Delaware
|
75-2402409
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
PART
I. FINANCIAL INFORMATION
|
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Page(s)
|
|||
Item
1.
|
Financial
Statements:
|
||
Balance
Sheets as of March 31, 2006 (unaudited) and December 31,
2005
|
3
|
||
Statements
of Operations for the Three Months Ended March 31, 2006 and 2005
(unaudited)
|
4
|
||
Statements
of Cash Flows for the Three Months ended March 31, 2006 and 2005
(unaudited)
|
5
|
||
Notes
to Financial Statements
|
6
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||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
|
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|||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
11
|
|
Item
4.
|
Controls
and Procedures
|
11
|
|
PART
II. OTHER INFORMATION
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Item
1.
|
Legal
Proceedings
|
12
|
|
Item
1A.
|
Risk
Factors
|
12
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
12
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
12
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
12
|
|
Item
5.
|
Other
Information
|
12
|
|
Item
6.
|
Exhibits
|
12
|
|
Signatures
|
13
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||
Exhibit
Index
|
14
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||
Exhibit
31.1
|
Certification
by John A. Paganelli, Chief Executive Officer, pursuant to Rule 13a-14(a)
and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the
quarterly period ended March 31, 2006.
|
||
Exhibit
31.2
|
Certification
by David Hostelley, Chief Financial Officer, pursuant to Rule 13a-14(a)
and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the
quarterly period ended March 31, 2006.
|
||
Exhibit
32.1
|
Certification
by John A. Paganelli, Chief Executive Officer pursuant to18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31, 2006.
|
||
Exhibit
32.2
|
Certification
by David Hostelley, Chief Financial Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31, 2006.
|
Item 1. |
Financial
Statements:
|
March
31,
|
|
|
December
31,
|
||||
2006
|
|
|
2005
|
||||
ASSETS
|
(unaudited)
|
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
8,851
|
$
|
8,901
|
|||
Prepaid
expenses and other current assets
|
133
|
99
|
|||||
Total
current assets
|
8,984
|
9,000
|
|||||
Total
assets
|
$
|
8,984
|
$
|
9,000
|
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
304
|
$
|
277
|
|||
Total
current liabilities
|
304
|
277
|
|||||
Total
liabilities
|
304
|
277
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
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|||||||
Preferred
stock - $.01 par value, 10,000,000 shares authorized; 1,015,028 and
952,839 shares of Series A convertible preferred issued and outstanding
(liquidation value $2,538,000 and $2,382,000)
|
10
|
10
|
|||||
Common
stock - $.01 par value, 30,000,000 shares authorized; 16,978,090
and
16,945,026 shares issued and outstanding
|
170
|
169
|
|||||
Additional
paid-in capital
|
68,383
|
68,384
|
|||||
Subscriptions
receivable, net of reserve
|
(101
|
)
|
(101
|
)
|
|||
Accumulated
deficit
|
(56,445
|
)
|
(56,402
|
)
|
|||
Treasury
stock, 611,200 shares of common stock, at cost
|
(3,337
|
)
|
(3,337
|
)
|
|||
Total
stockholders’ equity
|
8,680
|
8,723
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
8,984
|
$
|
9,000
|
Three
Months Ended March 31,
|
|
||||||
|
|
|
2006
|
|
|
2005
|
|
(unaudited)
|
|||||||
Revenue:
|
$
|
--
|
$
|
--
|
|||
Operating
Expenses:
|
|||||||
General
and administrative
|
188
|
331
|
|||||
188
|
331
|
||||||
Operating
loss
|
(188
|
)
|
(331
|
)
|
|||
Other
(income) expense
|
(145
|
)
|
(41
|
)
|
|||
Loss
before provision (benefit) for taxes
|
(43
|
)
|
(290
|
)
|
|||
Provision
(benefit) for taxes
|
--
|
--
|
|||||
Net
Loss
|
(43
|
)
|
(290
|
)
|
|||
Preferred
stock dividend
|
(238
|
)
|
(234
|
)
|
|||
Net
loss attributable to common shareholders
|
$
|
(281
|
)
|
$
|
(524
|
)
|
|
Net
loss per share-basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
|
Weighted
average number of shares outstanding - basic and diluted
|
16,338
|
16,261
|
Three
Months Ended March 31,
|
|||||||
2006
|
|
|
2005
|
||||
(unaudited)
|
|||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(43
|
)
|
$
|
(290
|
)
|
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
-
|
1
|
|||||
Interest
accrual on subscription receivable
|
-
|
(4
|
)
|
||||
Changes
in:
|
|||||||
Prepaids
and other assets
|
(34
|
)
|
15
|
||||
Accounts
payable and accrued expenses
|
27
|
(47
|
)
|
||||
Net
cash used in operating activities
|
(50
|
)
|
(325
|
)
|
|||
NET
DECREASE IN CASH
|
(50
|
)
|
(325
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
8,901
|
8,734
|
|||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
8,851
|
$
|
8,409
|
(1) |
Financial
Statement Presentation
|
(2) |
Cash
and Cash Equivalents
|
(3) |
Loss
Per Common Share
|
(4) |
Share-Based
Compensation
|
Weighted
AveragePrice
|
|
|
Number
of Shares
|
|
|
Weighted
Average Remaining Contractual Term(In
Years
|
)
|
|||
Outstanding,
January 1, 2006
|
$
|
3.37
|
905,000
|
|||||||
Granted
|
0.41
|
20,000
|
||||||||
Canceled
or Expired
|
4.28
|
(570,000
|
)
|
|||||||
Forfeited
|
-
|
-
|
||||||||
Exercised
|
-
|
-
|
||||||||
Outstanding,
March 31, 2006
|
$
|
1.73
|
355,000
|
6.20
|
||||||
Options
exercisable as of March 31, 2006
|
355,000
|
6.20
|
Risk-free
interest rate
|
4.3
|
%
|
||
Expected
volatility
|
37.3
|
%
|
||
Weighted
average expected life (in years)
|
5.0
|
|||
Dividend
yield
|
0
|
%
|
Three
Months Ended
|
|
|||
|
|
|
March
31,
|
|
|
|
|
2005
|
|
Net
loss attributable to common stockholders as reported
|
$
|
(524
|
)
|
|
Deduct:
Total stock-based employee compensation expense determined under
fair
value based method for all awards, net of related tax
effects
|
(5
|
)
|
||
Pro
forma net loss
|
$
|
(529
|
)
|
|
Earnings
per share:
|
||||
Basic
and diluted-as reported
|
$
|
(0.03
|
)
|
|
Basic-pro
forma
|
$
|
(0.03
|
)
|
(5) |
Dividends
|
(6) |
Subscriptions
Receivable
|
(7) |
Recently
Issued Accounting Standards
|
Item 2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Item 3. |
Quantitative
and Qualitative Disclosures About Market
Risk
|
Item 4. |
Controls
and Procedures
|
Item 1. |
Legal
Proceedings
|
Item 1A. |
Risk
Factors
|
Item 2. |
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Item 3. |
Defaults
Upon Senior Securities
|
Item 4. |
Submission
of Matters to a Vote of Security
Holders
|
Item 5. |
Other
Information
|
Item 6. |
Exhibits
|
Exhibit
31.1
|
Certification
by John Paganelli, Chief Executive Officer, pursuant to Rule 13a-14(a)
and
15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly
period
ended March 31, 2006.
|
|
Exhibit
31.2
|
Certification
by David Hostelley, Chief Financial Officer, pursuant to Rule 13a-14(a)
and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the
quarterly period ended March 31, 2006.
|
|
Exhibit
32.1
|
Certification
by John Paganelli, Chief Executive Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31, 2006.
|
|
Exhibit
32.2
|
Certification
by David Hostelley, Chief Financial Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31,
2006.
|
EXHIBIT |
|
NUMBER |
DESCRIPTION
|
Exhibit
31.1
|
Certification
by John Paganelli, Chief Executive Officer, pursuant to Rule 13a-14(a)
and
15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 for the quarterly
period
ended March 31, 2006.
|
|
Exhibit
31.2
|
Certification
by David Hostelley, Chief Financial Officer, pursuant to Rule 13a-14(a)
and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the
quarterly period ended March 31, 2006.
|
|
Exhibit
32.1
|
Certification
by John Paganelli, Chief Executive Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31, 2006.
|
|
Exhibit
32.2
|
Certification
by David Hostelley, Chief Financial Officer pursuant to 18 U.S.C.
Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
for the quarterly period ended March 31,
2006.
|