EXHIBIT 99.1
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
OF
OPHTHALMIC INTERNATIONAL, INC.
AND SUBSIDIARIES
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Ophthalmic International, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Ophthalmic International, Inc. and Subsidiaries as of June 30, 2009 and 2008 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ophthalmic International, Inc. and Subsidiaries at June 30, 2009 and 2008, and the results of its operations, changes in stockholders’ equity (deficit), and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Semple, Marchal & Cooper, LLP
Certified Public Accountants
Phoenix, Arizona
October 2, 2009
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2009 and 2008
| | | 6/30/2009 | | | 6/30/2008 | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | |
| Cash and Cash Equivalents | | $ | – | | | $ | – | |
| Accounts Receivable | | | – | | | | 10,491 | |
| Inventory | | | 3,556 | | | | 14,724 | |
| | | | | | | | | |
| Total Current Assets | | | 3,556 | | | | 25,215 | |
| | | | | | | | | |
| Property and equipment, net | | | 3,669 | | | | 4,468 | |
| | | | | | | | | |
| OTHER ASSETS | | | | | | | | |
| Deposits | | | 4,520 | | | | 4,520 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 11,745 | | | $ | 34,203 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Notes payable - related parties | | $ | 269,726 | | | $ | 263,060 | |
| Notes payable | | | 215,300 | | | | 120,000 | |
| Accounts payable | | | 101,452 | | | | 30,338 | |
| Bank overdraft | | | 2,463 | | | | 410 | |
| Accrued interest | | | 61,553 | | | | 22,241 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 650,494 | | | | 436,049 | |
| | | | | | | | | |
| COMMITMENTS | | | – | | | | – | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY/(DEFICIT) | | | | | | | | |
| Common Stock - $0.001 par value; 1,000,000 shares | | | | | | | | |
| authorized 100,000 shares issued and outstanding at | | | | | | | | |
| June 30, 2009 and June 30, 2008, respectively | | | 100 | | | | 100 | |
| Additional paid-in capital | | | 12,426,870 | | | | 12,426,870 | |
| Accumulated deficit | | | (13,065,719 | ) | | | (12,828,816 | ) |
| | | | | | | | | |
| TOTAL STOCKHOLDERS’ EQUITY(DEFICIT) | | | (638,749 | ) | | | (401,846 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT) | | $ | 11,745 | | | $ | 34,203 | |
| | | | | | | | | |
See accompanying notes to consolidated financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended June 30, 2009 and 2008
| | | Years ended June 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| PRODUCT REVENUES | | $ | 86,276 | | | $ | 71,195 | |
| | | | | | | | | |
| Cost of Product Revenues | | | 28,834 | | | | 43,320 | |
| | | | | | | | | |
| GROSS PROFIT | | | 57,442 | | | | 27,875 | |
| | | | | | | | | |
| GENERAL AND ADMINISTRATIVE EXPENSES | | | | | | | | |
| Employees and consultants expenses | | | 30,850 | | | | 40,700 | |
| Legal and professional fees | | | 63,931 | | | | 45,347 | |
| Rent expense | | | 54,240 | | | | 52,551 | |
| Selling and marketing expenses | | | 17,045 | | | | 14,145 | |
| Insurance | | | 30,726 | | | | 35,891 | |
| Telephone and utilities | | | 10,546 | | | | 11,027 | |
| Office expenses | | | 26,014 | | | | 60,234 | |
| Postage and shipping | | | 1,397 | | | | 5,731 | |
| Other general and administrative expenses | | | 3,809 | | | | 3,784 | |
| | | | | | | | | |
| TOTAL GENERAL AND ADMINISTRATIVE EXPENSES | | | 238,558 | | | | 269,410 | |
| | | | | | | | | |
| LOSS FROM OPERATIONS | | | (181,116 | ) | | | (241,535 | ) |
| | | | | | | | | |
| OTHER INCOME (EXPENSES) | | | | | | | | |
| Other Income | | | 1,755 | | | | 10,636 | |
| Interest expense | | | (57,542 | ) | | | (35,845 | ) |
| | | | | | | | | |
| TOTAL OTHER INCOME (EXPENSES) | | | (55,787 | ) | | | (25,209 | ) |
| | | | | | | | | |
| NET LOSS | | $ | (236,903 | ) | | $ | (266,744 | ) |
| | | | | | | | | |
| Basic and Diluted Loss per Share | | $ | (2.37 | ) | | $ | (2.67 | ) |
| | | | | | | | | |
| Weighted Average Shares Outstanding | | | 100,000 | | | | 100,000 | |
See accompanying notes to consolidated financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the years ended, June 30, 2009 and 2008
| | | | | | | | | | | | Total | |
| | | Common Stock | | | Additional | | | | | | Stockholders’ | |
| | | | | | | | | Paid-in | | | Accumulated | | | Equity | |
| | | Shares | | | Amount | | | Capital | | | Deficit | | | (Deficit) | |
| | | | | | | | | | | | | | | | |
| BALANCE AT JULY 1, 2007 | | | 100,000 | | | $ | 100 | | | $ | 12,426,870 | | | $ | (12,562,072 | ) | | $ | (135,102 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | | | | | | | | | | | | | (266,744 | ) | | | (266,744 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| BALANCE AT JUNE 30, 2008 | | | 100,000 | | | | 100 | | | | 12,426,870 | | | | (12,828,816 | ) | | | (401,846 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | | | | | | | | | | | | | (236,903 | ) | | | (236,903 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| BALANCE AT JUNE 30, 2009 | | | 100,000 | | | $ | 100 | | | $ | 12,426,870 | | | $ | (13,065,719 | ) | | $ | (638,749 | ) |
See accompanying notes to consolidated financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 2009 and 2008
| | | Years ended June 30, | |
| | | 2009 | | | 2008 | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: | | | | | | |
| | | | | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
| Net Loss | | $ | (236,903 | ) | | $ | (266,744 | ) |
| Adjustments to reconcile net loss to net | | | | | | | | |
| cash provided (used) by operating activities: | | | | | | | | |
| Depreciation | | | 799 | | | | 798 | |
| | | | | | | | | |
| Changes in Assets and Liabilities: | | | | | | | | |
| Inventory | | | 11,168 | | | | (2,518 | ) |
| Accounts receivable | | | 10,491 | | | | 13,834 | |
| Accounts payable | | | 71,114 | | | | 30,338 | |
| Accrued interest | | | 39,312 | | | | 20,845 | |
| | | | | | | | | |
| NET CASH USED IN OPERATING ACTIVITIES | | $ | (104,019 | ) | | $ | (203,447 | ) |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Overdraft | | $ | 2,053 | | | $ | 409 | |
| Proceeds from borrowings | | | 149,641 | | | | 211,060 | |
| Payment to borrowers | | | (47,675 | ) | | | (16,500 | ) |
| | | | | | | | | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | | $ | 104,019 | | | $ | 194,969 | |
| | | | | | | | | |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | | | – | | | | (8,478 | ) |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | | | – | | | | 8,478 | |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | | $ | – | | | $ | – | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Cash paid during the year for: | | | | | | | | |
| Interest | | $ | 18,230 | | | $ | 15,000 | |
See accompanying notes to consolidated financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF ESTIMATES
ORGANIZATION
Ophthalmic International, Inc. (The Company) was a wholly owned subsidiary of Coronado Industries, Inc. prior to January 26, 2007. The Company was purchased from Coronado Industries, Inc. for cash and other considerations.
Ophthalmic International, Inc. intends to manufacture and market the patented Vacuum Fixation Device and the patented suction rings to major medical supply companies and health care providers throughout the world.
GOING CONCERN
The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not made an operating profit since 1996. Further, the Company has a working capital deficit of $(646,938) and a negative net worth of $(13,065,719) as of June 30, 2009, which causes a doubt about the ability of the Company to remain a going concern.
Management intends to raise additional capital through debt or equity financing, but there are no guarantees that sufficient capital can be raised to support operations. Accordingly, the financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the uncertainty of the Company’s ability to continue as a going concern.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the activity of Ophthalmic International, Inc., together with its wholly-owned subsidiaries, American Glaucoma, Inc. and Ophthalmic International, LLC. All significant inter-company accounts and transactions have been eliminated. All of the above subsidiaries were inactive for the years ended June 30, 2009 and 2008.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, collectibility of accounts receivable, depreciable lives, and realization of net operating losses.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF ESTIMATES (Continued)
INVENTORIES
Inventories consist primarily of materials and parts and are stated at the lower of cost, as determined on a first-in, first-out (FIFO) basis, or market.
ACCOUNTS RECEIVABLE
The Company follows the allowance method of recognizing uncollectible accounts receivable. The allowance method recognizes bad debt expense based on a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable. As of June 30, 2009 and 2008, the Company has not established an allowance for uncollectible accounts receivable as they believe that all accounts are fully collectible. The Company does not record finance charges on delinquent accounts receivable balances unless they are received. Accounts receivable are generally unsecured.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to operations as incurred. Betterments or renewals are capitalized when incurred. Depreciation is provided using accelerated methods over the following useful lives:
Office Furniture and Equipment | | 5 – 7 Years |
Machinery | | 5 – 7 Years |
| Leasehold Improvements | | 5 – 39 Years |
LONG-LIVED ASSETS
Long-lived assets are accounted for in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF ESTIMATES (Continued)
DEFERRED INCOME TAXES
Deferred income taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Basic loss per share includes no dilution and is computed by dividing the loss to common stockholders by the weighted average number of common shares outstanding for the period. There are no dilutive securities outstanding as of June 30, 2009 and 2008.
REVENUE RECOGNITION
The company recognizes revenue based on guidance provided in Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” and in accordance with Emerging Issues Task Force (“EITF”) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.” The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price is fixed or determinable, and collection is reasonably assured. We recognize revenue on our standard products when title passes to the customer upon shipment. The standard products do not have customer acceptance criteria. The company has standard rights of return that are accounted for as a warranty provision under SFAS No. 5, “Accounting for Contingencies.” The company does not have any price protection agreements or other post shipment obligations. For custom equipment where customer acceptance is part of the sales agreement, revenue will be recognized when the customer has accepted the product. In cases where custom equipment does not have customer acceptance as part of the sales agreement, revenue will be recognized upon shipment, as long as the system meets the specifications as agreed upon with the customer. Certain transactions may have multiple deliverables, with the deliverables clearly defined. To the extent that the secondary deliverables are other than perfunctory, the company will recognize the revenue on each deliverable, if separable, or on the completion of all deliverables, if not separable.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF ESTIMATES (Continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of our financial instruments included in current assets and current liabilities approximated their respective fair values at each balance sheet date due to the immediate or short-term maturity of these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“FAS 160”). FAS 160 requires that the noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. FAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective for fiscal years beginning after December 15, 2008. The Company does not expect FAS No. 160 will have a material effect on its financial statements.
In March 2008, the FASB issued SFAS 161, Derivative Instruments and Hedging Activities (“FAS 161”), which became effective for the Company on January 1, 2009. This standard amends and expands the disclosure requirements of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. FAS 161 requires disclosures related to objectives and strategies for using derivatives; the fair-value amounts of, and gains and losses on, derivative instruments; and credit-risk-related contingent features in derivative agreements. The adoption of FAS No. 161 did not have a material effect on the Company’s financial statements.
In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires that publicly traded companies include the fair value disclosures required by SFAS No. 107 in their interim financial statements. This FSP is effective for interim reporting periods ending after June 15, 2009. The Company does not expect FSP FAS 107-1 and APB 28-1 will have a material effect on its financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NATURE OF OPERATIONS AND USE OF ESTIMATES (Continued)
RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In April 2009, the FASB issued FASB Staff Position FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). This FSP provides guidance regarding how to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability when compared with normal market activity for the asset or liability. In such situation, an entity may conclude that transactions or quoted prices may not be determinative of fair value, and may adjust the transactions or quoted prices to arrive at the fair value of the asset or liability. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. The adoption of FSP FAS 157-4 did not have a material effect on the Company’s financial statements.
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (FAS No. 165”). This Statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. FAS No. 165 was effective for interim or annual financial periods ending after June 15, 2009. The adoption of FAS No. 165 did not have a material effect on the Company’s financial statements.
In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“FAS No. 167”). This Statement requires entities to perform a qualitative analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This Statement also requires an ongoing reassessment of variable interests and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. FAS No. 167 is effective as of the beginning of an entity’s first annual reporting period that begins after November 15, 2009. The Company does not expect FAS 167 to have a material effect on its financial statements.
In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles: a replacement of FASB Statement No. 162” (FAS No. 168”). This Statement establishes two levels of U.S. generally accepted accounting principles (GAAP) – authoritative and non-authoritative. The FASB Accounting Standards Codification (ASC) will become the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the Securities and Exchange Commission (SEC). SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not expect FAS 168 to have a material effect on its financial statements.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. PROPERTY AND EQUIPMENT
At June 30, 2009 and 2008, property and equipment consists of the following:
| | | 2009 | | | 2008 | | |
| | | | | | | | | | |
| Office furniture and equipment | | $ | 58,433 | | | $ | 58,433 | | |
| Machinery and equipment | | | 15,613 | | | | 15,613 | | |
| Leasehold improvements | | | 3,000 | | | | 3,000 | | |
| | | | 77,046 | | | | 77,046 | | |
| Less: accumulated depreciation | | | (73,377 | ) | | | (72,578 | ) | |
| | | | | | | | | | |
| Net property and equipment | | $ | 3,669 | | | $ | 4,468 | | |
Depreciation expense was $799 and $798, for the years ended June 30, 2009 and 2008, respectively.
NOTE 3. INVENTORY
As of June 30, 2009 and 2008, inventory consisted of the following:
| | | 2009 | | | 2008 | | |
| | | | | | | | | | |
| Raw materials | | $ | 3,556 | | | $ | 6,224 | | |
| Finished goods | | | – | | | | 8,500 | | |
| | | $ | 3,556 | | | $ | 14,724 | | |
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. RELATED PARTY TRANSACTIONS
As of June 30, 2009 and 2008, notes payable to related parties consist of the following:
| | | 2009 | | | 2008 | |
| | | | | | | |
| 12% per annum, note payable to stockholders, principal and interest due at various times through June 30, 2010, unsecured | | $ | 258,726 | | | $ | 252,060 | |
| | | | | | | | | |
| 18% per annum note payable to a stockholder, principal and interest due on demand; unsecured | | | 11,000 | | | | 11,000 | |
| | | | 269,726 | | | | 263,060 | |
| Less: Current Portion | | | (269,726 | ) | | | (263,060 | ) |
| | | $ | – | | | $ | – | |
NOTE 5. INCOME TAXES
As of June 30, 2009 and 2008, the components of deferred income taxes are as follows:
| | | 2009 | | | 2008 | |
| | | | | | | |
Deferred Tax Assets - net operating losses | | $ | 201,000 | | | $ | 106,000 | |
| Less: valuation allowance | | | (201,000 | ) | | | (106,000 | ) |
| Net Deferred Tax Asset | | $ | – | | | $ | – | |
The Company has provided a full valuation allowance on its deferred tax asset as of June 30, 2009 and 2008, due to uncertainty of the realization of the net operating losses.
As of June 30, 2009, the Company has net operating loss carry-forwards available to offset future federal and state taxable income in the amounts of approximately $500,000, which will expire through June 30, 2029. The effective rate approximates the statutory rate of income taxes at a combined federal and state rate of 40%, which resulted in a $95,000 increase in the valuation allowance for 2009.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company entered into a non-cancelable lease agreement for office space in Fountain Hills, Arizona commencing December 1, 2004, through December 15, 2009. Monthly rental payments are $4,520.
OPHTHALMIC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. COMMITMENTS AND CONTINGENCIES (Continued)
Future minimum lease payments under the Company’s non-cancellable operating lease as of June 30, 2009 are as follows:
| Year Ending June 30: | | | | |
| 2010 | | | 27,120 | | |
| Future minimum lease payments | | $ | 27,120 | | |
For the years ended June 30, 2009 and 2008, rent expense under the lease agreements was $54,240 and $52,551, respectively.
Indemnification
The Company has agreed to indemnify its officers and directors for certain events or occurrences that may arise as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company believes the estimated fair value of these indemnification agreements is minimal and has no liabilities recorded for these agreements as of June 30, 2009 and 2008.
NOTE 7. NOTE PAYABLES
| | | 2009 | | | 2008 | |
| | | | | | | |
| 15% per annum note payables to Robert Suliot, principal and interest payable on demand. | | $ | 95,000 | | | $ | 100,000 | |
| | | | | | | | | |
| 12% per annum note payable to Victor Webb, principal and interest payable on demand. | | | 20,000 | | | | 20,000 | |
| | | | | | | | | |
| 12% per annum note payable to XL Lending, principal and interest payable on demand. | | | 32,000 | | | | – | |
| | | | | | | | | |
| 12% per annum note payable to Harvey Wish, principal and interest payable on demand. | | | 2,300 | | | | – | |
| | | | | | | | | |
| 12% per annum note payable to Larry Belcamino, principal and interest payable on demand. | | | 6,000 | | | | – | |
| | | | | | | | | |
| 15% per annum note payable to Vickie Goulette, principal and interest payable on demand. | | | 60,000 | | | | – | |
| | | | 215,300 | | | | 120,000 | |
| Less: current portion | | | (215,300 | ) | | | (120,000 | ) |
| | | $ | – | | | $ | – | |
