|
Delaware
|
88-0292161
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
|
Non-accelerated
filer o
|
Smaller
reporting company
x
|
|
Page
|
||||
|
PART
I - FINANCIAL INFORMATION
|
||||
|
Item
1. Financial Statements.
|
3 | |||
|
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
|
24 | |||
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk.
|
27 | |||
|
Item
4. Controls and Procedures.
|
28 | |||
|
PART
II - OTHER INFORMATION
|
||||
|
Item
1. Legal Proceedings.
|
29 | |||
|
Item
1A. Risk Factors.
|
31 | |||
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
|
31 | |||
|
Item
3. Defaults Upon Senior Securities.
|
31 | |||
|
Item
4. Submission of Matters to a Vote of Security Holders.
|
31 | |||
|
Item
5. Other Information.
|
31 | |||
|
Item
6. Exhibits.
|
31 | |||
|
SEPTEMBER
30,
2009
|
DECEMBER
31, 2008
|
|||||||
|
ASSETS
|
(Unaudited)
|
(Restated)
|
||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 7,692 | $ | 4,809 | ||||
|
Inventories
|
1,110,700 | — | ||||||
|
Current
assets from discontinued operations
|
6,406 | 6,406 | ||||||
|
TOTAL
CURRENT ASSETS
|
1,124,798 | 11,215 | ||||||
|
NONCURRENT
ASSETS
|
||||||||
|
Intangible
assets, net of accumulated amortization of $807,250
|
2,421,750 | — | ||||||
|
Investment
in joint venture
|
— | 3,229,000 | ||||||
|
Deposits
|
11,150 | — | ||||||
|
TOTAL
NONCURRENT ASSETS
|
2,432,900 | 3,229,000 | ||||||
|
TOTAL
ASSETS
|
$ | 3,557,698 | $ | 3,240,215 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
||||||||
|
LIABILITIES
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable (including $385,357 due to joint venture partner at
September 30, 2009)
|
$ | 4,874,995 | $ | 3,802,777 | ||||
|
Notes
and convertible notes payable, net of discount of $0 and
$134,423
|
7,290,280 | 9,264,732 | ||||||
|
Accrued
expenses and other liabilities (including $2,185,000 due to joint venture
partner at September 30, 2009 and December 31, 2008)
|
3,180,589 | 3,489,210 | ||||||
|
Fair
value of derivative liabilities
|
2,633,367 | 748,244 | ||||||
|
Current
liabilities from discontinued operations
|
1,387,406 | 1,387,406 | ||||||
|
TOTAL
LIABILITIES
|
19,366,637 | 18,692,369 | ||||||
|
COMMITMENTS
AND CONTINGENCIES
|
||||||||
|
STOCKHOLDERS'
DEFICIT
|
||||||||
|
Series
E Preferred stock, $.001 par value, 100,000 shares
authorized;
|
||||||||
|
100,000
shares issued and outstanding
|
100 | — | ||||||
|
Additional
paid-in capital - Series E Preferred stock
|
625,894 | — | ||||||
|
Common
stock, $.00001 par value, 250,000,000 shares authorized;
|
||||||||
|
248,990,902
and 184,704,015 shares issued and outstanding
|
2,491 | 1,848 | ||||||
|
Additional
paid-in capital
|
118,107,011 | 109,848,580 | ||||||
|
Accumulated
deficit
|
(134,544,435 | ) | (125,302,582 | ) | ||||
|
TOTAL
STOCKHOLDERS' DEFICIT
|
(15,808,939 | ) | (15,452,154 | ) | ||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$ | 3,557,698 | $ | 3,240,215 | ||||
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
|
SEPTEMBER
30,
|
SEPTEMBER
30,
|
|||||||||||||||
|
2009
|
2008
(Restated)
|
2009
|
2008
(Restated)
|
|||||||||||||
|
REVENUES
|
$ | — | $ | — | $ | — | $ | — | ||||||||
|
EXPENSES
|
||||||||||||||||
|
Payroll
and related taxes
|
153,687 | 135,496 | 404,023 | 666,531 | ||||||||||||
|
Consulting
fees
|
719,488 | 422,768 | 1,474,117 | 1,138,796 | ||||||||||||
|
Officers'
and directors' stock based compensation
|
335,750 | 97,500 | 3,246,280 | 435,000 | ||||||||||||
|
Amortization
|
242,175 | — | 807,250 | — | ||||||||||||
|
General
and administrative
|
95,460 | 111,055 | 341,119 | 275,059 | ||||||||||||
|
TOTAL
EXPENSES
|
1,546,560 | 766,819 | 6,272,789 | 2,515,386 | ||||||||||||
|
LOSS
FROM OPERATIONS
|
(1,546,560 | ) | (766,819 | ) | (6,272,789 | ) | (2,515,386 | ) | ||||||||
|
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
|
Loss
on extinguishment of debt
|
— | — | — | (1,096,650 | ) | |||||||||||
|
Extinguishment
of derivative liabilities
|
629,563 | 150,995 | 629,563 | 442,529 | ||||||||||||
|
Change
in fair value of derivative liabilities
|
(378,532 | ) | 600,838 | (2,514,686 | ) | 266,179 | ||||||||||
|
Interest
expense, net
|
(197,145 | ) | (418,697 | ) | (1,083,941 | ) | (856,218 | ) | ||||||||
|
NET
OTHER INCOME (EXPENSE)
|
53,886 | 333,136 | (2,969,064 | ) | (1,244,160 | ) | ||||||||||
|
LOSS
FROM CONTINUING OPERATIONS
|
(1,492,674 | ) | (433,683 | ) | (9,241,853 | ) | (3,759,546 | ) | ||||||||
|
LOSS
FROM DISCONTINUED OPERATIONS
|
— | — | — | (196 | ) | |||||||||||
|
NET
LOSS
|
$ | (1,492,674 | ) | $ | (433,683 | ) | $ | (9,241,853 | ) | $ | (3,759,742 | ) | ||||
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
||||||||||||||||
|
BASIC
and DILUTED
|
226,806,725 | 155,459,034 | 206,213,560 | 133,121,067 | ||||||||||||
|
LOSS
PER SHARE FROM CONTINUING OPERATIONS
|
||||||||||||||||
|
BASIC
and DILUTED
|
$ | ( 0.01 | ) | $ | ( 0.00 | ) | $ | ( 0.04 | ) | $ | ( 0.03 | ) | ||||
|
LOSS
PER SHARE FROM DISCONTINUED OPERATIONS
|
||||||||||||||||
|
BASIC
and DILUTED
|
— | — | — | $ | ( 0.00 | ) | ||||||||||
|
NET
LOSS PER SHARE
|
||||||||||||||||
|
BASIC
and DILUTED
|
$ | ( 0.01 | ) | $ | ( 0.00 | ) | $ | ( 0.04 | ) | $ | ( 0.03 | ) | ||||
|
COMMON
STOCK
|
||||||||||||
|
ADDITIONAL
|
||||||||||||
|
PAID-IN
|
||||||||||||
|
Description
|
SHARES
|
AMOUNT
|
CAPITAL
|
|||||||||
|
BALANCE,
DECEMBER 31, 2008 (Restated)
|
184,704,015 | $ | 1,848 | $ | 109,848,580 | |||||||
|
Shares
issued for cash
|
12,889,996 | 129 | 1,353,321 | |||||||||
|
Shares
issued for conversion of notes
|
25,683,212 | 257 | 2,702,942 | |||||||||
|
Shares
issued for settlement of debt
|
2,720,346 | 27 | 131,753 | |||||||||
|
Shares
issued for services
|
22,668,333 | 226 | 1,881,774 | |||||||||
|
Shares
issued for options exercised
|
75,000 | 1 | (1 | ) | ||||||||
|
Shares
issued for interest
|
250,000 | 3 | 9,497 | |||||||||
|
Fair
value of vested options issued for officers’ and directors’
compensation
|
— | — | 1,707,780 | |||||||||
|
Warrants
issued with convertible notes
|
— | — | 28,060 | |||||||||
|
Modification
of warrants
|
— | — | 443,305 | |||||||||
|
Preferred
Series E shares issued for accrued expenses
|
— | — | — | |||||||||
|
Preferred
Series E shares issued for accounts payable
|
— | — | — | |||||||||
|
Net
loss
|
— | — | — | |||||||||
|
BALANCE,
SEPTEMBER 30, 2009
|
248,990,902 | $ | 2,491 | $ | 118,107,011 | |||||||
|
SERIES
E PREFERRED STOCK
|
||||||||||||||||||||
|
ADDITIONAL
|
TOTAL
|
|||||||||||||||||||
|
PAID-IN
|
ACCUMULATED
|
STOCKHOLDERS'
|
||||||||||||||||||
|
Description
|
SHARES
|
AMOUNT
|
CAPITAL
|
DEFICIT
|
DEFICIT
|
|||||||||||||||
|
BALANCE,
DECEMBER 31, 2008 (Restated)
|
— | $ | — | $ | — | $ | (125,302,582 | ) | $ | (15,452,154 | ) | |||||||||
|
Shares
issued for cash
|
— | — | — | — | 1,353,450 | |||||||||||||||
|
Shares
issued for conversion of notes
|
— | — | — | — | 2,703,199 | |||||||||||||||
|
Shares
issued for settlement of debt
|
— | — | — | — | 131,780 | |||||||||||||||
|
Shares
issued for services
|
— | — | — | — | 1,882,000 | |||||||||||||||
|
Shares
issued for options exercised
|
— | — | — | — | — | |||||||||||||||
|
Shares
issued for interest
|
— | — | — | — | 9,500 | |||||||||||||||
|
Fair
value of vested options issued for officers’ and directors’
compensation
|
— | — | — | — | 1,707,780 | |||||||||||||||
|
Warrants
issued with convertible notes
|
— | — | — | — | 28,060 | |||||||||||||||
|
Modification
of warrants
|
— | — | — | — | 443,305 | |||||||||||||||
|
Preferred
Series E shares issued for accrued expenses
|
70,385 | 70 | 440,537 | — | 440,607 | |||||||||||||||
|
Preferred
Series E shares issued for accounts payable
|
29,615 | 30 | 185,357 | — | 185,387 | |||||||||||||||
|
Net
loss
|
— | — | — | (9,241,853 | ) | (9,241,853 | ) | |||||||||||||
|
BALANCE,
SEPTEMBER 30, 2009
|
100,000 | $ | 100 | $ | 625,894 | $ | (134,544,435 | ) | $ | (15,808,939 | ) | |||||||||
|
2009
|
2008
(Restated)
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net
loss
|
$ | (9,241,853 | ) | $ | (3,759,742 | ) | ||
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||
|
Amortization
of debt discount
|
176,465 | 207,514 | ||||||
|
Amortization
of intangible asset
|
807,250 | — | ||||||
|
Loss
on extinguishment of debt
|
— | 1,096,650 | ||||||
|
Stock
based compensation
|
2,050,726 | 391,444 | ||||||
|
Extinguishment
of derivative liabilities
|
— | (266,179 | ) | |||||
|
Change
in fair value of derivative liabilities
|
1,885,123 | (442,529 | ) | |||||
|
Fair
value of vested options
|
1,707,780 | 244,831 | ||||||
|
Accrued
interest expense on convertible notes payable
|
381,526 | 421,502 | ||||||
|
Common
stock exchanged for interest and financing costs
|
— | 227,080 | ||||||
|
Fair
value of modification of warrants
|
443,305 | — | ||||||
|
Change
in operating assets and liabilities:
|
||||||||
|
Inventories
|
(1,110,700 | ) | — | |||||
|
Assets
from discontinued operations
|
— | 12,272 | ||||||
|
Accounts
payable
|
1,270,636 | 555,192 | ||||||
|
Accrued
expenses and other liabilities
|
175,736 | 914,204 | ||||||
|
Liabilities
from discontinued operations
|
— | 25 | ||||||
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(1,454,006 | ) | (397,736 | ) | ||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
|
Payments
to joint venture
|
— | (385,000 | ) | |||||
|
Deposits
|
(11,150 | ) | — | |||||
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(11,150 | ) | (385,000 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
Payments
on notes payable
|
(25,411 | ) | (25,139 | ) | ||||
|
Proceeds
from notes and loans payable
|
140,000 | 782,279 | ||||||
|
Proceeds
from sale of common stock
|
1,353,450 | — | ||||||
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
1,468,039 | 757,140 | ||||||
|
NET
CHANGE IN CASH AND EQUIVALENTS
|
2,883 | (25,596 | ) | |||||
|
CASH
AND EQUIVALENTS – BEGINNING OF PERIOD
|
4,809 | 32,278 | ||||||
|
CASH
AND EQUIVALENTS – END OF PERIOD
|
$ | 7,692 | $ | 6,682 | ||||
|
SUPPLEMENTAL
DISCLOSURES
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | 2,903 | $ | 122 | ||||
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
||||||||
|
Common
stock issued for joint venture
|
— | 268,000 | ||||||
|
Common
stock for accrued expenses
|
43,750 | 148,970 | ||||||
|
Common
stock for accounts payable
|
13,031 | — | ||||||
|
Accrued
expense for joint venture
|
— | 659,000 | ||||||
|
Conversion
of notes payable to common stock
|
2,618,973 | 4,137,442 | ||||||
|
Non-cash
equity-warrant valuation and intrinsic value of beneficial
conversion
associated with convertible notes
|
28,060 | 194,080 | ||||||
|
Preferred
stock for accrued expenses
|
440,607 | — | ||||||
|
Preferred
stock for accounts payable
|
185,387 | — | ||||||
|
Total Carrying Value at
September
|
Fair
Value Measurements at September 30, 2009
|
|||||||||||||||
|
30,
2009
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
|
Cash
and cash equivalents
|
$
|
7,692
|
$
|
7,692
|
$
|
—
|
$
|
—
|
||||||||
|
Derivative
liabilities
|
2,633,367
|
—
|
—
|
2,633,367
|
||||||||||||
|
SEPTEMBER
30 2009 (Unaudited)
|
Telecom
|
GlobeTel
Wireless
|
Total
|
|||||||||
|
Cash
|
$ | 6,406 | $ | — | $ | 6,406 | ||||||
|
Total
assets
|
$ | 6,406 | $ | — | $ | 6,406 | ||||||
|
Accounts
payable
|
140,116 | 1,216,208 | 1,356,324 | |||||||||
|
Accrued
liabilities
|
9,605 | 21,477 | 31,082 | |||||||||
|
Total
current liabilities
|
149,721 | 1,237,685 | 1,387,406 | |||||||||
|
Net
liabilities of discontinued operations
|
$ | 143,315 | $ | 1,237,685 | $ | 1,381,000 | ||||||
|
DECEMBER
31, 2008
|
Telecom
|
GlobeTel
Wireless
|
Total
|
|||||||||
|
Cash
|
$ | 6,406 | $ | — | $ | 6,406 | ||||||
|
Total
assets
|
$ | 6,406 | $ | — | $ | 6,406 | ||||||
|
Accounts
payable
|
140,116 | 1,216,208 | 1,356,324 | |||||||||
|
Accrued
liabilities
|
9,605 | 21,477 | 31,082 | |||||||||
|
Total
current liabilities
|
149,721 | 1,237,685 | 1,387,406 | |||||||||
|
Net
liabilities of discontinued operations
|
$ | 143,315 | $ | 1,237,685 | $ | 1,381,000 | ||||||
|
December
31, 2008
|
||||||||||||
|
Account
|
(As
Initially Reported)
|
(Adjustment)
|
(As
Restated)
|
|||||||||
|
Current
Assets
|
||||||||||||
|
Cash
|
$
|
4,809
|
$
|
—
|
$
|
4,809
|
||||||
|
Current
assets from discontinued operations
|
6,406
|
—
|
6,406
|
|||||||||
|
Total
current assets
|
11,215
|
—
|
11,215
|
|||||||||
|
Investment
in joint venture
|
3,229,000
|
—
|
3,229,000
|
|||||||||
|
Total
Assets
|
$
|
3,240,215
|
$
|
—
|
$
|
3,240,215
|
||||||
|
Liabilities
and Stockholders’ Deficit
|
||||||||||||
|
Current
liabilities
|
||||||||||||
|
Accounts
payable
|
$
|
3,802,777
|
$
|
—
|
$
|
3,802,777
|
||||||
|
Notes
and notes payable, net of discount of $134,423
|
9,264,732
|
—
|
9,264,732
|
|||||||||
|
Accrued
expenses and other liabilities
|
3,489,210
|
—
|
3,489,210
|
|||||||||
|
Derivative
liabilities
|
—
|
748,244
|
(1)
|
748,244
|
||||||||
|
Current
liabilities from discontinued operations
|
1,387,406
|
—
|
1,387,406
|
|||||||||
|
Total
Current Liabilities
|
17,944,125
|
748,244
|
18,692,369
|
|||||||||
|
Stockholders’
Deficit
|
||||||||||||