Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-QSB
(Mark
One)
x
Quarterly
Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of
1934
For
quarterly period ended December
31, 2006
¨
Transition
Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
For
the
transition period from _____ to _____
COMMISSION
FILE NUMBER 0-17493
BRENDAN
TECHNOLOGIES, INC.
(Exact
name of small business issuer as specified in its charter)
NEVADA
|
|
88-0237223
|
(State
or other jurisdiction of incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
2236
Rutherford Road, Suite 107
|
Carlsbad,
California 92008
|
(Address
of principal executive offices)
|
Issuer's
telephone number (760)
929-7500
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 x No
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No
x
State
the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
Common
Stock, $.004995 par
value
|
23,705,594
|
(Class)
|
Outstanding
at February 14,
2007
|
Transitional
Small Business Disclosure Format (Check one): Yes ¨ No
x
Brendan
Technologies, Inc.
INDEX
|
|
Page
|
|
|
|
PART
I. FINANCIAL INFORMATION
|
|
|
|
|
|
Item
1. Financial Statements:
|
|
|
|
|
|
Condensed
consolidated Balance Sheets as of December 31, 2006 (unaudited) and
June
30, 2006
|
3
|
|
|
|
|
Condensed
consolidated Statements of Operations for the three and six months
ended
December 31, 2006 and 2005 (unaudited)
|
4
|
|
|
|
|
Condensed
consolidated Statements of Cash Flows for the three and six months
ended
December 31, 2006 and 2005 (unaudited)
|
5
|
|
|
|
|
Notes
to Condensed Unaudited Consolidated
Financial Statements
|
6
|
|
|
|
|
Item
2. Management’s Discussion and Analysis or Plan of
Operation
|
12
|
|
|
|
|
Item
3. Controls and Procedures
|
17
|
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
|
|
Item
1. Legal Proceedings
|
*
|
|
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
|
17
|
|
Item
3. Defaults upon Senior Securities
|
*
|
|
Item
4. Submission of Matters to a Vote of Security Holders
|
*
|
|
Item
5. Other Information
|
*
|
|
Item
6. Exhibits
|
20
|
|
|
|
SIGNATURES
|
20
|
* No
information provided due to inapplicability of the item.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Brendan
Technologies, Inc.
|
Condensed
Consolidated Balance Sheets
|
|
|
|
December
31,
2006
|
|
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
315,313
|
|
$
|
149,512
|
|
Accounts
receivable, net
|
|
|
62,290
|
|
|
56,107
|
|
Prepaid
expenses
|
|
|
1,357
|
|
|
301
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
378,960
|
|
|
205,920
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
81,920
|
|
|
72,740
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
100,424
|
|
|
8,190
|
|
|
|
|
|
|
|
|
|
|
|
$
|
561,304
|
|
$
|
286,850
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Notes
payable in default
|
|
$
|
130,000
|
|
$
|
255,000
|
|
Accrued
interest in default
|
|
|
86,630
|
|
|
78,217
|
|
Accounts
payable
|
|
|
52,884
|
|
|
161,430
|
|
Accrued
wages and vacation
|
|
|
833,268
|
|
|
772,030
|
|
Accrued
interest
|
|
|
458,490
|
|
|
414,959
|
|
Deferred
revenue
|
|
|
99,118
|
|
|
77,651
|
|
Current
portion of lease obligations
|
|
|
7,073
|
|
|
6,442
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
1,667,463
|
|
|
1,765,729
|
|
|
|
|
|
|
|
|
|
Long
term portion of lease obligations
|
|
|
7,293
|
|
|
10,996
|
|
|
|
|
|
|
|
|
|
8%
Convertible debentures net of debt discount
|
|
|
938,084
|
|
|
23,002
|
|
8%
Convertible debentures net of debt discount - related
parties
|
|
|
110,585
|
|
|
83,652
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit
|
|
|
|
|
|
|
|
Preferred
stock, $.004995 par value; 5,000,000 shares
|
|
|
|
|
|
|
|
authorized:
none outstanding
|
|
|
-
|
|
|
-
|
|
Common
stock, $.004995 par value; 50,000,000 shares
|
|
|
|
|
|
|
|
authorized:
23,705,594 and 25,498,794 issued and outstanding
|
|
|
|
|
|
|
|
at
December 31, 2006 and June 30, 2006, respectively
|
|
|
118,409
|
|
|
127,366
|
|
Additional
paid in capital
|
|
|
4,925,880
|
|
|
4,517,814
|
|
Accumulated
deficit
|
|
|
(7,206,410
|
)
|
|
(6,241,709
|
)
|
Total
stockholders' deficit
|
|
|
(2,162,121
|
)
|
|
(1,596,529
|
)
|
|
|
$
|
561,304
|
|
$
|
286,850
|
|
See
accompanying notes to unaudtied condensed consolidated financial
statements.
|
Brendan
Technologies, Inc.
|
Condensed
Consolidated Statements of Operation
|
(Unaudited)
|
|
|
Three
Months Ended December 31,
|
|
Six
Months Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
135,253
|
|
$
|
111,806
|
|
$
|
222,648
|
|
$
|
221,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
24,756
|
|
|
25,594
|
|
|
47,961
|
|
|
51,863
|
|
General
and administrative expenses
|
|
|
565,225
|
|
|
272,738
|
|
|
966,284
|
|
|
514,887
|
|
|
|
|
589,981
|
|
|
298,332
|
|
|
1,014,245
|
|
|
566,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(454,728
|
)
|
|
(186,526
|
)
|
|
(791,597
|
)
|
|
(345,102
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(104,101
|
)
|
|
(64,019
|
)
|
|
(173,104
|
)
|
|
(147,741
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before provision for income taxes
|
|
|
(558,829
|
)
|
|
(250,545
|
)
|
|
(964,701
|
)
|
|
(492,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(558,829
|
)
|
$
|
(250,545
|
)
|
$
|
(964,701
|
)
|
$
|
(492,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
shares outstanding
|
|
|
23,705,594
|
|
|
5,205,667
|
|
|
23,715,340
|
|
|
4,962,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
|
Brendan
Technologies, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
Six
Months Ended December 31,
|
|
|
|
2006
|
|
2005
|
|
Operating
activities:
|
|
|
|
|
|
Net
loss
|
|
$
|
(964,701
|
)
|
$
|
(492,843
|
)
|
Adjustments
to reconcile net loss
|
|
|
|
|
|
|
|
to
cash provided by operating activities:
|
|
|
|
|
|
|
|
Amortization
and depreciation
|
|
|
17,650
|
|
|
3,614
|
|
Stock
option compensation
|
|
|
46,278
|
|
|
-
|
|
Amortization
of debt discount
|
|
|
50,191
|
|
|
-
|
|
Amortization
of financing costs
|
|
|
27,421
|
|
|
-
|
|
Provision
for uncollectible receivables
|
|
|
1,000
|
|
|
-
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(7,183
|
)
|
|
13,804
|
|
Prepaid
expense and other assets
|
|
|
(1,056
|
)
|
|
(31,911
|
)
|
Accounts
payable
|
|
|
(108,546
|
)
|
|
6,722
|
|
Accrued
liabilities
|
|
|
113,182
|
|
|
28,776
|
|
Deferred
revenue
|
|
|
21,467
|
|
|
28,171
|
|
Net
cash used in operating activities
|
|
|
(804,297
|
)
|
|
(443,667
|
)
|
Investing
activities:
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(26,830
|
)
|
|
(17,136
|
)
|
Net
cash used in investing activities
|
|
|
(26,830
|
)
|
|
(17,136
|
)
|
Financing
activities:
|
|
|
|
|
|
|
|
Principal
payments of lease obligations
|
|
|
(3,072
|
)
|
|
(1,018
|
)
|
Principal
payments on notes payable in default
|
|
|
(125,000
|
)
|
|
-
|
|
Proceeds
from note receivable on sale of Omni divisions
|
|
|
-
|
|
|
281,498
|
|
Proceeds
from sale of stock, net of costs
|
|
|
-
|
|
|
202,500
|
|
Proceeds
from issuance of 8% convertible debentures,
|
|
|
|
|
|
|
|
net
of costs
|
|
|
1,125,000
|
|
|
-
|
|
Net
cash provided by financing activities
|
|
|
996,928
|
|
|
482,980
|
|
Net
increase in cash and cash equivalents
|
|
|
165,801
|
|
|
22,177
|
|
Cash
and cash equivalents,
beginning of year
|
|
|
149,512
|
|
|
32,504
|
|
Cash
and cash equivalents,
end of period
|
|
$
|
315,313
|
|
$
|
54,681
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
95,492
|
|
$
|
8,892
|
|
Income
taxes
|
|
$
|
-
|
|
$
|
-
|
|
Non
Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
Cancellation
of stock
|
|
$
|
8,957
|
|
$
|
-
|
|
Debt
discount on 8% convertible debentures
|
|
$
|
333,176
|
|
$
|
-
|
|
Financing
costs related to 8% convertible debentures
|
|
$
|
119,655
|
|
$
|
-
|
|
Conversion
of Brendan notes payable into common stock
|
|
$
|
-
|
|
$
|
1,692,972
|
|
Conversion
of Brendan accrued interest into common stock
|
|
$
|
-
|
|
$
|
961,226
|
|
Issuance
of common stock in payment of accounts payable
|
|
$
|
-
|
|
$
|
35,000
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
|
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
Note
1 - Business
Nature
of Business
Brendan
Technologies, Inc., a Nevada corporation (the “Company”,
“we”
or“Brendan”)
provides software solutions to improve the accuracy, quality control, workflow,
and regulatory compliance of immunoassay testing in laboratories in the
biopharmaceutical, clinical, research, veterinarian and agricultural industries.
The
accompanying unaudited condensed consolidated financial statements include
the
accounts of the Company and the Company’s wholly owned subsidiary, Brendan
Technologies, Inc., a Michigan corporation. The unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission.
All material inter-company accounts and transactions have been eliminated in
consolidation. Certain information and footnote disclosures normally included
in
annual financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments, consisting of normal and recurring adjustments, necessary
for a
fair presentation of the financial position and the results of operations for
the periods presented have been included. Operating results for the three and
six month periods ended December 31, 2006 are not necessarily indicative of
the
results that may be expected for the fiscal year ending June 30, 2007. For
further information, refer to the financial statements and notes thereto
included in the Brendan Technologies, Inc. Annual Report on Form 10-KSB for
the
fiscal year ended June 30, 2006.
Recent
Accounting Pronouncements
On
July
13, 2006, FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income
Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”) was issued.
The provisions of FIN 48 are effective for fiscal years beginning after December
15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. It also prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken
in a
tax return. The Company is currently evaluating the impact of FIN 48 on
its results of operations, financial condition or cash flows.
In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”),
which provides interpretive guidance on the consideration of the effects of
prior year misstatements in quantifying current year misstatements for the
purpose of a materiality assessment. SAB No. 108 requires registrants to
quantify misstatements using both the balance sheet and income statement
approaches and to evaluate whether either approach results in quantifying an
error that is material based on relevant quantitative and qualitative factors.
The guidance is effective for the first fiscal period ending after November
15,
2006. Upon adoption the Company does not expect SAB No. 108 to have a
material effect on its results of operations, financial condition or cash
flows.
Note
2- Going Concern
Going
Concern
These
financial statements have been prepared on a going concern basis. However,
during the six months ended December 31, 2006 and the year ended June 30, 2006,
the Company incurred net losses of $964,701 and $845,393, respectively, and
had
an accumulated deficit of $7,206,410 and $6,241,709, at December 31 and June
30,
2006, respectively. In addition, as of December 31, 2006, the Company had a
working capital deficit of $1,288,503 and is in default on $216,630 of debt
and
interest. The Company’s ability to continue as a going concern is dependent upon
its ability to generate profitable operations in the future and/or to obtain
the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. The outcome of these matters
cannot be predicted with any certainty at this time and as such raise
substantial doubt as to the Company’s ability to continue as a going concern.
Since inception, the Company has satisfied its capital needs through debt and
equity financings and expects to fund the Company from these sources until
profitability is achieved. There can be no assurance that funds will be
available at terms favorable to the Company or that future profitability can
be
achieved. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts
or
the amounts and classification of liabilities that might be necessary should
the
Company be unable to continue as a going concern.
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
Management’s
Plans
Management's
plans to eliminate the going concern situation include, but are not limited
to,
the following:
· |
Obtain
additional equity or debt financing from investors.
|
· |
Increase
revenue from the sale of its software. The Company is anticipating
to
release an upgraded version of its software during the next twelve
months
that will address customer enterprise level
requirements.
|
· |
If
necessary, the Company will initiate cost cutting programs that would
reduce cash requirements.
|
Note
3 - Loss Per Share
The
Company utilizes SFAS No. 128, “Earnings per Share.” Basic loss per share is
computed by dividing loss available to common shareholders by the
weighted-average number of common shares outstanding. 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. Common equivalent shares are excluded from the
computation if their effect is anti-dilutive.
For
the
six months ended December 31, 2006 and 2005, the following common equivalent
shares were excluded from the computation of loss per share since their effects
are anti-dilutive.
|
|
December
31,
|
|
|
|
2006
|
|
2005
|
|
|
|
|
|
(Post-merger)
|
|
Options
|
|
|
4,635,000
|
|
|
3,840,000
|
|
Warrants
|
|
|
6,060,667
|
|
|
54,000
|
|
Total
|
|
|
10,695,667
|
|
|
3,894,000
|
|
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
Estimates
The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Note
4-
Notes Payable In Default
Notes
payable in default consisted of the following:
|
|
December
31,
|
|
June
30,
|
|
|
|
2006
|
|
2006
|
|
|
|
|
|
|
|
Two
unsecured, senior subordinated
|
|
|
|
|
|
|
|
notes
payable, due on various dates on or before
|
|
|
|
|
|
|
|
September
2004, bearing interest at 8% per annum.
|
|
$
|
130,000
|
|
$
|
130,000
|
|
Unsecured,
note payable for $125,000,
|
|
|
|
|
|
|
|
with
interest at a rate of 12% per annum.
|
|
|
-
|
|
|
125,000
|
|
|
|
$
|
130,000
|
|
$
|
255,000
|
|
The
above
notes which were not converted as part of the reverse merger remain in default.
Note
5- 8% Convertible Debentures
Overview.
During
the period of June 20, 2006 through December 31, 2006, we sold an aggregate
of $1,350,000 of 8% convertible debentures to a group of thirteen individual
investors, two of which are affiliates of the Company, and one institutional
investor. Subsequent to December 31, 2006, we sold an additional aggregate
of
$342,500 of 8% convertible debentures to a group of nine individual
investors. The convertible debentures entitle the debenture holder to
convert the principal into our common stock for two years from the date of
closing. Interest on the debentures is payable quarterly in cash. In
accordance with Emerging Issues Task Force Issue 98-5, Accounting for
Convertible Securities with a Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios (“EITF 98-5”), the Company recognized an embedded
beneficial conversion feature present in the Convertible Note. The Company
allocated a portion of the proceeds equal to the intrinsic value of that feature
to additional paid-in capital and recorded a corresponding discount against
the
carrying value of the Convertible Notes. The Company valued the warrants in
accordance with EITF 00-27 using the Black-Scholes pricing model and the
following assumptions: contractual terms of from 1 to 5 years, an average risk
free interest rate of 4.57% to 5.20%, a dividend yield of 0%, and volatility
of
39% to 43%. The debt discount attributed to the beneficial conversion feature
and value of the warrants issued are amortized over the term of the Convertible
Note (2 years) as interest expense. If the debenture is converted to common
stock previous to its maturity date, any debt discount not previously amortized
is expensed to non-cash interest at the time of the conversion.
Number
of Shares Debentures May Be Converted Into.
The
debentures can be converted into a number of our common shares at a conversion
price equal to $0.50 per share.
Warrants.
Concurrent with the issuance of the convertible debentures, we issued to the
debenture holders warrants to purchase shares of our common stock. These
warrants are exercisable for one to five years from the date of issuance at
exercise prices ranging from $0.60 to $1.00 per share.
Right
of First Refusal.
The
debenture holders have a right of first refusal to purchase or participate
in
any equity securities offered by us in any private transaction which closes
on
or prior to the date that is two years after the issue date of each
debenture.
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
Registration
Rights.
We are
responsible for registering the resale of the shares of our common stock which
will be issued on the conversion of the debentures.
Restrictions
on Use of Funds.
We may
not pay any cash dividends without the debenture holders prior written
approval.
The
following table presents the status, as of December 31 and June 30, 2006, of
our
convertible
debentures:
|
|
As
of
|
|
|
|
December
31,
2006
|
|
June
30,
2006
|
|
|
|
|
|
|
|
Convertible
debentures issued
|
|
$
|
1,350,000
|
|
$
|
125,000
|
|
Less
debt discount
|
|
|
(301,331
|
)
|
|
(18,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1,048,669
|
|
|
106,654
|
|
Less
current portion
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Long
term portion
|
|
$
|
1,048,669
|
|
$
|
106,654
|
|
|
|
|
|
|
|
|
|
Issued
to related parties
|
|
$
|
110,585
|
|
$
|
83,652
|
|
|
|
|
|
|
|
|
|
Maturity
dates of outstanding convertible
debentures
|
|
|
|
|
|
|
|
Year
Ending
|
|
|
|
|
|
|
|
June
30, 2007
|
|
$
|
-
|
|
$
|
-
|
|
June
30, 2008
|
|
|
125,000
|
|
|
125,000
|
|
June
30, 2009
|
|
|
1,225,000
|
|
|
-
|
|
|
|
$
|
1,350,000
|
|
$
|
125,000
|
|
Note
6- Shareholder’s Deficit
Common
Stock
The
Company has authorized 50,000,000 shares of common stock at $.004995 par value.
|
|
Common
|
|
|
|
|
|
Shares
|
|
Dollars
|
|
|
|
|
|
|
|
Balance
July 1, 2006
|
|
|
25,498,794
|
|
$
|
4,645,180
|
|
|
|
|
|
|
|
|
|
Cancellation
of shares
|
|
|
(1,793,200
|
)
|
|
-
|
|
Warrant
valuation related to financing costs
|
|
|
-
|
|
|
19,655
|
|
Non
cash issuance of stock options
|
|
|
-
|
|
|
46,278
|
|
Non
cash debt discount on issuance of
|
|
|
|
|
|
|
|
8%
convertible debentures, net of amortization
|
|
|
-
|
|
|
333,176
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2006
|
|
|
23,705,594
|
|
$
|
5,044,289
|
|
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
During
the six months ended December 31, 2006, the Company cancelled 1,793,200 shares
reserved for issuance to an individual as a result of a 1999 agreement with
an
investment banking firm in which the individual was a principal. The individual
was obligated to use his best efforts to secure private placement financings
and
the investment banking firm was to underwrite an initial public offering for
the
Company. The Company determined that due to performance the individual was
not
entitled to these shares.
Warrants
During
the six months ended December 31, 2006, the Company issued warrants exercisable
into up to 4,900,000 shares of common stock to investors as part of the issuance
of 8% convertible debentures. In addition, the Company issued a warrant for
the
purchase of up to 200,000 shares to one individual who assisted the Company
in
raising funds and a warrant for the purchase of up to 240,000 shares to one
individual who is providing investor relations services to the
Company.
The
Company estimated the fair value of the warrants at the issuance date by using
the Black-Scholes pricing model with the following weighted average assumptions
used for the six months ended December 31, 2006: dividend yield of zero percent;
expected volatility of 39% to 43%; risk free interest rate of 4.57% to 5.20%;
and expected lifes of 1 to 5 years.
In
August
2005, Brendan issued a warrant exercisable, after giving effect to the reverse
merger on December 29, 2005, into 54,000 shares of the Company’s stock at an
exercise price of $.75 per share with
an
expiration date of five years from the date of grant. The Company estimated
the
fair value of the warrant at the issuance date by using the Black-Scholes
pricing model with the following weighted average assumptions used for the
six
months ended December 31, 2005: dividend yield of
zero
percent; expected volatility of 100%; risk free interest rate of 4.08%; and
expected life of 5 years. The valuation of the warrant, $7,407, was recorded
as
a stock offering cost.
As
of
December 31, 2006, 6,060,667 warrants are outstanding at prices ranging from
$0.60 to $6.00 per share with expiration dates ranging from 2007 to 2011.
Included in the warrants outstanding are 166,667 warrants remaining from the
predecessor’s obligations transferred to the Company.
Stock
Option Plan
In
April 2006 we adopted a Stock Option Plan, which we refer to as the "Plan,"
which provides for the grant of stock options intended to qualify as "incentive
stock options" and "nonqualified stock options" (collectively "stock options")
within the meaning of Section 422 of the United States Internal Revenue
Code of 1986 (the "Code"). Stock options may be issued to any of our officers,
directors, key employees or consultants.
Under
the
Plan, we have reserved 7.5 million shares underlying stock options for
issuance to executive officers, employees and consultants of the Company. The
Plan is administered by the full Board of Directors, who determine which
individuals shall receive stock options, the time period during which the stock
options may be exercised, the number of shares of common stock that may be
purchased under each stock option and the stock option price.
During
the six months ended December 31, 2006, the Company issued stock options
exercisable into up to 310,000 shares of common stock to employees and a
director of the Company. The
Company estimated the fair value of the stock options at the date of grant
by
using the Black-Scholes pricing model with the following weighted average
assumptions used for the six months ended December 31, 2006: dividend yield
of
zero percent; expected volatility of 39% to 43%; risk free interest rate of
4.62% to 4.78%; and expected lifes of 5 years. During the six months ended
December 31, 2006, a stock option that would have been exercisable into up
to
297,334 shares expired. The stock option had been issued from the predecessor’s
stock option plan.
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
As
of
December 31, 2006, 4,635,000 options are outstanding at prices ranging from
$0.025 to $4.87 per share with expiration dates ranging from 2009 to 2011.
Included in the options outstanding are 25,000 options remaining from the
predecessor’s stock option plan.
ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
THE
FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR
FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A VARIETY
OF
FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "RISK FACTORS."
SEE ALSO OUR ANNUAL REPORT ON FORM 10-KSB FOR OUR FISCAL YEAR ENDED JUNE 30,
2006.
Critical
Accounting Policies and Estimates
The
preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States requires us to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and
liabilities.
On
an
ongoing basis, we evaluate our estimates, including those related to our product
returns, bad debts, intangible assets, long-lived assets and contingencies
and
litigation. We base our estimates on historical experience and on various other
assumptions that are believed 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.
Actual results may differ from these estimates under different assumptions
or
conditions.
We
have
identified three accounting policies that we believe are key to an understanding
of our financial statements. These important accounting policies require
management's most difficult, subjective judgments.
1.
Revenue Recognition
The
Company recognizes revenues related to software licenses and software
maintenance in accordance with the American Institute of Certified Public
Accountants (“AICPA”) Statements of Position (“SOP”) No. 97-2, “Software Revenue
Recognition,” as amended by SOP No. 94-4 and SOP No. 98-9. We follow the
guidance established by the SEC in Staff Accounting Bulletin No. 104, as well
as
generally accepted criteria for revenue recognition, which require that, before
revenue is recorded, there is persuasive evidence of an arrangement, the fee
is
fixed or determinable, collection is reasonably assured, and delivery to our
customer has occurred. In addition, our invoices may include multiple elements
that identify vendor specific objective evidence of fair value for each of
those
elements. The Company recognizes revenue as follows:
Software-
our software is sold with an indefinite license period, and as such, product
revenue is recorded at the time of the customer’s acceptance (generally 30 days
after shipment which allows for a 30 day return guarantee if the customer is
not
satisfied with the product), net of estimated allowances and returns.
Post-contract
customer support- (“PCS”) obligations are generally for annual services and are
recognized over the period of service. Revenues for which payment has been
received are treated as deferred revenue until services are provided and
revenues have been earned.
Training
and service calls- recognized at the time training or service calls are
provided.
Royalties-
we recognize revenue from royalties only after the cash has been collected
(typically 30 days after the end of the quarter on which the royalty payment
is
based.)
Licensing-
we also derive license revenue from fees for the transfer of proven and reusable
intellectual property components. Generally, these payments will include a
nonrefundable technology license fee, which will be payable upon the transfer
of
intellectual property. License fees will be recognized upon the execution of
the
license agreement and transfer of intellectual property provided no further
significant performance obligations exist and collectibility is deemed probable.
Customization
revenue- fees related to software service contracts to aid customers in adapting
such intellectual property to their particular instruments, which will be
performed on a best efforts basis and for which we will receive periodic
milestone payments, will be recognized as revenue over the estimated development
period, using a cost-based percentage of completion method.
2.
Debt
Discount
In
determining the accounting treatment to be used for our convertible debentures
and associated stock warrants we relied upon Emerging Issues Task Force Issue
(EITFI) 98-5 "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios" and EITFI 00-27
"Application of Issue No. 98-5 to Certain Convertible Securities." We issue
warrants as part of our convertible debentures and other financings. We value
the warrants using the Black-Scholes pricing model based on expected fair value
at issuance and the estimated fair value and any beneficial conversion feature
expense is recorded as debt discount. The debt discount is amortized to non-cash
interest over the life of the debenture assuming the debenture will be held
to
maturity which is normally 2 years. If the debenture is converted to common
stock previous to its maturity date, any debt discount not previously amortized
is expensed to non-cash interest at the time of the conversion.
3.
Going Concern
These
financial statements have been prepared on a going concern basis. However,
during the six months ended December 31, 2006 and the year ended June 30, 2006,
the Company incurred net losses of $964,701 and $845,393, respectively, and
had
an accumulated deficit of $7,206,410 and $6,241,709, at December 31 and June
30,
2006, respectively. In addition, as of December 31, 2006, the Company had a
working capital deficit of $1,288,503 and is in default on $216,630 of debt
and
interest. The Company’s ability to continue as a going concern is dependent upon
its ability to generate profitable operations in the future and/or to obtain
the
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. The outcome of these matters
cannot be predicted with any certainty at this time and as such raise
substantial doubt as to the Company’s ability to continue as a going concern.
Since inception, the Company has satisfied its capital needs through debt and
equity financings and expects to fund the Company from these sources until
profitability is achieved. There can be no assurance that funds will be
available at terms favorable to the Company or that future profitability can
be
achieved.
Results
of Operations
On
December 29, 2005, the Company completed the acquisition of substantially all
the assets of Brendan Sub pursuant to a Merger Agreement and completed the
disposition of substantially all the assets of Omni-Washington and Butler
pursuant to a Stock Purchase Agreement. As a result of these transactions and
the issuance of common stock to the shareholders, noteholders and individuals
who assisted in the merger, Brendan Sub, a now wholly-owned subsidiary of the
Company, became the accounting acquirer and the transaction was accounted for
as
a reverse merger acquisition.
As
a
result of Brendan Sub being the accounting acquirer and the post acquisition
financial statements being the historical statements of Brendan Sub, the fiscal
year end of Brendan Sub was changed from December 31 to June 30. The Company’s
transition period was the six months ended June 30, 2005.
Three
Months Ended December 31, 2006 Compared to Three Months Ended December 31,
2005
Selected
Financial Information
|
|
Three
Months Ended December 31,
|
|
Increase
|
|
|
|
|
|
2006
|
|
2005
|
|
(Decrease)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
135,253
|
|
$
|
111,806
|
|
$
|
23,447
|
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
24,756
|
|
|
25,594
|
|
|
(838
|
)
|
|
-3.3
|
%
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
565,225
|
|
|
272,738
|
|
|
292,487
|
|
|
107.2
|
%
|
Interest
expense
|
|
|
104,101
|
|
|
64,019
|
|
|
40,082
|
|
|
-62.6
|
%
|
Total
expenses
|
|
|
694,082
|
|
|
362,351
|
|
|
331,731
|
|
|
91.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(558,829
|
)
|
$
|
(250,545
|
)
|
$
|
308,284
|
|
|
123.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per basic and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
share
|
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
|
-60.0
|
%
|
Revenues
Revenues
for the quarter ended December 31, 2006 increased $23,447, 21.0%, to $135,253
compared to $111,806 for the quarter ended December 31, 2005. The primary reason
for the revenue increase was approximately $16,000 increase in maintenance
and
support plus approximately $11,000 increase in training revenues. We anticipate
that revenue will decline for the next several quarters as our customers are
anticipating the release of our upgraded version of the StatLIA software to
an
enterprise level during the first half of calendar year 2007.
Selling
Expenses
Selling
expenses decreased by $838, a 3.3% decrease, to $24,756 for the three months
ended December 31, 2006 from $25,594 for the three months ended December 31,
2005. This decrease was primarily due to a reduction in commission expense
for
the three months ended December 31, 2006 related to the customer validation.
General
and Administrative Expenses
General
and administrative expenses increased by $292,487, a 107.2% increase, to
$565,225 for the quarter ended December 31, 2006 from $272,738 for the quarter
ended December 31, 2005. The primary reasons for the increase were approximately
$38,000 increase in expenses related to investor relations, $11,000 increase
in
expenses related to becoming a public company, $28,000 increase in non-cash
compensation as a result of expensing employee stock options, and $208,000
related to an increase in personnel and infrastructure related to upgrading
our
StatLIA software to an enterprise version.
Interest
Expense
Interest
expense increased by $40,082, a 62.6% increase, to $104,101 for the quarter
ended December 31, 2006 from $64,019 for the quarter ended December 31, 2005.
The primary reason for the increase was the increase in interest related to
the
issuance of 8% convertible debentures partially offset by the conversion of
notes payable into common stock of Omni in December 2005.
Six
Months Ended December 31, 2006 Compared to Six Months Ended December 31,
2005
Selected
Financial Information
|
|
Six
Months Ended December 31,
|
|
Increase
|
|
|
|
|
|
2006
|
|
2005
|
|
(Decrease)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
222,648
|
|
$
|
221,648
|
|
$
|
1,000
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
47,961
|
|
|
51,863
|
|
|
(3,902
|
)
|
|
-7.5
|
%
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
966,284
|
|
|
514,887
|
|
|
451,397
|
|
|
87.7
|
%
|
Interest
expense
|
|
|
173,104
|
|
|
147,741
|
|
|
25,363
|
|
|
-17.2
|
%
|
Total
expenses
|
|
|
1,187,349
|
|
|
714,491
|
|
|
472,858
|
|
|
66.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(964,701
|
)
|
$
|
(492,843
|
)
|
$
|
471,858
|
|
|
95.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per basic and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
share
|
|
$
|
(0.04
|
)
|
$
|
(0.10
|
)
|
$
|
(0.06
|
)
|
|
-60.0
|
%
|
Revenues
Revenues
for the six months ended December 31, 2006 remained stable at $222,648 compared
to $221,648 for the six months ended December 31, 2005. We anticipate that
revenue will decline for the next quarter as our customers are anticipating
the
release of our upgraded version of the StatLIA software to an enterprise level
during the first half of calendar year 2007.
Selling
Expenses
Selling
expenses decreased by $3,902, a 7.5% decrease, to $47,961 for the six months
ended December 31, 2006 from $51,863 for the six months ended December 31,
2005.
This decrease was primarily due to a reduction in commission expense for the
six
months ended December 31, 2006 related to customer validation.
General
and Administrative Expenses
General
and administrative expenses increased by $451,397, an 87.7% increase, to
$966,284 for the six months ended December 31, 2006 from $514,887 for the six
months ended December 31, 2005. The primary reasons for the increase were
approximately $39,000 increase in consulting expenses associated with becoming
a
public company which included the retaining of a chief financial officer,
$15,000 increase in expenses related to becoming a public company, $46,000
increase in non-cash compensation as a result of expensing employee stock
options, and $306,000 related to an increase in personnel and infrastructure
related to upgrading our StatLIA software to an enterprise version.
Interest
Expense
Interest
expense increased by $25,363, a 17.2% increase, to $173,104 for the six months
ended December 31, 2006 from $147,741 for the six months ended December 31,
2005. The primary reason for the increase was the increase in interest related
to the issuance of 8% convertible debentures partially offset by the conversion
of notes payable into common stock of Omni in December 2005.
Capital
Resources
|
|
As
of
|
|
Increase
|
|
|
|
December
31, 2006
|
|
June
30, 2006
|
|
(Decrease)
|
|
Working
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
$
|
378,960
|
|
$
|
205,920
|
|
$
|
173,040
|
|
Current
liabilities
|
|
|
1,667,463
|
|
|
1,765,729
|
|
|
(98,266
|
)
|
Working
capital deficit
|
|
$
|
(1,288,503
|
)
|
$
|
(1,559,809
|
)
|
$
|
(271,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
$
|
1,055,962
|
|
$
|
117,650
|
|
$
|
938,312
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit
|
|
$
|
(2,162,121
|
)
|
$
|
(1,596,529
|
)
|
$
|
565,592
|
|
|
|
Six
Months Ended December 31,
|
|
Increase
|
|
|
|
2006
|
|
2005
|
|
(Decrease)
|
|
Statements
of Cash Flows Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) by:
|
|
|
|
|
|
|
|
Operating
activities
|
|
$
|
(804,297
|
)
|
$
|
(443,667
|
)
|
$
|
360,630
|
|
Investing
activities
|
|
$
|
(26,830
|
)
|
$
|
(17,136
|
)
|
$
|
9,694
|
|
Financing
activities
|
|
$
|
996,928
|
|
$
|
482,980
|
|
$
|
513,948
|
|
|
|
As
of
|
|
Increase
|
|
|
|
December
31, 2006
|
|
June
30, 2006
|
|
(Decrease)
|
|
Balance
Sheet Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
315,313
|
|
$
|
149,512
|
|
$
|
165,801
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$
|
62,290
|
|
$
|
56,107
|
|
$
|
6,183
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
1,344,642
|
|
$
|
1,348,419
|
|
$
|
(3,777
|
)
|
Liquidity
Brendan
has historically financed its operations through debt and equity financings.
At
December 31, 2006, we had cash holdings of $315,313, an increase of $165,801
compared to June 30, 2006. Our net working capital deficit at December 31,
2006,
was $1,208,503 compared to $1,559,809 as of June 30, 2006.
These
financial statements have been prepared on a going concern basis. However,
during the six months ended December 31, 2006 and the year ended June 30, 2006,
the Company incurred net losses of $964,701 and $845,393, respectively, and
had
an accumulated deficit of $7,206,410 and $6,241,709, at December 31, 2006 and
June 30, 2006, respectively. The Company’s ability to continue as a going
concern is dependent upon its ability to generate profitable operations in
the
future and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come
due. The outcome of these matters cannot be predicted with any certainty at
this
time. Since inception, the Company has satisfied its capital needs through
debt
and equity financings. During the six months ended December 31, 2006, the
Company issued $1,125,000 of 8% convertible debentures, net of costs amounting
to $100,000.
Management
plans to continue to provide for its capital needs during the twelve months
ending December 31, 2007, by increasing sales through the continued development
of its products and by debt and/or equity financings. These financial statements
do not include any adjustments to the amounts and classification of assets
and
liabilities that may be necessary should the Company be unable to continue
as a
going concern.
Recent
Accounting Pronouncements
On
July
13, 2006, FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income
Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”) was issued.
The provisions of FIN 48 are effective for fiscal years beginning after December
15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. It also prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken
in a
tax return. The Company is currently evaluating the impact of FIN 48 on
its results of operations, financial condition or cash flows.
In
September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”),
which provides interpretive guidance on the consideration of the effects of
prior year misstatements in quantifying current year misstatements for the
purpose of a materiality assessment. SAB No. 108 requires registrants to
quantify misstatements using both the balance sheet and income statement
approaches and to evaluate whether either approach results in quantifying an
error that is material based on relevant quantitative and qualitative factors.
The guidance is effective for the first fiscal period ending after November
15,
2006. Upon adoption the Company does not expect SAB No. 108 to have a
material effect on its results of operations, financial condition or cash
flows.
ITEM
3. CONTROLS AND PROCEDURES.
(a) |
Evaluation
of disclosure controls and procedures. Our Chief Executive Officer
and
Principal Financial Officer, after evaluating the effectiveness of
our
"disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end
of the
period covered by this Quarterly Report on Form 10-QSB (the "Evaluation
Date"), have concluded that as of the Evaluation Date, our disclosure
controls and procedures are effective to provide reasonable assurance
that
information 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, and that such information is accumulated
and
communicated to our management, including our Chief Executive Officer
and
Principal Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
|
(b) |
Changes
in internal control over financial reporting. There were no significant
changes in our internal control over financial reporting during our
most
recent fiscal quarter that materially affected, or were reasonably
likely
to materially affect, our internal control over financial
reporting.
|
PART
II. OTHER
INFORMATION
ITEM
2. RECENT SALES OF UNREGISTERED SECURITIES
During
the period of October 1, 2006 through January 24, 2007, the Company sold to
and
received cash from a group of investors 8% Convertible Debentures for an
aggregate $567,500 and common stock purchase warrants to purchase up to
2,270,000 common shares. In addition, the Company issued warrants to two
individuals for services provided t purchase up to 280,000 common
shares.
8%
Convertible Debentures
|
|
|
|
Amount
of
|
|
Number
of Shares
May
Be Converted
|
|
|
|
Debenture
holder
|
|
Debenture
|
|
Debenture
|
|
Into
|
|
Debenture
|
|
Tim
Flowers
|
|
|
12/18/2006
|
|
$
|
10,000
|
|
|
20,000
|
|
|
12/18/2008
|
|
Steven
Pratt
|
|
|
12/18/2006
|
|
$
|
10,000
|
|
|
20,000
|
|
|
12/18/2008
|
|
Donald
Opperman
|
|
|
12/18/2006
|
|
$
|
10,000
|
|
|
20,000
|
|
|
12/18/2008
|
|
Mitchell
Luedloff
|
|
|
12/18/2006
|
|
$
|
10,000
|
|
|
20,000
|
|
|
12/18/2008
|
|
Nazeah
Aladray
|
|
|
12/18/2006
|
|
$
|
10,000
|
|
|
20,000
|
|
|
12/18/2008
|
|
James
and Josephine Zolin
|
|
|
12/18/2006
|
|
$
|
25,000
|
|
|
50,000
|
|
|
12/18/2008
|
|
Lowell
Giffhorn
|
|
|
12/18/2006
|
|
$
|
50,000
|
|
|
100,000
|
|
|
12/18/2008
|
|
Victor
Gabourel
|
|
|
12/18/2006
|
|
$
|
50,000
|
|
|
100,000
|
|
|
12/18/2008
|
|
Anthony
Wayne Opperman
|
|
|
12/18/2006
|
|
$
|
50,000
|
|
|
100,000
|
|
|
12/18/2008
|
|
Jesse
Giffhorn
|
|
|
1/2/2007
|
|
$
|
12,500
|
|
|
25,000
|
|
|
1/2/2009
|
|
Todd
Flannery
|
|
|
1/10/2007
|
|
$
|
50,000
|
|
|
100,000
|
|
|
1/10/2009
|
|
Jason
Neilitz
|
|
|
1/10/2007
|
|
$
|
75,000
|
|
|
150,000
|
|
|
1/10/2009
|
|
Doug
Kincaid Jr.
|
|
|
1/10/2007
|
|
$
|
75,000
|
|
|
150,000
|
|
|
1/10/2009
|
|
Adnan
Aladray
|
|
|
1/15/2007
|
|
$
|
20,000
|
|
|
40,000
|
|
|
1/15/2009
|
|
James
and Josephine Zolin
|
|
|
1/24/2007
|
|
$
|
10,000
|
|
|
20,000
|
|
|
1/24/2009
|
|
Jerome
Chrobak
|
|
|
1/24/2007
|
|
$
|
25,000
|
|
|
50,000
|
|
|
1/24/2009
|
|
Bruce
Belz, Trustee Belz Family Trust
|
|
|
1/24/2007
|
|
$
|
25,000
|
|
|
50,000
|
|
|
1/24/2009
|
|
Victor
Gabourel
|
|
|
1/24/2007
|
|
$
|
50,000
|
|
|
100,000
|
|
|
1/24/2009
|
|
Common
Stock Purchase Warrants
Name
|
|
Date
of Issuance
|
|
Number
of Shares
|
|
Exercise
Price
|
|
Expiraton
Date
|
|
|
|
Dian
Griesel
|
|
|
10/1/2006
|
|
|
240,000
|
|
$
|
0.60
|
|
|
10/1/2011
|
|
|
Services
|
|
Lowell
Giffhorn
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
James
and Josephine Zolin
|
|
|
12/18/2006
|
|
|
50,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Victor
Gabourel
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Anthony
Wayne Opperman
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Tim
Flowers
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Steven
Pratt
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Donald
Opperman
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Mitchell
Luedloff
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Nazeah
Aladray
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
0.60
|
|
|
12/18/2011
|
|
|
Debenture
|
|
Lowell
Giffhorn
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
James
and Josephine Zolin
|
|
|
12/18/2006
|
|
|
50,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Victor
Gabourel
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Anthony
Wayne Opperman
|
|
|
12/18/2006
|
|
|
100,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Tim
Flowers
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Steven
Pratt
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Donald
Opperman
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Mitchell
Luedloff
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Nazeah
Aladray
|
|
|
12/18/2006
|
|
|
20,000
|
|
$
|
1.00
|
|
|
12/18/2007
|
|
|
Debenture
|
|
Jesse
Giffhorn
|
|
|
1/2/2007
|
|
|
25,000
|
|
$
|
0.60
|
|
|
1/2/2012
|
|
|
Debenture
|
|
Jesse
Giffhorn
|
|
|
1/2/2007
|
|
|
25,000
|
|
$
|
1.00
|
|
|
1/2/2008
|
|
|
Debenture
|
|
Jason
Neilitz
|
|
|
1/10/2007
|
|
|
150,000
|
|
$
|
0.60
|
|
|
1/10/2012
|
|
|
Debenture
|
|
Doug
Kincaid Jr.
|
|
|
1/10/2007
|
|
|
150,000
|
|
$
|
0.60
|
|
|
1/10/2012
|
|
|
Debenture
|
|
Todd
Flannery
|
|
|
1/10/2007
|
|
|
100,000
|
|
$
|
0.60
|
|
|
1/10/2012
|
|
|
Debenture
|
|
Michael
Morrisett
|
|
|
1/10/2007
|
|
|
40,000
|
|
$
|
0.60
|
|
|
1/10/2008
|
|
|
Services
|
|
Jason
Neilitz
|
|
|
1/10/2007
|
|
|
150,000
|
|
$
|
1.00
|
|
|
1/10/2008
|
|
|
Debenture
|
|
Doug
Kincaid Jr.
|
|
|
1/10/2007
|
|
|
150,000
|
|
$
|
1.00
|
|
|
1/10/2008
|
|
|
Debenture
|
|
Todd
Flannery
|
|
|
1/10/2007
|
|
|
100,000
|
|
$
|
1.00
|
|
|
1/10/2008
|
|
|
Debenture
|
|
Adnan
Aladray
|
|
|
1/15/2007
|
|
|
40,000
|
|
$
|
0.60
|
|
|
1/15/2012
|
|
|
Debenture
|
|
Adnan
Aladray
|
|
|
1/15/2007
|
|
|
40,000
|
|
$
|
1.00
|
|
|
1/15/2008
|
|
|
Debenture
|
|
James
and Josephine Zolin
|
|
|
1/24/2007
|
|
|
20,000
|
|
$
|
0.60
|
|
|
1/24/2012
|
|
|
Debenture
|
|
Victor
Gabourel
|
|
|
1/24/2007
|
|
|
100,000
|
|
$
|
0.60
|
|
|
1/24/2012
|
|
|
Debenture
|
|
Jerome
Chrobak
|
|
|
1/24/2007
|
|
|
50,000
|
|
$
|
0.60
|
|
|
1/24/2012
|
|
|
Debenture
|
|
Bruce
Belz, Trustee Belz Family Trust
|
|
|
1/24/2007
|
|
|
50,000
|
|
$
|
0.60
|
|
|
1/24/2012
|
|
|
Debenture
|
|
James
and Josephine Zolin
|
|
|
1/24/2007
|
|
|
20,000
|
|
$
|
1.00
|
|
|
1/24/2008
|
|
|
Debenture
|
|
Victor
Gabourel
|
|
|
1/24/2007
|
|
|
100,000
|
|
$
|
1.00
|
|
|
1/24/2008
|
|
|
Debenture
|
|
Jerome
Chrobak
|
|
|
1/24/2007
|
|
|
50,000
|
|
$
|
1.00
|
|
|
1/24/2008
|
|
|
Debenture
|
|
Bruce
Belz, Trustee Belz Family Trust
|
|
|
1/24/2007
|
|
|
50,000
|
|
$
|
1.00
|
|
|
1/24/2008
|
|
|
Debenture
|
|
With
respect to the above securities issuances, the Registrant relied on exemptions
provided by Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”) and Rule 506 under the Securities Act. No advertising or
general solicitation was employed in offering the securities. The securities
were issued to a limited number of persons all of whom were accredited investors
as that term is defined in Rule 501 of Regulation D under the
Securities Act. All were capable of analyzing the merits and risks of their
investment, acknowledged in writing that they were acquiring the securities
for
investment and not with a view toward distribution or resale, and understood
the
speculative nature of their investment. All securities issued contained a
restrictive legend prohibiting transfer of the shares except in accordance
with
federal securities laws.
ITEM
6. EXHIBITS.
Exhibit
No.
|
|
Title
|
|
|
|
|
|
|
|
31.1
|
|
302
Certification of John R. Dunn II, Chief Executive Officer
|
|
|
|
|
|
|
|
31.2
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302
Certification of Lowell W. Giffhorn, Chief Financial
Officer
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32.1
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906
Certification of John R. Dunn II, Chief Executive Officer
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32.2
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906
Certification of Lowell W. Giffhorn, Chief Financial
Officer
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SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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BRENDAN
TECHNOLOGIES, INC.
a
Nevada corporation
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Date:
February 14, 2007 |
By: |
/s/ JOHN
R.
DUNN II |
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John
R. Dunn II
Chief
Executive Officer
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(Principal
Executive and duly authorized
to
sign on behalf of the
Registrant)
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