase 980,000 shares of our common stock at $ 0.50 per
share.
On
May 12, 2009, Dr. Zentman a director and our Secretary advanced $15,000 to the
Company. On September 9, 2009, Dr. Zentman converted such advances
into 300 shares of our Series D2 convertible preferred stock convertible into
30,000 shares of our common stock and warrants to purchase 30,000 shares of our
common stock at $ 0.50 per share.
Director
Independence
We
are not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
None of the persons who serve as directors of our company, or who served as a
director during 2008 is “independent” within the meaning of Marketplace Rule
4200 of the National Association of Securities Dealers, Inc. except for Steven
Zvi Weinreb and Mikhail Leibov.
Item 14. Principal
Accountant Fees and Services
Our
board of directors unanimously approved 100% of the fees paid to our independent
registered public accounting firm for audit-related, tax and other fees. Our
board of directors pre-approves all non-audit services to be performed by our
independent registered public accounting firm.
The
percentage of hours expended on the independent registered public accounting
firm’s engagement to audit our financial statements for the most recent fiscal
year that were attributed to work performed by persons other than the
independent registered public accounting firm's full-time, permanent employees
was 0.
Audit
Fees
Davis
Accounting Group P.C. (“Davis”) provided audit services to us in connection with
our annual report for the fiscal year ended December 31, 2007. The aggregate
fees billed by Davis for (i) the audit of our annual financial statements and
reviews of our quarterly financial statements during the fiscal year ended
December 31, 2007, was $21,000 and (ii) the reviews of our quarterly financial
statements during the fiscal year ended December 31, 2008, was
$6,000.
On
May 8, 2009, we dismissed Davis as our independent registered public accounting
firm as disclosed in our Current Report on Form 8-K, filed May 20, 2009 and
Morgenstern, Svoboda & Baer CPA’s P.C. (“Morgenstern”) has served as our
independent registered public accounting firm since May 8, 2009.
Morgenstern
provided audit services to us in connection with our annual report for the
fiscal year ended December 31, 2008. The aggregate fees billed by Morgenstern
for the audit of our annual financial statements and a review of our quarterly
financial statements during the fiscal year ended December 31, 2008 was
$5,000.
Audit-Related
Fees
No
fees were billed to us by Davis in 2007 for assurance and related services
reasonably related to the audit or review of our financial
statements.
Morgenstern
billed us no fees in 2008 for assurance and related services reasonably related
to the audit or review of our financial statements.
Tax
Fees
No
fees were billed to us by Davis in 2007 for professional services rendered in
connection with the preparation of our tax returns.
Morgenstern
did not perform or bill us for tax-related services in 2008.
All
Other Fees
No
fees were billed to us by Davis in 2007 for other professional services rendered
or any other services not disclosed above.
Morgenstern
did not bills us for any fees in 2008 for other professional services rendered
or any other services not disclosed above.
Audit
Committee Pre-Approval
We do
not have a standing audit committee. Therefore, all services provided to us by
Davis and Morgenstern, as described above, were pre-approved by our board of
directors.
PART
IV
Item 15
. Exhibits
|
Exhibit Number
|
|
Description
|
|
3.1
|
|
Certificate
of Incorporation (incorporated herein by reference to Exhibit 3.1 to our
Registration Statement on Form SB-2 filed on June 8,
2007)
|
|
|
|
|
|
3.2
|
|
Certificate
of Amendment to Certificate of Incorporation (incorporated herein by
reference to Exhibit 4.2 to our Current Report of Form 8-K filed April 22,
2009)
|
|
|
|
|
|
3.3
|
|
Bylaws
(incorporated herein by reference to Exhibit 3.2 to our Registration
Statement on Form SB-2 filed on June 8, 2007)
|
|
|
|
|
|
4.1
|
|
Form
of Common Stock Certificate (incorporated herein by reference to Exhibit
3.3 to our Registration Statement on Form SB-2 filed on June 8,
2007)
|
|
|
|
|
|
4.2
|
|
Certificate
of Designations, Preferences and Rights of Series A Convertible Preferred
Stock (incorporated herein by reference to Exhibit 4.1to our Current
Report of Form 8-K filed February 23, 2009)
|
|
|
|
|
|
4.3
|
|
Certificate
of Designations, Preferences and Rights of Series B Preferred Stock
(incorporated herein by reference to Exhibit 4.2to our Current Report of
Form 8-K filed February 23, 2009)
|
|
|
|
|
|
4.4
|
|
Certificate
of Designations, Preferences and Rights of Series D Convertible Preferred
Stock (incorporated herein by reference to Exhibit 4.3 to our Current
Report of Form 8-K filed April 22, 2009)
|
|
|
|
|
|
4.5
|
|
Certificate
of Designations, Preferences and Rights of Series D-1 Convertible
Preferred Stock (incorporated herein by reference to Exhibit 4.4 to our
Current Report of Form 8-K filed April 22, 2009)
|
|
|
|
|
|
4.6
|
|
Certificate
of Designations, Preferences and Rights of Series D-2 Convertible
Preferred Stock*
|
|
|
|
|
|
10.1
|
|
Agreement,
dated March 31, 2008 by and among the Company, ATI and Acquisition Corp.
(incorporated herein by reference to Exhibit 10.2 to our Current Report of
Form 8-K filed April 4, 2008)
|
|
|
|
|
|
10.2
|
|
Amendment
No. 1 to Agreement, dated March 31, 2008 by and among the Company, ATI and
Acquisition Corp. (incorporated herein by reference to Exhibit 10.6 to our
Current Report of Form 8-K filed January 28, 2009)
|
|
|
|
|
|
10.3
|
|
Amendment
No. 2 to Agreement, dated March 31, 2008 by and among the Company, ATI and
Acquisition Corp. (incorporated herein by reference to Exhibit 10.7 to our
Current Report of Form 8-K filed February 23, 2009)
|
|
|
|
|
|
10.4
|
|
Stock
Purchase Agreement dated as of March 31, 2008 among the shareholders of
the Company, Einat Krasney and Mordechai Schwartz, and the purchasers of
such shares indicated therein (incorporated herein by reference to Exhibit
10.3 to our Current Report of Form 8-K filed April 4,
2008)
|
|
|
|
|
|
10.5
(1)
|
|
2009
Stock Option Plan (incorporated herein by reference to Exhibit 10.8 to our
Current Report of Form 8-K filed March 17, 2009)
|
|
|
|
|
|
10.6
(1)
|
|
Form
of Stock Option Agreement (incorporated herein by reference to Exhibit
10.9 to our Current Report of Form 8-K filed March 17,
2009)
|
|
|
|
|
|
10.7
|
|
Form
of Subscription Agreement for Series D-1 Convertible Preferred Stock
(incorporated herein by reference to Exhibit 10.9 to our Current Report of
Form 8-K filed April 22, 2009)
|
|
|
|
|
|
10.8
|
|
Form
of Warrant Agreement (incorporated herein by reference to Exhibit 10.10 to
our Current Report of Form 8-K filed March 17, 2009)
|
|
|
|
|
|
10.9*
|
|
Form
of Warrant Agreement
|
|
|
|
|
|
16
|
|
Letter
from Davis Accounting Group, P.C., dated may 27, 2009 (incorporated herein
by reference to Exhibit 16 to our Current Report of Form 8-K/A filed May
28, 2009)
|
|
|
|
|
|
21*
|
|
List
of subsidiaries
|
|
|
|
|
|
31.1*
|
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
302(a) of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.1*
|
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350
|
*
filed herewith
(1)
Management contract or compensatory plan or arrangement.
SIGNATURE
PAGE
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
POWERSAFE
TECHNOLOGY CORP.
|
Date: October
23, 2009
|
By:
/s/
Jack
N. Mayer
|
|
|
|
Jack
N. Mayer
|
|
|
|
President
and Treasurer (Principal Executive
Officer
and Principal Financial Officer)
|
|
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.
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
/s/
Jack N. Mayer
|
|
|
|
|
|
|
Jack
N. Mayer
/s/
Samuel Zentman
|
|
President,
Treasurer and Director
|
|
October
23, 2009
|
|
|
Samuel
Zentman
/s/
Steven Zvi Weinreb
|
|
|
|
October
23, 2009
|
|
|
Steven
Zvi Weinreb
|
|
Director
|
|
October
25, 2009
|
|
POWERSAFE
TECHNOLOGY CORP.
(A
Development stage company)
FINANCIAL
STATEMENTS
DECEMBER
31, 2008
TABLE
OF CONTENTS
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
- F-2
|
|
|
|
|
Balance
Sheets
|
F-3
|
|
|
|
|
Statements
of Operations
|
F-4
|
|
|
|
|
Statements
of Cash Flows
|
F-5
|
|
|
|
|
Statements
of Stockholders’ Equity
|
F-6
|
|
|
|
|
Notes
to Financial Statements
|
F-7
-F-18
|
MORGENSTERN,
SVOBODA, & BAER CPA’s, P.C.
CERTIFIED
PUBLIC ACCOUNTANTS
40
Exchange Place, Suite 1820
New
York, NY 10005
TEL:
(212) 925-9490
FAX:
(212) 226-9134
E-MAIL:
MSBCPAS@gmail.COM
Report
of Independent Registered Public Accounting Firm
Board
of Directors and Stockholders of
Powersafe
Technology Corp.
We
have audited the accompanying balance sheet of Powersafe Technology Corp. (a
development stage company) as of December, 31 2008, and the related statement of
income, stockholders’ equity and comprehensive income, and cash flows
for the year ended December 31, 2008.
Powersafe
Technology Corp.’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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 audit 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 also 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 Powersafe Technology Corp. as of
December 31, 2008, and the results of its operations and its cash flows for year
ended December 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of December 31, 2008, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plan regarding these
matters is also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/
Morgenstern,
Svoboda & Baer CPA’s P.C.
Morgenstern,
Svoboda & Baer CPA’s P.C.
Certified
Public Accountants
New
York, N.Y.
June
22, 2009
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To
the Board of Directors and Stockholders of
Powersafe
Technology Corp.:
We
have audited the accompanying balance sheet of Powersafe Technology Corp. (a
Delaware corporation in the development stage) as of December 31, 2007, and the
related statements of operations and comprehensive (loss), stockholders’ equity,
and cash flows for the period ended December 31, 2007, and from inception
(February 5, 2007) through December 31, 2007. 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 audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit 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 audit 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides 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 Powersafe Technology Corp. as of
December 31, 2007, and the results of its operations and its cash flows for the
period ended December 31, 2007, and from inception (February 5, 2007) through
December 31, 2007, in conformity with accounting principles generally accepted
in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company is in the development stage, and has not established any
source of revenue to cover its operating costs. As such, it has incurred an
operating loss since inception. Further, as of December 31, 2007, the cash
resources of the Company were insufficient to meet its planned business
objectives. These and other factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plan regarding these
matters is also described in Note 2 to the financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Respectfully
submitted,
/s/
Davis Accounting Group P.C.
Cedar
City, Utah,
February
14, 2008.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
AS OF
DECEMBER 31, 2008, AND 2007
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash in
bank
|
|
$
|
-
|
|
|
$
|
3,405
|
|
|
Cash in escrow
account
|
|
|
11,866
|
|
|
|
-
|
|
|
Prepaid
expenses
|
|
|
3,565
|
|
|
|
-
|
|
|
Total
current assets
|
|
|
15,431
|
|
|
|
3,405
|
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
|
Patent, net of
accumulated amortization of $2,439 and $1,031in 2008, and 2007,
respectively
|
|
|
10,127
|
|
|
|
11,535
|
|
|
Investment in
Amplification Technologies, Inc. - Series C Preferred
Stock
|
|
|
1,367,155
|
|
|
|
-
|
|
|
Total
other assets
|
|
|
1,377,282
|
|
|
|
11,535
|
|
|
Total
Assets
|
|
$
|
1,392,713
|
|
|
$
|
14,940
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable –
Trade
|
|
$
|
81,747
|
|
|
$
|
56
|
|
|
Accrued
liabilities
|
|
|
67,095
|
|
|
|
6,807
|
|
|
Due to escrow
agent
|
|
|
6,227
|
|
|
|
-
|
|
|
Subscription
advance
|
|
|
50,000
|
|
|
|
-
|
|
|
Due to related
party
|
|
|
12,313
|
|
|
|
-
|
|
|
Due to affiliate -
Amplification Technologies, Inc.
|
|
|
21,795
|
|
|
|
-
|
|
|
Total
current liabilities
|
|
|
239,177
|
|
|
|
6,863
|
|
|
Total
liabilities
|
|
|
239,177
|
|
|
|
6,863
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity:
|
|
|
|
|
|
|
|
|
|
Common stock, par
value $.0001 per share, 100,000,000 shares authorized; 2,358,362 and
5,025,029 shares issued and outstanding in 2008, and 2007,
respectively
|
|
|
235
|
|
|
|
503
|
|
|
Additional paid-in
capital
|
|
|
1,417,110
|
|
|
|
54,346
|
|
|
Common stock
subscribed – 18,253 shares
|
|
|
15,550
|
|
|
|
-
|
|
|
Comprehensive
Income
|
|
|
200
|
|
|
|
200
|
|
|
(Deficit)
accumulated during the development stage
|
|
|
(279,559
|
)
|
|
|
(46,972
|
)
|
|
Total
stockholders’ equity
|
|
|
1,153,536
|
|
|
|
8,077
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
1,392,713
|
|
|
$
|
14,940
|
|
The
accompanying notes to financial statements are an integral part of these balance
sheets
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
AND
COMPREHENSIVE (LOSS)
FOR THE
YEARS ENDED DECEMBER 31, 2008, AND 2007, AND CUMULATIVE FROM INCEPTION (FEBRUARY
5, 2007)
THROUGH
DECEMBER 31, 2008
|
|
|
2008
|
|
|
2007
|
|
|
CUMULATIVE
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional
fees
|
|
|
119,078
|
|
|
|
37,916
|
|
|
|
156,994
|
|
|
Public
relations
|
|
|
37,859
|
|
|
|
-
|
|
|
|
37,859
|
|
|
Investor
relations
|
|
|
27,134
|
|
|
|
-
|
|
|
|
27,134
|
|
|
Director
fees
|
|
|
32,925
|
|
|
|
-
|
|
|
|
32,925
|
|
|
Insurance
|
|
|
11,721
|
|
|
|
-
|
|
|
|
11,721
|
|
|
Incorporation
fees
|
|
|
-
|
|
|
|
2,850
|
|
|
|
2,850
|
|
|
Amortization
|
|
|
1,408
|
|
|
|
1,031
|
|
|
|
2,439
|
|
|
Other
|
|
|
2,576
|
|
|
|
5,175
|
|
|
|
7,751
|
|
|
Total general and
administrative
|
|
|
232,701
|
|
|
|
46,972
|
|
|
|
279,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
from Operations
|
|
|
(232,701
|
)
|
|
|
(46,972
|
)
|
|
|
(279,673
|
)
|
|
Other
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense)
|
|
|
114
|
|
|
|
-
|
|
|
|
114
|
|
|
Total other income
(expense)
|
|
|
114
|
|
|
|
-
|
|
|
|
114
|
|
|
Provision
for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net
(Loss)
|
|
$
|
(232,587
|
)
|
|
$
|
(46,972
|
)
|
|
$
|
(279,559
|
)
|
|
Other
Comprehensive Income –Foreign currency translation
|
|
|
|
|
|
|
200
|
|
|
|
200
|
|
|
Total
Comprehensive (loss)
|
|
$
|
(232,587
|
)
|
|
$
|
(46,772
|
)
|
|
$
|
(279,359
|
)
|
|
(Loss)
Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) per common
share - Basic and Diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
Weighted Average Number
of Common Shares Outstanding - Basic and Diluted
|
|
|
2,774,800
|
|
|
|
3,616,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes to financial statements are an integral part of these
statements.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ EQUITY (NOTE 2)
FOR THE
PERIOD FROM INCEPTION (FEBRUARY 5, 2007)
THROUGH
DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Stock
|
|
|
Other
|
|
|
During
the
|
|
|
|
|
|
|
|
Common
stock
|
|
|
Paid-in
|
|
|
Subscribed
|
|
|
Comprehensive
|
|
|
Development
|
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Not
issued
|
|
|
Income
|
|
|
Stage
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
– February 5, 2007
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
60,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer
agent fees paid by issued shares
|
|
|
25,000
|
|
|
|
2
|
|
|
|
523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
offering costs
|
|
|
|
|
|
|
|
|
|
|
(21,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-for-1
adjustment
|
|
|
10,050,000
|
|
|
|
1,005
|
|
|
|
(1,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
related party loans
|
|
|
|
|
|
|
|
|
|
|
14,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Israeli
currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
|
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(46,972
|
)
|
|
|
(46,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retro
effect of reverse spilt
|
|
|
(10,049,971
|
)
|
|
|
(1,004
|
)
|
|
|
1,004
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
– December 31, 2007
|
|
|
5,025,029
|
|
|
|
503
|
|
|
|
54,346
|
|
|
|
-
|
|
|
|
200
|
|
|
|
(46,972
|
)
|
|
|
8,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Returned
shares
|
|
|
(2,666,667
|
)
|
|
|
(268
|
)
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Contribution
|
|
|
|
|
|
|
|
|
|
|
1,360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
subscribed-payment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
subscribed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,650
|
|
|
|
|
|
|
|
|
|
|
|
11,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debts
forgiven
|
|
|
|
|
|
|
|
|
|
|
2,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(232,587
|
)
|
|
|
(232,587
|
)
|
|
Balance
– December 31, 2008
|
|
|
2,358,362
|
|
|
$
|
235
|
|
|
$
|
1,417,110
|
|
|
$
|
15,550
|
|
|
$
|
200
|
|
|
$
|
(277,909
|
)
|
|
$
|
1,153,536
|
|
The
accompanying notes to financial statements are an integral part of these
statements.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
FOR THE
YEARS ENDED DECEMBER 31, 2008 AND 2007, AND CUMULATIVE
FROM
INCEPTION (FEBRUARY 5, 2007) THROUGH DECEMBER 31, 2008
|
|
|
Year
Ended
December
31,
2008
|
|
|
Year
Ended
December
30,
2007
|
|
|
Cumulative
From
Inception
|
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(232,587
|
)
|
|
$
|
(46,972
|
)
|
|
$
|
(279,559
|
)
|
|
Adjustments to
reconcile net (loss) to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
forgiven
|
|
|
2,496
|
|
|
|
14,850
|
|
|
|
17,346
|
|
|
Amortization
|
|
|
1,408
|
|
|
|
1,031
|
|
|
|
2,439
|
|
|
Transfer agent
fees paid by issued shares
|
|
|
-
|
|
|
|
525
|
|
|
|
525
|
|
|
Director fees
paid by common stock subscribed
|
|
|
3,900
|
|
|
|
-
|
|
|
|
3,900
|
|
|
Changes
in net assets and liabilities-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
(3,565
|
)
|
|
|
-
|
|
|
|
(3,565
|
)
|
|
Accounts payable –
Trade
|
|
|
81,691
|
|
|
|
56
|
|
|
|
81,747
|
|
|
Accrued
liabilities
|
|
|
60,288
|
|
|
|
6,807
|
|
|
|
67,095
|
|
|
Due to escrow
agent
|
|
|
6,227
|
|
|
|
-
|
|
|
|
6,227
|
|
|
Net
Cash (Used in) Operating Activities
|
|
|
(80,142
|
)
|
|
|
(23,703
|
)
|
|
|
(103,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in
Amplification Technologies, Inc. - Preferred Stock
|
|
|
(1,367,155
|
)
|
|
|
-
|
|
|
|
(1,367,155
|
)
|
|
Patent
acquired
|
|
|
-
|
|
|
|
(12,566
|
)
|
|
|
(12,566
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Investing Activities
|
|
|
(1,367,155
|
)
|
|
|
(12,566
|
)
|
|
|
(1,379,721
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock for cash
|
|
|
-
|
|
|
|
60,974
|
|
|
|
60,974
|
|
|
Common stock
subscribed
|
|
|
11,650
|
|
|
|
-
|
|
|
|
11,650
|
|
|
Capital contributed
by stockholders
|
|
|
1,360,000
|
|
|
|
-
|
|
|
|
1,360,000
|
|
|
Due to affiliate -
Amplification Technologies, Inc.
|
|
|
21,795
|
|
|
|
-
|
|
|
|
21,795
|
|
|
Deferred offering
costs
|
|
|
-
|
|
|
|
(21,500
|
)
|
|
|
(21,500
|
)
|
|
Loans from related
parties Directors and stockholders-net
|
|
|
12,313
|
|
|
|
-
|
|
|
|
12,313
|
|
|
Subscription
advance
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
1,455,758
|
|
|
|
39,474
|
|
|
|
1,495,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Exchange Rate Changes on Cash
|
|
|
-
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Increase (decrease) in Cash
|
|
|
8,461
|
|
|
|
3,405
|
|
|
|
11,866
|
|
|
Cash
- Beginning of Period
|
|
|
3,405
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$
|
11,866
|
|
|
|
3,405
|
|
|
$
|
11,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period Consisting of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash in
bank
|
|
$
|
-
|
|
|
|
3,405
|
|
|
$
|
-
|
|
|
Cash in escrow
account
|
|
|
11,866
|
|
|
|
-
|
|
|
|
11,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,866
|
|
|
|
3,405
|
|
|
$
|
11,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during
the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income
taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
On
July 11, 2007, the Company issued 25,000 (post reverse stock split) shares of
restricted common stock, valued at $525 for payment of transfer agent
fees.
On
December 31, 2007, two former Directors and shareholders forgave the Company of
a related party debt in the amount of $14,850 ($7,425 each).
On
March 31, 2008, two former Directors and shareholders forgave the Company of a
related party debt in the amount of $2,496 ($1,248 each).
During
the year ended December 31, 2008, the Company had 5,000 (post reverse stock
split) shares of subscribed common stock, par value $0.0001, with a Director of
the Company for services rendered valued at $3,900.
The
accompanying notes to financial statements are an integral part of these
statements. On September 23, 2008, the Company notified FINRA of its intention
to implement a reverse stock split of its share of common stock on the basis of
one post-consolidated share for three pre-consolidated shares. The reverse split
became effective as of October 2, 2008. The accompanying financial statements
and related notes thereto have been adjusted accordingly to reflect this reverse
stock split.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
N
OTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
|
(1)
|
Summary
of Significant Accounting Policies
|
Basis
of Presentation and Organization
Powersafe
Technology Corp. (“Powersafe” or the “Company”) is a Delaware corporation in the
development stage. The Company was incorporated under the laws of the State of
Delaware on February 5, 2007. The initial business plan of the Company was to
develop a commercial application utilizing the technology and patent pertaining
to a multiple outlet power box with selectively protected outlet logic. The
Company planned to develop a prototype of the multiple outlet power box, and
then to further develop, manufacture, and market the product, and/or seek
third-party entities interested in potential partnership opportunities and
licensing rights to manufacture and market the product. The Company also
intended to market the product to individuals for home and business use. On
March 31, 2008 the Company entered into a merger agreement with Amplification
Technologies Inc. (“ATI”), and invested in non convertible preferred stock of
ATI. Since then the Company has focused on completing the merger with ATI and
developing ATI’s business (See Note 2 below). The accompanying
financial statements of Powersafe were prepared from the accounts of the Company
under the accrual basis of accounting.
In
addition, in 2007, the Company commenced a capital formation activity to effect
a Registration Statement on Form SB-2 with the Securities and Exchange
Commission (“SEC”), and raise capital of up to $60,000 from a self-underwritten
offering of 2,000,000 shares of newly issued common stock at a price of $0.03
per share (post forward stock split) in the public markets. The Registration
Statement on Form SB-2 was filed with the SEC on June 8, 2007, and declared
effective on June 21, 2007. Prior to December 31, 2007, the Company had received
stock subscriptions for 2,000,000 shares of common stock, par value $0.0001 per
share (post reverse stock split), at on offering price of $0.03 per share (post
forward stock split), and deposited proceeds of approximately
$60,000.
Cash
and Cash Equivalents
For
purposes of reporting within the statements of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from planned
operations. It plans to realize revenues from ATI’s business subsequent to the
planned merger with ATI described in Note 2 below, which may include direct
sales to OEM’s as well as licensing. Revenues will be recognized by major
categories under the following policies:
For
manufacturing and selling activities, revenues will be realized when the product
is delivered to customers, and collection is reasonably assured.
For
licensing activities, revenues from such agreements will be realized over the
term and under the conditions of each specific license once all contract
conditions have been met. Payments for licensing fees are generally received at
the time the license agreements are executed, unless other terms for delayed
payment are documented and agreed to between the parties.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
Patent
The
Company acquired a United States patent and all other intellectual property
rights relating to the technology from the inventor on March 26, 2007, under the
terms of a Patent Transfer and Sale Agreement. The patent was originally granted
to the inventor by the United States Patent and Trademark Office on January 13,
1998. The cost of obtaining the patent has been capitalized by the Company, and
is being amortized using the straight-line method over a period of approximately
10 years. For the years ended December 31, 2008 and 2007, the Company recorded
patent amortization of $1,408, and $1,031, respectively.
Deferred
Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital,
if any, until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital raised.
When an offering is terminated, deferred offering costs are charged to
operations during the period in which the offering is terminated. As of December
31, 2007, $21,500 in deferred offering costs were charged against the capital
raised upon completion of the offering discussed in Note 6.
Concentrations
of Risk
Prior
to March 31, 2008, the Company maintained its cash account in United States
dollars at one commercial bank in Israel. The balance in the account was subject
to the normal and customary risks of disbursement and withdrawal pertaining to a
foreign currency account in that country. Prior to June 30, 2008, the Company
closed its commercial bank account in Israel, and currently does not have a bank
account.
Impairment
of Long-Lived Assets
The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable. For the
years ended December 31, 2008, and 2007, no events or circumstances occurred for
which an evaluation of the recoverability of long-lived assets was
required.
Loss
Per Common Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is computed similar to
basic loss per share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the years ended December 31, 2008, and 2007.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
Income
Taxes
The
Company accounts for income taxes pursuant to SFAS No. 109, “
Accounting for Income Taxes
” (“SFAS No. 109”).
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
temporary differences between the basis of certain assets and liabilities for
income tax and financial reporting purposes. The deferred tax assets and
liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences.
The
Company maintains a valuation allowance with respect to deferred tax assets. The
Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax assets and taking into consideration the Company’s
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal and state tax
laws.
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizeablity of the related deferred
tax assets. Any change in the valuation allowance will be included in income in
the year of the change in estimate.
Foreign
Currency Translation
The
Company accounts for foreign currency translation pursuant to SFAS No. 52,
“
Foreign Currency Translation
” (“SFAS
No. 52”). The Company’s functional currency is the United States Dollar.
However, certain accounts of the Company are denominated in Israeli New Shekels.
Under SFAS No. 52, all assets and liabilities are translated into United States
dollars using the current exchange rate at the end of each fiscal period.
Revenues and expenses are translated using the average exchange rates prevailing
throughout the respective periods. Translation adjustments are included in other
comprehensive income (loss) for the period. Translation gains or losses related
to such transactions are recognized for each reporting period in the related
statement of operations and comprehensive income (loss).
Fair
Value of Financial Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is required in
estimating fair value. Accordingly, the estimates of fair value may not be
indicative of the amounts the Company could realize in a current market
exchange. As of December 31, 2008, and 2007, the carrying value of the Company’s
financial instruments approximated fair value due to the short-term maturity and
nature of these instruments.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of December 31, 2008, and 2007, and expenses for the
years ended December 31, 2008, and 2007, and cumulative from inception. Actual
results could differ from those estimates made by management.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
|
(2)
|
Development
Stage Activities and Going Concern
|
The
Company is currently in the development stage, and had difficulties in
developing a commercial application utilizing the technology and patent
pertaining to a multiple outlet power box with selectively protected outlet
logic. On March 31, 2008, all the shareholders of the Company executed stock
purchase agreements (the “
Stock Purchase
Agreements
”) providing for, among other things, the sale of all of the
issued and outstanding stock of the Company. The purchase price of the stock,
95% of which was acquired by a group of unaffiliated investors, and 5% of which
was given to persons who assisted in the transaction, was $625,000. Mr. Jack N.
Mayer, the sole Director, chief executive, and accounting officer of the
company, and his wife, acquired approximately 27.2% of the issued and
outstanding shares of Powersafe in the transaction.
On
March 31, 2008, the Company executed an agreement (the “
Merger Agreement
”) with ATI providing, among
other things, for the merger of the Company’s wholly owned subsidiary, with and
into ATI, with ATI surviving as the Company’s wholly owned subsidiary. The
merger closed on February 17, 2009. The Company expects that its primary
activity will be the development of ATI’s business.
ATI
is a privately held Delaware corporation formed in May 2002, whose scientists
have invented an extremely sensitive photodetector technology. The Company
believes that this technology has significant performance and cost advantages
over traditional technology and is positioned as a next generation solid state
technology for low level light detection. ATI’s platform semiconductor
technology, which allows amplification of weak signals with very low noise, has
been patented to encompass detection of signals other than light, and thus could
in principle be used to create biological, radiological, electrical, and
chemical sensors. Mr. Mayer is the controlling stockholder of ATI.
While
management of the Company believes that the Company will be successful in its
operating activities, there can be no assurance that the Company will be
successful in the development of ATI’s technology and patents, or sales of
product that will generate sufficient revenues to sustain the operations of the
Company.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred an operating loss since inception, had negative working capital as of
December 31, 2008, and 2007, and the cash resources of the Company were
insufficient to carryout its business plan. These and other factors raise
substantial doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
The
Company acquired a United States patent for a multiple outlet power box with
selectively protected outlet logic, and all other intellectual property rights
relating to the technology from an unrelated third-party inventor on March 26,
2007, under the terms of a Patent Transfer and Sale Agreement (the “Patent Sale
Agreement”) for total consideration of $9,000. The patent was originally granted
to the inventor on January 13, 1998, for a period of twenty years from the
filing date (March 12, 1996) by the United States Patent and Trademark Office.
The Company paid $4,000 to the inventor under the terms of the Patent Sale
Agreement on March 26, 2007, the date of execution of the Agreement. The Company
was also obligated to pay to the inventor an additional $4,000 under the Patent
Sale Agreement at the time of recording the assignment of the patent with the
United States Patent and Trademark Office. The assignment of the patent was
recorded on April 12, 2007, and the additional consideration of $4,000 was paid
to the inventor on April 24, 2007. The remaining $1,000 due under the agreement
was paid as of December 31, 2007. The cost of the patent amounted to $12,566
consisting of the patent acquisition cost and related legal fees. The Company
has no continuing or contingent obligation to pay royalties under the Patent
Sale Agreement. Further, the inventor is not a promoter or stockholder of the
Company.
On
March 31, 2008, the Board of Directors appointed Jack N. Mayer, the controlling
stockholder of Amplification Technologies, Inc., as a Director and as President
and Treasurer of Powersafe. Einat Krasney resigned from her positions as
President and Director of the Company, (See Note 8). In addition,
Mordechai Schwartz resigned from the Board of Directors on April 2, 2008 (See
Note 8).
|
(5)
|
Related
Party Transactions
|
During
the period ended December 31, 2007, advances for working capital purposes from
two former Directors and officers, who are also stockholders of the Company,
were received and subsequently partially repaid by the Company. On December 31,
2007, the two former Directors and stockholder forgave the Company of the debt
due in the amount of $14,850 ($7,425 each). The amount forgiven was recorded as
additional paid-in capital.
During
the period ended March 31, 2008, advances for working capital purposes from two
former Directors and officers, who were also stockholders of the Company, were
received and subsequently partially repaid by the Company. On March 31, 2008,
two former Directors and stockholder forgave the Company of the debt due in the
amount of $2,496 ($1,248 each). The amount forgiven was recorded as additional
paid-in capital.
During
the year ended December 31, 2008, the escrow agent, a former officer of the
Company, advanced the Company $38,490 for working capital purposes. As of
December 31, 2008, the balance owed to him was $6,227.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
As
of December, 2008, the Company owed to its Chief Executive Officer
$12,313 for various working capital loans received during the period. The loans
are unsecured, non-interest bearing, and have no terms for
repayment.
As of
December, 2008, the Company owed to ATI, an affiliated company, $21,795 for
various working capital loans received during the period. The loans are
unsecured, non-interest bearing, and have no terms for repayment.
On
February 18, 2007, the Company issued 3,000,000 shares of common stock (post
reverse stock split) to two Directors and officers of the Company for proceeds
of $300.
On
July 11, 2007, the Company issued 25,000 shares of restricted common stock (post
reverse stock split) in payment for transfer agent fees. The transaction was
valued at $525.
In
addition, in 2007, the Company commenced a capital formation activity to affect
a Registration Statement on Form SB-2 with the SEC, and raise capital of up to
$60,000 from a self-underwritten offering of 2,000,000 shares of newly issued
common stock at a price of $0.03 per share (post reverse stock split) in the
public markets. The Registration Statement on Form SB-2 was filed with the SEC
on June 8, 2007, and declared effective on June 21, 2007. Since June 21, 2007,
the Company has received stock subscriptions for 2,000,000 (post reverse stock
split) shares of common stock, par value $0.0001 per share, at an offering price
of $0.03 per share (post reverse stock split), and deposited proceeds of
approximately $60,000. In addition, as of December 31, 2007, the Company
recognized $21,500 of deferred offering costs related to this capital formation
activity.
On
October 29, 2007, the Company notified the NASD of its intention to implement a
3-for-1 forward stock split of its issued and outstanding common stock to the
holders of record as of November 7, 2007. Such forward stock split was effective
as of November 8, 2007.
On
December 31, 2007, two former Directors and shareholders of the Company forgave
the Company of a related party debt. The balance of the debt was $14,850, which
was an increase to additional paid-in capital.
On
February 26, 2008, two former Directors and shareholders of the Company returned
to the Company 2,666,667 (post reverse stock split) shares of the Company’s
common stock for no consideration.
For
the period ended March 31, 2008, two former Directors and shareholders of the
Company forgave the Company of a related party debt. The balance of the debt was
$2,496, which was recorded as additional paid-in capital.
In
connection with the reverse merger, described in Note 8, the new stockholders of
the Company contributed $1,360,000 of capital to the Company. The Company used
1,310,227 of the funds to purchase non-convertible Series C Preferred Stock
issued by Amplification Technologies, Inc. (“ATI”), a Delaware company. The
Company incurred $6,928 in legal fees associated with the stock purchase. The
Series C Preferred Stock of ATI have a 2% monthly pay in kind dividend,
restrictive covenants including a prohibition on funded debt and the issuance of
securities which are senior or pari passu to the Series C Preferred, are
redeemable by ATI on February 14, 2009, and were retired as part of the
merger.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
During
the year ended December 31, 2008, the Company had 5,000 (post reverse stock
split) shares of subscribed common stock, par value $0.0001, with a Director of
the Company for services rendered valued at $3,900.
On
September 23, 2008, the Company notified FINRA of its intention to implement a
reverse stock split of its share of common stock on the basis of one
post-consolidated share for three pre-consolidated shares. The reverse split
became effective as of October 2, 2008. The accompanying financial statements
and related notes thereto have been adjusted accordingly to reflect this reverse
stock split.
The
provision (benefit) for income taxes for the years ended December 31, 2008, and
2007, was as follows (assuming an effective federal and state tax rate of
23%):
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Current
Tax Provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
and state-Taxable income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total
current tax provision
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Tax Provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
and state-Loss carryforwards
|
|
$
|
53,115
|
|
|
$
|
10,804
|
|
|
Change
in valuation allowance
|
|
|
(53,115
|
)
|
|
|
(10,834
|
)
|
|
Total
deferred tax provision
|
|
$
|
—
|
|
|
$
|
—
|
|
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
The
Company had deferred income tax assets as of December 31, 2008, as
follows:
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Loss
carryforwards
|
|
$
|
63,919
|
|
|
$
|
10,804
|
|
|
Less
- Valuation allowance
|
|
|
(63,919
|
)
|
|
|
(10,804
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
net deferred tax assets
|
|
$
|
—
|
|
|
|
—
|
|
As of
December 31, 2008, the Company had net operating loss carryforwards for income
tax reporting purposes of approximately $277,909 that may be offset against
future taxable income. The net operating loss carryforwards expire in the year
2028. Current tax laws limit the amount of loss available to be offset against
future taxable income when a substantial change in ownership occurs or a change
in the nature of the business. Therefore, the amount available to offset future
taxable income may be limited.
No
tax benefit has been reported in the financial statements for the realization of
loss carryforwards, as the Company believes there is high probability that the
carryforwards will not be utilized in the foreseeable future. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
|
(8)
|
Commitments
and Contingencies
|
On
July 5, 2007, the Company entered into a Consulting Agreement with Island
Capital Management, LLC dba Island Stock Transfer (“Island Stock Transfer”) for
consulting and advisory services. Under the Agreement, the Company agreed to pay
Island Stock Transfer initial fees amounting to $2,525 plus transaction fees
payable as follows: (1) $1,000 due at the time of execution of the Agreement;
and, $1,000 within 60 days; (2) the issuance of 75,000 shares (post forward
stock split) of the Company’s common stock with a value of $525; and (3)
transaction fees in accordance with the fee schedule for services of Island
Stock Transfer. The Company also has the right under the Agreement to repurchase
the 75,000 shares (post forward stock split) of common stock from Island Stock
Transfer for a period of 12 months for $10,000. Prior to December 31, 2007, the
Company paid $2,000 to Island Stock Transfer and had issued them 75,000 shares
(post forward stock split) of common stock for such services with a value of
$525 in satisfaction of the agreement.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
On
March 31, 2008, the Company entered into a merger agreement with ATI, a
privately held Delaware corporation. Pursuant to the terms of the merger
agreement, as amended, on February 17, 2009, ATI was merged with Powersafe in
exchange for approximately 6,620,000 shares of common stock to the common
stockholders of ATI, 43,458 shares of Series A Convertible Preferred Stock to
the former holders of Series A Convertible Preferred Stock of ATI, 21,808 shares
of non-convertible Series B Preferred Stock to the former holders of Series B
Preferred Stock of ATI and assumed the obligation to issue up to 680,000 shares
of common stock reserved for issuance to satisfy option awards and similar
obligations. As a result of the merger, the capitalization of the Registrant
consists of (a) 8,995,256 shares of common stock issued and outstanding, and up
to 30,000 additional shares to be issued, (b) $1,347,211 face amount of Series A
Convertible Preferred Stock, convertible into an aggregate of approximately
808,200 shares of common stock, (c) approximately $2,180,800 liquidation
preference of non-convertible Series B Preferred Stock, and (d) up to 680,000
shares of common stock reserved for issuance to satisfy option awards and
similar obligations. As of February 20, 2009, Mr. Jack N. Mayer, the president
and a director of the Registrant, and a family member of Mr. Mayer, advanced
$264,500 to the Registrant. These advances were expected to be converted into
convertible preferred stock and warrants of the Registrant; any securities that
may be issued in connection with such advances are not included in the capital
structure set forth above. As a result of the merger with ATI, on the closing
date, Mr. Mayer and his affiliates beneficially owned approximately 51% of the
Registrant on a fully diluted basis, and Mr. Samuel Zentman, a director of the
Registrant, owned approximately 3.85% of the Registrant on a fully diluted
basis. Mr. Mayer and his affiliates also owned an aggregate of $2,034,525
liquidation preference of non-convertible Series B Preferred Stock and Mr.
Zentman owned $10,803 of said shares.
|
(9)
|
Recent
Accounting Pronouncements
|
On
March 19, 2008, The FASB issued FASB Statement No. 161, “
Disclosures about Derivative Instruments and Hedging
Activities – an amendment of FASB statement 133
” (“SFAS No. 161 enhances
required disclosures regarding derivatives and hedging activities, including
enhanced disclosures regarding how: (a) an entity uses derivative instruments;
(b) derivative instruments and related hedged items are accounted for under FASB
Statement No. 133, “ Accounting for derivative Instruments and Hedging
Activities”; and (c) derivative instruments and related hedged items affect an
entity’s financial positions, financial performance, and cash flows.
Specifically, SFAS No.161 requires:
|
●
|
Disclosure
of the objectives for using derivative instruments be disclosed in terms
of underlying risk and account designation;
|
|
●
|
Disclosure
of the fair values of derivative instruments and their gains and losses in
a tabular format;
|
|
●
|
Disclosure
of information about credit-risk-related contingent features;
and
|
|
●
|
Cross-reference
from the derivative footnote to other footnotes in which
derivative-related information is
disclosed
|
SFAS
No. 161 is effective for fiscal years and interim periods beginning after
November 15, 2008. Early application is encouraged.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
On
May 9, 2008, the FASB issued FASB Statement No. 162, “
The Hierarchy of Generally Accepted Accounting
Principles
” (“SFAS No. 162”). SFAS No. 162 is intended to improved
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (“GAAP”) for nongovernmental entities.
Prior
to the issuance of SFAS No. 162, GAAP hierarchy was defined in the American
Institute of Certified Public Accountants (“AICPA”) Statement on Auditing
Standards (“SAS”) No. 69, “
The Meaning of
Present Fairly in Conformity with Generally Accept Accounting
Principles
.” SAS No. 69 has been criticized because it is directed to the
auditor rather than the entity. SFAS No. 162 addresses these issues by
establishing that the GAAP hierarchy should be directed to entities because it
is the entity (not the auditor) that is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.
The
sources of accounting principles that are generally accepted are categorized in
descending order as follows:
|
|
a)
|
FASB
Statements of Financial Accounting Standards and Interpretations, FASB
Statement 133 Implementation Issues, FASB Staff Positions, and American
Institute of Certified Public Accountants (AICPA) Accounting Research
Bulletins and Accounting Principles Board Opinions that are not superseded
by actions of the FASB.
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b)
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FASB
Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of Position.
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c)
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AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task
Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts
(EITF D-Topics).
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d)
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Implementation
guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements
of Position not cleared by the FASB, and practices that are widely
recognized and prevalent either generally or in the
industry.
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SFAS
No. 162 is effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board amendment to its authoritative literature. It is only
effective for nongovernmental entities; therefore, the GAAP hierarchy will
remain in SAS 69 for state and local governmental entities and federal
governmental entities.
On
May 26, 2008, the FASB issued FASB Statement No. 163, “
Accounting for Financial Guarantee Insurance
Contracts
” (“SFAS No. 163”). SFAS No. 163 clarifies how FASB Statement
No. 60, “
Accounting and Reporting by Insurance
Enterprises
” (“SFAS No. 60”), applies to financial guarantee insurance
contracts issued by insurance enterprises, including the recognition and
measurement of premium revenue and claim liabilities. It also requires expanded
disclosures about financial guarantee insurance contracts.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
The
accounting and disclosure requirements of SFAS No. 163 are intended to improve
the comparability and quality of information provided to users of financial
statements by creating consistency. Diversity exists in practice in accounting
for financial guarantee insurance contracts by insurance enterprises under SFAS
No. 60, “
Accounting and Reporting by Insurance
Enterprises
.” That diversity results in inconsistencies in the
recognition and measurement of claim liabilities because of differing views
about when a loss has been incurred under FASB Statement No. 5, “Accounting for
Contingencies”.
(“SFAS
No. 5”). SFAS No. 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default when there is evidence that credit
deterioration has occurred in an insured financial obligation. It also requires
disclosure about (a) the risk-management activities used by an insurance
enterprise to evaluate credit deterioration in its insured financial obligations
and (b) the insurance enterprise’s surveillance or watch list.
(10)
Subsequent Events
On
January 27, 2009, Powersafe signed an amendment to the agreement dated March 31,
2008 (the “Merger Agreement”), with Amplification Technologies, Inc. (“ATI”),
pursuant to which the parties acknowledged that the Closing Date had not taken
place by December 31, 2008, and amended the Merger Agreement to extend the date
after which the parties may elect to terminate from December 31, 2008, to April
30, 2009. On February 17, 2009, the merger agreement was further amended to
include the company’s wholly owned subsidiary Powersafe Acquisition Corp. with
and into ATI, and the merger was fully consummated.
On
March 12, 2009, the Board of Directors of the Company appointed Steven
Zvi Weinreb as a director, effective immediately, to serve until the
next annual meeting of the Company’s stockholders and until his successor is
duly appointed and qualified. Mr. Weinreb will be entitled to $1,000 per month
and 834 shares of common stock per month. He will be entitled to $500 for each
half day of work beyond the scope of customary services provided as a
director.
Effective
as of April 1, 2009, the Board of Directors of the Company appointed Mikhail
Leibov as a director to serve until his successor is duly appointed and
qualified. He acted as a consultant to the Company since February 2009. He was
also appointed a director of ATI. In consideration for his services
as a director and consultant to the Company and ATI, Mr. Leibov will be
compensated at the rate of $100 per hour and will receive 833 shares of the
Company's common stock per month.
POWERSAFE
TECHNOLOGY CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008, AND 2007
On
April 9, 2009, the company filed an amendment with the Secretary of State of the
State of Delaware amending its Certificate of Incorporation in accordance with
the approval of the stockholders of the Company obtained at the special meeting
of the shareholders held on September 18, 2008. The amendment created a class of
5,000,000 shares of “blank check” preferred stock. Upon filing said amendment,
the Company created two classes of preferred shares – 50,000 Series D
Convertible Preferred Stock (the “Series D Preferred”) and 20,000 Series D-1
Convertible Preferred Stock (the “Series D-1 Preferred”). The holders of the
Series D Preferred and Series D-1 Preferred are each entitled to (i) a dividend
equal to 8% per annum, payable each quarter, (y) in cash to the holders of the
Series D-1 Preferred and (z) in shares of additional Series D-1 Preferred to the
holders of the Series D Preferred thru December 31, 2010 and in cash thereafter,
(ii) majority board representation (as a class with all pari passu preferred) if
there is a continuing default in dividend payments for any 2 quarters
or a default in any other terms of said preferred stock, (iii) a liquidation
preference of $75 and $70 per share, with respect to the Series D Preferred and
Series D-1 Preferred, respectively, (iv) the right to convert into 100 shares of
common stock of the Company (for each share of preferred) and (v) covenants
regarding no issuance of any debt or series having a preference to these
preferred or any class in parity except securities with a liquidation preference
in parity with the preferred of up to $4,000,000. The Company may redeem the
preferred shares, upon 30 days’ notice, commencing (a) March 31, 2012, or (b)
December 31, 2009, if the average closing price of the common stock is equal to
at least $1.15. The preferred shares are mandatorily redeemable on March 31,
2014. For every share of preferred stock purchased, the holder shall receive 100
warrants, exercisable for $0.75 per share of common stock until October 31,
2010. The Series D-1 Preferred and warrants are being offered to service
providers of the Company and to directors for directors’ fees. As of the date of
this report, holders of $205,620 of trade payables owed by either the Company or
its wholly owned subsidiary Amplification Technologies, Inc. and a director owed
$16,00 in fees, have agreed to exchange such payables for the issuance of 3,427
and 267 shares of Series D-1 Preferred and 342,700 and 26,700 warrants
respectively. The Series D Preferred were expected to be sold in a private
placement at $65 per share of Series D Preferred. As of the date of this
report, the Company has sold 1077 shares of Series D Preferred and 107,000
warrants for $70,000. The Company agreed. to pay holders 1/2% per month
beginning November 1, 2009, until either the Company shall have registered with
the SEC the shares of common stock that the preferred are convertible into, or
such shares can be sold under Rule 144. Mr. Mayer, an officer and director and
principal stockholder of the Company, has agreed to convert $150,000 of certain
advances he made to the Company for 2,500 shares of Series D-1 Preferred and
250,000 warrants. The Company has agreed to pay holders of the Preferred 1/2%
per month beginning November 1, 2009, until either the Company shall have
registered with the SEC the shares of common stock that the preferred are
convertible into, or such shares can be sold under Rule 144.
F-18
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