SECURITIES AND EXCHANGE COMMISSION
Delaware
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13-3886065
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(State
or other jurisdiction
of
incorporation or organization)
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(I.R.S.
Employer
Identification
No.)
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Title
of each class
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Name
of each exchange on which registered
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None
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None
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Yes
o
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No
x
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Yes
o
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No
x
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Yes
o
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No
x
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Large
Accelerated Filer o
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Accelerated
Filer o
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Non-accelerated
Filer o
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Smaller
reporting company x
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Yes
o
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No
x
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Page 1
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Page | ||
PART
I
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Item 1.
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Business
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3
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Item 1.A.
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Risk
Factors
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10
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Item 1.B.
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Unresolved
Staff Comments
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13
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Item 2.
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Properties
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13
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Item 3.
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Legal
Proceedings
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13
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Item 4.
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Submission
of Matters to a Vote of Securities Holders
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13
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PART
II
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|||
Item 5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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14
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Item 6.
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Selected
Financial Data
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16
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Item 7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
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16
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Item 7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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19
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Item 8.
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Financial
Statements and Supplementary Data
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20
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Item 9.
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Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
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41
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Item 9A(T).
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Controls
and Procedures
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41
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Item 9B.
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Other
Information
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42
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PART
III
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|||
Item 10.
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Directors,
Executive Officers and Corporate Governance
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42
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Item 11.
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Executive
Compensation
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44
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Item 12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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44
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Item 13.
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Certain
Relationships and Related Transactions, and Director
Independence
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45
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Item 14.
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Principal
Accounting Fees and Services
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45
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PART
IV
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|||
Item 15.
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Exhibits,
Financial Statement Schedules
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46
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SIGNATURES | 47 | ||
INDEX
TO EXHIBITS
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48
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Page 2
Page 3
Page 4
One example of an upcoming planned RFP is the School District of Orange County, Florida (“OCPS”). OCPS is the 12th largest school district out of more than 16,000 in the country, but the 5th largest in the State of Florida. Growth rates have consistently been in the upper 10% nationally. The District utilizes an annual $1,155,839,214 general operations budget, with an additional $54,758,541 for food service and grant projects, a $922,002,514 capital projects fund and a $150,092,563 internal service fund. The recently reported debt service fund is $80,088,644. Their current shortfall is roughly 2,000 student stations and growing every year despite the large annual capital projects funds.
· |
Can
be provided in customized multiple configurations and types,
creating buildings of various types; educational facilities, medical
centers, office buildings; one-story or up to three-story, buildings,
classrooms, and as many variations as the client needs and
dictates;
|
· |
Exceeds
minimum American Society of Heating, Refrigerating and Air-Conditioning
Engineers (“ASHRAE”) Indoor Quality
Standards;
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· |
A
truly relocatable building, if so
desired;
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· |
Exterior
compatibility with the site and existing
buildings;
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· |
Attractive
leasing and lease-purchase options;
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· |
Can
be integrated with conventional construction and/or other modular
building
components;
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· |
One
unit, entire building or complex;
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· |
Sustainable
(“green”) building solutions;
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· |
Have
solved previous conception and perception problems of modular
construction; and
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· |
Design,
fabricate and install with a one-stop single source of responsibility
firm
- minimizing a client's coordination and communication efforts between
a
multitude of professionals and
vendors.
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Page 5
Page 6
The State of Florida Department Office of Educational Facilities (“OEF”) reports information in various forms from year-to-year. A recent previous report was compiled to reflect the following:
Permanent classrooms
133,528
Relocatable classrooms
18,858
Total classrooms
152,386
Low of 15 years for Collier County
High of 37 years for Jefferson County
An average of 25 years throughout the state of Florida
Based on 2% replacement value applied to year 2000 inventory State Funding Only
The estimated five year needs for K-12 are as follows:
Projected five year Full Time Equivalency ("FTE") growth in K-12: 190,408 students
Approximately 7,616 new classrooms required before the Class Size Amendment and Pre-K
The possibility exists that classroom numbers could increase by more than 25%, depending on the effect of impacts provided for in the Class Size Amendment to the State Constitution and the current Pre-K legislation recently passed.
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K-12
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Colleges
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Universities
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Total
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|||||||||
Deferred
maintenance
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3,400
|
255
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1,200
|
4,855
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|||||||||
Renovation/Rebuilding
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2,270
|
487
|
260
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3,017
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|||||||||
Remodeling
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1,591
|
449
|
780
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2,820
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|||||||||
New
construction
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12,438
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1,144
|
1,560
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15,142
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|||||||||
TOTAL
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19,699
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2,335
|
3,800
|
25,834
|
|||||||||
Source:
K-12 5 year work plans. CC & SUS capital improvement
plans
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K-12
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Colleges
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Universities
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Total
|
|||||||||
Deferred
maintenance
|
5,950
|
446
|
2,100
|
8,496
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|||||||||
Renovation/Rebuilding
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3,973
|
852
|
455
|
5,280
|
|||||||||
Remodeling
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2,784
|
786
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1,365
|
4,935
|
|||||||||
New
construction
|
21,767
|
2,002
|
2,730
|
26,499
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|||||||||
TOTAL
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34,474
|
4,086
|
6,650
|
45,210
|
|||||||||
Source:
K-12 5 year work plans. CC & SUS capital improvement
plans
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Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Square
Footage
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|||||||||||||
Total
Acres |
Office
|
Operations
|
Total
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||||||||||
Corporate
Offices
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|
||||||||||||
1
Melbourne, Florida
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2,200
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2,200
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|||||||||||
Manufacturing
Facility
|
|||||||||||||
2
Orlando, Florida
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4
|
1,600
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-
|
1,600
|
1
|
This
office is leased through May 31, 2012.
|
2
|
This
land space was leased through December 31, 2007. It is
presently occupied
on a month-to-month
basis.
|
(1)
|
Approved
the merger of the Company's wholly-owned subsidiary with
and into NCSI
including the issuance of 4,334,429 shares of the Company's
common stock
to the shareholders of NCSI:
|
|
(2)
|
Approved
a 1-for-10 reverse stock split of the Company's issued
and outstanding
shares:
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|
(3)
|
Approved
the change in the Company's name from K-2 Digital, Inc.,
to
ABCC.
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2007
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2006
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||||||||||||||||||||||||
4th
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3rd
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2nd
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1st
|
4th
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3rd
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2nd
|
1st
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||||||||||||||||||
Qtr.
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|
Qtr.
|
|
Qtr.
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Qtr.
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|
Qtr.
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|
Qtr.
|
|
Qtr.
|
|
Qtr.
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|||||||||||
High
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$
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1.74
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$
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2.01
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$
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1.20
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$
|
1.80
|
$
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0.90
|
$
|
0.80
|
$
|
1.20
|
$
|
1.60
|
|||||||||
Low
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$
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0.40
|
$
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0.35
|
$
|
0.50
|
$
|
0.50
|
$
|
0.46
|
$
|
0.51
|
$
|
0.60
|
$
|
0.50
|
|||||||||
Close
|
$
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0.95
|
$
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1.19
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$
|
0.56
|
$
|
0.60
|
$
|
0.60
|
$
|
0.51
|
$
|
0.80
|
$
|
0.60
|
Page 14
Date of agreement |
# Of Shares Granted That Have Not Been Exercised |
Agreement Price |
Expiration Date |
Status | |
12/9/1997 | 500 | $ | 17.50 | 12/9/2007 | EXPIRED |
1/16/2001 | 2,500 | $ | 8.13 | 1/15/2006 | EXPIRED |
4/14/2000 | 500 | $ | 58.13 | 4/14/2010 | |
4/14/2000 | 1,700 | $ | 50.00 | 4/14/2010 | |
12/9/1997 | 500 | $ | 17.50 | 12/9/2007 | EXPIRED |
12/9/1997 | 500 | $ | 17.50 | 12/9/2007 | EXPIRED |
6/16/1999 | 500 | $ | 25.63 | 6/16/2009 | |
4/1/2000 | 125 | $ | 58.13 | 4/1/2010 | |
12/9/1997 | 1,000 | $ | 17.50 | 12/9/2007 | EXPIRED |
12/9/1997 | 500 | $ | 17.50 | 12/9/2007 | EXPIRED |
6/16/1999 | 500 | $ | 25.63 | 6/16/2009 | |
Total Issued | 8,825 | ||||
Average |
|||||
Total Current | 3,325 | $ | 19.16 | ||
1997 Stock Option Plan | |||||
Date of agreement |
# Of Shares
Granted |
Agreement Price |
Expiration |
Status |
|
12/1/2000 | 100 | $ | 10.9380 | 12/1/2010 | |
4/14/2000 | 24,600 | $ | 50.0000 | 4/14/2010 | |
1/2/2001 | 10,000 | $ | 7.5000 | 1/2/2011 | |
4/27/2007 | 20,000 | $ | 0.8500 | 4/27/2017 | |
4/27/2007 | 10,000 | $ | 0.8500 | 4/27/2017 | |
4/27/2007 | 10,000 | $ | 0.8500 | 4/27/2017 | |
7/7/1999 | 1,000 | $ | 25.0000 | 7/7/2009 | |
6/1/2000 | 500 | $ | 54.3750 | 6/1/2010 | |
12/1/2000 | 500 | $ | 10.9380 | 12/1/2010 | |
10/22/1998 | 40,000 | $ | 15.0000 | 10/22/2008 | |
6/1/2000 | 500 | $ | 54.3750 | 6/1/2010 | |
3/15/2001 | 5,000 | $ | 6.5620 | 3/15/2011 | |
7/7/1999 | 1,000 | $ | 25.0000 | 7/7/2009 | |
6/1/2000 | 500 | $ | 54.3750 | 6/1/2010 | |
8/19/2002 | 4,000 | $ | 0.5000 | 8/19/2012 | |
12/9/1997 | 500 | $ | 17.5000 | 12/9/2007 | EXPIRED |
10/1/1999 | 750 | $ | 29.3750 | 10/1/2009 | |
6/1/2000 | 500 | $ | 54.3750 | 6/1/2010 | |
4/27/2007 | 10,000 | $ | 0.8500 | 4/27/2017 | |
Total Issued | 139,450 | ||||
Average |
|||||
Total Current | 138,950 | $ | 15.68 |
Page 15
·
|
contains
a description of the nature and level of risks in the market
for penny
stocks in both public offerings and secondary
trading;
|
·
|
contains
a description of the broker's or dealer's duties to the
customer and of
the rights and remedies available to the customer with
respect to a
violation to such duties or other requirements of Securities'
laws;
contains a brief, clear, narrative description of a dealer
market,
including bid and ask prices for penny stocks and the significance
of the
spread between the bid and ask price;
|
·
|
contains
a toll-free telephone number for inquiries on disciplinary
actions;
|
·
|
defines
significant terms in the disclosure document or in the
conduct of trading
in penny stocks; and
|
·
|
contains
such other information and is in such form, including language,
type, size
and format, as the Commission shall require by rule or
regulation.
|
·
|
bid
and offer quotations for the penny stock;
|
·
|
the
compensation of the broker-dealer and its salesperson
in the
transaction;
|
·
|
the
number of shares to which such bid and ask prices apply,
or other
comparable information relating to the depth and liquidity
of the marker
for such stock; and
|
·
|
monthly
account statements showing the market value of each penny
stock held in
the customer's account.
|
In addition, the penny stock rules that require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.
Related Stockholder Matters
None
Purchase of Equity Securities
On October 11, 2007 the Company acquired 100% of the outstanding stock of SSL, a Florida limited liability company in exchange for nominal consideration. Subsequently, the Company converted SSL into a “C” Corporation.
Item 6. Selected Financial Data.
None.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
This report on Form 10-K contains forward-looking statements within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended, that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such as “anticipate”, “expects”, “intends”, “plans”, “believes”, “seeks” and “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-K. Investors should carefully consider all of such risks before making an investment decision with respect to the Company’s stock. The following discussion and analysis should be read in conjunction with our financial statements for Accelerated Building Concepts, Inc. Such discussion represents only the best present assessment from our Management.
The Company is a holding company which currently operates two wholly-owned subsidiaries, New Century Structures, Inc. (“NCSI”) and Sustainable Structures Leasing, Inc. (“SSL”).
The Company’s principal operating subsidiary, NCSI, is a manufacturing and leasing company engaged in the manufacturing and leasing of concrete and structural insulated panel modular buildings. The Company markets the southeast United States with its primary focus on Florida.
The following Management Discussion and Analysis should be read in conjunction with the financial statements and accompanying notes included in this Form 10-K.
The Company reports its financial results of operations under two segments; manufacturing and leasing. During 2007, the Company recognized no revenue or expenses under the leasing segment. Prior to August 10, 2007, the Company was a shell company and had no operations.
On August 10, 2007, ABCC acquired all of the outstanding common stock of NCSI. For accounting purposes the acquisition has been treated as a recapitalization of NCSI with NCSI as the acquirer (reverse acquisition). The historical financial statements prior to August 10, 2007 are those of NCSI.
Total revenues decreased to $1,964,509 for the year ended December 31, 2007 from $6,678,617 for the year ended December 31, 2006. The decrease resulted primarily from the downturn in the educational market. The Company completed a major project in 2006 that represented 66% of the total revenue for that year. The inability to bond work was a primary factor in the Company not receiving awards in 2007. While the Company has three Indefinite Quantity Contracts with various school boards, the schools have not ordered from them. According to the September 2007 McGraw-Hill Construction (not incorporated in this Form 10-K), the school markets were at a virtual standstill in 2007. SSL had no activity for 2007.
Cost of sales was $1,511,514 and $4,783,727, respectively for the years ended December 31, 2007 and 2006. The cost of sales relates solely to NCSI. As a percent of revenue, the cost of sales was 76.9% and 71.6% of revenue, respectively. The increase for 2007 was primarily due to the high cost of sales related to various factors, primarily the completion of one project which required a higher than projected cost to complete the project. Other factors associated with the significant cost of sales relate to the third quarter having decreased revenue due to limited marketing efforts in prior periods therefore not providing the Company with viable contracts along with the downturn in the educational market. This factor resulted in standard costs (i.e. depreciation, payroll) to stay static as the Company completed its marketing efforts which should provide a significant increase in revenue in 2008.
Gross profit was $452,995 and $1,894,890, respectively for the years ended December 31, 2007 and 2006, respectively.
Total operating expenses increased to $878,217 for the year ended December 31, 2007 from $1,440,797 for the year ended December 31, 2006. This 39.0% decrease was mainly attributable to the reduction of unnecessary overhead expenses. The primary expenses for NCSI are administrative payroll, rent, insurance, professional fees and payroll taxes.
On January 9, 2007 the Company reported
a theft to the Orange County (Florida) Police and the
Brevard County (Florida) Police. After review of the items
taken, the Company estimated approximately $700,000 was
stolen over a period of one year. The Company estimated,
in good faith, a one time write-off of approximately
$360,000 as it managed to recuperate some items taken. A
Company officer and team leaders (four total) were
dismissed and charge with Grand Theft. On July 15, 2008,
the Company received notice from the Office of the State
Attorney, Eighteenth Judicial Circuit, in and for Brevard
County, that one former employee was convicted in a plea
bargain to LIO Petit Theft.
As of December 31, 2007, the Company had a working capital deficit of $1,735,650. Net loss was $597,593 for the year ended December 31, 2007. The Company generated a negative cash flow from operations of $96,669 for the year ended December 31, 2007. The negative cash flow from operating activities for the period is primarily attributable to the decrease in revenues and the associated profits.
Cash flows used in investing activities of $9,465 for the year ended December 31, 2007 related primarily to the acquisition of assets offset by the sale of equipment.
Cash flows used in financing activities for the year ended December 31, 2007 was $352,124 primarily due to the issuance of notes payable, issuance of common stock offset by the conversion of preferred stock into common stock, and the conversion of notes payable into common stock.
The
Company had a net decrease in cash of $458,258 for the year
ended December 31,
2007 compared to an increase of $377,875 for the year ended
December 31,
2006.
For the next twelve months, the Company intends to fund its operations through private debt and equity financing and income from operations. However, if the pricing of commodities and other raw materials prices increase dramatically, sales grow rapidly, and we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition. The Companys decision to become a public entity was directly related to the need for operating capital. The Company maintains a Revolving Credit Line with Avante Holding Group, Inc., in order to provide day-to-day operating capital. The Company is seeking Purchase Order financing and contract financing as required.
The effect of inflation on the Company's revenue and operating results was not significant. The Company's operations are located in North America and there are no seasonal aspects that would have a material effect on the Company's financial condition or results of operations.
The Company has $9 million in backlog contracts for 2008.
Critical Accounting Policies
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments:
·
|
Revenue
recognition
|
·
|
Product
warranty reserve
|
·
|
Allowance
for uncollectible accounts
|
The Company recognizes revenue when persuasive evidence of an arrangement exists, the price to the customer is fixed, collectibility is reasonably assured and title and risk of ownership is passed to the customer, which is usually upon delivery.
NCSI contracts to build commercial, residential, and other infrastructures to its customers, none of which are related to the Company. As such, they recognize their revenue under the percentage of completion method as work on a contract as progresses. Recognition of revenue and profits generally is related to costs incurred in providing the services required under the contract. Statement of Position 81-1 discusses accounting for performance of construction contracts. The use of the percentage of completion method depends on our ability to make reasonably dependable estimates. Additionally, contracts executed by the Company and its customers include provisions that clearly specify the enforceable rights of our services that are provided to and received by our customers. Our estimates assume that our customers will satisfy their obligations under the contract and our performance requirements will be completed.
Currently, NCSI provides one-year warranties on its contracts. Various components of the completed project are covered by third party warranties for products, services and other applicable items. Each warranty has different terms. Additionally, the Company provides its own warranty of its product and/or services. The terms of the warranty outside of the third party warranties is a standard one year comprehensive materials and workmanship warranty with two years on roofing labor and materials. This excludes damage due to a lack of standard maintenance, malicious acts, acts of God, and inappropriate use.
We are required to estimate the collectibility of our trade receivables. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past due balances. In order to assess the collectibility of these receivables, we perform ongoing credit evaluations of our customers' financial condition. Through these evaluations we may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are reevaluated and adjusted as additional information is received. These percentages are determined by a variety of factors including, but are not limited to, current economic trends, historical payment and bad debt write-off experience. We are not able to predict changes in the financial condition of our customers and if circumstances related to our customers deteriorate, our estimates of the recoverability of our receivables could be materially affected and we may be required to record additional allowances. Alternatively, if we provided more allowances than are ultimately required, we may reverse a portion of such provisions in future periods based on our actual collection experience. As of December 31, 2007, we determined that there was no need for a reserve.
Page
|
||||
|
|
|||
Report
of Independent Registered Public Accounting Firm
|
21
|
|||
Consolidated
Financial Statements
|
||||
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
22
- 23
|
|||
Consolidated
Statements of Operations for the Year Ended December 31, 2007
and
2006
|
24
|
|||
Consolidated
Statements of Stockholders’ Equity for the Year Ended December 31, 2007
and 2006
|
25
|
|||
Consolidated
Statements of Cash Flows for the Year Ended December 31, 2006
and
2006
|
26
- 27
|
|||
Notes
to Consolidated Financial Statements
|
28 - 40
|
ACCELERATED
BUILDING CONCEPTS CORPORATION
|
|
f/k/a
K2 DIGITAL, INC.
|
|
and
SUBSIDIARIES
|
|
Consolidated
Balance Sheets
|
|
December
31,
|
2007
|
2006
|
||||||
ASSETS
|
|||||||
Current
Assets
|
|||||||
Cash
|
$
|
394
|
$
|
458,652
|
|||
Accounts
Receivable, Net
|
39,606
|
385,098
|
|||||
Prepaid
Expenses
|
44,773
|
20,473
|
|||||
Total
Current Assets
|
84,773
|
864,223
|
|||||
Property,
Plant and Equipment, Net
|
500,350
|
620,046
|
|||||
Total
Assets
|
$
|
585,123
|
$
|
1,484,269
|
See
accompanying notes to consolidated financial statements.
|
ACCELERATED BUILDING CONCEPTS CORPORATION
f/k/a K2 DIGITAL, INC.
and SUBSIDIARIES
Consolidated Balance Sheets
December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY
2007 | 2006 | |||
Current Liabilities | ||||
Notes Payable, Current Portion |
$ |
647,941 |
$ |
1,257,924 |
Accounts Payable and Accrued Expenses |
843,328 |
688,842 |
||
Accrued Payroll and Taxes |
192,939 |
234,656 |
||
Billings in Excess of Costs on Uncompleted Contracts |
38,010 |
650,771 |
||
Deferred Revenue |
98,206 |
- |
||
Total Current Liabilities |
1,820,424 |
2,832,193 |
||
Noncurrent Liabilities |
|
|
||
Notes Payable, Noncurrent Portion |
622,918 |
442,265 |
||
Total Noncurrent Liabilities |
622,918 |
442,265 |
||
Total Liabilities |
2,443,342 |
3,274,457 |
||
Stockholders' Equity |
|
|
||
Series A convertible preferred stock, voting, $0.01 par value, 1,000,000 |
|
|
||
shares authorized, 1,000,000 shares issued and outstanding |
- |
10,000 |
||
Series B convertible preferred stock, voting, $0.315 par value, 1,000,000 |
|
|
||
shares authorized, 606,944 shares issued and outstanding |
- |
191,794 |
||
Series C convertible preferred stock, voting, $0.555 par value, 100,000 |
|
|
||
shares authorized, 90,000 shares issued and outstanding |
- |
50,000 |
||
Series D convertible preferred stock, voting, $0.665 par value, 500,000 |
|
|
||
shares authorized, 424,225 shares issued and outstanding |
- |
282,000 |
||
Common stock, $0.1 par value, 24,000,000 shares authorized; 7,718,465 |
|
|
||
shares issued, 7,676,723 shares outstanding |
771,844 |
- |
||
Common stock, $0.01 par value, 30,000,000 shares authorized, 1,600,000 |
|
|
||
shares issued and outstanding |
- |
485 |
||
Additional Paid In Capital |
12,099,150 |
199,980 |
||
Subscriptions Receivable | (250,000) | (57) | ||
Treasury Stock | (819,296) |
- |
||
Distributions |
- |
(158,283) | ||
Accumulated Deficit | (13,659,917) | (2,366,107) | ||
Total Stockholders' Equity |
(1,858,219) | (1,790,188) | ||
Total Liabilities and Stockholders' Equity |
$ |
585,123 |
$ |
1,484,269 |
See accompanying notes to consolidated financial statements. |
ACCELERATED
BUILDING CONCEPTS CORPORATION
|
|
f/k/a
K2 DIGITAL, INC.
|
|
and
SUBSIDIARIES
|
|
Consolidated
Statements of Operations
|
|
For
the Years Ended December 31,
|
2007
|
2006
|
||||||
Sales
|
$
|
1,964,509
|
$
|
6,678,617
|
|||
Cost
of Sales
|
1,511,514
|
4,783,727
|
|||||
Gross
Profit (Loss)
|
452,995
|
1,894,890
|
|||||
Operating
Expenses
|
878,217
|
1,440,797
|
|||||
Income
From Operations
|
(425,222
|
)
|
454,093
|
||||
Interest
Income / (Expense), Net
|
(172,371
|
)
|
(243,145
|
)
|
|||
Income
(Loss) Before Extraordinary Item
|
(597,593
|
)
|
210,948
|
||||
Extraordinary
Item - Theft
|
-
|
325,000
|
|||||
Net
Loss After Extrordinary Item
|
$
|
(597,593
|
)
|
$
|
(114,052
|
)
|
|
Basic
and diluted based upon
|
|||||||
5,804,849
weighted average
|
|||||||
shares
outstanding
|
$
|
(0.10
|
)
|
||||
Basic
and diluted based upon
|
|||||||
5,024,465
weighted average
|
|||||||
shares
outstanding
|
$
|
(0.020
|
)
|
||||
See
accompanying notes to consolidated financial
statements.
|
ACCELERATED
BUILDING CONCEPTS CORPORATION
|
|
f/k/a
K2 DIGITAL, INC.
|
|
and
SUBSIDIARIES
|
|
Consolidated
Statements of Stockholders' Equity
|
|
For
the Year Ended December 31, 2007
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
Total
|
|||||||||||||||||||||||||
|
|
|
|
|
Common
Stock
|
Paid-in
|
Subscriptions
|
|
Accumulated
|
Treasury
|
Shareholders'
|
||||||||||||||||||||||||||
|
Series
A
|
Series
B
|
Series
C
|
Series
D
|
Shares
|
Amount
|
Capital
|
Receivable
|
Distributions
|
Deficit
|
Stock
|
Equity
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance,
January 1, 2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
$
|
325
|
$
|
-
|
$
|
-
|
$
|
(158,283
|
)
|
$
|
(2,252,055
|
)
|
$
|
-
|
$
|
(2,410,013
|
)
|
|||||||||||
|
|||||||||||||||||||||||||||||||||||||
Issuance
of Series A
|
10,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
10,000
|
|||||||||||||||||||||||||
Issuance
of Series B
|
-
|
191,794
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
191,794
|
|||||||||||||||||||||||||
Issuance
of Series C
|
-
|
-
|
50,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
50,000
|
|||||||||||||||||||||||||
Issuance
of Series D
|
-
|
-
|
-
|
282,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
282,000
|
|||||||||||||||||||||||||
Issuance
of Common Stock
|
-
|
-
|
-
|
-
|
-
|
160
|
199,980
|
-
|
-
|
-
|
-
|
200,140
|
|||||||||||||||||||||||||
Subscriptions
Receivable
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(57
|
)
|
-
|
-
|
-
|
(57
|
)
|
|||||||||||||||||||||||
Net
(loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(114,052
|
)
|
-
|
(114,052
|
)
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||
Balance,
December 31, 2006
|
$
|
10,000
|
$
|
191,794
|
$
|
50,000
|
$
|
282,000
|
1,600,000
|
$
|
485
|
$
|
199,980
|
$
|
(57
|
)
|
$
|
(158,283
|
)
|
$
|
(2,366,107
|
)
|
$
|
-
|
$
|
(1,790,188
|
)
|
||||||||||
|
|||||||||||||||||||||||||||||||||||||
Conversion
of Preferred Stock
|
(10,000
|
)
|
(191,794
|
)
|
(50,000
|
)
|
(282,000
|
)
|
2,121,169
|
21,212
|
512,582
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Recapitalization
|
-
|
-
|
-
|
-
|
1,303,296
|
480,747
|
10,794,988
|
57
|
158,283
|
(10,696,216
|
)
|
(819,296
|
)
|
(81,437
|
)
|
||||||||||||||||||||||
Issuance
of Common Stock
|
-
|
-
|
-
|
-
|
250,000
|
25,000
|
225,000
|
(250,000
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Conversion
of Debt
|
-
|
-
|
-
|
-
|
2,000,000
|
200,000
|
300,000
|
-
|
-
|
-
|
-
|
500,000
|
|||||||||||||||||||||||||
Conversion
of Debt
|
-
|
-
|
-
|
-
|
300,000
|
30,000
|
45,000
|
-
|
-
|
-
|
-
|
75,000
|
|||||||||||||||||||||||||
Conversion
of Debt
|
-
|
-
|
-
|
-
|
144,000
|
14,400
|
21,600
|
-
|
-
|
-
|
-
|
36,000
|
|||||||||||||||||||||||||
Net
(Loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(597,593
|
)
|
-
|
(597,593
|
)
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||
Balance,
December 31, 2007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
7,718,465
|
$
|
771,844
|
$
|
12,099,150
|
$
|
(250,000
|
)
|
$
|
-
|
$
|
(13,659,916
|
)
|
$
|
(819,296
|
)
|
$
|
(1,858,218
|
)
|
See
accompanying independent auditors report and notes to consolidated
financial statements.
|
ACCELERATED
BUILDING CONCEPTS CORPORATION
|
|
f/k/a
K2 DIGITAL, INC.
|
|
and
SUBSIDIARIES
|
|
Consolidated
Statements of Cash Flows
|
|
For
the Years Ended December 31,
|
2007
|
2006
|
||||||
Cash
Flows From Operating Activities:
|
|||||||
Net
Loss
|
$
|
(597,593
|
)
|
$
|
(114,052
|
)
|
|
Adjustments
to Reconcile Net Loss to Net
|
|||||||
Cash
Used By Operating Activities:
|
|||||||
Depreciation
and Amortization
|
124,821
|
114,430
|
|||||
Loss
on Sale of Property, Plant and Equipment
|
4,340
|
-
|
|||||
Changes
in Assets and Liabilities:
|
|||||||
Accounts
Receivable, Net
|
345,492
|
(25,149
|
)
|
||||
Prepaid
Expenses and Other Current Assets
|
(24,300
|
)
|
(20,473
|
)
|
|||
Accounts
Payable, Accrued Expenses and Taxes Payable
|
112,769
|
(1,176,640
|
)
|
||||
Costs
and Estimated Billings in Excess of Billings on
|
|||||||
Uncompleted
Contracts
|
(612,761
|
)
|
650,771
|
||||
Deferred
Revenue
|
98,206
|
-
|
|||||
Net
Cash Used In Operating Activities
|
(594,026
|
)
|
(571,113
|
)
|
|||
Cash
Flows From Investing Activities:
|
|||||||
Proceeds
from Sale of Property, Plant and Equipment
|
84,977
|
-
|
|||||
Acquisition
of Property, Plant and Equipment
|
(94,442
|
)
|
(592,385
|
)
|
|||
Net
Cash Used In Investing Activities
|
(9,465
|
)
|
(592,385
|
)
|
|||
Cash
Flows From Financing Activities:
|
|||||||
Issuance
of Common Stock
|
-
|
200,140
|
|||||
Stock
Subscriptions Receivable
|
-
|
(57
|
)
|
||||
Issuance
of Preferred Stock - Series A
|
-
|
10,000
|
|||||
Issuance
of Preferred Stock - Series B
|
-
|
191,794
|
|||||
Issuance
of Preferred Stock - Series C
|
-
|
50,000
|
|||||
Issuance
of Preferred Stock - Series D
|
-
|
282,000
|
|||||
Recapitalization
due to Merger
|
(81,437
|
)
|
-
|
||||
Issuance
of Notes Payable
|
227,693
|
||||||
Repayment
of Notes Payable and Line of Credit
|
(46,023
|
)
|
807,496
|
||||
Net
Cash Provided By Financing Activities
|
100,233
|
1,541,373
|
|||||
Net
Increase (Decrease) in Cash
|
(458,258
|
)
|
377,875
|
||||
Cash
at Beginning of Year
|
458,652
|
80,777
|
|||||
Cash
at End of Period
|
$
|
394
|
$
|
458,652
|
See
accompanying notes to consolidated financial statements.
|
ACCELERATED
BUILDING CONCEPTS CORPORATION
|
|
f/k/a
K2 DIGITAL, INC.
|
|
and
SUBSIDIARIES
|
|
Consolidated
Statements of Cash Flows
|
|
For
the Years Ended December 31, 2007 and 2006
|
|
(Continued)
|
Supplemental
Disclosure of Cash Flow Information:
|
|||||||
Cash
paid during the period for interest
|
$
|
172,371
|
$
|
243,145
|
|||
Taxes
Paid
|
$
|
-
|
$
|
-
|
On September 13, 2007 the Company converted $611,000 of debt
assumed in the acquisition of Century
Structures, Inc. for 2,444,000 shares of its common stock at
$0.25 per
share.
|
|
|
|
On October 29, 2007 the Company entered into a stock subscription agreement to sell 250,000 shares of its common stock at $1.00 per share. As of December 31, 2007, the balance remains unpaid. | |
On
August 9, 2007, the Company's outstanding shares of Series A,
B, C and D
preferred stock were converted into common stock.
|
|
See
accompanying notes to consolidated financial statements.
|
On August 10, 2007, ABCC acquired all of the outstanding common stock of NCSI. For accounting purposes the acquisition has been treated as a recapitalization of NCSI with NCSI as the acquirer (reverse acquisition). The historical financial statements prior to August 10, 2007 are those of NCSI.
The Company recognizes revenue on its construction projects in accordance with Statement of Position 81-1, which discusses accounting for performance of construction contracts. The use of the percentage of completion method depends on our ability to make reasonably dependable estimates. The Company measures percentage of completion based upon percentage of costs associated with the job completed. Additionally, contracts executed by NCSI and its respective customers include provisions that clearly specify the enforceable rights of our services that are provided to and received by our customers. Our estimates assume that our customers will satisfy their obligations under the contract and our performance requirements will be completed.
September
30, 2007
|
||||||||||
As
|
As
|
|||||||||
Reported
|
Adjustments
|
Restated
|
||||||||
Liabilities
|
||||||||||
Current
Liabilities
|
||||||||||
Notes
Payable, Current Portion
|
$
|
510,181
|
$
|
-
|
$
|
510,181
|
||||
Accounts
Payable and Accrued Expenses
|
727,688
|
-
|
727,688
|
|||||||
Accrued
Payroll and Taxes
|
224,113
|
-
|
224,113
|
|||||||
Deferred
Revenue
|
98,206
|
-
|
98,206
|
|||||||
Total
Current Liabilities
|
1,560,188
|
-
|
1,560,188
|
|||||||
Noncurrent
Liabilities
|
||||||||||
Notes
Payable, Noncurrent Portion
|
752,384
|
-
|
752,384
|
|||||||
Total
Noncurrent Liabilities
|
752,384
|
-
|
752,384
|
|||||||
Total
Liabilities
|
2,312,572
|
-
|
2,312,572
|
|||||||
Stockholders'
Equity
|
||||||||||
Common
Stock
|
71,351
|
-
|
71,351
|
|||||||
Distributions
|
(158,283
|
)
|
158,283
|
-
|
||||||
Additional
Paid In Capital
|
9,840,614
|
(208,229
|
)
|
9,632,385
|
||||||
Subscription
Receivable
|
-
|
-
|
-
|
|||||||
Treasury
Stock
|
(819,296
|
)
|
-
|
(819,296
|
)
|
|||||
Accumulated
Other Comprehensive Income
|
25,722
|
(25,722
|
)
|
-
|
||||||
Accumulated
Deficit
|
(10,474,629
|
)
|
75,668
|
(10,398,961
|
)
|
|||||
Total
Stockholders' Equity
|
(1,514,521
|
)
|
-
|
(1,514,521
|
)
|
|||||
Total
Liabilities and Stockholders' Equity
|
$
|
798,051
|
$
|
-
|
$
|
798,051
|
Page 30
|
|||||||||||||||||||
2007 |
2008 |
||||||||||||||||||
As
|
As
|
As
|
As |
||||||||||||||||
Reported
|
Adjustments
|
Restated
|
Reported
|
Adjustments
|
Restated
|
||||||||||||||
Sales
|
$
|
110,972
|
$
|
-
|
$
|
110,972
|
$
|
10,281
|
$
|
1,986,736
|
$
|
1,997,017
|
|||||||
Cost
of Sales
|
265,699
|
-
|
265,699
|
-
|
1,877,392
|
1,877,392
|
|||||||||||||
Gross
Profit
|
(154,727
|
)
|
-
|
(154,727
|
)
|
10,281
|
109,344
|
119,625
|
|||||||||||
Operating
Expenses
|
142,504
|
-
|
142,504
|
15,101
|
208,937
|
224,038
|
|||||||||||||
Income
from Operations
|
(297,231
|
)
|
-
|
(297,231
|
)
|
(4,820
|
)
|
(99,593
|
)
|
(104,413
|
)
|
||||||||
Interest
Income / (Expense), Net
|
(55,164
|
)
|
-
|
(55,164
|
)
|
-
|
(33,436
|
)
|
(33,436
|
)
|
|||||||||
Net
Loss
|
$
|
(352,395
|
)
|
$
|
-
|
$
|
(352,395
|
)
|
$
|
(4,820
|
)
|
$
|
(133,029
|
)
|
$
|
(137,849
|
)
|
||
Comprehensive
Loss:
|
|||||||||||||||||||
Net
Loss
|
$
|
(352,395
|
)
|
$
|
-
|
$
|
(352,395
|
)
|
$
|
(4,820
|
)
|
$
|
(133,029
|
)
|
$
|
(137,849
|
)
|
||
Other
Comprehensive Loss,
|
|||||||||||||||||||
unrealized
gain (loss) on available-
|
|||||||||||||||||||
for-sale
security
|
-
|
-
|
-
|
(480
|
)
|
480
|
-
|
||||||||||||
Realized
holding gain (loss) arising
|
|||||||||||||||||||
during
the period
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Comprehensive
Loss
|
$
|
(352,395
|
)
|
$
|
-
|
$
|
(352,395
|
)
|
$
|
(5,300
|
)
|
$
|
(132,549
|
)
|
$
|
(137,849
|
)
|
||
Net
Income (Loss) Per Share:
|
|||||||||||||||||||
Basic
and diluted based upon
|
|||||||||||||||||||
5,502,639
weighted average
|
|||||||||||||||||||
shares
outstanding
|
$
|
(0.05
|
)
|
$
|
(0.01
|
)
|
$
|
(0.06
|
)
|
||||||||||
Basic
and diluted based upon
|
|||||||||||||||||||
5,024,465
weighted average
|
|||||||||||||||||||
shares
outstanding
|
$
|
(0.001
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
||||||||||
Note:
The weighted average shares outstanding has been
corrected.
|
Nine
Months Ended September 30, 2007
|
Nine
Months Ended September 30, 2006
|
||||||||||||||||||
As
|
As
|
As
|
As
|
||||||||||||||||
Reported
|
Adjustments
|
Restated
|
Reported
|
Adjustments
|
Restated
|
||||||||||||||
Sales
|
$
|
1,789,643
|
$
|
(28,662
|
)
|
$
|
1,760,981
|
$
|
42,198
|
$
|
5,485,113
|
$
|
5,527,311
|
||||||
Cost
of Sales
|
1,314,469
|
-
|
1,314,469
|
-
|
4,327,693
|
4,327,693
|
|||||||||||||
Gross
Profit
|
475,174
|
(28,662
|
)
|
446,512
|
42,198
|
1,157,420
|
1,199,618
|
||||||||||||
Operating
Expenses
|
693,801
|
(104,330
|
)
|
589,471
|
64,106
|
749,185
|
813,291
|
||||||||||||
Income
from Operations
|
(218,627
|
)
|
75,668
|
(142,959
|
)
|
(21,908
|
)
|
408,235
|
386,327
|
||||||||||
Interest
Income / (Expense), Net
|
(127,125
|
)
|
-
|
(127,125
|
)
|
-
|
(186,806
|
)
|
(186,806
|
)
|
|||||||||
Net
Loss
|
$
|
(345,752
|
)
|
$
|
75,668
|
$
|
(270,084
|
)
|
$
|
(21,908
|
)
|
$
|
221,429
|
$
|
199,521
|
||||
Comprehensive
Loss:
|
|||||||||||||||||||
Net
Loss
|
$
|
(345,752
|
)
|
$
|
75,668
|
$
|
(270,084
|
)
|
$
|
(21,908
|
)
|
$
|
221,429
|
$
|
199,521
|
||||
Other
Comprehensive Loss,
|
|||||||||||||||||||
unrealized
gain (loss) on available-
|
|||||||||||||||||||
for-sale
security
|
-
|
-
|
-
|
2,400
|
(2,400
|
)
|
-
|
||||||||||||
Realized
holding gain (loss) arising
|
|||||||||||||||||||
during
the period
|
(10,078
|
)
|
10,078
|
-
|
-
|
-
|
-
|
||||||||||||
Comprehensive
Loss
|
$
|
(355,830
|
)
|
$
|
85,746
|
$
|
(270,084
|
)
|
$
|
(19,508
|
)
|
$
|
219,029
|
$
|
199,521
|
||||
Net
Income (Loss) Per Share:
|
|||||||||||||||||||
Basic
and diluted based upon
|
|||||||||||||||||||
5,185,608
weighted average
|
|||||||||||||||||||
shares
outstanding
|
$
|
(0.05
|
)
|
$
|
-
|
$
|
(0.05
|
)
|
|||||||||||
Basic
and diluted based upon
|
|||||||||||||||||||
5,804,849
weighted average
|
|||||||||||||||||||
shares
outstanding
|
$
|
(0.004
|
)
|
$
|
0.034
|
$
|
0.03
|
||||||||||||
Note:
The weighted average shares outstanding has been
corrected.
|
Nine
Months Ended September 30, 2007
|
||||||||||
As
|
As
|
|||||||||
Reported
|
Adjustments
|
Restated
|
||||||||
Cash
Flows From Operating Activities:
|
||||||||||
Net
Loss
|
$
|
(345,752
|
)
|
$
|
75,668
|
$
|
(270,084
|
)
|
||
Adjustments
to Reconcile Net Income to Net
|
||||||||||
Cash
Used By Operating Activities:
|
||||||||||
Depreciation
and Amortization
|
93,143
|
-
|
93,143
|
|||||||
Stock
Based Compensation
|
5,540
|
(5,540
|
)
|
-
|
||||||
Realized
Gain on Sale of Available-for-Sale Security
|
(22,131
|
)
|
22,131
|
-
|
||||||
Conversion
of Convertible Preferred Securities
|
(165,000
|
)
|
165,000
|
-
|
||||||
Assumed
Notes Payable in Acquisition, Net
|
790,686
|
(790,686
|
)
|
-
|
||||||
Distributions
Acquired in Acquisition
|
(158,283
|
)
|
158,283
|
-
|
||||||
Accumulated
Deficit Acquired in Acquisition
|
(2,366,108
|
)
|
2,366,108
|
-
|
||||||
Decrease
(Increase) In:
|
||||||||||
Accounts
Receivable, Net
|
(119,571
|
)
|
385,098
|
265,527
|
||||||
Note
Receivable, Net
|
4,500
|
(4,500
|
)
|
-
|
||||||
Investment
in Available-for-Sale Security
|
18,100
|
(18,100
|
)
|
-
|
||||||
Prepaid
Expenses and Other Current Assets
|
(49,904
|
)
|
20,473
|
(29,431
|
)
|
|||||
Increase
(Decrease) In:
|
||||||||||
Accounts
Payable, Accrued Expenses and Taxes Payable
|
879,292
|
(825,267
|
)
|
54,025
|
||||||
Billings
in Excess of Costs on Uncompleted Contracts
|
-
|
(650,771
|
)
|
(650,771
|
)
|
|||||
Deferred
Revenue
|
98,206
|
-
|
98,206
|
|||||||
Net
Cash Used In Operating Activities
|
(1,337,282
|
)
|
897,897
|
(439,385
|
)
|
|||||
Cash
Flows From Investing Activities:
|
||||||||||
Acquisition
of Property, Plant and Equipment
|
(717,945
|
)
|
620,046
|
(97,899
|
)
|
|||||
Net
Cash Used In Investing Activities
|
(717,945
|
)
|
620,046
|
(97,899
|
)
|
|||||
Cash
Flows From Financing Activities:
|
||||||||||
Gross
Proceeds from Sale of Available-for-Sale Security
|
20,000
|
(20,000
|
)
|
-
|
||||||
Recapitalization
due to Merger
|
-
|
(81,437
|
)
|
(81,437
|
)
|
|||||
Issuance
of Notes Payable
|
499,337
|
(308,036
|
)
|
191,301
|
||||||
Repayment
of Notes Payable
|
(27,458
|
)
|
-
|
(27,458
|
)
|
|||||
Additional
Paid-in Capital
|
1,493,874
|
(1,493,874
|
)
|
-
|
||||||
Net
Cash Provided By Financing Activities
|
1,985,753
|
(1,903,347
|
)
|
82,406
|
||||||
Net
Increase (Decrease) in Cash
|
(69,474
|
)
|
(385,404
|
)
|
(454,878
|
)
|
||||
Cash
at Beginning of Year
|
73,248
|
385,404
|
458,652
|
|||||||
Cash
at End of Period
|
$
|
3,774
|
$
|
-
|
$
|
3,774
|
||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||
Cash
paid during the period for interest
|
$
|
129,098
|
$
|
-
|
$
|
129,098
|
||||
Taxes
Paid
|
$
|
-
|
$
|
-
|
$
|
-
|
On April 27, 2007, the Company signed a Merger Agreement with NCSI, whereby NCSI would merge with Merger Sub. In connection with the merger, the shareholders of NCSI would acquire a controlling interest in K2. NCSI's designees would be appointed as directors of K2 and the Board and shareholders would approve a 1 x 10 reverse split of K2 shares such that the current shareholders of K2 own approximately 500,000 post merger shares representing 10% of the post merger shares issued and outstanding. Under the terms of the termination of the agreement with NPOWR, certain amounts owed to K2 under the LOI were payable in the form of a note. With the acquisition of the NPOWR preferred stock by Avante, $13,500 due under the note was assumed by Avante. The note was paid in full during the quarter ended June 30, 2007.
Page 32
Useful
|
December
31,
|
December
31,
|
||||||||
Life
|
|
2007
|
|
2006
|
||||||
Facility
|
20
|
$
|
182,078
|
$
|
72,688
|
|||||
Capital
Improvements
|
5
|
55,610
|
55,610
|
|||||||
Machinery
& equipment
|
5
|
347,971
|
228,681
|
|||||||
Heavy
equipment
|
7
|
107,156
|
-
|
|||||||
Vehicles
and trailers
|
4
|
7,000
|
10,000
|
|||||||
Computer
equipment
|
3
|
449
|
450
|
|||||||
Furniture
and fixtures
|
5
|
25,773
|
25,773
|
|||||||
726,038
|
393,202
|
|||||||||
Less:
accumulated depreciation
|
(225,688
|
)
|
-
|
|||||||
Net
property and equipment
|
$
|
500,350
|
$
|
393,202
|
||||||
Depreciation expense was $124,821 and $114,430 for the year ended December 31, 2007 and 2006, respectively.
Page 33
Due | December 31, | ||
Date | 2007 | ||
Avante Holding Group, Inc., revolving credit, | |||
principal and interest at prime plus 4%. | July 2008 | $ | 296,469 |
Bank of America, line of credit, interest only | |||
payments at 11.75%. The amount is guaranteed | |||
by Joseph Sorci. | February 2013 | 100,000 | |
Caterpillar Financial Services Corporation, | |||
principal and interest at 2.8%. Monthly | |||
payments of $1,018.49. Note collateralized by | |||
Caterpillar Excavator. The amount is | |||
guaranteed by Joseph Sorci. | July 2008 | 5,638 | |
Caterpillar Financial Services Corporation, | |||
principal and interest at 3.92%. Monthly | |||
payments of $1,616.61. Note collateralized by | |||
Caterpillar Telescopic Handler. The amount is | |||
guaranteed by Joseph Sorci. | July 2009 | 31,502 | |
Regions Bank, principal and interest at prime | |||
rate. Monthly payments of $10,002.99. The | |||
balance is guaranteed by Joseph Sorci and | |||
Michael W. Hawkins. | June 2012 | 458,851 | |
Bridge Note, issued by multiple individuals. | |||
Interest only payments with interest at 10%. | August 2008 | 128,000 | |
Wells Fargo, principal and interest at 7.99%. | |||
Monthly payment of $2,097.42. Note | |||
collateralized by 2007 Phoenix Glider cement | |||
truck. The amount is guaranteed by Michael W. | |||
Hawkins. | September 2011 | 24,493 | |
Weaver Precast of Florida, LLC, promissory | |||
note and interest at 5%. Monthly payments of | |||
$10,767.67. | December 2009 | 225,906 | |
1,270,859 | |||
Less: Current portion | 647,941 | ||
Total long-term debt | $ | 622,918 |
The combined aggregate monthly payment amount for notes payable, as of December 31, 2007, is $26,569.85. Avante Holding Group, Inc. and Bank of America have a variable payback schedule that is not fixed. Therefore, it is not incorporated into the monthly minimum obligations schedule.
Future minimum obligations for the above notes payable are as follows:
2008 | $ | 427,454 |
2009 | 260,564 | |
2010 | 120,036 | |
2011 | 120,036 | |
2012 | 60,018 | |
Total Lease Obligations | $ | 988,108 |
NOTE 5 - COMMITMENTS
The Company leases office space in Melbourne, Florida from GAMI, LLC (“GAMI”, see Note 7 - Related Parties). The terms of the agreement are monthly payments of $4,000 expiring May 31, 2012. There are two renewable five year extensions.
Page 34
2008
|
$
|
48,000
|
||
2009
|
48,000
|
|||
2010
|
48,000
|
|||
2011
|
48,000
|
|||
2012
|
20,000
|
|||
Total
Lease Obligations
|
$
|
212,000
|
Year
Ended
|
|||||||
December
31,
|
|||||||
2007
|
2006
|
||||||
OPERATING
REVENUE
|
|||||||
Manufacturing
|
$
|
1,964,509
|
$
|
6,678,617
|
|||
Leasing
|
-
|
-
|
|||||
Consolidated
Totals
|
$
|
1,964,509
|
$
|
6,678,617
|
|||
INCOME
(LOSS) FROM OPERATIONS (1)
|
|||||||
Manufacturing
|
$
|
(344,508
|
)
|
$
|
210,948
|
||
Leasing
|
-
|
-
|
|||||
Corporate
|
(80,714
|
)
|
-
|
||||
Consolidated
Totals
|
$
|
(425,222
|
)
|
$
|
210,948
|
||
IDENTIFIABLE
ASSETS
|
|||||||
Manufacturing
|
$
|
585,123
|
$
|
1,484,269
|
|||
Leasing
|
-
|
-
|
|||||
Corporate
|
-
|
-
|
|||||
Consolidated
Totals
|
$
|
585,123
|
$
|
1,484,269
|
|||
DEPRECIATION
AND AMORTIZATION
|
|||||||
Manufacturing
|
$
|
124,821
|
$
|
114,430
|
|||
Leasing
|
-
|
-
|
|||||
Corporate
|
-
|
-
|
|||||
Consolidated
Totals
|
$
|
124,821
|
$
|
114,430
|
|||
(1)
Does not reflect the Extraordinary Loss of $325,000.
|
Page 35
NCSI and Avante entered into a Consulting Agreement on January 1, 2006 to provide corporate guidance and financial and accounting services. As compensation, Avante receives $10,000 per month and bonus compensation. Under this agreement Avante has the unilateral authority to hire additional personnel required to perform investor relations, financial administration, and executive oversight and request reimbursement from NCSI on a reimbursable expense basis. The term of this agreement is for three years with one additional automatic three-year extension.
Page 36
Year
Ended
|
|||||||
December
31,
|
|||||||
2007
|
2006
|
||||||
Numerator
|
|||||||
Net
Loss
|
$
|
(597,593
|
)
|
$
|
(114,052
|
)
|
|
Denominator
|
|||||||
Basic
and diluted
|
|||||||
Weighted
average common shares outstanding
|
5,804,849
|
5,024,465
|
|||||
Denominator
in basic calculation
|
5,804,849
|
5,024,465
|
|||||
Basic
and diluted net income (loss) per share
|
$
|
(0.10
|
)
|
$
|
(0.02
|
)
|
|
For
the Year Ended
|
|||||||
December
31,
|
|||||||
2007
|
2006
|
||||||
Tax
expense (benefit) at the statutory rate of 35%
|
$
|
(209,158
|
)
|
$
|
(39,918
|
)
|
|
State
income taxes, net of federal income tax
|
-
|
-
|
|||||
Change
in valuation allowance
|
209,158
|
39,918
|
|||||
Total
|
$
|
-
|
$
|
-
|
Page 37
|
December
31,
|
|||
2007
|
||||
Deferred
tax assets:
|
||||
Net
operating loss carryforward - 2006 and prior (1)
(2)
|
$
|
8,114,052
|
||
Net
operating loss carryforward - 2007
|
597,593
|
|||
Total
net operating loss carryforward
|
$
|
8,711,645
|
||
Total
deferred tax assets
|
$
|
8,711,645
|
||
Less
valuation allowance
|
(8,711,645
|
)
|
||
Total
deferred tax assets
|
$
|
-
|
(1)
|
As
of December 31, 2006, the Company had net operating loss carryforwards
of
approximately $8.0 million for federal and state income tax purposes,
which are available to reduce future taxable income and will
expire
through 2025 if not utilized. In addition, a 2001 impairment
charge
related to the investment in available-for-sale securities of
approximately $130,000, net of approximately $1,277,000 deducted
(for tax
purposes) during the subsequent years for subsequent sales, is
not
deductible until the securities are sold. The future tax benefits
associated with the net operating loss carryforwards and impairment
charge
were the primary components of an estimated $3.3 million deferred
tax
asset at December 31, 2006. A valuation allowance has been established
for
the entire amount of the deferred tax asset since its realization
is
considered unlikely. Further, a change in the ownership of a
majority of
the fair market value of the Company's common stock (such as
the change in
ownership that would occur in the contemplated transaction discussed
in
Note 1) could significantly delay or limit the utilization of
net
operating loss carryforwards.
|
(2)
|
For
2006 and prior, $8.0 million relates to K2 Digital, Inc. prior
to the
merger whereas $114,052 relates to NCSI for
2006.
|
The Company has two stock plans, the 1996 Stock Option Plan (the "1996 Plan"), and the 1997 Stock Incentive Plan (the "1997 Plan", and together with the 1996 Plan, the "Plans"). Pursuant to the Plans, designated employees, including officers and directors of the Company and certain outside consultants, will be entitled to receive nonqualified stock options and qualified stock incentive compensation of up to 225,000 and 500,000 options under the 1996 Plan and 1997 Plan respectively. The number of options available under the 1997 Plan were increased by an additional 400,000 and 800,000 options in 1999 and 2000, respectively, to a total of 1,700,000 options. In January 2001, the Board of Directors and stockholders approved an amendment to the 1997 Plan to increase the aggregate number of shares reserved for future issuance of the Company's common stock under the 1997 Plan from 1,700,000 shares to 3,000,000 shares. The 1996 Plan expired on January 1, 2006 and the 1997 Plan expired on June 12, 2007. On April 27, 2007 the Company issued 500,000 options to various directors and officers of the Company. On August 9, 2007 as part of the merger with New Century Structures, Inc., the options were reversed split on a 10:1 basis. Under the terms of the Plans, the minimum exercise price of options granted cannot be less than 100% of the fair market value of the common stock of the Company on the option grant date. Options granted under the Plan generally expire ten years after the option grant date. For incentive stock options granted to such persons who would be deemed to have in excess of a 10% ownership interest in the Company, the option price shall not be less that 110% of such fair market value for all options granted.
Page 38
The Company complies with Accounting Principles Board (APB) No. 25 "Accounting for Stock Issued to Employees" in accounting for stock options issued to employees. Stock options are granted with an exercise price equal to the fair market value on the date of grant. Accordingly, no compensation expense will be recognized for options issued to employees.
In accordance with the provisions of SFAS 123(r), the Company complies with recognizing compensation expense related to outstanding options. 500,000 options were granted in fiscal 2007. Prior to fiscal 2007, the Company had adopted the disclosure-only provision of SFAS 123, Accounting for Stock-Based Compensation, as amended by SFAS 148, Accounting for Stock-Based Compensation, Transition and Disclosure, which permitted the Company to account for stock option grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. Under APB 25, compensation expense is recorded when the exercise price of the Companys employee stock option is less than the market price of the underlying stock at the date of grant.
A summary of the Plans at December 31, 2007 is presented in the table below:
2007 | |||
Weighted | |||
Average | |||
Exercise | |||
Shares |
Price | ||
Outstanding at the beginning of the year* | 98,275 | $ | 23.97 |
Granted at fair value | 50,000 | $ | 0.85 |
Forfeited | 3,500 | $ | 17.50 |
Exercised | - | - | |
Currently Outstanding | 144,775 | $ | 24.65 |
Options exercisable at the end of the year | 144,775 | $ | 24.65 |
* Reflect 10:1 reverse split completed on August 9, 2007.
The following table summarizes information for the current stock options outstanding:
Options Outstanding | Options Exercisable | ||||||
Weighted- | Weighted- | Weighted- | |||||
Range of | Number | Average | Average | Number | Average | ||
Exercise | Outstanding | Remaining | Exercise | Exercisable | Exercise | ||
Prices | @ 12/31/07 | in years | Price | @ 12/31/07 | Price | ||
$0.08 - $58.125 | 144,775 | 8.92 | $ | 24.65 | 144,775 | $ | 24.65 |
Page 39
NOTE 13 SUBSEQUENT EVENTS
On February 11, 2008, the Company issued 300,000 shares of common stock to various debt holders in exchange for the conversion of $135,000 in debt.
Page 40
NAME |
AGE
|
POSITION
|
HELD
POSITION SINCE
|
|||
Joseph
J. Sorci (2)
|
51
|
Chairman,
Chief Executive Officer
|
10-Aug-07
|
|||
Bruce
Harmon (1)
|
49
|
Director,
Audit Chairman, Interim Chief Financial Officer, Director
|
10-Aug-07
|
|||
|
|
|
|
|||
Thomas
Amon (2)
|
60
|
Secretary,
Director
|
10-Aug-07
|
|||
Ralph
A. Henry (1)
|
56
|
Director
|
10-Aug-07
|
|||
Gina
L. Bennett (2)
|
39
|
Director
|
10-Aug-07
|
|||
(1)
Directors term expires 2008.
|
||||||
(2)
Directors term expires 2009.
|
Nonqualified
|
||||||||||||||||||||||||||||
Name
and
|
Non-Equity
|
Deferred
|
||||||||||||||||||||||||||
Principal
|
Stock
|
Option
|
Incentive
Plan
|
Compensation
|
All
Other
|
|||||||||||||||||||||||
Position
|
Year
|
|
Salary
(1)
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
|||||||||||
Joseph
J. Sorci (2)
(6)
|
2007
|
$
|
-
|
$
|
-
|
$
|
36,000
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
36,000
|
|||||||||||
Chairman
and CEO
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
|
||||||||||||||||||||||||||||
Bruce
Harmon (3)
|
2007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
Director
and Interim CFO
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
|
||||||||||||||||||||||||||||
Ralph
A. "Hank" Henry (4)
|
2007
|
$
|
2,885
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,885
|
|||||||||||
Director
and COO
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
|
||||||||||||||||||||||||||||
Gina
L. Bennett (5)
|
2007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
Director
and COO
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
(1)
The amounts reflected in the above table do not include any amounts
for
perquisites and other personal benefits extended to the named executive
officer.
|
|
(2)
Compensation paid is paid to Florida Architects, Inc., as to which
Mr.
Sorci is the CEO and majority shareholder.
|
|
(3)
Mr. Harmon receives no direct compensation for the services provided.
Mr.
Harmon is compensated through the Administrative Consulting
Agreement.
|
|
(4)
Mr. Henry resigned his position as COO of NCSI in January
2006.
|
|
(5)
Ms. Bennett receives no direct compensation for the services provided.
Mr.
Bennett is compensated through the Administrative Consulting
Agreement.
|
|
Ms.
Bennett was the COO of NCSI from January 2006 through June
2007.
|
|
(6)
Stock Awards for Mr. Sorci was the conversion of debt to common
stock.
|
The following table sets forth certain information regarding the beneficial ownership of our shares of voting stock as of December 31, 2007 by: (i) each person who is known by us to beneficially own more than 5% of the issued and outstanding shares of common stock; (ii) the Chairman and Chief Executive Officer; (iii) the directors; and (iv) all of the executive officers and directors as a group. For purposes of the beneficial ownership calculations below, the total issued, issuable and outstanding voting stock is 7,676,723. Unless otherwise indicated, the persons named below have sole voting and investment power with respect to all shares beneficially owned by them, subject to community property laws where applicable.
|
Amount
and Nature of
|
|
|||||
Name
and Address of Beneficial Owner (1) (2)
|
Beneficial
Ownership
|
Percent
|
|||||
Joseph
J. Sorci, Chairman and CEO
|
1,267,831
|
16.5
|
%
|
||||
Bruce
Harmon, Director and Interim CFO
|
129,575
|
1.7
|
%
|
||||
Brian
Gromlich
|
-
|
0.0
|
%
|
||||
Thomas
G. Amon, Director and Secretary
|
312,500
|
4.1
|
%
|
||||
Ralph
A. "Hank" Henry, Director
|
107,979
|
1.4
|
%
|
||||
Gina
L. Bennett, Director
|
129,575
|
1.7
|
%
|
||||
Avante
Holding Group, Inc. (3)
|
2,595,254
|
33.8
|
%
|
||||
All
officers and directors as a group
|
1,947,460
|
25.4
|
%
|
(1)
The amounts reflected in the above table do not include any amounts for perquisites and other personal benefits extended to the named executive officer.
(2)
Compensation paid is paid to Florida Architects, Inc., as to which Mr. Sorci is the CEO and majority shareholder.
(3)
Mr. Harmon receives no direct compensation for the services provided. Mr. Harmon is compensated through the Administrative Consulting Agreement.
(4)
Mr. Henry resigned his position as COO of NCSI in January 2006.
(5)
Ms. Bennett receives no direct compensation for the services provided. Mr. Bennett is compensated through the Administrative Consulting Agreement. Ms. Bennett was the COO of NCSI from January 2006 through June 2007.
(6)
Stock Awards for Mr. Sorci was the conversion of debt to common stock.
The
Law
Offices of Thomas G. Amon, New York, New York, represents the Company on
certain
legal matters. Thomas G. Amon, a principal in that firm is a director of
the Company and owns 312,500 common shares of Company stock
The Company has a payable of $9,390 and $25,471 to Alternative Construction Safe Rooms, Inc. (“ACSR”) and Alternative Construction by Revels, Inc. (“ACR”), respectively. ACSR and ACR are subsidiaries of Alternative Construction Technologies, Inc., which Michael W. Hawkins is the CEO, Chairman and significant shareholder.
Item 14. Principal Accounting Fees and Services
Audit
Fees
The Company has paid $13,500 and $12,000 for its quarterly financial reviews, Form 10-Q reviews, and Form 10-K reviews for 2007 and 2006, respectively. The Company has paid $45,000 and $14,000 for its annual financial audits for 2007 and 2006, respectively.
Page 45
The Companys taxes are prepared internally therefore no fees have been paid associated with tax preparation.
All Other Fees
The Company has no other related fees.
The Companys Audit Committee has an Audit Committee Charter with the appropriate policies and procedures regarding approvals. The Audit Committee has approved of all items disclosed in this section.
The Companys auditors for 2007 are Liebman, Goldberg & Drogin, LLP, located in Garden City, New York.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
Financial Statements
See Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference.
Exhibits
See the Exhibit Index following the signature page of this Registration Statement, which Exhibit Index is incorporated herein by reference.
Page 46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Joseph J. Sorci | April 14, 2008 |
Joseph Sorci, Chairman of the Board and Chief Executive Officer | Date |
/s/ Bruce Harmon | April 14, 2008 |
Bruce Harmon, Interim Chief Financial Officer, Audit Committee Chairman, and | Date |
Director | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities |
|
and on the dates indicated. | |
/s/ Joseph J. Sorci | April 14, 2008 |
Joseph Sorci, Chairman of the Board and Chief Executive Officer | Date |
/s/ Bruce Harmon | April 14, 2008 |
Bruce Harmon, Audit Committee Chairman, Director and Interim Chief Financial | Date |
Officer | |
/s/ Thomas G. Amon | April 14, 2008 |
Thomas G. Amon, Director | Date |
/s/ Brian Gromlich | April 14, 2008 |
Brian Gromlich, Director | Date |
/s/ Ralph A. "Hank" Henry | April 14, 2008 |
Ralph A. "Hank" Henry, Director | Date |
/s/ Gina L. Bennett | April 14, 2008 |
Gina L. Bennett, Director | Date |
Page 47
Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act
(a) Except to the extent that the materials enumerated in (1) and/or (2) below are specifically incorporated into this Form by reference (in which case see Rule 12b-23(d)), every registrant which files an annual report on this Form pursuant to Section 15(d) of the Act shall furnish to the Commission for its information, at the time of filing its report on this Form, four copies of the following:
(1)
Any annual report to security holders covering the registrants last fiscal year; and
(2)
Every proxy statement, form of proxy or other proxy soliciting material sent to more than ten of the registrants security holders with respect to any annual or other meeting of security holders.
(b) The foregoing material shall not be deemed to be "filed" with the Commission or otherwise subject to the liabilities of Section 18 of the Act, except to the extent that the registrant specifically incorporates it in its annual report on this Form by reference.
(c) If no such annual report or proxy material has been sent to security holders, a statement to that effect shall be included under this caption. If such report or proxy material is to be furnished to security holders subsequent to the filing of the annual report of this Form, the registrant shall so state under this caption and shall furnish copies of such material to the Commission when it is sent to security holders.
Page 48
EXHIBIT |
|
|
NUMBER |
|
DESCRIPTION OF DOCUMENT |
|
|
|
3.1 |
|
Certificate of Incorporation of the Company* |
|
|
|
3.1(a) |
|
Amendment to Certificate of Incorporation of the Company* |
|
|
|
3.1(b) |
|
Amendment to Certificate of Incorporation of the Company (incorporated by reference from the Registrant's Form 10KSB for its fiscal year ended 12/31/00).* |
|
|
|
3.1(c) |
|
Amendment of Certificate of Incorporation of the Company (incorporated by reference from the Registrant’s Form 14A filed with the Securities & Exchange Commission on July 24, 2007).* |
|
|
|
3.2 |
|
By-laws of the Company* |
|
|
|
3.2(b) |
|
Amendment to By-laws of the Company* |
|
|
|
4.1 |
|
Common Stock Certificate* |
|
|
|
4.2 |
|
Warrant Certificate* |
|
|
|
4.4 |
|
Warrant Agreement by and between Continental Stock Transfer & Trust Company and the Company* |
|
|
|
4.5 |
|
Voting Agreement among Messrs. Centner, de Ganon, Cleek and Szollose* |
|
|
|
10.1 |
|
1996 Stock Incentive Plan and Rules Relating thereto* |
|
|
|
10.2 |
|
1997 Stock Option Plan (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/96).* |
|
|
|
10.3 |
|
Amendment to 1997 Stock Option Plan (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/00).* |
|
|
|
10.4 |
|
Consulting Agreement with Harvey Berlent* |
|
|
|
10.5 |
|
Employment Agreement with Matthew G. de Ganon* |
|
|
|
10.6 |
|
Extension of Employment Agreement with Matthew G. de Ganon dated November 2, 1998 (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/98).* |
|
|
|
10.7 |
|
Amendment to Employment Agreement of Matthew G. de Ganon dated April 14, 2000 (incorporated by reference from the Registrant's Form 10-QSB for the quarterly period ended 03/31/00).* |
|
|
|
10.8 |
|
Employment Agreement with Douglas E. Cleek* |
|
|
|
10.9 |
|
Extension of Employment Agreement with Douglas E. Cleek dated January 15, 1999 (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/98).* |
|
|
|
10.10 |
|
Employment Agreement with Gary W. Brown dated April 14, 2000 (incorporated by reference from the Registrant's Form 10-QSB for the quarterly period ended 03/31/00).* |
|
|
|
10.11 |
|
Restricted Stock Agreement of Gary W. Brown (incorporated by reference from the Registrant's Form 10-QSB for the quarterly period ended 03/31/00).* |
|
|
|
10.12 |
|
Employment Agreement with Lynn Fantom dated February 13, 2001 (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/00).* |
|
|
|
10.13 |
|
Agreement of Lease dated as of April 18, 1997, between 30 Broad Associates, L.P., as landlord, and the Company, as tenant, relating to 30 Broad Street, New York, New York (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/00).* |
Page 49
10.14 |
|
Amendment to Lease dated as of April 1, 1998, between 30 Broad Associates, L.P., as landlord, and the Company, as tenant, relating to 30 Broad Street, New York, New York (incorporated by reference from the Registrant's Form 10-KSB for its fiscal year ended 12/31/00).* |
|
|
|
|
|
10.15 |
|
Second Amendment to Lease dated as of July 10, 2000, between ASC-CSFB 30 Broad, LLC, as landlord, and the Company, as tenant, relating to 30 Broad Street, New York, New York (incorporated by reference from the Registrant's Form 10-QSB for the quarterly period ended 06/30/00).* |
|
|
|
|
|
10.16 |
|
Common Stock Purchase Agreement dated as of December 11, 2000 between the Company and Fusion Capital Fund II, LLC (incorporated by reference from the Registrant's Current Report on Form 8-K filed 12/11/00).* |
|
|
|
|
|
10.17 |
|
Form of Registration Rights Agreement between the Company and Fusion Capital Fund II, LLC (incorporated by reference from the Registrant's Current Report on Form 8-K filed 12/11/00).* |
|
|
|
|
|
10.18 |
|
Master Transaction Agreement, dated as of August 20, 2001, between the Company and Integrated Information Systems, Inc. (incorporated by reference from the Registrant's Current Report on Form 8-K filed 8/30/01).* |
|
|
|
|
|
10.19 |
|
Agreement and Plan of Merger, dated as of January 15, 2002, by and among First Step Distribution Network, Inc. and its shareholders, First Step Acquisition Corp. and the Company (incorporated by reference from the Registrant's Current Report on Form 8-K filed 01/17/02).* |
|
|
|
|
|
10.20 |
|
Side Letter dated April 8, 2002, by and between the Company and First Step Distribution Network, Inc. (incorporated by reference from the Registrant's Annual Report on Form 10-KSB filed 04/16/02).* |
|
|
|
|
|
16.1 |
|
Letter from Arthur Andersen LLP regarding change in certifying accountant (incorporated by reference from the Registrant's Current Report on Form 8-K filed 04/16/02).* |
|
|
|
|
|
21.1 |
|
Subsidiary List* |
|
|
|
|
|
23.1 |
|
Consent of Liebman Goldberg & Drogin, LLP** |
|
|
|
|
|
31.1** |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
31.2** |
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Title 18, United States Code, Section 1350 Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
||
|
|
|
|
32.2** |
|
Certification of Principal Officer pursuant to Title 18, United States Code, Section 1350 Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
* Incorporated by reference from the Company's Registration Statement on
Form SB-2, No. 333-4319.
** Filed herewith.
Page 50