form10_qsb.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC. 20549
FORM
10-QSB
[X] QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For
the
Quarterly Period Ended September 30, 2007
[ ] TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For
the
transition period from ______________ to ________________
Commission
File No. 0-28315
LUMONALL,
INC.
(Exact
Name of Small Business Issuer as Specified in Its Charter)
MIDLAND
INTERNATIONAL CORPORATION
(Former
name of corporation if changed since last report)
Nevada
|
84-1517404
|
(State
or Other Jurisdiction of Incorporation)
|
(I.R.S.
Employer Identification No.)
|
|
3565
King Road, Suite 102
King
City, Ontario, Canada L7B 1M3
(Address
of Principal Executive Offices)
|
(905)
833-9845
(Issuer’s
Telephone Number, Including Area
Code)
|
Indicate
by check mark whether the registrant: (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 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[ ]
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).Yes[ ]No[X]
As
of
November 9, 2007, the number of common stock outstanding was
107,917,654
Lumonall,
Inc.
(A
Development Stage Company)
PART
I
|
Financial
Information
|
|
|
|
|
Item
1.
|
Condensed
Financial Statements (unaudited)
|
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
7
|
|
|
8
|
|
|
|
Item
2.
|
|
15
|
|
|
|
Item
3.
|
|
20
|
|
|
|
PART
II.
|
Other
Information
|
21 |
|
|
|
Item
1.
|
|
21
|
|
|
|
Item
2.
|
|
21
|
|
|
|
Item
3.
|
|
21
|
|
|
|
Item
4.
|
|
21
|
|
|
|
Item
5.
|
|
21
|
|
|
|
Item
6.
|
|
22
|
|
|
|
|
23
|
PART
I. Financial Information
Item
1. Condensed Financial
Statements
Lumonall,
Inc.
(A
Development Stage Company)
September
30, 2007
(UNAUDITED)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
Cash
and cash equivalents
|
|
$ |
55,614
|
|
Due
from related parties (Note 4)
|
|
|
169,744
|
|
Prepaid
expenses
|
|
|
11,382
|
|
Total
current assets
|
|
|
236,740
|
|
|
|
|
|
|
Investment
(Note 5)
|
|
|
99,377
|
|
Intangibles (Note 6)
|
|
|
90,000
|
|
TOTAL
ASSETS
|
|
$ |
426,117
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable and accrued
liabilities
|
|
$ |
174,260
|
|
Due
to related parties (Note
4)
|
|
|
145,080
|
|
Deposits
|
|
|
190,000
|
|
Note payable - related parties (Note 7)
|
|
50,000
|
|
Total
current liabilities
|
|
|
559,340
|
|
|
|
|
|
|
Stockholders’
deficiency
|
|
|
|
|
Preferred
stock, $0.001 par
value, 5,000,000 shares authorized, No shares issued and
outstanding
|
|
|
-
|
|
Common
stock, $0.001 par value,
200,000,000 shares authorized, 107,917,654 shares issued and outstanding
at Sept. 30, 2007
|
|
|
107,918
|
|
Additional
paid-in
capital
|
|
|
2,554,873
|
|
Accumulated
deficit
|
|
|
(2,796,014 |
) |
Total
stockholders’ deficiency
|
|
|
(133,223 |
) |
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
|
|
$ |
426,117
|
|
See
accompanying notes to financial statements.
Lumonall,
Inc.
(A
Development Stage Company)
(UNAUDITED)
|
|
Three
months ended
September
30
|
|
|
Six
months ended
September
30
|
|
|
May
1, 1996 (Inception) to September 30
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
Revenues
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,500
|
|
Gross
profit
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
|
55,000
|
|
|
|
-
|
|
|
|
115,000
|
|
|
|
-
|
|
|
|
925,585
|
|
Office
and
general
|
|
|
102,920
|
|
|
|
7,702
|
|
|
|
344,351
|
|
|
|
9,429
|
|
|
|
699,061
|
|
Professional
and
consulting
|
|
|
386,125
|
|
|
|
17,500
|
|
|
|
538,415
|
|
|
|
63,927
|
|
|
|
1,096,771
|
|
Amortization
|
|
|
5,000
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,050
|
|
Total
operating expenses
|
|
|
549,045
|
|
|
|
25,202
|
|
|
|
1,007,766
|
|
|
|
73,356
|
|
|
|
2,731,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before other expenses and income taxes
|
|
|
(549,045 |
) |
|
|
(25,202 |
) |
|
|
(1,007,766 |
) |
|
|
(73,356 |
) |
|
|
(2,720,967 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
of loss of equity accounted investee
|
|
|
-
|
|
|
|
-
|
|
|
|
623
|
|
|
|
-
|
|
|
|
623
|
|
Interest
expense
|
|
|
-
|
|
|
|
8,564
|
|
|
|
-
|
|
|
|
17,317
|
|
|
|
34,421
|
|
Realized
loss on disposal of assets
|
|
|
- |
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
10,003
|
|
Write
off of intangible assets
|
|
|
- |
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
30,000
|
|
Total
other expenses
|
|
|
-
|
|
|
|
8,564
|
|
|
|
623
|
|
|
|
17,317
|
|
|
|
75,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before income taxes
|
|
|
(549,045 |
) |
|
|
(33,766 |
) |
|
|
(1,008,839 |
) |
|
|
(90,673 |
) |
|
|
(2,796,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income
taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(549,045 |
) |
|
$ |
(33,766 |
) |
|
$ |
(1,008,839 |
) |
|
$ |
(90,673 |
) |
|
$ |
(2,796,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding – Basic and
diluted
|
|
|
101,529,176
|
|
|
|
33,417,654
|
|
|
|
98,329,348
|
|
|
|
33,408,327
|
|
|
|
23,465,740
|
|
Loss
per share of common stock - Basic and diluted
|
|
$ |
(0.005 |
) |
|
$ |
(0.010 |
) |
|
$ |
(0.010 |
) |
|
$ |
(0.003 |
) |
|
$ |
(0.119 |
) |
See
accompanying notes to financial statements.
Lumonall,
Inc.
(A
Development Stage Company)
May
1, 1996 to March 31, 2007
(UNAUDITED)
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Income
(Deficit)
|
|
|
Total
Stockholders’
Deficiency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
May 1, 1996
|
|
|
-
|
|
|
$ |
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
24,000,000
|
|
|
|
24,000
|
|
|
|
(23,700 |
) |
|
|
-
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period from inception to March 31, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(19,186 |
) |
|
|
(19,186 |
) |
Balance,
March 31, 2004
|
|
|
24,000,000
|
|
|
$ |
24,000
|
|
|
|
(23,700 |
) |
|
|
(19,186 |
) |
|
|
(18,886 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
of debt for equity
|
|
|
-
|
|
|
|
-
|
|
|
|
30,500
|
|
|
|
-
|
|
|
|
30,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued as consideration for assets purchased
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
71,503
|
|
|
|
-
|
|
|
|
74,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
|
78,000
|
|
|
|
78
|
|
|
|
59,922
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
1,250,000
|
|
|
|
1,250
|
|
|
|
213,750
|
|
|
|
-
|
|
|
|
215,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for consulting services provided
|
|
|
650,000
|
|
|
|
650
|
|
|
|
64,350
|
|
|
|
-
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended March 31, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(558,404 |
) |
|
|
(558,404 |
) |
Balance,
March 31, 2005
|
|
|
28,978,000
|
|
|
$ |
28,978
|
|
|
|
416,325
|
|
|
|
(577,590 |
) |
|
|
(132,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to cash received in prior period
|
|
|
900,000
|
|
|
|
900
|
|
|
|
(900 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
600,000
|
|
|
|
600
|
|
|
|
59,400
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for consulting services provided
|
|
|
350,000
|
|
|
|
350
|
|
|
|
64,650
|
|
|
|
-
|
|
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
2,400,000
|
|
|
|
2,400
|
|
|
|
100,297
|
|
|
|
-
|
|
|
|
102,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
received for shares issued after year end
|
|
|
-
|
|
|
|
-
|
|
|
|
8,060
|
|
|
|
-
|
|
|
|
8,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period ended March 31, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(894,850 |
) |
|
|
(894,850 |
) |
Balance,
March 31, 2006
|
|
|
33,228,000
|
|
|
$ |
33,228
|
|
|
|
647,832
|
|
|
|
(1,472,440 |
) |
|
|
(791,380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash received before year end
|
|
|
189,654
|
|
|
|
190
|
|
|
|
(190 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
83,811
|
|
|
|
-
|
|
|
|
85,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
2,700,000
|
|
|
|
2,700
|
|
|
|
132,300
|
|
|
|
-
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to investment
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to debt forgiveness
|
|
|
27,750,000
|
|
|
|
27,750
|
|
|
|
377,400
|
|
|
|
-
|
|
|
|
405,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended March 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(315,185 |
) |
|
|
(315,185 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2007
|
|
|
85,867,654
|
|
|
|
85,868
|
|
|
|
1,321,153
|
|
|
|
(1,787,625 |
) |
|
|
(380,604 |
) |
See
accompanying notes to financial statements.
Lumonall,
Inc.
(A
Development Stage Company)
April
1, 2007 to September 30, 2007
(UNAUDITED)
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Common
Stock Subscribed
|
|
|
Accumulated
Income
(Deficit)
|
|
|
Total
Stockholders’
Equity/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2007
|
|
|
85,867,654
|
|
|
$ |
85,868
|
|
|
|
1,321,153
|
|
|
|
-
|
|
|
|
(1,787,625 |
) |
|
|
(380,604 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock subscriptions received
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
634,000
|
|
|
|
-
|
|
|
|
634,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
7,680,000
|
|
|
|
7,680
|
|
|
|
376,320
|
|
|
|
(384,000 |
) |
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for consulting services
|
|
|
2,700,000
|
|
|
|
2,700
|
|
|
|
132,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to debt forgiveness
|
|
|
2,450,000
|
|
|
|
2,450
|
|
|
|
33,320
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period ended June 30, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(459,344 |
) |
|
|
(459,344 |
) |
Balance,
June 30, 2007
|
|
|
98,697,654
|
|
|
$ |
98,698
|
|
|
|
1,863,093
|
|
|
|
250,000
|
|
|
|
(2,246,969 |
) |
|
|
(35,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock pursuant to private placements
|
|
|
9,220,000
|
|
|
|
9,220
|
|
|
|
451,780
|
|
|
|
(250,000 |
) |
|
|
-
|
|
|
|
211,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock purchase warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
240,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period ended September 30, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(549,045 |
) |
|
|
(549,045 |
) |
Balance,
September 30, 2007
|
|
|
107,917,654
|
|
|
$ |
107,918
|
|
|
|
2,554,873
|
|
|
|
-
|
|
|
|
(2,796,014 |
) |
|
|
(133,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to financial statements.
(A
Development Stage Company)
(UNAUDITED)
|
|
Six
Months Ended
September
30,
|
|
|
May
1, 1996 (Inception) to September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
Net
cash used in operations
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,008,389 |
) |
|
$ |
(90,673 |
) |
|
$ |
(2,796,014 |
) |
Adjustments
to reconcile net
loss
to
net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
10,000
|
|
|
|
-
|
|
|
|
10,050
|
|
Share
of loss of equity accounted investee
|
|
|
623
|
|
|
|
-
|
|
|
|
623
|
|
Loss
on disposal of capital asset
|
|
|
-
|
|
|
|
-
|
|
|
|
10,003
|
|
Writedown
of intangible assets
|
|
|
-
|
|
|
|
-
|
|
|
|
30,000
|
|
Bad
debt expense
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Common
stock for consulting services provided
|
|
|
135,000
|
|
|
|
-
|
|
|
|
295,250
|
|
Warrants
issued for consulting services provided
|
|
|
240,000
|
|
|
|
-
|
|
|
|
240,000
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
(60,000 |
) |
Inventory
|
|
|
-
|
|
|
|
-
|
|
|
|
49,500
|
|
Prepaid
expenses
|
|
|
(11,382 |
) |
|
|
-
|
|
|
|
(11,382 |
) |
Accounts
payable and accrued liabilities
|
|
|
24,920
|
|
|
|
25,347
|
|
|
|
174,260
|
|
Deposits
|
|
|
190,000
|
|
|
|
-
|
|
|
|
190,000
|
|
Net
cash used in operating activities
|
|
|
(419,228 |
) |
|
|
(65,326 |
) |
|
|
(1,807,710 |
) |
Cash
flows provided by investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from disposition of capital assets
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
Net
cash provided by investing activities:
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
Cash
flows provided by financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in bank indebtedness
|
|
|
-
|
|
|
|
292
|
|
|
|
-
|
|
Proceeds
from the Issuance of common stock
|
|
|
845,000
|
|
|
|
-
|
|
|
|
1,482,068
|
|
Proceeds
from (payments to) related parties
|
|
|
(321,225 |
) |
|
|
65,034
|
|
|
|
416,256
|
|
Repayment
of notes payable – related party
|
|
|
(50,000 |
) |
|
|
-
|
|
|
|
(50,000 |
) |
Net
cash provided by financing activities:
|
|
|
473,775
|
|
|
|
65,326
|
|
|
|
1,848,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in cash
|
|
|
54,547
|
|
|
|
-
|
|
|
|
55,614
|
|
Cash, beginning
of period
|
|
|
1,067
|
|
|
|
-
|
|
|
|
-
|
|
Cash, end
of period
|
|
$ |
55,614
|
|
|
$ |
-
|
|
|
$ |
55,614
|
|
Supplemental
Cash Flow Information:
|
|
Six
Months Ended
September
30,
|
|
|
May
1, 1996
(Inception)
to
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
Paid
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
Interest
Paid
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
Non-Cash
Activities
Shares
issued as consideration
for technology development
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
65,000
|
|
Shares
issued as consideration
for assets purchased
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
74,503
|
|
Issuance
of common stock for
consulting services
|
|
$ |
135,000
|
|
|
$ |
-
|
|
|
$ |
195,000
|
|
Warrants
issued for consulting services provided
|
|
$ |
240,000
|
|
|
$ |
-
|
|
|
$ |
240,000
|
|
Issuance
of common stock for
debt forgiveness arrangement
|
|
$ |
35,770
|
|
|
$ |
-
|
|
|
$ |
440,920
|
|
See
accompanying notes to financial statements.
(A
Development Stage Company)
Notes
to
the Condensed Financial Statements
September
30, 2007
(Unaudited)
Basis
of presentation – Going concern
The
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the liquidation of liabilities in
the
ordinary course of business. As shown in the accompanying financial
statements, we had assets of $426,117, a working capital deficit of $322,600
and
an accumulated deficit of $2,796,014 at September 30, 2007. As a
result, substantial doubt exists about our ability to continue to fund future
operations using its existing resources.
In
the
past our operations were funded through private placement of common equity,
the
sale of certain assets and loans from related parties. Although the amounts
due
to related parties are reflected as current liabilities, there are no specific
repayment terms. In order to ensure the success of the new business, we will
have to raise additional financing to satisfy existing liabilities and to
provide the necessary funding for future operations.
The
accompanying condensed unaudited financial statements of Lumonall, Inc. (the
“Company”) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include
all
of the information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. In the opinion of management
of
the Company, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period ended September 30, 2007 are not necessarily
indicative of the results that may be expected for the year ending March 31,
2008. For further information, refer to the financial statements and footnotes
thereto included in the Company’s annual report on Form 10-KSB for the year
ended March 31, 2007.
Business
operations
We
were
originally incorporated in the State of Colorado on May 1, 1996 as Grand Canyon
Ventures Two, Incorporated. The Company changed its name to Azonic Engineering
Corporation on September 23, 1998. On November 12, 1999 is was re-domiciled
to
the State of Nevada by merging into its wholly owned subsidiary Azonic
Corporation, a Nevada corporation. On July 21, 2005 the Azonic Corporation
changed its name to Midland International Corporation. On August 7, 2007 we
changed our name from Midland International Corporation to Lumonall, Inc.
(referred to herein as “Lumonall,” the “Company,” Registrant” and
“Issuer”).
In
February 2007, we adopted a new business plan. To implement this new
business plan we acquired the United States licensing, North American
manufacturing and Canadian non-government distribution rights to a process
for
photo luminous pigments and production of foil used in manufacturing of photo
luminous materials. We also made a 30% investment in an entity that holds the
world-wide intellectual property rights to certain photo luminous
materials
Note
2 – Recent developments
Name
Change and Increase in Authorized Share Capital
On
August
7, 2007, we filed amendments to our Articles of Incorporation to increase our
authorized capital stock from 105,000,000 shares, consisting of 100,000,000
shares of Common Stock having a par value of $.001 per share and 5,000,000
shares of Preferred Stock having a par value of $.001 per share, to 205,000,000
shares of authorized capital, consisting of 200,000,000 shares of Common Stock
having a par value of $.001 per share and 5,000,000 shares of Preferred Stock
having a par value of $.001 per share, and to change our name to “Lumonall,
Inc.”
On
August
16, 2007 we were notified that the name change had been approved and that the
trading symbol was changed to “LUMN” effective August 17, 2007.
Appointment
of New Directors and Officers
At
a
meeting of the Board of Directors on August 28, 2007, we appointed four
additional new members to the Board, Mr. Geir Drangsholt, Mr. Michael Hetherman,
Mr. Frank Hoyen and Mr. Bjorn Pedersen. With these new appointments the Board
consists of 6 directors, including Ms. Carrie Weiler and Mr. John
Simmonds.
With
regard to Board appointments, Messrs. Drangsholt, Hoyen and Pedersen will be
considered independent directors. Mr. Hetherman was also appointed President
and
Chief Operating Officer of Lumonall Inc. and therefore will be considered a
non-independent executive director.
Mr.
Gary
Hokkanen was appointed Chief Financial Officer of the Company.
Distribution
Chain Developments
During
the previous quarter, we signed a number of distributors to take this new PLM
product to market. Those partners, covering a majority of North America, include
the Willis Group of Companies in Canada, and Designer Building Solutions,
Butler-Johnson Corporation, Hallmark Building Supplies and Parksite, Inc. in
the
United States. As of September 30, 2007, we received deposits totaling $190,000
for future orders of PLM product from most of our distributors.
We
held a
distributors meeting in Chicago, Illinois at the end of August. The purpose of
the meeting was to train distributor sales and marketing managers to start
major metro penetration across North America, and included strategy and training
sessions led by Geir Drangsholt, as well as one of our directors and Prolink
International AS Sales and Development Manager, Bjorn Pedersen.
National
Research Council Report
The
National Research Council of Canada report studying the effectiveness of PLM
products was recently released. The study, jointly funded by Public Works
and
Government Services Canada
and the NRC, was done with our support and confirmed the value and importance
of
PLM Safety Way Guidance Systems (SWGS) as an effective and improved means of
evacuation in emergency conditions.
Conducted
in the C.D. Howe building in Ottawa, Ontario, a 13-story building that is home
to Industry Canada and the Office of the Auditor General, the report included
two other PLM manufacturers in addition to us.
According
to the report (entitled “Evaluation of the effectiveness of different
photoluminescent stairwell installations for the evacuation of office building
occupants”), “Renovations to the Pentagon following the September 11, 2001
attack included the addition of a PLM [Safety Way Guidance System] in corridors
and stairs, while the United Nations installed such a system in 2003. New York
City recognized as a result of the events of September 11, 2001, and the
blackout of August 2003, that a PLM [Safety Way Guidance System] is an essential
component to ensure occupant safety in high-rise structures.” New York City
officially passed Local Law 26 on May 31, 2005, which required all existing
or
new high-rise office buildings over 75-feet-tall to install a PLM SWGS by July
2006.
Furthermore,
according to the report, “other building codes are also in the process of
adopting measures to use photoluminescent safety markings as a means of better
defining escape routes, and this technology will continue to be developed and
used.”
Geir
Drangsholt Retained as Consultant and Advisor
Geir
Drangsholt is considered an authority on PLM and Safety Way Guidance Systems.
An
engineer by trade, Mr. Drangsholt has been instrumental on a global level for
developing standards and principles for PLM Safety Way Guidance Systems and
other fire safety models.
In
1997,
the need for universal exit path marking systems in buildings was deemed by
the
International Organization for Standardization (ISO) as one of the most critical
applications for standardized signage. For six years, a multidisciplinary
committee of the world's experts in evacuation systems and graphical
symbols, which included Mr. Drangsholt as a Norwegian delegate, met several
times a year to develop ISO 16069. The result, published in 2003, is a standard
that sets forth the basic principles for designing egress path marking systems
for buildings.
Geir
Drangsholt is also head of the Norwegian group writing the Norwegian Standard
for SWGS, based on ISO 16069. He has also been Managing Director and Senior
Engineer of TekOk AS, a private fire consultant company in Norway, since
2000.
New
Head Office
Effective
September 17, 2007, we relocated our head office to 3565 King Road, Suite 102,
King City, Ontario, L7B 1M3, Canada, (telephone 905-833-9845, fax
905-833-9847). The new office will contain the latest and most up to
date technology in photoluminescent signage and provides a good example of
what
their products are capable of.
Note
3 – Summary of Significant Accounting Policies
The
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States.
The
financial statements have, in management’s opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting polices summarized below.
Use
of estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the
period. Actual results could differ from those estimates, and such
differences could be material.
Cash
and cash equivalents
Cash
and
cash equivalents include time deposit, certificates of deposits, and all highly
liquid debt instruments with original maturities of three months or less. The
Company maintains cash and cash equivalents at financial institutions, which
periodically exceed federal insured amounts.
Development
stage
The
Company has operated as a development stage enterprise since its inception
by
devoting substantially all of its efforts to financial planning, raising
capital, research and development, and developing markets for its products.
Accordingly, the financial statements of the Company have been prepared in
accordance with the accounting and reporting principles prescribed by SFAS
No.
7, “Accounting and Reporting by Development Stage Enterprises,” issued by
FASB.
The
Company was substantially inactive from May 1, 1996 through September 30, 2004.
Activities began on or about October 1, 2004.
Fair
value of financial instruments
The
carrying value of receivables, bank indebtedness, accounts payable and accrued
liabilities, income taxes payable, and customer deposits approximates fair
value
because of the short maturity of these instruments. The carrying value of
long-term debt and due to and from related parties also approximates fair value.
Unless otherwise noted, it is management’s opinion that the Company is not
exposed to significant interest, currency or credit risk arising from these
financial instruments.
Income
taxes
The
Company provides for income taxes using the asset and liability method as
prescribed by Statement of Financial Accounting Standards No. 109, “Accounting
for Income Taxes”. Under the assets and liability method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable
to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Additionally, a valuation allowance is
established when necessary to reduce deferred income tax assets to the amounts
expected to be realized. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Basic
and diluted earnings (loss) per share
The
Company reports basic earnings (loss) per share in accordance with Statement
of
Financial Accounting Standards No. 128, “Earnings Per Share”. Basic
earnings (loss) per share is computed using the weighted average number of
shares outstanding during the year. Diluted earnings per share
includes the potentially dilutive effect of outstanding common stock options
and
warrants which are convertible to common shares.
Recent
issued accounting standards
In
February 2007, the FASB issued FASB Statement NO. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities – Including an Amendment of FASB
Statement No. 115” (“SFAS 159”). The fair value option established by SFAS 159
permits all entities to choose to measure eligible items at fair value at
specified election dates. A business entity will report unrealized gains or
loses on items for which the fair value option has been elected in earnings
(or
another performance indication if the business entity does not report earnings)
at each subsequent reporting date. The fair value option: (a) may be applied
instrument by instrument, with a few exceptions, such as investments otherwise
accounted for by the equity method; (b) is irrevocable (unless a new election
date occurs); and (c) is applied only to entire instruments and not to portions
of instruments. FASB No. 159 is effective as of the beginning of the fiscal
years beginning after November 15, 2007. The adoption of SFAS 159 is not
expected to be material to the Company’s financial statements.
Note
4 – Related Party Transactions
Periodically
expenses of the Company are paid by related parties on behalf of the
Company. These transactions result in non-interest bearing payables
to related parties with no specific terms of repayment other than as described
below. At September 30, amounts due to related parties amounted to
$145,080 and amounts due from related parties totaled $169,744. Related parties
of the Company include entities under common management.
The
Company is obligated to pay $150,000 to Wireless Age Communications,
Inc. (an entity that has certain common officers and directors) over a six
month
period beginning June 2007 as repayment of the principal under promissory note
plus accrued and unpaid interest. As of September 30, 2007, the remaining amount
owed was $75,000.
The
Company is obligated to pay Simmonds Mercantile and Management Inc. (“Simmonds
Mercantile”) $20,000 per month for certain executive level management services.
The Company’s head office was also located at the offices of Simmonds
Mercantile. Simmonds Mercantile is solely owned by the Company’s CEO John
Simmonds. During the year ended March 31, 2007, Simmonds Mercantile agreed
to
forgive unpaid management fees (and other related parties of Simmonds
Mercantile) of approximately $175,000 as part of a commitment to issue
35,000,000 common shares for debt forgiveness to a group of investors led by
an
officer and director. As of September 30, 2007, 30,200,000 common shares had
been issued.
Pursuant
to the Company’s acquisition of the US licensing and manufacturing rights the
Company agreed to fund the payment of certain cash obligations of Prolink North
America Inc. As at September 30, 2007, the Company had advanced $166,103 to
Prolink North America Inc. for such purposes. In addition 4,800,000 shares
of
the Company’s common stock, valued at $70,080 had not been issued to Lumonall
Canada Inc. and has been recorded as current related party
liability.
At
September 30, 2007, the amounts due to related parties were:
|
|
|
|
Wireless
Age Communications, Inc.
|
|
$ |
75,000
|
|
Lumonall
Canada Inc.
|
|
|
70,080
|
|
|
|
$ |
145,080
|
|
At
September 30, 2007, the amounts due from related parties were:
|
|
|
|
Prolink
North America Inc.
|
|
$ |
166,103
|
|
Lumonall
Canada Inc.
|
|
|
3,641
|
|
|
|
$ |
169,744
|
|
Note
5 – Investments
Pursuant
to an agreement entered into on February 13, 2007, the Company issued 20,000,000
shares of its common stock to acquire a 30% interest in PPRAS a newly formed
private entity based in Norway. PPRAS holds the intellectual property rights
for
PLM pigments and production of foil used in the manufacturing of photo luminous
materials (“PLM”).
The
Company has significant influence over the business affairs of PPRAS and
accordingly accounts for the investment using the equity method.
The
Company valued the initial investment in PPRAS at $100,000. The Company’s
carrying value of its investment in PPRAS can be summarized as
follows:
|
|
|
|
Initial
investment
|
|
$ |
100,000
|
|
Less:
|
|
|
|
|
Equity
share of earnings (losses) from inception to September 30,
2007
|
|
|
(623 |
) |
|
|
$ |
99,377
|
|
The
carrying value of the investment exceeds the proportionate share of net assets
of the investee by approximately $80,000. The investee was recently incorporated
and has not placed any material value on the worldwide intellectual property
rights. Management believes the carrying value of its investment in PPRAS as
at
September 30, 2007, is valued appropriately.
PPRAS
assets totaled $18,916 at September 30, 2007 and there are no liabilities.
The
losses since incorporation to September 30, 2007 have been
$2,076.
Note
6 – Licensing and Manufacturing Rights
Pursuant
to an agreement entered into on February 6, 2007, the Company acquired the
USA
licensing, North American manufacturing and Canadian non-government distribution
rights of PLM from a related party known as Lumonall Canada Inc. Lumonall is
considered a related party by virtue of certain common officers and directors.
Lumonall obtained the North American PLM rights from PPRAS. The PLM rights
are
indefinite lived assets and have been valued initially at $100,000. The Company
conservatively estimates the useful life of the rights at 5 years and
accordingly is amortizing the initial value on a straight line basis over the
estimated useful life.
The
Company’s carrying value of the intangible assets is summarized as
follows:
|
|
|
|
Initial
investment in rights
|
|
$ |
100,000
|
|
Less:
|
|
|
|
|
Amortization
to September 30, 2007
|
|
|
10,000
|
|
|
|
$ |
90,000
|
|
Under
the
terms of the acquisition the Company agreed to pay the following royalties
to
Prolink North America:
|
1.
|
A
sign royalty of approximately $2.01 (CAD$2.00) per sign, capped at
approximately $1,005,200
(CAD$1,000,000),
|
|
2.
|
Non-sign
1% royalty on net sales from all other photo luminous
products,
|
The
Company also became obligated to provide a secured non-interest bearing demand
loan to Prolink North America Inc. to pay certain historic amounts owed by
Prolink North America Inc. to Prolink International AS. As of September 30,
2007, the Company had advanced approximately $166,103 under the requirement.
The
Company does not aniticipate making further loans to Prolink North America
Inc.
The
Company agreed to pay the following further royalty to Lumonall Canada
Inc:
|
1.
|
A
further royalty of $500,000 from future profits, payable as 15% of
earnings before interest taxes depreciation and amortization (“EBITDA”)
quarterly in arrears.
|
Pursuant
to the terms of the acquisition the Company agreed to issue a $100,000 note
payable to Lumonall Canada Inc. (Note 7).
Note
7 – Note Payable – Related Party
|
|
2007
|
|
|
2006
|
|
Note
payable, unsecured, non-interest bearing, repayable in two instalment
payments of $25,000 on November 30, 2007 and February 28, 2008 (principal
$50,000).
|
|
$ |
50,000
|
|
|
$ |
-
|
|
Less: current
portion:
|
|
|
(50,000 |
) |
|
|
-
|
|
|
|
$ |
-
|
|
|
$ |
-
|
|
FORWARD-LOOKING
STATEMENTS
Certain
matters discussed in this Annual Report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of
1995 and as such may involve risks and uncertainties. These
forward-looking statements relate to, among other things, expectations of the
business environment in which the Company operates, projections of future
performance, perceived opportunities in the market and statements regarding
the
Company's goals. The Company's actual results, performance, or
achievements expressed or implied in such forward-looking statements may
differ.
BACKGROUND
The
Company was incorporated in the State of Colorado on May 1, 1996 as Grand Canyon
Ventures Two, Incorporated. The Company changed its name to Azonic Engineering
Corporation on September 23, 1998. On November 12, 1999, it was re-domiciled
to
the State of Nevada by merging into its wholly owned subsidiary Azonic
Corporation ("Company"), a Nevada corporation. On July 21, 2005 the Company
officially changed its name to Midland International Corporation. On
August 7, 2007 we changed our name from Midland International Corporation to
Lumonall, Inc.
As
of
February 2007, we adopted a new business plan. We acquired the United
States licensing, North American manufacturing and Canadian non-government
distribution rights of photo luminous pigments and production of foil used
in
manufacturing of photo luminous materials (“PLM”) and made a 30% investment in
an entity that holds the world wide intellectual rights to these PLM
products.
RESULTS
OF OPERATION
Comparison
of Results of Operations for the Three Month Period Ended September 30, 2007
and
2006
We
generated no revenues in the three-month periods ended September 30, 2007 and
2006. The new PLM business plan was begun during the fourth quarter
of fiscal 2007 and did not result in any revenues.
We
incurred management fees of $55,000 in the three-month period ended September
30, 2007, compared to nil in the same period ended September 30, 2006.
Management fees during the current period were for the services of John
Simmonds, our CEO, and Carrie Weiler, our Corporate Secretary.
We
incurred office and general expenses of $102,920 in the three-month period
ended
September 30, 2007 compared to $7,702 in the same period ended September 30,
2006, an increase of approximately $95,000. Office and general expenses include
travel and auto, occupancy and communications and other similar costs associated
with operating the business in its current state of evolution. During the three
month period ended September 30, 2007 travel and auto costs totaled $50,481,
occupancy costs totaled $15,029, advertising and promotional costs were $8,950,
and foreign exchange translation costs were $8,779. We expect operating costs
to
increase as we pursue the new business.
We
also
incurred professional and consulting fees of $386,125 in the three-month period
ended September 30, 2007, compared to $17,500 in the same period ended June
30,
2006. Professional and consulting fees during the current year included various
fees associated with the new business opportunity, including general management,
technical, political lobbyist and marketing functions. Professional and
consulting fees in the current period included services valued at $240,000
paid
with warrants to acquire 12,000,000 common shares.
We
incurred interest expense of $8,564 during the three month period ended
September 30, 2006 compared to nil during the three month period ended September
30, 2007. Interest expense arose from an 8% promissory note issued to Wireless
Age Communications, Inc. for unpaid management fees.
As
a
result, we incurred a net loss of ($33,766) during the three month period ended
September 30, 2006, (approximately $0.001 per share) compared to a net loss
of
($549,045) in the same period ended September 30, 2007 (approximately $0.005
per
share)
Management
expects the operating losses to continue until breakeven operations are achieved
under the PLM business plan. Additional financing will be required in order
to
offset pre-breakeven operating losses.
Comparison
of Results of Operations for the Six Month Period Ended September 30, 2007
and
2006
We
generated no revenues in the six-month periods ended September 30, 2007 and
2006. The new PLM business plan was begun during the fourth quarter
of fiscal 2007 and did not result in any revenues.
We
incurred management fees of $115,000 in the six-month period ended September
30,
2007, compared to nil in the same period ended September 30, 2006. Management
fees during the current period were for the services of John Simmonds, our
CEO,
and Carrie Weiler, our Corporate Secretary.
We
incurred office and general expenses of $344,351 in the six-month period ended
September 30, 2007 compared to $9,429 in the same period ended September 30,
2006, an increase of approximately $335,000. Office and general expenses include
travel and auto, occupancy and communications and other similar costs associated
with operating the business in its current state of evolution. During the six
month period ended September 30, 2007 travel and auto costs totaled $87,043,
occupancy costs totaled $33,415, advertising and promotional costs were $61,480,
legal and accounting costs of $51,023 and foreign exchange translation costs
were $7,585. We expect operating costs to increase as we pursue the new
business.
We
also
incurred professional and consulting fees of $538,415 in the six-month period
ended September 30, 2007, compared to $63,927 in the same period ended September
30, 2006. Professional and consulting fees during the current year included
various fees associated with the new business opportunity, including general
management, technical and marketing functions, including services valued at
$135,000 for which we paid with 2,700,000 shares of our common stock and
services valued at $240,000 for which we issued warrants to purchase 12,000,000
common shares.
We
incurred interest expense of $17,317 during the six month period ended September
30, 2006 compared to nil during the six month period ended September 30, 2007.
Interest expense arose from an 8% promissory note issued to Wireless Age
Communications, Inc. for unpaid management fees.
Prolink
Property Rights AS, an entity in which we have a 30% interest, generated losses
of $2,077, of which $623 is our share during the six month period ended
September 30, 2007.
As
a
result, we incurred a net loss of ($90,673) during the six month period ended
September 30, 2006, (approximately $0.002 per share) compared to a net loss
of
($1,007,766) in the same period ended September 30, 2007 (approximately $0.010
per share)
Management
expects the operating losses to continue until breakeven operations are achieved
under the PLM business plan. Additional financing will be required in order
to
offset pre-breakeven operating losses.
PLAN
OF
OPERATION
We
hold
the USA licensing, North American manufacturing and Canadian non-government
distribution rights of photo luminous pigments and production of foil used
in
manufacturing of photo luminous materials (“PLM”). and we made a 30% investment
in an entity that holds the world wide intellectual rights to these PLM
products. We anticipate beginning to realize on these rights and this investment
in fiscal 2008.
With
the
rights to Prolink International’s PLM formulation, and a North American
distribution network in place, we have cleared some hurdles already. Looking
forward, the keys to success will be to further train and equip that network
for
anticipated sales, add a North American manufacturing plant to service our
customers’ needs here, as well as complementing the Norwegian production base,
and continue to develop awareness and educate the public on the benefits of
PLM
with regard to safety and energy conservation.
We
will
shortly be unveiling a media strategy to improve awareness regarding PLM Exit
Signs and Safety Way Guidance Systems (“SWGS”), as well as lobbying all levels
of government to further effect both energy saving legislation, in addition
to
building safety requirements.
Our
online presence will also be growing, aiding in the education process for both
our distributors and the general public. The new site will provide improved
services for our distribution network, as well as the general public. This
will
likely include streaming video demonstrations (for both Exit Signs and SWGS),
an
on-line product catalogue, product FAQs, and a marketing materials
database.
These
measures, in the short term, address the North American marketplace and our
presence here. As we develop our infrastructure and grow in sales, we will
start
capitalizing on our worldwide opportunities.
Following
that, we are continuing with research and development in order to further
identify other products and applications for PLM.
We
will
need to raise additional cash to continue to pay its operating expenses in
the
next twelve months until the revenues of the new venture exceed the day to
day
operating costs. We also plan to seek other opportunities in North
America.
We
plan
to raise additional funds, in the next twelve months, through the issuance
of
its common stock or through a combination of equity and debt security
instruments. It is anticipated that the debt security instruments will have
conversion features that would cause further dilution to existing
shareholders.
LIQUIDITY
AND CAPITAL RESOURCES
Our
total
assets increased from $306,189 at March 31, 2007 to $426,117 at September 30,
2007. The increase is primarily the result of increased activity
associated with the PLM business.
We
hold a
30% interest in Prolink Intellectual Properties Inc. which we value at $99,377
and also hold intangible assets (USA licensing, North American manufacturing
and
Canadian non-government distribution rights to PLM products) valued at $90,000.
In addition we advanced $169,744 to related parties (including $166,103 to
Prolink North America Inc. as part of our agreements under the new business
plan).
Our
total
liabilities decreased from $686,793 at March 31, 2007 to $559,340 at September
30, 2007. The decrease is primarily the result of due to related parties
balances decreasing from $437,453 at March 31, 2007 to $145,080 at September
30,
2007. Due to related party amounts do not have specific repayment terms and
it
is expected that these amounts will be repaid as the financial position of
the
Company improves. Accounts payable and accrued liabilities increased from
$149,340 at the beginning of the year to $174,260 at the end of the current
quarter. We also repaid $50,000 of a $100,000 promissory note to Lumonall Canada
Inc. We are obligated to repay the remaining note over a one year
term.
The
stockholders’ deficiency decreased from ($380,604) at March 31, 2007 to
($133,223) at September 30, 2007. The increase is attributable to
private placements generating net proceeds of $845,000 during the six month
period ended June 30, 2007, the issuance of 2,450,000 common shares, valued
at
$35,770 as consideration for assisting in certain related party debt
forgiveness, the issuance of 2,700,000 common shares, valued at $135,000 for
consulting services provided the issuance of warrants to acquire 12,000,000
common shares and our loss of $1,007,766 for the first half of fiscal 2008.
(See
Statement of Stockholders’ Deficiency contained in the financial
statements).
At
September 30, 2007, we had a working capital deficit of $322,600. We
had cash balances of $55,614 at September 30, 2007 and we are largely reliant
upon our ability to arrange equity private placements or alternatively advances
from related parties to pay expenses as incurred. In addition to
normal accounts payable of $174,260 we also owe related companies $145,080
(some
of is without specific repayment terms) and $50,000 through a promissory note
which has regular quarter repayment dates over the next year. Our
only source for capital could be loans or private placements of common
stock.
During
the six month period ended September 30, 2007 we; 1) used $419,228 in cash
in
operating activities arising primarily from operating losses, and 2) generated
$473,775 in cash from
financing activities. Financing activities included cash proceeds of $845,000
from private placements of common stock, partially offset by repayments of
amounts to related parties of $321,225 and repayment of related party notes
payable of $50,000.
We
remain
in the development stage and, since inception, have experienced significant
liquidity problems and have no significant capital resources now at September
30, 2007.
Our
current cash resources may not be insufficient to support the business over
the
next 12 months and we are unable to carry out any plan of business without
funding. We estimate that we may need additional debt or equity capital to
fully
implement our business plan in the future and there are no assurances that
we
will be able to raise this capital when needed. However, while there
are no definitive agreements in place as of the date of this report, we are
currently engaged in various discussions with interested parties to provide
funds or otherwise enter into a strategic alliance to provide such
funding. The inability to obtain sufficient funds from external
sources when needed will have a material adverse affect on our results of
operations and financial condition.
We
cannot
predict to what extent our current lack of liquidity and capital resources
will
impair our new business operations. However management does believe we will
incur further operating losses. There is no assurance that we can continue
as a
going concern without substantial funding. Management has taken steps to begin
sourcing the necessary funding to begin to execute the business
plan.
We
estimate it will require additional financing to cover legal, accounting,
transfer, consulting, management fees and the miscellaneous costs of being
a
reporting company in the next fiscal year. We do not intend to pursue or fund
any research or development activities during the coming year. We do not intend
to add any additional part-time or full-time employees until our activities
can
support it. Our business plan calls for us to not make any large capital
expenditures in the coming year.
Going
concern qualification: We have incurred significant losses from
operations for the six month period ended June 30, 2007, and such losses are
expected to continue. In addition, we have a working capital deficit
of $322,600 and an accumulated deficit of $2,796,014. The foregoing
raises substantial doubt about the Company's ability to continue as a going
concern. Management's plans include seeking additional capital and/or
debt financing. There is no guarantee that additional capital and/or
debt financing will be available when and to the extent required, or that if
available, it will be on terms acceptable to us. The financial
statements do not include any adjustments that might result from the outcome
of
this uncertainty.
CONTRACTUAL
OBLIGATIONS AND COMMITMENTS
We
have a
debt obligation to repay a $50,000 promissory note in quarterly payments of
$25,000 on November 30, 2007 and February 28, 2008. We also hold deposits of
$190,000 from our distributors for future orders of PLM products.
Under
the
terms of the acquisition of the USA licensing, North American manufacturing
and
Canadian non-government distribution rights to PLM products, the Company agreed
to pay the following royalties to Prolink North America:
1.
|
A
sign royalty of approximately $2.01 (CAD$2.00) per sign, capped at
approximately $1,005,200 (CAD$1,000,000).
|
|
|
2.
|
Non-sign
1% royalty on net sales from all other photo luminous
products.
|
We
also
became obligated to provide Prolink North America a non-interest bearing secured
demand loan to pay certain historic amounts owed by Prolink North America Inc.
to Prolink International AS. As of June 30, 2007, we had advanced approximately
$166,103 under the requirement. Management does not anticipate making further
loans to Prolink North America Inc..
We
agreed
to pay the following further royalty to Lumonall Canada Inc:
1.
|
A
further royalty of $500,000 from future profits, payable as 15% of
earnings before interest taxes depreciation and amortization (“EBITDA”)
quarterly in arrears.
|
a. Evaluation
of Disclosure Controls and Procedures:
Disclosure
controls and procedures are designed to ensure that information required to
be disclosed in the reports filed or
submitted under the Exchange Act is
recorded, processed, summarized and reported, within
the time period specified in the SEC's rules and
forms. Disclosure controls and procedures
include, without limitation, controls and
procedures designed to ensure that information required to be
disclosed in the reports filed under the Exchange Act is
accumulated and communicated to
management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions
regarding required disclosure. As of the end of
the period covered by this
report, the Company carried out an
evaluation, under the supervision and with
the participation of the
Company's management, including the Company's Chief
Executive Officer and
Chief Financial Officer, of
the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon and as of
the date of that evaluation, the
Chief Executive Officer and Chief
Financial Officer concluded that the
Company's disclosure controls and procedures are effective
to ensure that information required to be disclosed in the reports
the Company files and submits under
the Exchange Act is recorded, processed, summarized and reported as
and when required.
b. Changes
in Internal Control over Financial Reporting:
There
were no changes in the Company's internal control over financial reporting
identified in connection with the Company evaluation of these controls as of
the
end of the period covered by this report that could have significantly affected
those controls subsequent to the date of the valuation referred to in the
previous paragraph, including any correction action with regard to significant
deficiencies and material weakness.
Item
1.
Legal Proceedings
None
Item
2.
Unregistered Sales of Equity Securities and Use of Proceeds
During
the current period the company issued the following common
shares
Date
|
|
Name
|
|
#
of Shares
|
|
Proceeds
|
30-Aug-07
|
|
Horst
Heuniken
|
|
2,000,000
|
|
100,000
|
30-Aug-07
|
|
Joseph
Balthazor
|
|
1,000,000
|
|
50,000
|
30-Aug-07
|
|
Edenshaw
Management
|
|
2,000,000
|
|
100,000
|
5-Sep-07
|
|
Terje
Israelsen
|
|
120,000
|
|
6,000
|
5-Sep-07
|
|
Kent
Arne Overheim
|
|
100,000
|
|
5,000
|
5-Sep-07
|
|
Bjorn
Pedersen
|
|
200,000
|
|
10,000
|
5-Sep-07
|
|
Frank
Hoyen
|
|
200,000
|
|
10,000
|
5-Sep-07
|
|
Jan
Hoyen
|
|
200,000
|
|
10,000
|
5-Sep-07
|
|
Geir
Skog Olsen
|
|
100,000
|
|
5,000
|
5-Sep-07
|
|
Draco
Invesering
|
|
3,300,000
|
|
165,000
|
The
company issued the following common stock purchase warrants:
Date
of Issuance
|
|
Expiry
Date
|
|
Warrant
Holder
|
|
Exercise
Price
|
|
Number
of Common Shares
|
August
7, 2007
|
|
August
7, 2008
|
|
Gerry
Merovitz
|
|
$ 0.05
|
|
2,000,000
|
August
7, 2007
|
|
August
7, 2008
|
|
Charles
Merovitz
|
|
$ 0.05
|
|
2,000,000
|
August
7, 2007
|
|
April
13, 2009
|
|
Katemy
Holdings Inc.
|
|
$ 0.05
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
The
Company entered into the aforementioned transaction in reliance upon the
exemption from securities registration afforded by Section 4(2) of the U.S.
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, including Regulation S.
Item
3.
Defaults Upon Senior Securities
None
Item
4.
Submission of Matters to a Vote of Security Holders
None
Item
5.
Other Information
None
Exhibit
31.1 Rule
13a-14(a) Certification of Chief Executive Officer.
Exhibit
31.2
|
Rule
13a-14(a) Certification of Chief Financial
Executive.
|
Exhibit
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Exhibit
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
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.
DATE: November
13,
2007
|
|
|
|
|
BY:
/s/
John G. Simmonds
|
|
|
BY:
/s/ Gary N.
Hokkanen
|
|
Name:
John
G.
Simmonds
|
|
|
Name:
Gary
N. Hokkanen
|
|
Title:
CEO/Director
|
|
|
Title:
CFO
|
|