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 March
31, 2007
¨
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 May 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 March 31,
2007
|
|
|
(unaudited)
and June 30, 2006
|
|
3
|
|
|
|
Condensed
consolidated Statements of Operations for the three
|
|
|
and
nine months ended March 31, 2007 and 2006 (unaudited)
|
|
4
|
|
|
|
Condensed
consolidated Statements of Cash Flows for the nine
|
|
|
months
ended March 31, 2007 and 2006 (unaudited)
|
|
5
|
|
|
|
Notes
to Condensed Unaudited Consolidated Financial
|
|
|
Statements
|
|
6
|
|
|
|
Item
2. Management’s Discussion and Analysis or Plan of
Operation
|
|
11
|
|
|
|
Item
3. Controls and Procedures
|
|
16
|
|
|
|
PART II. OTHER
INFORMATION |
|
|
|
|
|
Item
1. Legal
Proceedings
|
|
*
|
|
|
|
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
16
|
|
|
|
Item
3. Defaults
upon Senior Securities
|
|
*
|
|
|
|
Item
4. Submission
of Matters to a Vote of Security Holders
|
|
*
|
|
|
|
Item
5. Other
Information
|
|
*
|
|
|
|
Item
6. Exhibits
|
|
19
|
|
|
|
SIGNATURES
|
|
19
|
* No
information provided due to inapplicability of the item.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Brendan
Technologies, Inc.
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
March
31,
|
|
June
30,
|
|
|
|
2007
|
|
2006
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
107,324
|
|
$
|
149,512
|
|
Accounts
receivable, net
|
|
|
74,489
|
|
|
56,107
|
|
Prepaid
expenses
|
|
|
30,611
|
|
|
301
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
212,424
|
|
|
205,920
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
153,597
|
|
|
72,740
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
132,978
|
|
|
8,190
|
|
|
|
|
|
|
|
|
|
|
|
$
|
498,999
|
|
$
|
286,850
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Notes
payable in default
|
|
$
|
130,000
|
|
$
|
255,000
|
|
Accrued
interest in default
|
|
|
90,963
|
|
|
78,217
|
|
Accounts
payable
|
|
|
2,979
|
|
|
161,430
|
|
Accrued
wages and vacation
|
|
|
842,452
|
|
|
772,030
|
|
Accrued
interest
|
|
|
468,658
|
|
|
414,959
|
|
Deferred
revenue
|
|
|
113,161
|
|
|
77,651
|
|
Current
portion of lease obligations
|
|
|
7,413
|
|
|
6,442
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
1,655,626
|
|
|
1,765,729
|
|
|
|
|
|
|
|
|
|
Long
term portion of lease obligations
|
|
|
5,307
|
|
|
10,996
|
|
|
|
|
|
|
|
|
|
8%
Convertible debentures net of debt discount
|
|
|
1,082,270
|
|
|
23,002
|
|
8%
Convertible debentures net of debt discount - related
parties
|
|
|
120,603
|
|
|
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
March 31, 2007 and June 30, 2006, respectively
|
|
|
118,409
|
|
|
127,366
|
|
Additional
paid in capital
|
|
|
5,216,190
|
|
|
4,517,814
|
|
Accumulated
deficit
|
|
|
(7,699,406
|
)
|
|
(6,241,709
|
)
|
Total
stockholders' deficit
|
|
|
(2,364,807
|
)
|
|
(1,596,529
|
)
|
|
|
$
|
498,999
|
|
$
|
286,850
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
Brendan
Technologies, Inc.
Condensed
Consolidated Statements of Operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
Nine
Months Ended March 31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
164,888
|
|
$
|
251,449
|
|
$
|
387,536
|
|
$
|
473,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
10,608
|
|
|
24,067
|
|
|
58,570
|
|
|
75,930
|
|
General
and administrative expenses
|
|
|
519,230
|
|
|
306,663
|
|
|
1,485,513
|
|
|
821,550
|
|
|
|
|
529,838
|
|
|
330,730
|
|
|
1,544,083
|
|
|
897,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(364,950
|
)
|
|
(79,281
|
)
|
|
(1,156,547
|
)
|
|
(424,383
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(128,046
|
)
|
|
(30,508
|
)
|
|
(301,150
|
)
|
|
(178,249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before provision for income taxes
|
|
|
(492,996
|
)
|
|
(109,789
|
)
|
|
(1,457,697
|
)
|
|
(602,632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(492,996
|
)
|
$
|
(109,789
|
)
|
$
|
(1,457,697
|
)
|
$
|
(602,632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
$
|
(0.02
|
)
|
$
|
(0.00
|
)
|
$
|
(0.06
|
)
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted weighted average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common
shares outstanding
|
|
|
23,705,594
|
|
|
25,498,794
|
|
|
23,712,139
|
|
|
11,707,805
|
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brendan
Technologies, Inc.
Condensed
Consolidated Statements of Cash Flows
|
|
Nine
Months Ended March 31,
|
|
|
|
2007
|
|
2006
|
|
Operating
activities:
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,457,697
|
)
|
$
|
(602,632
|
)
|
Adjustments
to reconcile net loss
|
|
|
|
|
|
|
|
to
cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
31,650
|
|
|
9,070
|
|
Stock
option compensation
|
|
|
58,426
|
|
|
-
|
|
Amortization
of debt discount
|
|
|
101,417
|
|
|
-
|
|
Amortization
of financing costs
|
|
|
45,909
|
|
|
-
|
|
Amortizaton
of warrant valuation issued for services
|
|
|
7,598
|
|
|
-
|
|
Provision
for uncollectible receivables
|
|
|
1,000
|
|
|
-
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(19,382
|
)
|
|
2,719
|
|
Prepaid
expense and other assets
|
|
|
(30,310
|
)
|
|
(31,723
|
)
|
Accounts
payable
|
|
|
(158,451
|
)
|
|
26,605
|
|
Accrued
liabilities
|
|
|
136,867
|
|
|
54,732
|
|
Deferred
revenue
|
|
|
35,510
|
|
|
36,495
|
|
Net
cash used in operating activities
|
|
|
(1,247,463
|
)
|
|
(504,734
|
)
|
Investing
activities:
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(112,507
|
)
|
|
(59,841
|
)
|
Net
cash used in investing activities
|
|
|
(112,507
|
)
|
|
(59,841
|
)
|
Financing
activities:
|
|
|
|
|
|
|
|
Principal
payments of lease obligations
|
|
|
(4,718
|
)
|
|
(1,574
|
)
|
Principal
payments on notes payable in default
|
|
|
(125,000
|
)
|
|
-
|
|
Proceeds
from note receivable on sale of Omni divisions
|
|
|
-
|
|
|
496,498
|
|
Proceeds
from sale of stock, net of costs
|
|
|
-
|
|
|
202,500
|
|
Proceeds
from issuance of 8% convertible debentures,
|
|
|
|
|
|
|
|
net
of costs
|
|
|
1,447,500
|
|
|
-
|
|
Net
cash provided by financing activities
|
|
|
1,317,782
|
|
|
697,424
|
|
Net
increase in cash and cash equivalents
|
|
|
(42,188
|
)
|
|
132,849
|
|
Cash
and cash equivalents,
beginning of year
|
|
|
149,512
|
|
|
32,504
|
|
Cash
and cash equivalents,
end of period
|
|
$
|
107,324
|
|
$
|
165,353
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
87,379
|
|
$
|
13,445
|
|
Income
taxes
|
|
$
|
-
|
|
$
|
-
|
|
Non
Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
Cancellation
of stock
|
|
$
|
8,957
|
|
$
|
-
|
|
Debt
discount on 8% convertible debentures
|
|
$
|
572,698
|
|
$
|
-
|
|
Financing
costs related to 8% convertible debentures
|
|
$
|
147,905
|
|
$
|
-
|
|
Valuation
of warrants issued for services
|
|
$
|
30,390
|
|
$
|
-
|
|
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
nine month periods ended March 31, 2007 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
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
provides entities with an option to report selected financial assets and
liabilities at fair value, with the objective to reduce both the complexity
in
accounting for financial instruments and the volatility in earnings caused
by
measuring related assets and liabilities differently. We will be required to
adopt SFAS No. 159 in the first quarter of fiscal year 2008. We are currently
evaluating the requirements of SFAS No. 159 and have not yet determined the
impact, if any, its adoption will have on our consolidated financial position
and results of operations.
Note
2- Going Concern
Going
Concern
These
financial statements have been prepared on a going concern basis. However,
during the nine
months
ended March 31, 2007 and the year ended June 30, 2006, the Company incurred
net
losses of $1,457,697 and $845,393, respectively, and had an accumulated deficit
of $7,699,406 and $6,241,709, at March 31, 2007 and June 30, 2006, respectively.
In addition, as of March 31, 2007, the Company had a working capital deficit
of
$1,443,202 and is in default on $220,963 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. These condensed
consolidated financial statements do not include any adjustments
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
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.
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
nine months ended March 31, 2007 and 2006, the following common equivalent
shares were excluded from the computation of loss per share since their effects
are anti-dilutive.
|
March
31,
|
|
2007
|
|
2006
|
|
|
|
(Post-merger)
|
Convertible
debentures
|
3,385,000
|
|
-
|
Options
|
4,685,000
|
|
3,840,000
|
Warrants |
7,470,667
|
|
54,000
|
Total
|
|
|
|
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:
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
|
|
March
31,
|
|
June
30,
|
|
|
|
2007
|
|
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
unsecured note for $125,000 was repaid during the quarter ended September 30,
2006.
Note
5- 8% Convertible Debentures
Overview.
During
the period of June 20, 2006 through March 31, 2007, we sold an aggregate of
$1,692,500 of 8% convertible debentures to a group of 19 individual investors,
two of which are affiliates of the Company, and one institutional investor.
Subsequent to March 31, 2007, we sold an additional aggregate of $160,000 of
8%
convertible debentures to a group of four 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 5.09%, 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.
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.
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
The
following table presents the status, as of March 31, 2007 and June 30, 2006,
of
our
convertible
debentures:
|
|
|
As
of
|
|
|
|
|
March
31, 2007
|
|
|
June
30, 2006
|
|
|
|
|
|
|
|
|
|
Convertible
debentures issued
|
|
$
|
1,692,500
|
|
$
|
125,000
|
|
Less
debt discount
|
|
|
(489,627
|
)
|
|
(18,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1,202,873
|
|
|
106,654
|
|
Less
current portion
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Long
term portion
|
|
$
|
1,202,873
|
|
$
|
106,654
|
|
|
|
|
|
|
|
|
|
Issued
to related parties
|
|
$
|
120,603
|
|
$
|
83,652
|
|
|
|
|
|
|
|
|
|
Maturity
dates of outstanding
|
|
|
|
|
|
|
|
convertible
debentures
|
|
|
|
|
|
|
|
Year
Ending
|
|
|
|
|
|
|
|
June
30, 2007
|
|
$
|
-
|
|
$
|
-
|
|
June
30, 2008
|
|
|
125,000
|
|
|
125,000
|
|
June
30, 2009
|
|
|
1,567,500
|
|
|
-
|
|
|
|
$
|
1,692,500
|
|
$
|
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
|
|
|
-
|
|
|
27,905
|
|
Warrant
valuation as result of services provided
|
|
|
-
|
|
|
30,390
|
|
Non
cash issuance of stock options
|
|
|
-
|
|
|
58,426
|
|
Non
cash debt discount on issuance of
|
|
|
|
|
|
|
|
8%
convertible debentures, net of amortization
|
|
|
-
|
|
|
572,698
|
|
|
|
|
|
|
|
|
|
Balance
March 31, 2007
|
|
|
23,705,594
|
|
$
|
5,334,599
|
|
During
the nine months ended March 31, 2007, 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 the failure to meet any measurable
performance as called for in the agreement, the individual was not entitled
to
these shares.
BRENDAN
TECHNOLOGIES, INC.
Notes
to the Unaudited Condensed Consolidated Financial Statements
(Continued)
Warrants
During
the nine months ended March 31, 2007, the Company issued warrants exercisable
into up to 6,750,000 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 240,000 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 nine months ended March 31, 2007: dividend yield of zero percent;
expected volatility of 39% to 43%; risk free interest rate of 4.57% to 5.09%;
and expected lives 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
nine
months ended March 31, 2006: 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
March 31, 2007, 7,470,667 warrants are outstanding at prices ranging from $0.60
to $6.00 per share with expiration dates ranging from 2007 to 2012. 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 nine months ended March 31, 2007, the Company issued stock options
exercisable into up to 360,000 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 nine months ended March
31,
2007: dividend yield of zero percent; expected volatility of 39% to 43%; risk
free interest rate of 4.62% to 4.78%; and expected lives of 5 years. During
the
nine months ended March 31, 2007, 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.
As
of
March 31, 2007, 4,685,000 options are outstanding at prices ranging from $0.025
to $4.87 per share with expiration dates ranging from 2009 to 2012. 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 condensed 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 nine months ended March 31, 2007 and the year ended June 30, 2006,
the Company incurred net losses of $1,457,697 and $845,393, respectively, and
had an accumulated deficit of $7,699,406 and $6,241,709, at March 31, 2007
and
June 30, 2006, respectively. In addition, as of March 31, 2007, the Company
had
a working capital deficit of $1,443,202 and is in default on $220,963 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 March 31, 2007 Compared to Three Months Ended March 31,
2006
Selected
Financial Information
|
|
Three
Months Ended March 31,
|
|
|
|
Increase
|
|
|
|
|
|
2007
|
|
2006
|
|
(Decrease)
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
164,888
|
|
$
|
251,449
|
|
$
|
(86,561
|
)
|
|
-34.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
10,608
|
|
|
24,067
|
|
|
(13,459
|
)
|
|
-55.9
|
%
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
519,230
|
|
|
306,663
|
|
|
212,567
|
|
|
69.3
|
%
|
Interest
expense
|
|
|
128,046
|
|
|
30,508
|
|
|
97,538
|
|
|
-319.7
|
%
|
Total
expenses
|
|
|
657,884
|
|
|
361,238
|
|
|
296,646
|
|
|
82.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(492,996
|
)
|
$
|
(109,789
|
)
|
$
|
383,207
|
|
|
349.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per basic and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
share
|
|
$
|
(0.02
|
)
|
$
|
-
|
|
$
|
0.02
|
|
|
N/A
|
|
Revenues
Revenues
for the quarter ended March 31, 2007 decreased $86,561, 34.4%, to $164,888
compared to $251,449 for the quarter ended March 31, 2006. The primary reason
for the revenue decrease was an initial order for a minor prerelease component
of our upgraded version of the StatLIA software which amounted to approximately
$127,000 during the quarter ended March 31, 2006, was not repeated during the
current quarter. 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 second half of
calendar year 2007.
Selling
Expenses
Selling
expenses decreased by $13,459, a 55.9% decrease, to $10,608 for the three months
ended March 31, 2007 from $24,067 for the three months ended March 31, 2006.
This decrease was primarily due to a reduction in commission expense for the
three months ended March 31, 2007 related to customer validations.
General
and Administrative Expenses
General
and administrative expenses increased by $212,567, a 69.3% increase, to $519,230
for the quarter ended March 31, 2007 from $306,663 for the quarter ended March
31, 2006. The primary reasons for the increase were approximately $38,000
increase in expenses related to investor relations and $183,000 related to
an
increase in personnel and infrastructure related to upgrading our StatLIA
software to an enterprise version.
Interest
Expense
Interest
expense increased by $97,538, a 319.7% increase, to $128,046 for the quarter
ended March 31, 2007 from $30,508 for the quarter ended March 31, 2006. The
primary reason for the increase was the increase in interest related to the
issuance of 8% convertible debentures.
Nine
Months Ended March 31, 2007 Compared to Nine Months Ended March 31,
2006
Selected
Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended March 31,
|
|
Increase
|
|
|
|
|
|
2007
|
|
2006
|
|
(Decrease)
|
|
%
|
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
387,536
|
|
$
|
473,097
|
|
$
|
(85,561
|
)
|
|
-18.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
58,570
|
|
|
75,930
|
|
|
(17,360
|
)
|
|
-22.9
|
%
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
1,485,513
|
|
|
821,550
|
|
|
663,963
|
|
|
80.8
|
%
|
Interest
expense
|
|
|
301,150
|
|
|
178,249
|
|
|
122,901
|
|
|
-68.9
|
%
|
Total
expenses
|
|
|
1,845,233
|
|
|
1,075,729
|
|
|
769,504
|
|
|
71.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$
|
(1,457,697
|
)
|
$
|
(602,632
|
)
|
$
|
855,065
|
|
|
141.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) per basic and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
share
|
|
$
|
(0.06
|
)
|
$
|
(0.05
|
)
|
$
|
0.01
|
|
|
20.0
|
%
|
Revenues
Revenues
for the nine months ended March 31, 2007 decreased $85,561, 18.1%, to $387,536
for the nine months ended March 31, 2007 compared to $473,097 for the nine
months ended March 31, 2006. The primary reason for the revenue decrease was
an
initial order for a minor prerelease component of our upgraded version of the
StatLIA software which amounted to approximately $127,000 during the fiscal
nine
months ended March 31, 2006, was not repeated during the current fiscal year.
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 second half of calendar year
2007.
Selling
Expenses
Selling
expenses decreased by $17,360, a 22.9% decrease, to $58,570 for the nine months
ended March 31, 2007 from $75,930 for the nine months ended March 31, 2006.
This
decrease was primarily due to a reduction in commission expense for the nine
months ended March 31, 2007 related to customer validations.
General
and Administrative Expenses
General
and administrative expenses increased by $663,963, an 80.8% increase, to
$1,485,513 for the nine months ended March 31, 2007 from $821,550 for the nine
months ended March 31, 2006. The primary reasons for the increase were $58,000
increase in non-cash compensation as a result of expensing employee stock
options, and $459,000 related to an increase in personnel and infrastructure
related to upgrading our StatLIA software to an enterprise version and
approximately $76,000 increase in investor relation expenses.
Interest
Expense
Interest
expense increased by $122,901, a 68.9% increase, to $301,150 for the nine months
ended March 31, 2007 from $178,249 for the nine months ended March 31, 2006.
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
|
|
|
|
|
March
31, 2007
|
|
|
June
30, 2006
|
|
|
(Decrease)
|
|
Working
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
$
|
212,424
|
|
$
|
205,920
|
|
$
|
6,504
|
|
Current
liabilities
|
|
|
1,655,626
|
|
|
1,765,729
|
|
|
(110,103
|
)
|
Working
capital deficit
|
|
$
|
(1,443,202
|
)
|
$
|
(1,559,809
|
)
|
$
|
(116,607
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
$
|
1,208,180
|
|
$
|
117,650
|
|
$
|
1,090,530
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit
|
|
$
|
(2,364,807
|
)
|
$
|
(1,596,529
|
)
|
$
|
768,278
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended March 31,
|
|
|
Nine
Months Ended March 31,
|
|
|
Increase
|
|
|
|
|
2007
|
|
|
2006
|
|
|
(Decrease
|
)
|
Statements
of Cash Flows Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided (used) by:
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
$
|
(1,247,463
|
)
|
$
|
(504,734
|
)
|
$
|
742,729
|
|
Investing
activities
|
|
$
|
(112,507
|
)
|
$
|
(59,841
|
)
|
$
|
52,666
|
|
Financing
activities
|
|
$
|
1,317,782
|
|
$
|
697,424
|
|
$
|
620,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
Increase
|
|
|
|
|
March
31, 2007
|
|
|
June
30, 2006
|
|
|
(Decrease
|
)
|
Balance
Sheet Select Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
107,324
|
|
$
|
149,512
|
|
$
|
(42,188
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$
|
74,489
|
|
$
|
56,107
|
|
$
|
18,382
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
1,314,089
|
|
$
|
1,348,419
|
|
$
|
(34,330
|
)
|
Liquidity
Brendan
has historically financed its operations through debt and equity financings.
At
March 31, 2007, we had cash holdings of $107,324, a decrease of $42,188 compared
to June 30, 2006. Our net working capital deficit at March 31, 2007, was
$1,443,202 compared to $1,559,809 as of June 30, 2006.
These
financial statements have been prepared on a going concern basis. However,
during the nine months ended March 31, 2007 and the year ended June 30, 2006,
the Company incurred net losses of $1,457,697 and $845,393, respectively, and
had an accumulated deficit of $7,699,406 and $6,241,709, at March 31, 2007
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 nine months ended March 31, 2007, the Company
issued $1,567,500 of 8% convertible debentures, net of costs amounting to
$120,000.
Management
plans to continue to provide for its capital needs during the twelve months
ending March 31, 2008, 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
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
provides entities with an option to report selected financial assets and
liabilities at fair value, with the objective to reduce both the complexity
in
accounting for financial instruments and the volatility in earnings caused
by
measuring related assets and liabilities differently. We will be required to
adopt SFAS No. 159 in the first quarter of fiscal year 2008. We are currently
evaluating the requirements of SFAS No. 159 and have not yet determined the
impact, if any, its adoption will have on our consolidated financial position
and results of operations.
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 April 26, 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 purchase
up
to 280,000 common shares to two individuals for services they
provided.
8%
Convertible Debentures
|
|
Issuance
|
|
|
|
Number
of Shares
|
|
Maturity
|
|
|
|
Date
of
|
|
Amount
of
|
|
May
Be Converted
|
|
Date
of
|
|
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
|
|
Richard
Daniels
|
|
|
4/12/2007
|
|
$
|
25,000
|
|
|
50,000
|
|
|
4/12/2009
|
|
Victor
Gabourel
|
|
|
4/26/2007
|
|
$
|
100,000
|
|
|
200,000
|
|
|
4/26/2009
|
|
James
and Josephine Zolin
|
|
|
4/26/2007
|
|
$
|
10,000
|
|
|
20,000
|
|
|
4/26/2009
|
|
Jerome
Chrobak
|
|
|
4/26/2007
|
|
$
|
25,000
|
|
|
50,000
|
|
|
4/26/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
727,500
|
|
|
1,455,000
|
|
|
|
|
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
|
Richard
Daniels
|
|
4/12/2007
|
|
50,000
|
|
$0.60
|
|
4/12/2012
|
|
Debenture
|
Richard
Daniels
|
|
4/12/2007
|
|
50,000
|
|
$1.00
|
|
4/12/2008
|
|
Debenture
|
Victor
Gabourel
|
|
4/26/2007
|
|
200,000
|
|
$0.60
|
|
4/26/2012
|
|
Debenture
|
James
and Josephine Zolin
|
|
4/26/2007
|
|
20,000
|
|
$0.60
|
|
4/26/2012
|
|
Debenture
|
Jerome
Chrobak
|
|
4/26/2007
|
|
50,000
|
|
$0.60
|
|
4/26/2012
|
|
Debenture
|
Victor
Gabourel
|
|
4/26/2007
|
|
200,000
|
|
$1.00
|
|
4/26/2008
|
|
Debenture
|
James
and Josephine Zolin
|
|
4/26/2007
|
|
20,000
|
|
$1.00
|
|
4/26/2008
|
|
Debenture
|
Jerome
Chrobak
|
|
4/26/2007
|
|
50,000
|
|
$1.00
|
|
4/26/2008
|
|
Debenture
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,190,000
|
|
|
|
|
|
|
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
|
|
302
Certification of Lowell W. Giffhorn, Chief Financial
Officer
|
|
|
32.1
|
|
906
Certification of John R. Dunn II, Chief Executive Officer
|
|
|
32.2
|
|
906
Certification of Lowell W. Giffhorn, Chief Financial
Officer
|
|
|
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.
|
|
|
|
BRENDAN
TECHNOLOGIES, INC.
a
Nevada Corporation
|
|
|
|
Date: May
14, 2007 |
By: |
/s/ JOHN
R. DUNN II |
|
John R. Dunn II |
|
Chief
Executive Officer |
|
(Principal
Executive and duly authorized
to
sign on behalf of the Registrant)
|