UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
(Amendment No. 1)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MEGANET CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
5045
(Primary Standard Industrial Classification Code)
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
Telephone: (702) 987-0087
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Saul Backal
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
Telephone: (702) 987-0087
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of Communications to:
Gary R. Henrie, Esq.
3518 N. 1450 W.
Pleasant Grove, Utah 84062
Tel: (801) 310-1419
Email: grhlaw@hotmail.com
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this registration statement.
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
- 1 -
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered | Amount to be Registered | Proposed Maximum Offering Price Per Share | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||
Common stock, par value $.001 per share | 10,000,000 shares | $10.00 (1) | $100,000,000 | $11,610.00(2) |
(1) | This share price is the offering price of the common stock. |
(2) | $290.25 of the registration fee was paid in connection with the original filing of the registration statement. The balance of the registration fee has been paid in connection with the filing of this amendment to the registration statement. |
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where such offers are not permitted.
Subject to completion,
October _____, 2011
- 2 -
PROSPECTUS
10,000,000 Shares
MEGANET CORPORATION
Common Stock
We are registering 10,000,000 shares of common stock of Meganet Corporation, a Nevada corporation (“Meganet”), held by the selling stockholders. The selling stockholders will receive all of the proceeds from the sale of the shares. We will pay all expenses incident to the registration of the shares under the Securities Act of 1933, as amended.
At the present time our common stock is currently not quoted on any exchange or listed in any listing venue. Until such time as our common stock is quoted on the OTC Bulletin Board or other quotation or trading or listing venue, all selling stockholders will sell at the stated fixed price of $10.00 per share. Thereafter the shares will be sold at prevailing market prices or privately negotiated prices.
Investing in our common stock involves risks, which are described in the “Risk Factors” section beginning on page 8 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is October _____, 2011.
- 3 -
You should rely only on the information contained in this prospectus. We have not authorized any person to provide you with any information or represent anything not contained in this prospectus, and, if given or made, any such other information or representation should not be relied upon as having been authorized by us. The selling stockholders are not offering to sell, or seeking offers to buy, our common stock in any jurisdiction where the offer or sale is not permitted. You should not assume that the information provided in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.
Page | ||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 5 | |
PROSPECTUS SUMMARY | 6 | |
RISK FACTORS | 8 | |
USE OF PROCEEDS | 12 | |
DETERMINATION OF OFFERING PRICE | 12 | |
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS | 12 | |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 | |
BUSINESS | 15 | |
MANAGEMENT | 19 | |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 20 | |
VOTING SECURITIES AND PRINCIPAL HOLDERS | 21 | |
SELLING STOCKHOLDERS | 22 | |
PLAN OF DISTRIBUTION | 24 | |
DESCRIPTION OF CAPITAL STOCK | 26 | |
LEGAL MATTERS | 26 | |
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | 26 | |
EXPERTS | 27 | |
WHERE YOU CAN FIND MORE INFORMATION | 27 | |
INDEX TO FINANCIAL STATEMENTS | 28 |
- 4 -
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus contains forward-looking statements. The words “forecast”, “eliminate”, “project”, “intend”, “expect”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
· | Our ability to achieve our business of producing and selling products; |
· | Our ability to develop new products of interest to our client base; |
· | Our ability to attract, retain and motivate qualified employees and management. The impact of federal, state or local government regulations; |
· | Competition in the electronic defense technology industry; |
· | Availability and cost of additional capital; |
· | Litigation in connection with our business; |
· | Our ability to protect our trademarks, patents and other proprietary rights; |
· | Other risks described from time to time in our periodic reports filed with the Securities and Exchange Commission |
This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative but not exhaustive. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.
Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
- 5 -
The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors” and our consolidated financial statements and accompanying notes. Any references to “Meganet”, “we”, “us” or “our” refer to Meganet Corporation, a Nevada corporation.
Our Business
Meganet is in the business of inventing, developing, producing and marketing data security, intelligence/counter-intelligence and military operational devices. Meganet’s products include among other things encryption devices, bomb jammers, communication interceptors, devices that render communications secure and spy phones. Meganet’s success is largely dependent upon selling products to the U.S. military and the U.S. intelligence agencies.
Our Offices
Meganet Corporation is a Nevada corporation organized on March 26, 2009. Our principal executive offices are located at 2510 E. Sunset Rd. Unit 5-777, Las Vegas, NV 89120. The telephone number of our principal executive offices is (702) 987-0087.
Our Website
Our Internet address is www.meganet.com. Information contained on our website is not part of this prospectus.
The Offering
Shares of common stock offered by us: None.
Shares of common stock that may be sold by the selling stockholders: 10,000,000.
At the present time our common stock is currently not quoted on any exchange or listed in any listing venue. Until such time as our common stock is quoted on the OTC Bulletin Board or other quotation or trading or listing venue, all selling stockholders will sell at privately negotiated prices. Thereafter the shares will be sold at prevailing market prices or privately negotiated prices.
Use of proceeds:
We will not receive any proceeds from the resale of the shares offered hereby, all of which proceeds will be paid to the selling stockholders.
Risk factors:
The purchase of our common stock involves a high degree of risk. You should carefully review and consider “Risk Factors” beginning on page 5.
We will pay all expenses incident to the registration of the shares under the Securities Act.
- 6 -
Summary Financial Information
The tables and information below are derived from Meganet’s unaudited financial statements for the three month period ended June 30, 2011, and its audited financial statements for the years ended March 31, 2011, and March 31, 2010.
Balance Sheet Summary | June 30, 2011 | March 31, 2011 | March 31, 2010 | |||||||||
(Unaudited) | (Audited) | (Audited) | ||||||||||
Cash | $ | 532 | $ | 89,584 | $ | 103 | ||||||
Prepaid expenses | 31,885 | 59,140 | - | |||||||||
Property and equipment, net | 1,357,454 | 1,458,258 | 1,766,975 | |||||||||
Total assets | 1,389,871 | 1,606,982 | 1,767,078 | |||||||||
Total liabilities | 296,891 | 287,195 | 189,203 | |||||||||
Total stockholders’ equity | 1,092,979 | 1,319,787 | 1,577,875 |
Statement of Operations Summary | Three Months Ended June 30, 2011 | Year Ended March 31, 2011 | Year Ended March 31, 2010 | |||||||||
(Unaudited) | (Audited) | (Audited) | ||||||||||
Revenues | $ | 44,102 | $ | 386,203 | $ | 1,938,355 | ||||||
Gross profit | 22,802 | 235,194 | 236,780 | |||||||||
Operating expenses | 249,610 | 830,799 | 869,110 | |||||||||
Net loss | (226,808 | ) | (595,605 | ) | (638,330 | ) |
- 7 -
RISK FACTORS
This offering involves a high degree of risk. You should carefully consider the risks and uncertainties described below in addition to the other information contained in this prospectus before deciding whether to invest in shares of our common stock. If any of the following risks actually occur, our business, financial condition or operating results could be harmed. In that case, the trading price of our common stock could decline and you may lose part or all of your investment. In the opinion of management, the risks discussed below represent the material risks known to the company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also impair our business operations and adversely affect the market price of our common stock.
Meganet may cease as a going concern.
The report of our independent registered public accounting firm points out that the Company has suffered recurring losses, used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant restructuring to sustain its operation for the foreseeable future. The auditors therefore believe that it is possible that Meganet may cease as a going concern in which event it is possible that investors would lose their investments. Management estimates it will need $180,000 in additional capital to sustain business operations over the next twelve months.
At the present time Meganet does not have additional authorized securities that it may sell in order to raise additional capital.
It is possible that Meganet may need to sell stock in the next 12 months in order to raise additional working capital. At the present time, Meganet has 100,000,000 shares of common stock issued and outstanding which constitutes all of the equity capital that is authorized and that Meganet may issue. Accordingly, in order to sell additional stock, that stock would first require approval by Meganet’s board of directors and shareholders and certain filings would need to be made with the Office of the Secretary of State of the State of Nevada. This could have the effect of slowing down the ability to obtain additional funding in an expedited manner. However, management is committed to not increase the number of authorized shares but to raise capital in other ways if necessary than through the sale of newly authorized capital.
If we lose our government certification, we would lose the ability to market to the U.S. Military and federal agencies.
The U.S. military and U.S. federal agencies comprise almost our entire sales market. We have the right to market to these agencies because we are certified as a government supplier. If we should ever lose this certification, it is almost certain that our business would fail.
If we fail to convince the market place that we have competitive products, we will not be commercially successful.
Even if we are successful in designing products competitive to those of our competitors, it is an ongoing need for us to educate and convince the market place of that competitiveness. If we are unable to do so, we will not be able to achieve the market penetration necessary to remain commercially successful and our investors may lose their investments.
If third party manufacturers do not perform in a commercially reasonable manner, Meganet may not be successful.
The Company relies on third parties to manufacture the hardware components of its products while our software components and products are created in house by our CEO, Mr. Saul Backal. The Company does not have supply contracts with the hardware manufacturers and instead works on an order-by-order basis. By not having supply contracts, the Company runs the risk that its current suppliers of hardware components will opt to discontinue their relationship with the Company thereby interrupting the flow of hardware components and limiting the Company’s ability to operate its business. If alternative third party manufacturers could not be located in a timely manner, the Company would go out of business and investors would lose their entire investment.
- 8 -
Our primary competitors are large department of defense contractors who have established names, products and almost unlimited resources to develop new products.
There are approximately five dominant defense contractors in our industry. They include Lockheed Martin, General Dynamics, Northrop Grumman, Harris Corporation and ITT Corporation. They have been able to successfully launch their products, and penetrate the marketplace. While we hope to design and market products that are competitive with those offered by these contractors, there is no assurance that we will be able to do so. Unless we are able to persuade government agencies that we have products superior to those of these dominant defense contractors, we will be unable to generate sufficient sales of our products to continue to be successful. Further, these contractors have numerous contracts within the government and its agencies, who may be unwilling to switch their buying habits to our Company.
Claims by others that our products infringed their patents or other intellectual property rights could adversely affect our financial condition.
Any claim of patent or other proprietary right infringement brought against us would be time consuming to defend and would likely result in costly litigation, diverting the time and attention of our management. Moreover, an adverse determination in a judicial or administrative proceeding could prevent us from developing, manufacturing and/or selling some of our products, which could harm our business, financial condition and operating results. Claims against our patents may cost the Company significant expenses to defend and if our patents are not upheld, the Company may not be able to continue operations and the investors may lose their entire investment.
We may not be able to protect our patent rights, trademarks, and other proprietary rights.
We believe that our patent rights, trademarks, and other proprietary rights are important to our success and our competitive position. While we have patents and licenses with respect to certain of our products, there is no assurance that they are adequate to protect our proprietary rights. Furthermore, manufacturers in third world countries have a reputation for abusing such rights, which abuse is almost impossible to prevent. Accordingly, we plan to devote substantial resources to the maintenance of these rights. However, the actions taken by us may be inadequate to prevent others from infringing upon our rights which could compromise any competitive position we may develop in the marketplace.
Military and intelligence operations are government agencies which are subject to budgetary constraints, which may inhibit sales.
Government agencies are generally subject to budgets which limit the amount of money that they can spend on weapons and device procurement. It may be that although a government agency is interested in acquiring our products, it will be unable to purchase our products because of budgetary constraints. Further, the lead time for an agency acquiring new weapons and receiving approval to acquire them may delay sales to such agencies. Any such delay will have an adverse effect upon our revenues.
If we cannot retain or hire qualified personnel, our business could fail.
Our business is a technical and highly specialized area of the military and intelligence supply industry. We are dependent on the genius and skills of our CEO and founder Mr. Saul Backal. The loss of Mr. Backal could disrupt our research and development and product promotion activities. We believe that our future success will depend in large part upon our ability to retain the services of Mr. Backal or attract and retain highly skilled, scientific and managerial personnel to replace him if that ever became necessary. We face intense competition for these kinds of personnel from other companies and organizations. We might not be successful in hiring or retaining the personnel needed for our company to be successful.
Our CEO and founder, Mr. Saul Backal, is an at-will employee and could leave Meganet’s employ upon his own volition.
Mr. Backal has an employment contract with Meganet. However, the contract provides that Mr. Backal’s employment is at-will and that he can leave Meganet at any time should he decide to do so. Should Mr. Backal leave Meganet’s employ at this time or in the near future, it would be very disruptive to the immediate future economic prospects of Meganet and probably the long term economic prospects as well.
- 9 -
Because our common stock is not traded, your ability to sell your shares is limited
Our common stock is not traded or listed on any market. Consequently, the liquidity of our common stock is impaired and/or nonexistent. Any investors in our stock will only be able to liquidate their investment if we are successful in developing a market for our stock in the future.
Purchasers in this offering will experience immediate and substantial dilution of their investment.
We expect that the offering price per share of the shares being sold by the Selling Stockholders will exceed the net tangible book value per share of the outstanding common stock. Accordingly, purchasers of common stock in this offering would pay a price per share that exceeds the value of our assets after subtracting our liabilities.
We do not intend to pay any cash dividends on common stock in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock.
We have never paid a cash dividend on our common stock. We do not intend to pay cash dividends on our common stock in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock.
In the event Meganet’s common stock ever has a market price at below $5.00 per share, the stock will be subject to the “penny stock” rules of the SEC which could make transactions in Meganet’s stock cumbersome and may reduce the value of an investment in Meganet’s stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to Meganet, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
· | that a broker or dealer approve a person’s account for transactions in penny stocks; and |
· | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
· | obtain financial information and investment experience objectives of the person; and |
· | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form:
· | sets forth the basis on which the broker or dealer made the suitability determination; and |
· | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of Blue Spa’s common stock and cause a decline in the market value of Blue Spa’s common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
- 10 -
Meganet’s officers and directors own over 50% of Meganet’s shares of common stock and can effectively control Meganet’s affairs.
Meganet’s officers and directors own approximately 57% of Meganet’s shares of common stock. As a result, they are able to control matters requiring approval by Meganet’s shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. The officers and directors may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of Meganet, could deprive Meganet’s shareholders of an opportunity to receive a premium for their shares of common stock as part of a sale of Meganet and might ultimately affect the market price of Meganet’s common stock.
If the controlling shareholders sell a large number of shares all at once or in blocks, the value of Meganet’s shares would most likely decline.
The three officers and directors own approximately 58,000,000 of the 100,000,000 common shares that are issued and outstanding. Approximately 5,800,000 of those shares are being registered as a part of this registration and must be sold at a fixed price of $10.00 per share until such time as they are quoted on the OTC Bulletin Board or other quotation system or stock exchange. Meganet’s common stock is presently not traded on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of large numbers of shares at any price may cause the market price to fall.
- 11 -
USE OF PROCEEDS
Shares totaling 10,000,000 offered by this prospectus are being offered solely for the account of the selling stockholders. We will not receive any proceeds from the sale of the shares by the selling stockholders.
The $10.00 per share offering price of our common stock was arbitrarily determined. It bears no relationship to our earnings, net worth or other objective criteria of value.
We will seek to engage a market maker to make an application in our behalf and apply for a listing of our common stock on the OTC Bulletin Board. There is no assurance that we will be successful in engaging a market maker or that our application will be approved. We intend to file a registration statement under the Securities Exchange Act of 1934 (the “Exchange Act”) in order that we become a reporting company under the Exchange Act concurrently with the effectiveness of the registration statement of which this prospectus forms a part. If a market for our stock develops as a result of becoming listed on the OTC Bulletin Board, we anticipate the actual price of sale will vary according to the market for our stock at the time of resale.
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Market Information
There is no “established trading market” for our shares of common stock. We are not listed on the OTC Bulletin Board nor the Pink Sheets of the Financial Industry Regulatory Authority (“FINRA”)” nor on any exchange. The Company has no common equity that is subject to outstanding options or warrants to purchase, or securities convertible into, common equity. The Company has 100,000,000 common shares issued and outstanding, 42,000,000 of which could be sold at this time pursuant to Rule 144 promulgated under the Securities Act.
Holders
As of October 6, 2011, the number of record holders of the Company’s common stock is 660.
Dividends
Holders of shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by the Board of Directors out of funds legally available therefore. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and the financial condition of Meganet.
Securities Authorized for Issuance under Equity Compensation Plans
We have no equity compensation plans.
- 12 -
AND RESULTS OF OPERATIONS
Business Operations
Meganet is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company has developed and does develop products that it believes are attractive and important to these markets.
Working with government in a business capacity can be a long and arduous process. Governments and their agencies have constant budget restraints and lengthy product procurement processes. In many if not in most cases, a bidding process is required before an order for goods can be placed with a private supplier. Before products can be sold to the U.S. Government or to any of its agencies, the product and/or its supplier must be certified by the U.S. Government, which certification is not easy to obtain. From the time a product is developed until the time it is actually shipped to an agency in return for payment can be months if not years.
The financial statements that form part of this prospectus have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our independent accountants that audited the financial statements observed that the Company requires capital for its contemplated operational and marketing activities and that the Company’s ability to raise additional capital through the future issuances of common stock is unknown and that the obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of profitable operations are necessary for the Company to continue operations. The independent accountants concluded that the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.
Our management has been with Meganet from its inception and has in the past shepherded all software products from the development stage through the government procurement process to final delivery and payment. Management believes that despite the Company’s current illiquid position, the Company is in a strong position with respect to the upcoming 12 months of operations estimating Meganet has more than $10,000,000 of potential product sales in the so-called product pipeline. Being in the pipeline does not mean that product has necessarily been bought, sold or ordered. It does mean that products are somewhere in the bidding and/or procurement process and in management’s opinion have a reasonable chance of becoming orders, having a portion of those orders delivered and thereby producing collected revenues for the Company in material amounts within the next 12 months.
Liquidity
At June 30, 2011, the Company had cash in the amount of $532 compared to $296,891 in accounts payable and accrued liabilities. On a monthly basis the Company has fixed expenditures including without limitation rent and salary in the approximate amount of $25,000. Management estimates it will need $180,000 in additional capital to sustain business operations over the next twelve months. This amount does not include the salary of our CEO which is $10,000 per month and which he does not take but rather accrues if there is not sufficient cash to pay the salary at the time it is due. Of the $180,000 amount, our CEO will lend money to Meganet, if cash is not otherwise available within the Company, to pay rent, utilities, property taxes and maintenance for our business premises, and the incidentals of running the office such as mail and shipping expense and office supplies. If Meganet was not able to pay any of these expenses, the total over the coming 12 months that would be loaned to Meganet by our CEO would equal approximately $180,000.
It is common for companies to resolve illiquid positions by attempting to raise additional working capital through the sale of equity capital or short term borrowing. However, our management does not believe this will be necessary. Rather management believes there will be sales sufficient to cover the next 12 months of cash operating expenses; however, there can be no surety that anticipated sales will materialize. In order to mitigate the risk related with this uncertainty, the CEO has agreed to contribute additional amounts to capital as needed to cover operating expenses.
- 13 -
Background to Understanding the Financial Results for the Past Two Years
To understand Meganet’s financial results for the past two years, it is necessary to understand its sales cycle which is different from traditional companies that may have sales on a daily, weekly and/or monthly basis. Meganet’s sales cycle is highly sporadic as a result of its product lines and its customer mix.
Product Lines
Meganet is a technology company supplying world markets with products primarily instrumental in military defense, personal protection, data protection, home land security and other intelligence and counter-intelligence uses. Examples of products for these uses are bomb jammers and cell phone interceptors.
This product base lends itself to sporadic sales cycles for the following reasons. In times of war which can come upon a country quickly, a country will have immediate need of products for military defense uses such as bomb jammers. In times of peace, bomb jammers may not be needed for many years. To the contrary, as a country develops and implements a long term homeland security strategy, it may put out bids for certain types of intelligence and counter-intelligence products that it may leave out to bid for one to two years. To participate in such a bidding process, Meganet must maintain protectable state of the art technologies over a lengthy bidding process that it can deliver in quick fashion in the event it is awarded the bid for a particular product.
Customer Mix
Meganet’s focus is on government and military markets which has advantages and disadvantages. Advantages include the fact that governments have deep pockets and when they really need a product they can procure it and pay for it. Also, when a company such as Meganet has a technology that a government really needs, the product can sustain a large margin in the sales price. In addition, technology is often scalable. Once developed, products based upon a technology can bring close to a 100% return.
Disadvantages in selling to governments and militaries include the fact that there is fierce competition for these lucrative markets and large suppliers are notorious for using underhanded methods. Also, governments are subject to budgetary issues and budgetary crises and ever changing priorities for fixed budgeted funds. Governments have bidding requirements. This can be good and bad. Bidding does allow for companies such as Meganet to bid against the large suppliers. However, it makes for lengthy and unwieldy sales cycles that make it difficult to predict and sustain cash flow.
Examples Illustrative of Meganet’s Sales Cycle
A good way to understand Meganet’s sales cycle is to see examples of past sales. Meganet obtained its product base and its business plan from a company called Meganet Corporation, a California corporation (“Meganet California”). In 2002, Meganet California made a sale to the U.S. Department of Labor. After soliciting the U.S. Dept of Labor for over a year, Meganet California received a software order for $4,200,000. Since it was software it had no production cost and the sale was virtually 100% profit to the company. However, in the 12 months leading to this sale, total sales were only $100,000.
Another example is Meganet California’s sale to the U.S. Department of Transportation (the “DOT”) in 2005. After pursuing a sale for only three months which would typically be just the beginning of a solicitation cycle, an internal security breach at the DOT heightened security concerns and it issued Meganet California a $10,000,000 contract immediately. In the 12 months prior to the sale, Meganet California had sales of under $1,000,000 dollars total.
A third example is a sale to the U.S. Department of Veteran Affairs (the “DVA”) in 2007. Meganet California had been soliciting the DVA’s business for three years trying to sell a biometric USB storage device without success. One day without prior notice, Meganet California was selected as the sole source provider of biometric USB storage devices nationwide to over 5,000 facilities. Like before, sales for the prior 12 months had been under $1,000,000.
Prior Two Years
For the past two years, Meganet has been working hard toward securing some large sales which it believes will materialize in the near future. However, the financial statements included in this prospectus shows only one medium sale of approximately $1,800,000, and two smaller sales of approximately $500,000 each. However, this pattern of sporadic sales is typical for this Company.
Our sporadic sales cycle is not the only reason for the lack of sales in the prior two years. The global economic crisis has made many of our customers put purchases on hold. The U.S. government in particular has had many departments put projects on hold, cancel some existing projects and in many cases simply run out of budget for new products. Also in the private sector, the economic downturn has made the purchase of products like ours not a possibility at this time.
Meganet is a company that goes from one large sale to the next with low or quite periods in between. However, it has been a profitable company and we believe it will continue to be so.
Results of Operations for Fiscal Year Ended March 31, 2011
During the fiscal year ended March 31, 2011, Meganet realized gross profit of $235,194. This was offset by operating expenses of $830,799 resulting in a net loss of $595,605. However, $443,860 of the operating expense was non-cash depreciation expense. Nevertheless there was an operating cash shortfall during the year. The shortfall was more than covered by an influx of cash from the exercise of warrants bringing $301,574 into the Company. This resulted in a positive net change in cash for the year in the amount of $89,481.
The Company’s revenue consists primarily of revenue from the sale of jamming and interceptor hardware and data security software. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. The Company recognizes revenue from the sale of hardware products (e.g., jammers and cell phone interceptors) and software included with hardware that is essential to the functionality of the hardware, in accordance with general revenue recognition accounting guidance. The software inherent to the functionality of the hardware is inseparable from the hardware component and does not have a standalone air market value.
In addition to the software essential to the hardware that is sold, the Company sells off the shelf software to customers that is not related to the hardware that is sold. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software and (ii) sales of software upgrades.
Generally, the Company requires customers to deposit 50% of the gross sales price upon execution of a formal intent to sell with the remaining 50% due upon delivery of the product. The Company records deferred revenue when it receives payments in advance of the delivery of products.
Comparison of the Fiscal Years Ended March 31, 2011 and 2010
Operating results for the fiscal years ended March 31, 2011 and 2010 are similar with gross profit being $235,194 and $236,780 respectively, operating expenses being $830,799 and $869,110 respectively and net loss being $595,605 and $638,330 respectively. However, the line item that stands out is revenues for 2011 totaled $386,203 as compared to total revenues for 2010 which totaled $1,938,355. Management has explained that production was in reality fairly uniform over the two year period but given the protracted nature of the sales and ordering and production and delivery process, the application of accounting principles recognized a larger portion of revenue in the year ended March 31, 2010. Revenues for both years were driven principally by the sale of bomb jammers which accounted for approximately 90% of sales revenue. Bomb jammer sales were made to governments which have long sales cycles which can vary from three months to 15 months. This is the reason for large swings in sales revenues from period to period. This also makes it impossible to forecast revenues or to sustain a steady flow of revenue from month to month.
Comparison of the Three Month Periods Ended June 30, 2011 and 2010
Revenues for the three month period ended June 30, 2011 totaled $44,102 compared to $122,309 for the three month period ended June 30, 2010. This fluctuation is due to the long governmental sales cycles discussed above. For example, during the quarter ended June 30, 2011, Meganet was working on procuring two large international sales contracts which it hopes to begin realizing revenue on sometime in the coming six months. Operating expenses during the two periods under the categories of depreciation, compensation and rent were fairly uniform. However, under the category of “General and administrative”, expenses for the quarter ended June 30, 2011, were $57,425 as compared to $19,277 for the quarter ended June 30, 2010. This increase was due principally to expenses associated with the preparation of this registration statement and the associated financial statements and the auditing thereof.
Contractual Obligations
The Company has no long-term debt obligations, capital lease obligations, purchase obligations or other long-term liabilities other than the lease of its office and shop space for 60 months at $10,000 per month commencing January 1, 2010.
Off-balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
- 14 -
BUSINESS
History
Meganet was organized under the laws of the State of Nevada on March 26, 2009. On March 26, 2009, the Company issued 100,000,000 shares of common stock to the founding shareholders, valued at $0.021833 per share or $2,183,379 as consideration for equipment with a historical net book value of $2,205,365, liabilities of $50,000 and other net receivables of $28,014. The valuation was determined based upon the predecessor value of the assets and liabilities which were contributed to the Company in exchange for the shares of common stock. Each shareholder received the same number of shares held in the prior company. Meganet is an inventor, developer and marketer of data security, intelligence/counter-intelligence and military operational devices. Its customers include governments including the military of and the intelligence agencies of the United States and NATO as well as private enterprise.
Our Products
Meganet’s products are divided into five main categories.
Encryption
The Company is an assignee of patent rights (U.S. Patent # 6,219,421) to an encryption algorithm which has yet to be broken or compromised and which the Company believes is the most powerful on the market. Using this algorithm, the Company has developed a line of products using what Meganet calls Virtual Matrix Encryption or VME. These products have the capacity to protect data in biometric USB storage devices, computer files, email, chat, File Transfer Protocol (FTP), and more. VME also has digital signature applications and an electronic file shredder that allows for the secure shredding of confidential files, folders and disks.
Bomb Jamming
A bomb jammer prevents the detonation of an improvised explosive device (IED) also known as a roadside bomb. Meganet’s bomb jammers include motorcade applications for protecting convoys and soldier backpack applications for protecting foot patrols. Meganet has sold bomb jammers to the U.S. military, the U.S. intelligence agencies and for purposes of NATO applications. Meganet can also sell its bomb jammers outside the U.S. with a proper export license issued under the International Traffic in Arms Regulations (“ITAR”).
- 15 -
Communication Interception
The Company’s products include real-time cell phone, WiFi and other communication interceptors. Our client base for interceptors is the U.S. military and certain U.S. intelligence agencies and other countries and agencies of those countries upon obtaining the necessary export licensing under ITAR.
Secure Communications
The Company’s secure communication applications include encrypted cell phones, encrypted land lines, encrypted fax, encrypted PDA, encrypted radios, encrypted satellite phones and more. These are sold to and used by the U.S. military and select federal agencies and worldwide under ITAR licensing.
Intelligence/counter-intelligence Products
In addition to products already described in other categories, Meganet has a plethora of tools enabling the intelligence/counter-intelligence world to better perform its duties. In this realm, the Company provides bugs, bug detectors, bomb sniffers, miniature cameras and SPY and RAT phones. SPY phones include such functions as the carrier being able to activate the phone for purposes of recording and/or transmitting the proceedings of face to face meeting or conferences without any indication that the phone is active or has been activated. Also, other SPY phones allow for an outside party to activate a phone for the same purposes without even the carrier being aware that the phone has been activated.
Patents and Trademarks
As mentioned earlier, the Company is an assignee of patent rights (U.S. Patent # 6,219,421) to an encryption algorithm that supports Meganet’s encryption products. This patent was granted ten years ago and will therefore expire in April of 2021. Even after the expiration of the patent, Meganet will still be able to produce and sell the products based upon this patent. Meganet will just lose some of its competitive edge because others will also be able to use the technology after that time.
Meganet has also applied for patent protection on a technology it calls T-Sequence. A patent on this technology has not been granted but is pending. T-Sequence is also an encryption related technology. Meganet has one product at the present time based upon this technology.
Meganet has the following registered trademarks that it uses to identify its products and ideas in the marketplace: Secure Information is Power ™, Virtual Matrix Encryption ™, Meganet Corporation ™, Solutions for a Large Universe ™, VME ™, Ciphertext ™, Cipherlock ™, and Cipherfile ™.
- 16 -
Our Business Structure
Much of the value of our company and its products is based upon our intellectual property that provides, for example, the effectiveness of our encryption products and interceptor products. The intellectual property is normally in the form of software. The hardware such as USB storage devices or phones that we sell are typically comprised of off the shelf technology. However, when the hardware component is loaded with our proprietary software, the data on the storage device or the communications on the phones become encrypted to an extent that the product obtains it value. Though some of our intellectual property is protected by patent rights, much of it is protected by trade secrets. Accordingly, to protect our intellectual property from a rogue employee for example, access to our intellectual property is very limited within the Company.
The manufacturing of the hardware components of our products is conducted by independent third parties. We have no production contracts with these parties but rather order product via purchase orders when we have obtained an order from a client. We have manufacturers that over time we have come to trust, that deliver superior hardware product, whose identities we even consider as trade secrets. However, as stated previously, when the hardware product reaches us, it is superior product but does not go beyond what would be considered off the shelf technology. The software component that Meganet is assigned is then loaded into the product and shipped.
With the exception of the creation and production of our 59 software products which are created in house by our CEO, Mr. Saul Backal, many elements of our business operations from hardware manufacturing to sells to shipping are handled by third parties pursuant to purchase orders or invoicing without ongoing contractual arrangements. In this way, the Company has the flexibility to change suppliers as needed and the Company’s intellectual property is protected. Because of this, Meganet has only two employees. However, because of these two employees and the reliable third parties at the Company’s disposal, the ability of the Company to handle product orders is scalable and almost any size of a product order can be handled. It is possible that as the Company grows, additional employees will become necessary.
Marketing
Meganet actively markets its products. It is difficult, however, to track immediate results from specific marketing activities since our products typically have a long sales cycles. We market direct via a federal government GSA (U.S. General Services Administration) schedule, via a government SEWP (Solutions for Enterprise-Wide Procurement), via our website, via email, via electronic catalogs and domestic and international distributors.
We use database marketing to create personalized communications to customers or potential customers. We accumulate all data in the database and then use analytical tools to target a new product at the best matching customers or potential customers. We also use traditional marketing tools such as newspapers, TV interviews and mailings. We reach out with new products to potential markets through press releases and other trade show and/or media events. We network heavily with existing clients and potential clients that we know can benefit from new products or improved products we are bringing to market.
Competition
Our competition consists principally of other defense industry contractors. Of this group, the five that are among the largest and constitute our main competition are Lockheed Martin, General Dynamics, Northrop Grumman, Harris Corporation and ITT Corporation. Because of the effectiveness of the VME Technology that supports our encryption products and which is protected by U.S. Patent # 6,219,421, and the effectiveness of certain of our real-time interceptor products that to date, no one we know of has been able to duplicate, Meganet feels it does not have competition in relation to these products. However, because of the effectiveness of some of these products and because of their importance in military and intelligence applications, our markets in some products are limited to the U.S. military and certain federal agencies. However, with most of our products our market is worldwide after obtaining the necessary export license under ITAR. If these entities are not purchasing these products at a particular time or if we have supplied them all that they need at any particular time, our opportunity to sell product is limited, even if we do not have competition with respect to these products.
- 17 -
Government Regulation
The U.S. military and other federal agencies are almost the exclusive end-users of many of our products. To market to the military and these agencies, it is necessary that we have proper certifications from the U.S. government which we do have at this time. We are also subject to import/export laws which prohibit us from selling our products to anyone other than U.S. federal agencies and military unless we obtain proper export licensing under ITAR. It is necessary for us to continue to comply with these rules and regulations to which we are subject.
Research and Development
Our products have been and are development through the fertile and genius mind of our founder and CEO. When he conceives of a hardware component the Company needs in connection with a new product, he orders the hardware from one of the manufacturers in whom he has come to trust. If the manufacturer does not have the type of hardware needed as a ready product, the engineers of the manufacturer develop the product in order to fill the order to Meganet. Therefore the cost of the engineering work is included in the cost of the product to Meganet and is not borne directly by the customer. The cost of the development of the software by our CEO is merely a component of his salary. It is possible that the Company may outsource development work and incur research and development expense in that manner. However, it has not done so during the last two years. Our CEO spends 30% of his full working time on research and development. Accordingly, that is the amount of time spent by Meganet on research and development.
On January 1, 2010, the Company entered into a 60 month lease for its 10,000 square foot office and shop space located in Las Vegas Nevada. The lease required no security deposit and provides for monthly payments of $10,000. The lease provides for a 60 month renewal period at the expiration to the lease period which the Company anticipates to exercise.
Legal Proceedings
The Company is not involved in any legal proceedings.
- 18 -
Executive Officers and Directors
Set forth below is certain information with respect to our executive officers and directors:
Name | Age | Position | ||
Saul Backal | 48 | Chairman & CEO | ||
Roni Backal | 46 | Vice President & Director | ||
Orna Mizrahi | 44 | Treasurer & Director | ||
Saul Backal
Saul Backal is our Chairman and CEO and has held these positions since the inception of the Company on March 26, 2009. Prior thereto from 1997 to 2009, Mr. Backal was the Chairman and CEO of Meganet Corporation, a California corporation, which was also engaged in encryption, jamming, interception, biometric products and government & military products. With both companies, Mr. Backal was over management, organizational structure, finance, sales and marketing. Because of Mr. Backal’s intimate knowledge of Meganet, its products, clients, technologies and business operations, it is a natural fit for Mr. Backal to serve as Chairman of our board of directors.
Roni Backal
Roni Backal is vice president of the Company working with international sales, marketing, distribution, and production. His is also a director of Meganet. He has held this position since the inception of the Company in 2009. Prior thereto he held the same position in Meganet Corporation, the California corporation from 1999 to 2009. For approximately the past 30 years, Mr. Backal has owned a large publishing house in Israel. This ownership has given Mr. Backal vast business experience in sales, marketing and international trade, all of which is helpful to our company and qualifies him as a member of our board of directors.
Orna Mizrahi
Orna Mizrahi is treasurer of the Company working with financial management and planning, accounting and controller duties. She has held this position since the inception of the Company in 2009. Prior thereto she held the same position in Meganet Corporation, the California corporation from 1999 to 2009. She is also a member of our board of directors. Ms. Mizrahi has worked as a CPA in Israel for approximately 20 years. During this time she has served as the controller for the Israel operations of large international companies including Sony Electronics, DES Electronics, and RAFA Pharmaceuticals. Because of this experience is valuable to Meganet as treasurer and as a member of the board of directors.
The three persons that serve as our officers and directors are siblings.
Director Compensation
The Company does not compensate its directors for serving on the board of directors.
- 19 -
Executive Compensation
Summary Compensation Table
Name and principal position | Year | Salary ($) | Commissions($) | Stock Awards ($) | Total ($) |
Saul Backal, CEO (1) | 2011 2010 | $120,000 $120,000 | $39,620 $193,835 | $0 $0 | $159,620 $313,835 |
(1) | Mr. Backal has an employment agreement which provides he is to receive a base annual salary of $120,000. In addition he is to receive 10% of the gross product sales he brings to the Company. Mr. Backal has declined to take earned compensation when the Company is not in a cash position to pay it. In 2010 Mr. Backal was paid $192,121 of his total compensation of $313,835 which means $121,714 was accrued. In 2011 Mr. Backal was paid $62,470 of his total compensation of $159,620 which means $97,150 was accrued. As of March 31, 2011, $218,865 of Mr. Backal’s total compensation was unpaid and accrued in current liabilities. Pursuant to his employment agreement, Mr. Backal is an at-will employee and may terminate his employment at any time. Also pursuant to his employment agreement, Mr. Backal has the authority to increase his own salary and the discretion to pay himself a bonus if he believes major progress in being made with the company. |
Advances
Prior to inception on March 26, 2009, the former Meganet of California received an advance of $50,000 from the former president of the Company. The advance was used by the founding shareholders to purchase the equipment included in the initial capitalization of the Company (the Corporation as currently formed). This advance was unsecured, with no payment terms and did not provide for interest. During the year ended March 31, 2010, the Company repaid the advance in full, which included interest of $6,000 paid as a courtesy to the former officer.
Employment Agreement
As of March 31, 2011 the Company had only one employment agreement which was with the President and majority shareholder. The employment agreement stipulates that the President is to receive a base salary of $120,000 per annum. The agreement also contains a provision allowing for a commission to be paid equal to 10% of gross sales achieved by the President.
Director Independence
Meganet is not listed on a national securities exchange or in an inter-dealer quotation system which has independent director requirements. We have three directors, none of which are considered independent directors. The definition Meganet uses to determine whether a director is independent is NASDAQ Rule 4200(a)(15). A copy of that rule is attached to this filing as Exhibit 99.
- 20 -
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of October 6, 2011, we had 100,000,000 shares of common stock outstanding, which are our only outstanding voting securities. The following table sets forth information regarding the beneficial ownership of our common stock as of October 6, 2011, by:
· | each person who is known by us to own beneficially more than 5% of our common stock; |
· | each of our executive officers; |
· | each of our current directors; and |
· | all officers and directors as a group. |
Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage | ||
Saul Backal 2510 E. Sunset Rd. Unit 5-777 Las Vegas, NV 89120 | 55,470,350 Direct | 55% | ||
Roni Backal 2510 E. Sunset Rd. Unit 5-777 Las Vegas, NV 89120 | 1,000,000 Direct | 1% | ||
Orna Mizrahi 2510 E. Sunset Rd. Unit 5-777 Las Vegas, NV 89120 | 1,000,000 Direct | 1% | ||
All directors and executive officers as a group (3 persons) | 57,470,350 Direct | 57% |
- 21 -
SELLING STOCKHOLDERS
This prospectus relates in part to the offer and sale from time to time by the selling stockholders of 10,000,000 shares of common stock that have been issued. There can be no assurance that the selling stockholders will sell any or all of their common stock offered by this prospectus. We do not know if, when, or in what amounts, the selling stockholders may offer the common stock for sale. Our common stock is not currently quoted in any current quotation medium. Though the Company intends to make application for its stock to be listed on the OTC Bulletin Board, it is not known at this time if and when a market for our common stock will develop.
Selling Stockholders
The following table sets forth:
· | the names of the selling stockholders; |
· | the number of shares of common stock owned by each of the selling stockholders; |
· | the percentage of the class of common stock owned by each of the selling stockholders; and |
· | the number of shares of common stock being offered by the selling stockholders in this prospectus. |
· | the controlling person if not an individual |
· | the way in which the stock was acquired |
This table is based on information furnished to us by or on behalf of the selling stockholders. As of October 6, 2011, there were 100,000,000 shares of common stock outstanding. To the extent that any successor(s) to the named selling stockholder(s) wish to sell under this prospectus, we will file a prospectus supplement identifying such successors as selling stockholders.
.
- 22 -
Selling Stockholder | Shares Beneficially Owned Before the Offering | Shares Being Registered | Shares Beneficially Owned After the Offering | ||
Number | Percentage | ||||
2005 Todd & Alexandra Leone Revocable Trust | 30,300 | 3,030 | 27,270 | * | |
Edward & June Abramson Family Trust | 6,000 | 600 | 5,400 | * | |
Jeff Ackerman | 50,000 | 5,000 | 45,000 | * | |
Kurt J. Ackerman | 85,850 | 8,585 | 77,265 | * | |
Jesse B. Adams | 85,500 | 8,550 | 76,950 | * | |
Trent D. Adams | 35,125 | 3,512 | 31,613 | * | |
Zion & Valerie J. Adani | 16,667 | 1,666 | 15,001 | * | |
Yitzhak Aharoni | 13,000 | 1,300 | 11,700 | * | |
Haim Ahroni | 16,834 | 1,683 | 15,151 | * | |
Yael Aizik | 17,835 | 1,783 | 16,052 | * | |
Barbara R. Aldridge | 12,120 | 1,212 | 10,908 | * | |
Allan Lipkowitz Revocable Living Trust | 327,240 | 32,724 | 294,516 | * | |
Ben Alter | 151,944 | 15,194 | 136,750 | * | |
Fred Alter | 52,000 | 5,200 | 46,800 | * | |
Kelly Michael Alton | 26,260 | 2,626 | 23,634 | * | |
Ambos Pty Ltd ATF Threlfall Superannuation Fund | 10,000 | 1,000 | 9,000 | * | |
Arie Lourie & Dina Lourie Trustee, | 50,500 | 5,050 | 45,450 | * | |
Dean S. and Etasha W. Arnold | 5,050 | 505 | 4,545 | * | |
Robert Paul & Cheng Shu Aronson | 64,320 | 6,432 | 47,888 | * | |
Yuval Atias | 6,375 | 637 | 5,738 | * | |
Aviv & Hana Avishay | 46,250 | 4,625 | 41,625 | * | |
Gideon Avrami | 10,000 | 1,000 | 9,000 | * | |
Azrieli Group LTD | 100,000 | 10,000 | 90,000 | * | |
B.A.S.K. Investment Assoc. | 35,350 | 3,535 | 31,815 | * | |
Bret Bacciocco | 50,500 | 5,050 | 45,450 | * | |
Ron Backal | 1,000,000 | 100,000 | 900,000 | * | |
Roni Backal (1) | 1,000,000 | 100,000 | 900,000 | * | |
Saul Backal (1) | 55,470,350 | 5,547,035 | 49,923,315 | 49.9% | |
Tova Backal | 1,000,000 | 100,000 | 900,000 | * | |
Harel & Sadowsky, Ronit Bahalul | 12,500 | 1,250 | 11,250 | * | |
Laith & Lisa M. Bakoo | 50,500 | 5,050 | 45,450 | * | |
Louie & Christina Bakoo | 2,020 | 202 | 1,818 | * | |
Saleem and Julie Bakoo | 12,120 | 1,212 | 10,908 | * | |
Altug Bal | 10,000 | 1,000 | 9,000 | * | |
Zohar & Bali, Galit Loeb Bali | 10,000 | 1,000 | 9,000 | * | |
Moises Banuelos | 25,000 | 2,500 | 22,500 | * | |
Anat Barashy | 10,050 | 1,005 | 9,045 | * | |
Calvin Barnes | 28,140 | 2,814 | 25,326 | * | |
Robert or Teri Barros | 5,050 | 505 | 4,545 | * | |
Ben Bass | 60,600 | 6,060 | 54,540 | * | |
Michael B., SEP Batlan | 18,938 | 1,893 | 17,045 | * | |
Amir Bazak | 5,000 | 500 | 4,500 | * | |
Mauricio Becerra | 25,250 | 2,525 | 22,725 | * | |
James F. & Ama E. Beeler | 101,000 | 10,100 | 90,900 | * | |
Isaac Behar | 175,000 | 17,500 | 157,500 | * | |
Paraskevi Belogianneas | 12,500 | 1,250 | 11,750 | * | |
Scotty & Janie Bem | 40,400 | 4,040 | 36,360 | * | |
Menashe Ben Zur | 10,000 | 1,000 | 9,000 | * | |
Banjamin Benakote | 120,000 | 12,000 | 108,000 | * | |
Ziv Ben-Dor | 12,500 | 1,250 | 11,250 | * | |
Yochanan Ben-Ner | 336,667 | 33,666 | 303,001 | * | |
Chad M. Bennett | 5,025 | 502 | 4,523 | * | |
Eli Ben Zur | 80,000 | 8,000 | 72,000 | * | |
Razu & Arueka Bergman | 12,625 | 1,262 | 11,363 | * | |
Loie M. Bering | 16,667 | 1,666 | 15,001 | * | |
Elon Berk | 7,500 | 750 | 6,750 | * | |
Joseph G. Binder | 12,500 | 1,250 | 11,250 | * | |
Heidi M. Blair | 53,000 | 5,300 | 47,700 | * | |
Mila or Paul Blinder | 82,063 | 8,206 | 73,857 | * | |
Jaime Bocanegra | 1,000 | 100 | 900 | * | |
Boomerang Capital Pty Ltd. | 30,300 | 3,030 | 27,270 | * | |
Caroline Botsford | 25,125 | 2,512 | 22,613 | * | |
Kenneth J. Bowman | 74,385 | 7,438 | 66,947 | * | |
Kenneth J. Bowman | 5,000 | 500 | 4,500 | * | |
Kenneth J. Bowman | 615 | 61 | 554 | * | |
Dale A. Bradley | 5,050 | 505 | 4,545 | * | |
Brian Brassil | 244,425 | 24,442 | 219,983 | * | |
Donna F. Brassil | 35,014 | 3,501 | 31,513 | * | |
Jerry L. Bregman | 801,158 | 80,115 | 721,043 | * | |
Gerald Brost | 10,000 | 1,000 | 9,000 | * | |
Peter & Effie Brotsis | 20,100 | 2,010 | 18,090 | * | |
William Nelson Brotton | 25,250 | 2,525 | 22,725 | * | |
William R. Brown, as Trustee of the Brown Family Trust | 50,250 | 5,025 | 45,225 | * | |
Daivd M. & Nina Brubaker | 45,000 | 4,500 | 40,500 | * | |
Craig & Jodi Buda | 101,000 | 10,100 | 90,900 | * | |
Frank Buda | 101,000 | 10,100 | 90,900 | * | |
Edward F. Bukaty III | 10,000 | 1,000 | 9,000 | * | |
Ricky M. Bullard | 62,950 | 6,295 | 56,655 | * | |
Patrick & Olivia Burke Francis | 40,000 | 4,000 | 36,000 | * | |
John Burrough | 10,000 | 1,000 | 9,000 | * | |
Wendell R. Burton | 12,500 | 1,250 | 11,250 | * | |
Avram Buso | 250,000 | 25,000 | 225,000 | * | |
Laverda Y. Butler | 6,313 | 631 | 5,682 | * | |
Roger A. Caccamo | 36,438 | 3,643 | 32,795 | * | |
Tommer Carmel | 10,000 | 1,000 | 9,000 | * | |
R.A. Carrington | 50,000 | 5,000 | 45,000 | * | |
Josh, Carsman | 150,550 | 15,055 | 135,495 | * | |
Annette & James Cassidy | 12,500 | 1,250 | 11,250 | * | |
John Casey or Doreen Cassidy | 34,974 | 3,497 | 31,477 | * | |
Arpad A. Chabafy | 27,765 | 2,776 | 24,989 | * | |
Christopher Cherry | 16,834 | 1,683 | 15,151 | * | |
Cesar Haim & Monica Chomski | 50,500 | 5,050 | 45,450 | * | |
Joe & Juli Clark | 5,050 | 505 | 4,545 | * | |
Tim & Toni Cloonan | 20,000 | 2,000 | 18,000 | * | |
Jennifer D. Coco | 3,000 | 300 | 2,700 | * | |
Irving Cohen | 10,100 | 1,010 | 9,090 | * | |
Jeff Cole | 60,000 | 6,000 | 54,000 | * | |
James Coleman | 1,000,000 | 100,000 | 900,000 | * | |
Deborah J. Collins | 1,507,500 | 150,750 | 1,356,750 | 1.4% | |
Cindy L. Colombo | 17,500 | 1,750 | 15,750 | * | |
Michael A. Colombo | 17,500 | 1,750 | 15,750 | * | |
Traci Coltrane | 3,000 | 300 | 2,700 | * | |
Reginald Coopwood | 50,000 | 5,000 | 45,000 | * | |
Dave Cordone | 5,050 | 505 | 4,545 | * | |
Manuel Cornejo | 12,500 | 1,250 | 11,250 | * | |
David L. Cornella | 101,000 | 10,100 | 90,900 | * | |
Debbie Dubravka Cosic | 12,500 | 1,250 | 11,250 | * | |
David Couzin | 12,575 | 1,257 | 11,318 | * | |
Cronus Enterprise, LLC | 100,000 | 10,000 | 90,000 | * | |
Anthony C. Cruz | 10,000 | 1,000 | 9,000 | * | |
Maria Luisa Cruz | 100,000 | 10,000 | 90,000 | * | |
Marlon H. Cryer | 16,667 | 1,666 | 15,001 | * | |
Gregory M. Curnutte | 42,925 | 4,292 | 38,633 | * | |
William B. Curnutte | 5,050 | 505 | 4,545 | * | |
Gaetano Cutarella | 13,130 | 1,313 | 11,817 | * | |
Melissa Dalton | 10,000 | 1,000 | 9,000 | * | |
Marc T. Dasen | 18,485 | 1,848 | 16,637 | * | |
Kym David | 2,000 | 200 | 1,800 | * | |
Mike Davidov | 55,555 | 5,555 | 50,000 | * | |
Joel D. Davidowski | 63,968 | 6,396 | 57,572 | * | |
John R. Davison | 12,500 | 1,250 | 11,250 | * | |
Bernard Demers | 50,000 | 5,000 | 45,000 | * | |
Antoinette Demonbreun | 50,500 | 5,050 | 45,450 | * | |
Zigi & Lauren Dromy | 15,000 | 1,500 | 13,500 | * | |
Errol Derman | 20,100 | 2,010 | 18,090 | * | |
Mattew H. Deters | 2,000 | 200 | 1,800 | * | |
Eduardo Diaz | 4,000 | 400 | 3,600 | * | |
Shah Dilip | 50,500 | 5,050 | 45,450 | * | |
Phong Dinh Ngo | 25,000 | 2,500 | 22,500 | * | |
Alan J. & Melody M. Ditter | 3,000 | 300 | 2,700 | * | |
Thomas J. Dobbins | 16,666 | 1,666 | 15,000 | * | |
Bitton & Shelomo Tobol Dror | 18,750 | 1,875 | 16,875 | * | |
Michael B. & Jennifer Duffy | 10,000 | 1,000 | 9,000 | * | |
Elizabeth Mary Dunn | 50,500 | 5,050 | 45,450 | * | |
Scott Eaker | 10,050 | 1,005 | 9,045 | * | |
Barbara Shirley Eckert | 10,000 | 1,000 | 9,000 | * | |
Fred J. Eckert | 150,000 | 15,000 | 135,000 | * | |
Gerald Eckert MD | 10,000 | 1,000 | 9,000 | * | |
Thomas F. Eckert | 10,100 | 1,010 | 9,090 | * | |
Michael G. Eckman | 12,625 | 1,262 | 11,363 | * | |
Nissim Edri | 266,000 | 26,600 | 239,400 | * | |
Edward D. Jones & CO. Custodian FBO Eric R Von Borstel SEP | 38,750 | 3,875 | 34,875 | * | |
Peter Eggmann | 50,500 | 5,050 | 45,450 | * | |
Aharon Elchanan | 60,000 | 6,000 | 54,000 | * | |
Eleni & Demetrias Pantazis Family Trust | 40,400 | 4,040 | 36,360 | * | |
Dosit Eli | 5,000 | 500 | 4,500 | * | |
John J. Ellegate | 200,000 | 20,000 | 180,000 | * | |
James Ellison | 80,400 | 8,040 | 72,360 | * | |
Michael Engbrecht | 17,170 | 1,717 | 15,453 | * | |
Shawn Engbrecht | 11,195 | 1,119 | 10,076 | * | |
Kenneth G. Enochs Jr. | 10,000 | 1,000 | 9,000 | * | |
Brenda L. & Karl F. Esengard | 3,333 | 333 | 3,000 | * | |
Dennis D. Estrada | 6,250 | 625 | 5,625 | * | |
Frank J. Estrada | 130,000 | 13,000 | 117,000 | * | |
Becky Etcheverry | 12,500 | 1,250 | 11,250 | * | |
Jerry Lee Evans Jr. | 10,200 | 1,020 | 9,180 | * | |
Jerry Lee Sr. & Ruth Ann Evans | 71,710 | 7,171 | 64,539 | * | |
Amnon Even | 62,500 | 6,250 | 56,250 | * | |
Steven A. Farah | 17,170 | 1,717 | 15,453 | * | |
Benjamin Farkash | 15,625 | 1,562 | 14,063 | * | |
Sharon Fashempour | 9,333 | 933 | 8,400 | * | |
Charles Schwab Co. Inc. FBO Ronald J. Hauer IRA | 10,000 | 1,000 | 9,000 | * | |
Stephen Marco Fea | 111,166 | 11,116 | 100,050 | * | |
Eran Feig | 12,751 | 1,275 | 11,476 | * | |
Frank Feldman | 26,934 | 2,693 | 24,241 | * | |
Robin Ferris | 10,000 | 1,000 | 9,000 | * | |
Nancy & Vernon JR. Field | 20,000 | 2,000 | 18,000 | * | |
Thomas M. or Julie J. Field | 10,000 | 1,000 | 9,000 | * | |
Darrell Forgey | 8,333 | 833 | 7,500 | * | |
Ronald Forgey | 28,333 | 2,833 | 25,500 | * | |
Frajnd Family Trust 3-14-05 | 12,625 | 1,262 | 11,363 | * | |
Benjamin Freeman | 40,400 | 4,040 | 36,360 | * | |
Eliana Freeman | 20,000 | 2,000 | 18,000 | * | |
Gary Freeman | 303,000 | 30,300 | 272,700 | * | |
Jonathan Freeman | 12,000 | 1,200 | 10,800 | * | |
Leela Freeman | 20,000 | 2,000 | 18,000 | * | |
Marc Freeman | 120,000 | 12,000 | 108,000 | * | |
Ian & Julia Freitor | 10,000 | 1,000 | 9,000 | * | |
Ronald & Barbara Freshour | 16,413 | 1,641 | 14,772 | * | |
Gerald J. Fresonke | 16,667 | 1,666 | 15,001 | * | |
Alexander Fritz | 60,300 | 6,030 | 54,270 | * | |
Anne E. Fritz | 14,070 | 1,407 | 12,663 | * | |
Thomas M. Fritz | 179,845 | 17,984 | 161,861 | * | |
John S. & Jeanne A. Frost | 48,480 | 4,848 | 43,632 | * | |
Brad Fryman | 10,000 | 1,000 | 9,000 | * | |
Isabel Omayka Fuentes | 10,050 | 1,005 | 9,045 | * | |
Paul E. Fuller | 50,000 | 5,000 | 45,000 | * | |
Patricia A. Fusano | 12,500 | 1,250 | 11,250 | * | |
Meir & Laurie Gabbai | 165,650 | 16,565 | 149,085 | * | |
Rebekah Gamble | 14,140 | 1,414 | 12,726 | * | |
Richard J. & Lori L. Gascoyne | 100,500 | 10,050 | 90,450 | * | |
Navot Gasul | 16,667 | 1,666 | 15,001 | * | |
Felix Genkin | 50,332 | 5,033 | 45,299 | * | |
Antonio J. Gentile | 20,000 | 2,000 | 18,000 | * | |
Gregory A. Gereaux | 101,000 | 10,100 | 90,900 | * | |
Aylene Geringer | 1,579 | 157 | 1,422 | * | |
Michael Geringer | 14,079 | 1,407 | 12,672 | * | |
Richard Geringer | 1,579 | 157 | 1,422 | * | |
Johnny O. Gibbons | 10,100 | 1,010 | 9,090 | * | |
Terry L Jr. Giese | 22,000 | 2,200 | 19,800 | * | |
David Gitis | 7,500 | 750 | 6,750 | * | |
Marilny & Brad Good | 5,000 | 500 | 4,500 | * | |
Bryan Good | 20,100 | 2,010 | 18,090 | * | |
Diane or William Good | 10,100 | 1,010 | 9,090 | * | |
Renee & John Good | 20,200 | 2,020 | 18,180 | * | |
Robert Le Roy or Susan Lynn Good | 34,270 | 3,427 | 30,843 | * | |
Tom G. or Kathleen M. Good | 15,150 | 1,515 | 13,635 | * | |
Sandra L. Goodwin | 12,500 | 1,250 | 11,250 | * | |
Donald J. Gormley | 1,087,500 | 108,750 | 978,750 | * | |
Donald J. & Lynn E. Gormley | 20,200 | 2,020 | 18,180 | * | |
Ofer Gover | 10,500 | 1,050 | 9,450 | * | |
Hymie Green | 65,325 | 6,532 | 58,793 | * | |
Joyce Green | 14,442 | 1,444 | 12,998 | * | |
Daniel Morris Greenberg | 4,040 | 404 | 3,636 | * | |
Evan Jonah Greenberg | 4,040 | 404 | 3,636 | * | |
Lee & Rachel Greenberg | 247,510 | 24,751 | 222,759 | * | |
Marvin & Claire Greenberg | 30,300 | 3,030 | 27,270 | * | |
Richard G. & Jodie R Grimshaw | 1,010 | 101 | 909 | * | |
Stacey Grodski | 16,667 | 1,666 | 15,001 | * | |
Ron Grossman | 10,500 | 1,050 | 9,450 | * | |
Samuel A. Grossman | 25,000 | 2,500 | 22,500 | * | |
Valdis O. or Hinde Gubins | 30,000 | 3,000 | 27,000 | * | |
Maher Guirguis Guindi | 600,000 | 60,000 | 540,000 | * | |
Dmitry y. Gurovich | 500,000 | 50,000 | 450,000 | * | |
Ian Peter & Carol Anne Gunn | 20,200 | 2,020 | 18,180 | * | |
Shahar Habani | 197,960 | 19,796 | 178,164 | * | |
Dennis D. or Patricia Ann Hagele | 10,000 | 1,000 | 9,000 | * | |
Yosef Haim | 25,000 | 2,500 | 22,500 | * | |
Gary Jr. &Christy Hale | 50,000 | 5,000 | 45,000 | * | |
Uri & Ora Oli Halfon Trustees | 56,111 | 5,611 | 50,500 | * | |
Jason Harden | 12,500 | 1,250 | 11,250 | * | |
Susan Harmon | 17,500 | 1,750 | 15,750 | * | |
Duncan Harrison | 121,842 | 12,184 | 109,658 | * | |
Fred M. & Sara-Linn Harwin | 10,000 | 1,000 | 9,000 | * | |
Carolyn A. Hauer | 19,850 | 1,985 | 17,865 | * | |
Karen S. Hayes | 12,120 | 1,212 | 10,908 | * | |
Eric and Melissa Heffler | 12,625 | 1,262 | 11,363 | * | |
Clifford Hein | 70,350 | 7,035 | 63,315 | * | |
Sean Hendifar | 15,417 | 1,541 | 13,876 | * | |
Karen Hermesh | 6,313 | 631 | 5,682 | * | |
Talia Hermesh | 6,313 | 631 | 5,682 | * | |
Bruce A. Hesselbach | 20,000 | 2,000 | 18,000 | * | |
Robert N. & Deborah R. Hesselbach | 20,000 | 2,000 | 18,000 | * | |
Troy Hilfiker | 3,000 | 300 | 2,700 | * | |
Mei Hui Ho | 100,000 | 10,000 | 90,000 | * | |
William Lee & Barbara M. Hodges | 11,363 | 1,136 | 10,227 | * | |
Danile C. & Melanie C. Hogan | 25,000 | 2,500 | 22,500 | * | |
Carol Wardlaw Holden | 16,667 | 1,666 | 15,001 | * | |
Sandra I. Hollander | 12,500 | 1,250 | 11,250 | * | |
Dennis Michael & Stephanie Ann Hom | 100,000 | 10,000 | 90,000 | * | |
Charlotte Horowitz | 75,750 | 7,575 | 68,175 | * | |
Crawford Hoss | 45,450 | 4,545 | 40,905 | * | |
Carol G. Hovsepian | 12,625 | 1,262 | 11,363 | * | |
Zakary and/or Heather Hubbard | 20,100 | 2,010 | 18,090 | * | |
Phil Huber | 13,750 | 1,375 | 12,375 | * | |
Nicholas Basil Hudson | 13,837 | 1,383 | 12,454 | * | |
Hummingbird Trust | 222,680 | 22,268 | 200,412 | * | |
Douglas W. Hunter | 130,000 | 13,000 | 117,000 | * | |
Eric L. Hutchings | 25,000 | 2,500 | 22,500 | * | |
Ivan G. Hyden | 40,200 | 4,020 | 36,180 | * | |
Eric Iannamico | 8,333 | 833 | 7,500 | * | |
C. Young Im | 71,000 | 7,100 | 63,900 | * | |
William C. Irish Jr. | 25,125 | 2,512 | 22,613 | * | |
Irwin Meyers C/O Meyers, Saxon & Cole | 12,500 | 1,250 | 11,250 | * | |
John F. Irwin | 25,250 | 2,525 | 22,725 | * | |
Russell J. & Sozanne E. Isham | 50,753 | 5,075 | 45,678 | * | |
Thomas S. Ishkanian | 116,993 | 11,699 | 105,294 | * | |
Scott H. & Maggie Shea Jacobs | 26,950 | 2,695 | 24,255 | * | |
Stephanie Jaehn | 2,500 | 250 | 2,250 | * | |
Jeffrey & Sandra Janes | 20,500 | 2,050 | 18,450 | * | |
Alan J. Jaskoski | 1,250 | 125 | 1,125 | * | |
Robert S. Jefferson | 17,625 | 1,762 | 15,863 | * | |
Patti Lyn Jerzy | 10,000 | 1,000 | 9,000 | * | |
Reuven Jerzy | 16,667 | 1,666 | 15,001 | * | |
Sharone Jerzy | 10,100 | 1,010 | 9,090 | * | |
James D. & Jeris C. Johnson | 50,000 | 5,000 | 45,000 | * | |
Robert Joseph | 32,825 | 3,282 | 29,543 | * | |
William D. Joseph | 249,240 | 24,924 | 224,316 | * | |
Henry & Maxine E. Kalin | 20,200 | 2,020 | 18,180 | * | |
Yossi Kandero | 6,250 | 625 | 5,625 | * | |
Edo Kanterowitsch | 12,272 | 1,227 | 11,045 | * | |
Kathy S. Kaprinyak | 4,000 | 400 | 3,600 | * | |
William S. & Dina M. Kase | 21,834 | 2,183 | 19,651 | * | |
Allan Katz | 141,905 | 14,190 | 127,715 | * | |
Yair and Debra Katzir | 20,100 | 2,010 | 18,090 | * | |
Eyal S. Kaufmann | 12,500 | 1,250 | 11,250 | * | |
Todd Kausrud | 45,250 | 4,525 | 40,725 | * | |
Dayana Kedem | 5,000 | 500 | 4,500 | * | |
Keller Trust Dated: 8/21/99 | 12,625 | 1,262 | 11,363 | * | |
Alexander Kerman | 30,300 | 3,030 | 27,270 | * | |
Ken Kessler | 40,200 | 4,020 | 36,180 | * | |
The Gustav & Gerda Kiesel Joint living Trust, Dated 9-29-1999 | 410,734 | 41,073 | 369,661 | * | |
Coral Kline | 20,000 | 2,000 | 18,000 | * | |
Heath L. Kline | 30,500 | 3,050 | 27,450 | * | |
David J. Kludjian | 168,670 | 16,867 | 151,803 | * | |
Robert J. & Bette J. Knepp | 10,100 | 1,010 | 9,090 | * | |
Chris & Post, Eileen Kobus | 12,625 | 1,262 | 11,363 | * | |
Kristen E. Koch | 20,200 | 2,020 | 18,180 | * | |
Tom Kotarac | 77,000 | 7,700 | 69,300 | * | |
Koudanis Family Trust | 42,925 | 4,292 | 38,633 | * | |
John & Eugenia Koudanis | 25,250 | 2,525 | 22,725 | * | |
George Kravitz | 50,000 | 5,000 | 45,000 | * | |
Louis Krokover | 12,625 | 1,262 | 11,363 | * | |
Donald A. Kunda | 26,934 | 2,693 | 24,241 | * | |
Kevin & Julie Kunda | 6,667 | 666 | 6,001 | * | |
Tiffany Kunda | 8,080 | 808 | 7,272 | * | |
Adam Kunst | 10,000 | 1,000 | 9,000 | * | |
Natalia Kustovinov | 25,000 | 2,500 | 22,500 | * | |
Martin H. & Judith C. Katchai | 73,670 | 7,367 | 66,303 | * | |
Kathryn & Andreu Labrador | 2,000 | 200 | 1,800 | * | |
Damon J and Erin L LaCasella | 5,000 | 500 | 4,500 | * | |
Donald La Forest | 50,180 | 5,018 | 45,162 | * | |
Lana Lipkowitz Inc. | 10,100 | 1,010 | 9,090 | * | |
Lana Lipkowitz Inc. & Paul Goldberg | 10,100 | 1,010 | 9,090 | * | |
Robert Langbart | 30,150 | 3,015 | 27,135 | * | |
Moshe & Isac Lazarovits | 177,013 | 17,701 | 159,312 | * | |
Jason Leal | 9,000 | 900 | 8,100 | * | |
Carol Lee | 56,100 | 5,610 | 50,490 | * | |
Wayne Lee | 9,000 | 900 | 8,100 | * | |
Daniel M. Lent-Koop | 11,883 | 1,188 | 10,695 | * | |
Scott and Larra Leonardson | 22,000 | 2,200 | 19,800 | * | |
Roni Leuck | 1,579 | 157 | 1,422 | * | |
Melech Levi | 12,500 | 1,250 | 11,250 | * | |
Greg Levy | 151,500 | 15,150 | 136,350 | * | |
Harry S. & Rose E. Levy TTEE | 101,000 | 10,100 | 90,900 | * | |
Shay Levy | 8,838 | 883 | 7,955 | * | |
Perry B. & Bonnie R. Lewin | 20,200 | 2,020 | 18,180 | * | |
Myra F. Lewis | 12,500 | 1,250 | 11,250 | * | |
Jeff & Robin Lichtenstein | 1,000,000 | 100,000 | 900,000 | * | |
Robert Lichtenstein | 45,000 | 4,500 | 40,500 | * | |
Terry Lichtenstein | 55,550 | 5,555 | 49,995 | * | |
Jeff Lievense | 20,100 | 2,010 | 18,090 | * | |
Barbara A. Lilenfeld | 22,330 | 2,233 | 20,097 | * | |
Barbara M. Lilenfeld | 27,100 | 2,710 | 24,390 | * | |
Carol G. Lilenfeld | 12,625 | 1,262 | 11,363 | * | |
Sid Lipkowirz | 20,000 | 2,000 | 18,000 | * | |
Dennis Lipscomb | 12,625 | 1,262 | 11,363 | * | |
Steven E. & Sharon P. Littman | 1,344 | 134 | 1,210 | * | |
Aaron C. Loboda | 1,200 | 120 | 1,080 | * | |
Brandon T. Loboda | 3,030 | 303 | 2,727 | * | |
Christopher W. & Renee A. Loboda | 35,071 | 3,507 | 31,564 | * | |
Justin L. Loboda | 2,100 | 210 | 1,890 | * | |
Walter E & Monica S. Loboda | 2,677 | 267 | 2,410 | * | |
Augustin Lomeli | 40,000 | 4,000 | 36,000 | * | |
Michael J. & Stephanie J. Loomis | 12,500 | 1,250 | 11,250 | * | |
Loving Family Trust | 16,834 | 1,683 | 15,151 | * | |
Gabriel Luban | 8,000 | 800 | 7,200 | * | |
Alex Lvovsky | 25,000 | 2,500 | 22,500 | * | |
M. Scott Zillioux SEP IRA FCC As Custodian | 40,000 | 4,000 | 36,000 | * | |
James H. Jr & Kelly Mabry | 75,955 | 7,595 | 68,360 | * | |
Carl Macalalad | 149,333 | 14,933 | 134,400 | * | |
Oren Madar | 30,000 | 3,000 | 27,000 | * | |
ShaI Magdish | 36,666 | 3,666 | 33,000 | * | |
Dotty Malinsky | 10,000 | 1,000 | 9,000 | * | |
Nick L. & Dee Mallas | 50,500 | 5,050 | 45,450 | * | |
Joseph V. Maltese | 70,700 | 7,070 | 63,630 | * | |
Kosta & Lichtenstein, Terry Maltezos | 45,450 | 4,545 | 40,905 | * | |
Dino Daniel Mancinelli | 90,900 | 9,090 | 81,810 | * | |
Julie Mancinelli | 26,260 | 2,626 | 23,634 | * | |
Ricci Mancinelli | 221,950 | 22,195 | 199,755 | * | |
Carl J. Manfredi | 4,040 | 404 | 3,636 | * | |
Manios Family Trust | 10,000 | 1,000 | 9,000 | * | |
Gregory A. or Rae Ann Manship | 20,200 | 2,020 | 18,180 | * | |
Richard L. or Kathryn R. Manship | 100,400 | 10,040 | 90,360 | * | |
Donald Mantie | 18,750 | 1,875 | 16,875 | * | |
Kurt Aaron Mantie | 12,500 | 1,250 | 11,250 | * | |
Ovadya Mantsur | 22,000 | 2,200 | 19,800 | * | |
Brad March | 20,000 | 2,000 | 18,000 | * | |
Michel Margaritis | 12,500 | 1,250 | 11,250 | * | |
Zev Marmurstein | 33,667 | 3,366 | 30,301 | * | |
Patrick Marona | 10,100 | 1,010 | 9,090 | * | |
Ricardo Marquez | 6,667 | 666 | 6,001 | * | |
Harold M. & Marilyn Marshall | 22,220 | 2,222 | 19,998 | * | |
Sherry D. Martin | 50,500 | 5,050 | 45,450 | * | |
Mary E. Good Trustee | 10,100 | 1,010 | 9,090 | * | |
Michael Mascaro | 20,000 | 2,000 | 18,000 | * | |
Ana C. Mathis | 8,693 | 869 | 7,824 | * | |
James Mathis | 2,000 | 200 | 1,800 | * | |
Eliahu Matsliah | 300,000 | 30,000 | 270,000 | * | |
Erez Maya | 10,000 | 1,000 | 9,000 | * | |
Margaret E. Mayberry | 5,000 | 500 | 4,500 | * | |
Steven B. Mayberry | 21,000 | 2,100 | 18,900 | * | |
Timothy Sean Mayne | 18,750 | 1,875 | 16,875 | * | |
Loy A. Mayo | 20,100 | 2,010 | 18,090 | * | |
Mark McCullough | 20,100 | 2,010 | 18,090 | * | |
Patrick J. McInnis | 100,000 | 10,000 | 90,000 | * | |
David F. McKenzie | 50,000 | 5,000 | 45,000 | * | |
Mike Mecka | 10,050 | 1,005 | 9,045 | * | |
Ralph or Barbara Mecka | 33,750 | 3,375 | 30,375 | * | |
Darcey A. Meddings | 12,626 | 1,262 | 11,364 | * | |
Amish & Rajul Mehta | 101,000 | 10,100 | 90,900 | * | |
Howard D. & Rosemary E. Meinicove | 12,625 | 1,262 | 11,363 | * | |
Patricia Melton | 12,625 | 1,262 | 11,363 | * | |
Shauna & Tom Menner | 2,020 | 202 | 1,818 | * | |
Mitchell F. Mense | 20,000 | 2,000 | 18,000 | * | |
Christopher H. Mesbah | 12,500 | 1,250 | 11,250 | * | |
Eyal Messika | 33,250 | 3,325 | 29,925 | * | |
David J. & Cynthia C. Messing | 51,284 | 5,128 | 46,156 | * | |
Yaacov Jake Metzler | 176,750 | 17,675 | 159,075 | * | |
Shirley A. Meyer | 80,400 | 8,040 | 72,360 | * | |
John and Emi Hirose Meyers | 12,000 | 1,200 | 10,800 | * | |
Michael H. Decker & Michele Carkner-Decker | 808 | 80 | 728 | * | |
Jason Miller | 5,000 | 500 | 4,500 | * | |
Jaime Milstein | 403,750 | 40,375 | 363,375 | * | |
Mike or Michael I. Mintz | 13,750 | 1,375 | 12,375 | * | |
Frank Miraglia | 18,938 | 1,893 | 17,045 | * | |
Walter Miraglia | 4,040 | 404 | 3,636 | * | |
Mirimichi Investments PTY Ltd | 10,100 | 1,010 | 9,090 | * | |
L. P. Misuma | 33,333 | 3,333 | 30,000 | * | |
Iouri Mitchenko | 10,000 | 1,000 | 9,000 | * | |
David Mitshnik | 100,000 | 10,000 | 90,000 | * | |
Brian L. Mitteldorf | 222,200 | 22,220 | 199,980 | * | |
Robert & Peggy Mitteldorf | 444,400 | 44,440 | 399,960 | * | |
Avigdor Mizrahi | 16,667 | 1,666 | 15,001 | * | |
Orna Mizrahi (1) | 1,000,000 | 100,000 | 900,000 | * | |
Meir Mizrahi | 33,668 | 3,366 | 30,302 | * | |
Ali Motamedi-Rad | 20,000 | 2,000 | 18,000 | * | |
Bonnie Jean Moore | 5,050 | 505 | 4,545 | * | |
Sia Mormanis | 8,333 | 833 | 7,500 | * | |
Thomas J. III & Joanne O. Munger | 17,675 | 1,767 | 15,908 | * | |
Jim M. & Brenda K. Nabulsi | 20,200 | 2,020 | 18,180 | * | |
Zak & Elizabeth Nahmoulis | 21,208 | 2,120 | 19,088 | * | |
Alan Nanas | 20,000 | 2,000 | 18,000 | * | |
Herb Nanas | 20,000 | 2,000 | 18,000 | * | |
Rick Nanas | 10,000 | 1,000 | 9,000 | * | |
Shmuel Naparstek | 10,000 | 1,000 | 9,000 | * | |
Rami Navarro | 60,000 | 6,000 | 54,000 | * | |
Vaughn Nelson | 6,000 | 600 | 5,400 | * | |
Walter Netzke | 32,685 | 3,268 | 29,417 | * | |
Jerrold Newman | 50,000 | 5,000 | 45,000 | * | |
Hong N. Nguyen | 533,040 | 53,304 | 479,736 | * | |
William & Lupita Niccum | 10,100 | 1,010 | 9,090 | * | |
Howard P. Nichols | 20,000 | 2,000 | 18,000 | * | |
Norman Janes & Patricia M. Janes Living Trust | 12,500 | 1,250 | 11,250 | * | |
Erin Nowak | 4,020 | 402 | 3,618 | * | |
Michael F. & Elizabeth A. O’Brien | 14,358 | 1,435 | 12,923 | * | |
David P. O’Connor | 50,000 | 5,000 | 45,000 | * | |
Zareh Ohanian | 20,000 | 2,000 | 18,000 | * | |
Peter & Wendy Oillataguerre | 5,000 | 500 | 4,500 | * | |
Daniel E. Olander | 7,215 | 721 | 6,494 | * | |
Mathew J. O’Leary | 31,984 | 3,198 | 28,786 | * | |
Kerri Lee Oneill | 10,000 | 1,000 | 9,000 | * | |
Pacific West Management | 1,900,000 | 190,000 | 1,710,000 | 1.7% | |
William J. & Margo J. Pagnini, Trustees | 12,625 | 1,262 | 11,363 | * | |
John and Cindy Pappas | 4,242 | 424 | 3,818 | * | |
Lance K. Paris | 4,020 | 402 | 3,618 | * | |
Charles Mack & Hattie E. Pate | 20,200 | 2,020 | 18,180 | * | |
Jeffrey Pedersen | 12,625 | 1,262 | 11,363 | * | |
Michael G. Pelaic | 21,250 | 2,125 | 19,125 | * | |
James J. Peot | 10,000 | 1,000 | 9,000 | * | |
Ronald B. Perelman, MD | 25,000 | 2,500 | 22,500 | * | |
Gal Peretz | 10,000 | 1,000 | 9,000 | * | |
Juan F. Perez | 10,050 | 1,005 | 9,045 | * | |
Robert B. Perkins | 6,677 | 667 | 6,010 | * | |
Dirk D. & Jeannine J. Perriseau | 50,000 | 5,000 | 45,000 | * | |
James M. Perrizo | 12,500 | 1,250 | 11,250 | * | |
John K. Perry | 12,500 | 1,250 | 11,250 | * | |
John M. Petote | 631,250 | 63,125 | 568,125 | * | |
Bertold W. Pfeifer | 241,200 | 24,120 | 217,080 | * | |
Karin Pfeifer | 55,166 | 5,516 | 49,650 | * | |
Dwyne B. Philippin | 39,050 | 3,905 | 35,145 | * | |
Myrna Picard | 2,000 | 200 | 1,800 | * | |
Robin Picard | 8,000 | 800 | 7,200 | * | |
Harve Pierre | 12,625 | 1,262 | 11,363 | * | |
James Reid Pint | 50,500 | 5,050 | 45,450 | * | |
David L. Pitts | 20,000 | 2,000 | 18,000 | * | |
Kellye Tarelka Pitts | 20,000 | 2,000 | 18,000 | * | |
Posey Family Trust | 30,300 | 3,030 | 27,270 | * | |
Douglas F. & Windi L. Posey | 13,000 | 1,300 | 11,700 | * | |
Russ & Lauri Posey | 10,100 | 1,010 | 9,090 | * | |
Eleni Potouridou | 13,750 | 1,375 | 12,375 | * | |
Jeanne M. Powell | 20,000 | 2,000 | 18,000 | * | |
Allan H. & Judith M. Price | 18,750 | 1,875 | 16,875 | * | |
Myra Priskie | 20,000 | 2,000 | 18,000 | * | |
Linda Provencio | 10,000 | 1,000 | 9,000 | * | |
David L. Puckett | 148,134 | 14,813 | 133,321 | * | |
Paul D’arey Purtill | 60,000 | 6,000 | 54,000 | * | |
Amalia Michelle Quezada | 4,000 | 400 | 3,600 | * | |
Kobi & Golan Rabin | 12,625 | 1,262 | 11,363 | * | |
Josef & Mirit Rabinovitz | 303,000 | 30,300 | 272,700 | * | |
David J. Radis | 12,500 | 1,250 | 11,250 | * | |
Alen Rasidkadic | 15,000 | 1,500 | 13,500 | * | |
George & Dorothy Relyea | 5,050 | 505 | 4,545 | * | |
William T. Rhodes | 97,750 | 9,775 | 87,975 | * | |
Yolanda Ridoutt | 16,667 | 1,666 | 15,001 | * | |
Itzik & Sandra Rief | 20,200 | 2,020 | 18,180 | * | |
Bryan & Tamara Riley | 5,000 | 500 | 4,500 | * | |
Robert Saxon C/O Meyers, Saxon & Cole | 12,500 | 1,250 | 11,250 | * | |
James E. Rock, Jr. | 12,500 | 1,250 | 11,250 | * | |
John Thomas Rogers Jr. | 103,525 | 10,352 | 93,173 | * | |
Reynoldo J. Roman | 10,000 | 1,000 | 9,000 | * | |
Roscious Pty Ltd. | 20,000 | 2,000 | 18,000 | * | |
Jason Rosenberg | 4,500 | 450 | 4,050 | * | |
Larry & Carla Rosenberg | 26,333 | 2,633 | 23,700 | * | |
Bert Rosenbluth | 12,625 | 1,262 | 11,363 | * | |
Bernice Ross | 25,000 | 2,500 | 22,500 | * | |
Joseph S. Rossi | 50,500 | 5,050 | 45,450 | * | |
Chad W. Roth | 2,525 | 252 | 2,273 | * | |
Shane V. Roth | 7,070 | 707 | 6,363 | * | |
Ron Rotschild | 16,833 | 1,683 | 15,150 | * | |
Ruck & Maul Pty Ltd ATF Johneales Family Trust | 20,000 | 2,000 | 18,000 | * | |
Jeff Ruiz | 30,582 | 3,058 | 27,524 | * | |
Jerry Ruiz | 30,584 | 3,058 | 27,526 | * | |
Julian Ruiz Jr. | 10,500 | 1,050 | 9,450 | * | |
Stephen E. Ruskowski | 25,250 | 2,525 | 22,725 | * | |
Hyung Ryu | 17,500 | 1,750 | 15,750 | * | |
Solomon Sadoun | 33,666 | 3,366 | 30,300 | * | |
Joe Salcedo | 24,240 | 2,424 | 21,816 | * | |
Alexandra F. Salomon | 12,500 | 1,250 | 11,250 | * | |
Amanda M. Salomon | 12,500 | 1,250 | 11,250 | * | |
Lenore S. Salamon | 16,667 | 1,666 | 15,001 | * | |
Michael S. Salomon | 246,682 | 24,668 | 222,014 | * | |
Scott M Saloon | 12,500 | 1,250 | 11,250 | * | |
Etty Scaglia | 22,725 | 2,272 | 20,453 | * | |
Mathias Scaglia | 15,150 | 1,515 | 13,635 | * | |
David Paul & Sherrie Ann Scheele | 2,500 | 250 | 2,250 | * | |
Julie Anne Schultz | 9,343 | 934 | 8,409 | * | |
Shawn & Candy Scranton | 8,838 | 883 | 7,955 | * | |
Anthony M. Servera | 4,000 | 400 | 3,600 | * | |
Moshe Shaked | 60,600 | 6,060 | 54,540 | * | |
Guy Shamir | 12,625 | 1,262 | 11,363 | * | |
Pinhas & Natalia Sharon | 60,300 | 6,030 | 54,270 | * | |
Ron Shashua | 165,650 | 16,565 | 149,085 | * | |
Lee Brent Shaw | 20,000 | 2,000 | 18,000 | * | |
David J. Sheen | 12,500 | 1,250 | 11,250 | * | |
Hillel Sheinfeld | 12,500 | 1,250 | 11,250 | * | |
Robert Shermin | 58,333 | 5,833 | 52,500 | * | |
Clifford Makr & Jacqueline Frances Sheridan | 20,200 | 2,020 | 18,180 | * | |
Jean Sherwood | 5,050 | 505 | 4,545 | * | |
Stewart or Deborah Sherwood | 50,500 | 5,050 | 45,450 | * | |
Dotan Shoham | 252,500 | 25,250 | 227,250 | * | |
Chagay & Gila Shoval | 12,625 | 1,262 | 11,363 | * | |
Larry W. & Linda R. Shryer | 12,120 | 1,212 | 10,908 | * | |
Jonathan W. Shuken | 54,167 | 5,416 | 48,751 | * | |
Pamela Shuken | 37,500 | 3,750 | 33,750 | * | |
Victoria A. Shuken | 66,667 | 6,666 | 60,001 | * | |
Peter M. Shulman | 110,500 | 11,050 | 99,450 | * | |
Lie H. Sie | 10,050 | 1,050 | 9,045 | * | |
Joseph J & Elisabeth K Signor | 101,000 | 10,100 | 90,900 | * | |
Daniel H. Silver | 12,500 | 1,250 | 11,250 | * | |
Edwin & Cherie Silver | 18,938 | 1,893 | 17,045 | * | |
Robert & Judie Silver | 40,400 | 4,040 | 36,360 | * | |
Karleen I. Simons | 50,250 | 5,025 | 45,225 | * | |
Thomas Sinagra | 20,200 | 2,020 | 18,180 | * | |
Simon Singh | 10,000 | 1,000 | 9,000 | * | |
Michael V. Smalley | 20,100 | 2,010 | 18,090 | * | |
Leanna Smith | 12,500 | 1,250 | 11,250 | * | |
Michael D. Smith | 100,000 | 10,000 | 90,000 | * | |
Michael H. Sofia | 20,000 | 2,000 | 18,000 | * | |
Barbara Soony Mathes | 8,333 | 833 | 7,500 | * | |
Scott and Suzanne Soper | 50,000 | 5,000 | 45,000 | * | |
Todd & Katrina Spivek | 2,000 | 200 | 1,800 | * | |
Douglas & Churtchai Squire | 12,500 | 1,250 | 11,250 | * | |
Ann & William Sriro | 1,000 | 100 | 900 | * | |
Edna N. Statman | 25,250 | 2,525 | 22,725 | * | |
Scott A. Stave | 80,000 | 8,000 | 72,000 | * | |
Danny & Sharon Stefek | 82,000 | 8,200 | 73,800 | * | |
William A. Stephenson | 80,400 | 8,040 | 72,360 | * | |
Janice Stompro | 12,500 | 1,250 | 11,250 | * | |
Richard H. & Patricia Stoner | 70,350 | 7,035 | 63,315 | * | |
Nathaniel Swain | 12,060 | 1,206 | 10,854 | * | |
Chris Sweeney | 10,000 | 1,000 | 9,000 | * | |
Donald E. & Cindy L. Sweet | 61,863 | 6,186 | 55,677 | * | |
Todd & Jennifer Swendsen | 20,200 | 2,020 | 18,180 | * | |
Patricia Taber | 12,625 | 1,262 | 11,363 | * | |
David S. & Linda M. Tamura | 100,500 | 10,050 | 90,450 | * | |
Scott Tamura | 261,300 | 26,130 | 235,170 | * | |
John & Lisa Taraska | 6,302 | 630 | 5,672 | * | |
Cory Tauber | 2,000 | 200 | 1,800 | * | |
Sean Tauber | 7,000 | 700 | 6,300 | * | |
Richard S. Tenold | 21,210 | 2,121 | 19,089 | * | |
Richard S. Tenold | 12,625 | 1,262 | 11,353 | * | |
Shannon & Paty Terry | 45,955 | 4,595 | 412,360 | * | |
Joe Thabet | 10,100 | 1,010 | 9,090 | * | |
The Armored Group, LLC | 100,000 | 10,000 | 90,000 | * | |
The Rosen Family Trust | 36,667 | 3,666 | 3,301 | * | |
Stuart Thomas | 20,100 | 2,010 | 18,090 | * | |
Greg Thompson | 6,312 | 631 | 5,681 | * | |
Cathy Thompson | 6,313 | 631 | 5,682 | * | |
Alan Gregory Threlfall | 20,000 | 2,000 | 18,000 | * | |
Melinda & Matthen Threm | 20,200 | 2,020 | 18,180 | * | |
Wayne & Marjorie F. Threm | 70,700 | 7,070 | 63,630 | * | |
Nicholas John Tomlin | 40,400 | 4,040 | 36,360 | * | |
Miguel Torres | 33,666 | 3,366 | 30,300 | * | |
Sean Treloggen | 190,000 | 19,000 | 171,000 | * | |
Chaim Troman | 83,630 | 8,363 | 75,267 | * | |
Joseph Scott Trotochau | 40,000 | 4,000 | 36,000 | * | |
H. David Turner | 30,553 | 3,055 | 27,498 | * | |
Herbert Joseph Turner | 12,500 | 1,250 | 11,250 | * | |
Vito Ungaro | 61,310 | 6,131 | 55,179 | * | |
James & Phoda Vandermeyden | 9,000 | 900 | 8,100 | * | |
Barry Lee Vanderveen | 14,000 | 1,400 | 12,600 | * | |
Alon Varsha | 15,000 | 1,500 | 13,500 | * | |
Rami Varsha | 15,000 | 1,500 | 13,500 | * | |
Jamie Peter Vasas | 10,250 | 1,025 | 9,225 | * | |
Gary K. & Cheri L. Virgin | 20,000 | 2,000 | 18,000 | * | |
Mark Volkov | 33,668 | 3,366 | 30,302 | * | |
Eric Von Borstel | 303,455 | 30,345 | 273,110 | * | |
James Earl Waolder | 20,000 | 2,000 | 18,000 | * | |
Marc D. Wallick | 50,500 | 5,050 | 45,450 | * | |
Josephine V. Walsh | 8,417 | 8,417 | 7,576 | * | |
John H. Walters | 50,000 | 5,000 | 45,000 | * | |
Roger E. Walters | 101,000 | 10,100 | 90,900 | * | |
Robert Scott Webb | 4,000 | 400 | 3,600 | * | |
Terrence & Margaret Weber | 1,344 | 134 | 1,210 | * | |
Dawn Weber | 18,750 | 1,875 | 16,875 | * | |
Barry Weiner | 7,500 | 750 | 6,750 | * | |
Michael Weiss | 12,625 | 1,262 | 11,363 | * | |
Aaron Werth | 22,500 | 2,250 | 20,250 | * | |
Andrew Davison West | 123,725 | 12,372 | 111,353 | * | |
Anita Westfall | 98,834 | 9,883 | 88,951 | * | |
Arnon & Rivka Wexler | 12,500 | 1,250 | 11,250 | * | |
Desley White | 14,070 | 1,407 | 12,663 | * | |
Billy Jack or Antoinet Whitley | 50,500 | 5,050 | 45,450 | * | |
Norman D. Whitsed | 4,040 | 404 | 3,636 | * | |
Melvin L. & Bette J. Wilkins | 15,070 | 1,507 | 13,563 | * | |
Robert P. Williams | 12,500 | 1,250 | 11,250 | * | |
Sally D. Wilson | 25,000 | 2,500 | 22,500 | * | |
William L. & Jo H. Wiltse | 50,500 | 5,050 | 45,450 | * | |
William S. Wiltse | 41,410 | 4,141 | 37,269 | * | |
Carl W. Winters Jr. | 25,250 | 2,525 | 22,725 | * | |
James C. & Donna L. Witkowski | 10,000 | 1,000 | 9,000 | * | |
Edgar Wolff | 10,000 | 1,000 | 9,000 | * | |
Irvin Wolff | 10,000 | 1,000 | 9,000 | * | |
Li-Mei Wong | 70,700 | 7,070 | 63,630 | * | |
Mei-Yuk Wong | 25,000 | 2,500 | 22,500 | * | |
Richard & Caryn Wood | 50,000 | 5,000 | 45,000 | * | |
Charles E. Woodrow | 50,250 | 5,025 | 45,225 | * | |
Hedy Woodrow | 50,250 | 5,025 | 45,225 | * | |
Robert K. & Shirley F. Worcester | 202,000 | 20,200 | 181,800 | * | |
Jessica J. Wright | 24,400 | 2,440 | 21,960 | * | |
Oren Yaacobi | 22,500 | 2,250 | 20,250 | * | |
Amram Yahalom | 52,183 | 5,218 | 46,965 | * | |
Patricia Ann Yelder | 6,000 | 600 | 5,400 | * | |
Karen Lani Yonemoto | 30,300 | 3,030 | 27,270 | * | |
Yaeook Yoon | 12,500 | 1,250 | 11,250 | * | |
Gil Zahavi | 33,333 | 3,333 | 30,000 | * | |
Uri Zahavi | 55,555 | 5,555 | 50,000 | * | |
Peter Zakurdaew | 12,500 | 1,250 | 11,250 | * | |
Zeolla Marble Company, Inc. | 1,516,000 | 151,600 | 1,364,400 | 1.4% | |
Anthony B. & Mary E. Zeolla | 1,476,200 | 147,620 | 1,328,580 | 1.3% | |
John A. & Rosalia B. Zeolla | 280,800 | 28,080 | 25,920 | * | |
Amy Zillioux | 3,272 | 327 | 2,945 | * | |
Eric & Sheri Zillioux | 22,462 | 2,246 | 20,216 | * | |
Erin P. Zillioux | 2,525 | 252 | 2,273 | * | |
M. Scott & Nan Dwyer Zillioux | 25,083 | 2,508 | 22,575 | * | |
Matthew W. Zillioux | 2,525 | 252 | 2,273 | * | |
Joshua & Rachel Zipp | 10,000 | 1,000 | 9,000 | * | |
Louis & Frances Zirille | 5,050 | 505 | 4,545 | * | |
Mark Zodda | 25,250 | 2,525 | 22,725 | * | |
Steve & Deborah Zografos | 20,000 | 2,000 | 18,000 | * | |
Asher & Ruth Zohar | 222,200 | 22,220 | 199,980 | * | |
Ronen Zour | 190,833 | 19,083 | 171,750 | * | |
Luba Zuk | 22,725 | 2,272 | 20,453 | * | |
Jonathan Zuk | 269,597 | 26,959 | 242,638 | * | |
Roie Zuk | 10,000 | 1,000 | 9,000 | * | |
Shonie Zuk | 10,000 | 1,000 | 9,000 | * | |
Neta Zuk | 10,000 | 1,000 | 9,000 | * | |
Amichai Zuntz | 10,050 | 1,005 | 9,045 | * |
(*) Less than 1%
(1) This individual is an officer and director of the Company.
- 23 -
The Selling Stockholders (the “Selling Stockholders”) of the common stock (“Common Stock”) of the Company and any of their pledges, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. Until such time as our common stock is quoted on the OTC Bulletin Board or traded on the NYSE, AMEX or NASDAQ Small Cap Market or NASDAQ National Market System, all selling stockholders will sell at the fixed selling price of $10.00 per share. Thereafter the Selling Stockholders may use any one or more of the following methods when selling shares:
· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· settlement of short sales entered into after the date of this prospectus;
· broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
· a combination of any such methods of sale;
· through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or
· any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with NASDR Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the Common Stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume. “Short sale” is the name given to a transaction that takes place when a person believes a company’s stock price is about to go down. The person borrows from his broker or other individual shares of the company’s stock and sells the borrowed shares at the current price. After the price goes down, the person buys in the market, shares of the company’s stock at the reduced price and uses the purchased shares to replace the shares that were borrowed. As a result of the short sale, the person succeeds in buying low and selling high. The buying and selling are simply reversed in order. Short sales can have the effect of driving down the trading price of a company’s stock. If a stock price is falling and stockholders are selling short, stock purchases for the purpose of replacing borrowed shares further depress the market and encourages additional short selling. The net effect can be a downward spiral of the stock price of the company.
- 24 -
The Selling Stockholders may also sell shares of the Common Stock short and deliver these securities to close out their short positions, or loan or pledge the Common Stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. It is our understanding that no Selling Stockholder has entered into any written or oral agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale or the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the Common Stock for a period of two business days prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the Common Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
Although we intend to apply for listing of our common stock on the OTC Bulletin Board, public trading of our common stock may never materialize. If trading of our common stock does develop, the actual selling price will be determined by the market for our stock at the time of resale.
- 25 -
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value. As of October 6, 2011, 100,000,000 shares of common stock were issued and outstanding. The outstanding shares of common stock have been duly authorized and are fully paid and non-assessable.
Common Stock
The holders of common stock are entitled to one vote per share on all matters to be voted on by stockholders and are entitled to receive such dividends, if any, as may be declared from time to time by our board of directors from funds legally available therefore, subject to the dividend preferences of the preferred stock, if any. Upon our liquidation or dissolution, the holders of common stock are entitled to share ratably in all assets available for distribution after payment of liabilities and liquidation preferences of the preferred stock, if any. Holders of common stock have no preemptive rights, no cumulative voting rights and no rights to convert their common stock into any other securities. Any action taken by holders of common stock must be taken at an annual or special meeting or by written consent of the holders of over 50% of our capital stock entitled to vote on such action.
Warrants
As of October 6, 2011, Meganet has no warrants nor other derivative securities issued and outstanding.
Certain legal matters in connection with this offering will be passed upon for us by Gary R. Henrie, Attorney at Law, Pleasant Grove, Utah. These legal matters include that shares of common stock to be sold by the selling shareholders is validly issued, fully paid and non-assessable. Mr. Henrie's address is 3518 N. 1450 W., Pleasant Grove, Utah 84062. Mr. Henrie is licensed to practice law in the State of Nevada, the state in which Meganet is located and incorporated.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
- 26 -
The audited financial statements as of March 31, 2011 and March 31, 2010 included in this prospectus have been audited by HJ & Associates, L.L.C., independent registered public accounting firm, as stated in their report appearing elsewhere herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
We have filed a registration statement on Form S-1 under the Securities Act with the Securities and Exchange Commission with respect to the shares of our common stock offered by this prospectus. This prospectus was filed as a part of that registration statement but does not contain all of the information contained in the registration statement and exhibits. Reference is thus made to the omitted information. Statements made in this prospectus are summaries of the material terms of contracts, agreements and documents and are not necessarily complete; however, all information we considered material has been disclosed. Reference is made to each exhibit for a more complete description of the matters involved and these statements are qualified in their entirety by the reference. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Securities and Exchange Commission's principle office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F. Street, N.E., Washington, D.C. 20549. The Securities and Exchange Commission also maintains a web site (http://www.sec.gov) that contains this filed registration statement, reports, proxy statements and information regarding us that we have filed electronically with the Commission. For more information pertaining to our company and the common stock offered in this prospectus, reference is made to the registration statement.
Upon the effective date of this registration statement and thereafter, we will file with the Securities and Exchange Commission annual and quarterly periodic reports on forms 10-K and 10-Q respectively and current reports on form 8-K as needed. We are not required to deliver annual reports to our shareholders and at this time we do not intend to do so. We encourage our shareholders, however, to access and review all materials that we will file with the Securities and Exchange Commission at http://www.sec.gov. Our SEC file number is 333-176256.
- 27 -
INDEX TO FINANCIAL STATEMENTS
Pages | |
Balance Sheets as of June 30, 2011 (Unaudited) and March 31, 2011 | 29 |
Statements of Operations (Unaudited) for the three month periods ended June 30, 2011 and June 30, 2010 | 30 |
Statements of Cash Flows (Unaudited) for the three month periods ended June 30, 2011 and June 30, 2010 | 31 |
Notes to Financial Statements | 32 through 34 |
Report of Independent Registered Accounting Firms | 35 |
Balance Sheets as of March 31, 2011 and March 31, 2010 | 36 |
Statements of Operations for the years ended March 31, 2011 and 2010 | 37 |
Statements of Stockholders’ Equity for the years ended March 31, 2011 and 2010 | 38 |
Statements of Cash Flows for the years ended March 31, 2011 and 2010 | 39 |
Notes to Financial Statements | 40 through 46 |
- 28 -
ASSETS | ||||||||
June 30, 2011 | March 31, 2011 | |||||||
(Unaudited) | (Audited) | |||||||
Current assets: | ||||||||
Cash | $ | 532 | $ | 89,584 | ||||
Prepaid expenses | 31,885 | 59,140 | ||||||
Total current assets | 32,417 | 148,724 | ||||||
Property and equipment, net | 1,357,454 | 1,458,258 | ||||||
Total assets | $ | 1,389,871 | $ | 1,606,982 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Unearned revenue | $ | 12,356 | $ | 10,000 | ||||
Accounts payable and accrued liabilities | 284,535 | 277,195 | ||||||
Total current liabilities | 296,891 | 287,195 | ||||||
Total liabilities | 296,891 | 287,195 | ||||||
Stockholders' equity: | ||||||||
Common stock; $0.001 par value, 100,000,000 shares authorized and | ||||||||
100,000,000 and 100,000,000 shares issued and outstanding at June 30, 2011 | ||||||||
and March 31, 2011, respectively | 100,000 | 100,000 | ||||||
Additional paid-in capital | 2,453,722 | 2,453,722 | ||||||
Accumulated deficit | (1,460,743 | ) | (1,233,935 | ) | ||||
Total stockholders' equity | 1,092,979 | 1,319,787 | ||||||
Total liabilities and stockholders' equity | $ | 1,389,870 | $ | 1,606,982 |
The accompanying notes are an integral part of these financial statements.
- 29 -
MEGANET CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Revenues | $ | 44,102 | $ | 122,309 | ||||
Cost of revenues | 21,300 | 15,125 | ||||||
Gross profit | 22,802 | 107,184 | ||||||
Operating expenses: | ||||||||
General and administrative | 57,425 | 19,277 | ||||||
Depreciation | 116,234 | 109,966 | ||||||
Compensation | 43,611 | 44,028 | ||||||
Rent | 32,340 | 30,000 | ||||||
Total operating expenses | 249,610 | 203,271 | ||||||
Loss before other expenses | (226,808 | ) | (96,087 | ) | ||||
Other expenses | ||||||||
Interest expense | - | - | ||||||
Loss before income taxes | (226,808 | ) | (96,087 | ) | ||||
Provision for income taxes | - | - | ||||||
Net loss | $ | (226,808 | ) | $ | (96,087 | ) | ||
Basic loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||
Basic weighted average common | ||||||||
shares outstanding | 100,000,000 | 100,000,000 |
The accompanying notes are an integral part of these financial statements.
- 30 -
MEGANET CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (226,808 | ) | $ | (96,087 | ) | ||
Adjustments to reconcile net loss to net | ||||||||
cash (used) provided by operating activities: | ||||||||
Depreciation | 116,234 | 109,966 | ||||||
Changes in operating assets and liabilities: | ||||||||
Decrease in prepaid expenses | 27,255 | - | ||||||
Increase (decrease) in accounts payable and accrued expenses | 7,341 | 29,833 | ||||||
Increase in unearned revenue | 2,356 | - | ||||||
Net cash (used) provided in operating activities | (73,622 | ) | 43,712 | |||||
Cash flows from investing activities: | ||||||||
Purchase of fixed assets | (15,430 | ) | (3,968 | ) | ||||
Net cash used in investing activities | (15,430 | ) | (3,968 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of stock | - | 10,000 | ||||||
Proceeds from shareholder contributions | - | 4,303 | ||||||
Net cash provided by financing activities | - | 14,303 | ||||||
Net change in cash | (89,052 | ) | 54,047 | |||||
Cash, beginning of period | 89,584 | 103 | ||||||
Cash, end of period | $ | 532 | $ | 54,150 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | - | $ | - | ||||
Cash paid for taxes | $ | - | $ | - |
The accompanying notes are an integral part of these financial statements.
- 31 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. | DESCRIPTION OF BUSINESS AND HISTORY |
Description of business – Meganet Corporation, (the “Company” or “Meganet”) is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company’s data security solutions include a patented encryption algorithm which enhances security exponentially. The Company out-sources the manufacture of its counter-IED products, including bomb jammers, dismounted backpack portable jammers and facility jammers. The Company also develops and sells cell phone, satellite and wireless interceptors. Other data security solutions include encrypted cell phones, land lines, fax, PDA, radio, and satellites. Intelligence and counter-intelligence solutions include the development of SPY and RAT phones and devices for intelligence gathering. Counter-intelligence solutions include bugs, bug detectors, bomb sniffers, miniature cameras and digital video recorders. The Company maintains technology development, executive and sales offices in Las Vegas, Nevada.
History – Meganet Corporation was incorporated in Nevada on March 26, 2009. Prior to the formation of the current entity, a now dissolved entity under the name Meganet Corporation was incorporated in California with common ownership and similar business objectives. The integration of the Company’s operations from the now dissolved California company to the Nevada company is considered a recapitalization due to the common ownership resulting in the assets and liabilities being recorded at a carryover basis as determined under accounting principles generally accepted in the United States of America. The former entity had been dissolved before incorporation on March 26, 2009.
2. | SUMMARY OF SIGNIFICANT POLICIES |
Basis of presentation –The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. of Regulation S-X They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended March 31, 2011 included in the Company’s Form S-1 as filed with the Securities and Exchange Commission. The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form S-1. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending March 31, 2012.
Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash and cash equivalents – Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value.
Earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. There were no potentially dilutive securities outstanding during the periods presented.
- 32 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
2. | SUMMARY OF SIGNIFICANT POLICIES – (CONTINUED) |
Stock-based compensation – The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Fair value of financial instruments – The carrying amounts reflected in the consolidated balance sheets for cash, prepaid expenses, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.
Recent Accounting Pronouncements – The Company has evaluated recent pronouncements through Accounting Standards Updates “ASU” 2011-04 and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows.
3. | GOING CONCERN |
Going concern – The accompanying financial statements have been prepared 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 incurred losses since inception and has a cumulative retained deficit of $1,460,743 as of June 30, 2011. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
Management anticipates that that there will be sales sufficient to cover the next 12 months of cash operating expenses; however, there can be no surety and anticipated sales will materialize. In order to mitigate the risk related with this uncertainty, the CEO has agreed to contribute additional amount to capital as needed to cover operating expenses. Additionally, the Company plans to distribute additional shares of common stock in exchange for equity capital during the next 12 months.
4. | PREPAID EXPENSES |
Prepaid expenses consist of the following as of June 30, 2011 and March 31, 2011:
June 30, 2011 | March 31, 2011 | |||||||
Rent paid in advance | $ | 31,560 | $ | 43,900 | ||||
Professional fees | - | 14,590 | ||||||
Property taxes | 325 | 650 | ||||||
$ | 31,885 | $ | 59,140 |
- 33 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
5. | PROPERTY AND EQUIPMENT, NET |
Property and equipment consist of the following as of June 31, 2011 and March 31 2011:
June 30, 2011 | March 31, 2011 | |||||||
Furniture and equipment | $ | 2,275,634 | $ | 2,264,648 | ||||
Leasehold improvements | 82,987 | 78,543 | ||||||
2,358,621 | 2,343,191 | |||||||
Less: accumulated depreciation | (1,001,167 | ) | (884,933 | ) | ||||
$ | 1,357,454 | $ | 1,458,258 |
Depreciation expense for the three month ending June 30, 2011 and 2010 was $116,234 and $109,966, respectively.
6. | SUBSEQUENT EVENTS |
The Company has evaluated events subsequent to the balance sheet date through the issuance date of these financial statements in accordance with FASB ASC 855 and has determined there are no such events that would require adjustment to, or disclosure in, the financial statements.
- 34 -
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
Meganet Corporation
Las Vegas, Nevada
We have audited the accompanying balance sheets of Meganet Corporation as of March 31, 2011 and 2010, and the related statements of operations, shareholders' equity, 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 audit 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 financial statements referred to above present fairly, in all material respects, the financial position of Meganet Corporation as of March 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses, used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant restructuring to sustain its operation for the foreseeable future. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of uncertainty.
/S/ HJ & Associates, LLC
HJ & Associates, LLC
Salt Lake City, Utah
August 12, 2011
- 35 -
MEGANET CORPORATION
BALANCE SHEETS
ASSETS | March 31, | |||||||
2011 | 2010 | |||||||
Current assets: | ||||||||
Cash | $ | 89,584 | $ | 103 | ||||
Prepaid expenses | 59,140 | - | ||||||
Total current assets | 148,724 | 103 | ||||||
Property and equipment, net | 1,458,258 | 1,766,975 | ||||||
Total assets | $ | 1,606,982 | $ | 1,767,078 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 277,195 | $ | 189,203 | ||||
Unearned revenue | 10,000 | - | ||||||
Total current liabilities | 287,195 | 189,203 | ||||||
Total liabilities | 287,195 | 189,203 | ||||||
Stockholders' equity: | ||||||||
Common stock; $0.001 par value, 100,000,000 shares authorized and | ||||||||
100,000,000 and 100,000,000 shares issued and outstanding at March 31, 2011 | ||||||||
and 2010, respectively | 100,000 | 100,000 | ||||||
Additional paid-in capital | 2,453,722 | 2,116,205 | ||||||
Accumulated deficit | (1,233,935 | ) | (638,330 | ) | ||||
Total stockholders' equity | 1,319,787 | 1,577,875 | ||||||
Total liabilities and stockholders' equity | $ | 1,606,982 | $ | 1,767,078 |
The accompanying notes are an integral part of these financial statements.
- 36 -
MEGANET CORPORATION
STATEMENTS OF OPERATIONS
Year Ended March 31, | ||||||||
2011 | 2010 | |||||||
Revenues | $ | 386,203 | $ | 1,938,355 | ||||
Cost of revenues | 151,009 | 1,701,575 | ||||||
Gross profit | 235,194 | 236,780 | ||||||
Operating expenses: | ||||||||
General and administrative | 84,132 | 42,372 | ||||||
Depreciation | 443,860 | 441,073 | ||||||
Compensation | 182,807 | 348,325 | ||||||
Rent | 120,000 | 37,340 | ||||||
Total operating expenses | 830,799 | 869,110 | ||||||
Loss before other expenses and income taxes | (595,605 | ) | (632,330 | ) | ||||
Other expenses | ||||||||
Interest expense | - | 6,000 | ||||||
Loss before income taxes | (595,605 | ) | (638,330 | ) | ||||
Provision for income taxes | - | - | ||||||
Net loss | $ | (595,605 | ) | $ | (638,330 | ) | ||
Basic loss per common share | $ | (0.01 | ) | $ | (0.01 | ) | ||
Basic weighted average common | ||||||||
shares outstanding | 100,000,000 | 100,000,000 |
The accompanying notes are an integral part of these financial statements.
- 37 -
MEGANET CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED
MARCH 31, 2011 AND 2010
Common Stock | Additional | Accumulated | Total Stockholders' | |||||||||||||||||
Shares | Amount | Paid-in Capital | Deficit | Equity | ||||||||||||||||
Balance, March 31, 2009 | 100,000,000 | $ | 100,000 | $ | 2,083,379 | $ | - | $ | 2,183,379 | |||||||||||
Shareholder cash contributions | - | - | 32,826 | - | 32,826 | |||||||||||||||
Net loss | - | - | - | (638,330 | ) | (638,330 | ) | |||||||||||||
Balance, March 31, 2010 | 100,000,000 | 100,000 | 2,116,205 | (638,330 | ) | 1,577,875 | ||||||||||||||
Shares returned to treasury by majority shareholder | (1,902,928 | ) | (1,903 | ) | 1,903 | - | - | |||||||||||||
Options exercised | 1,877,928 | 1,878 | 299,696 | - | 301,574 | |||||||||||||||
Issaunce of stock for services | 25,000 | 25 | 12,475 | - | 12,500 | |||||||||||||||
Shareholder cash contributions | - | - | 23,443 | - | 23,443 | |||||||||||||||
Net loss | - | - | - | (595,605 | ) | (595,605 | ) | |||||||||||||
Balance, March 31, 2011 | 100,000,000 | $ | 100,000 | $ | 2,453,722 | $ | (1,233,935 | ) | $ | 1,319,787 |
The accompanying notes are an integral part of these financial statements.
- 38 -
MEGANET CORPORATION
STATEMENTS OF CASH FLOWS
Year Ended March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (595,605 | ) | $ | (638,330 | ) | ||
Adjustments to reconcile net loss to net | ||||||||
cash (used) provided by operating activities: | ||||||||
Depreciation | 443,860 | 441,073 | ||||||
Stock issued for services | 12,500 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) in prepaid expenses | (59,140 | ) | - | |||||
Decrease in accounts receivable | - | 254,214 | ||||||
Increase (decrease) in accounts payable and accrued expenses | 87,992 | (36,997 | ) | |||||
Increase in unearned revenue | 10,000 | - | ||||||
Net cash (used) provided in operating activities | (100,393 | ) | 19,960 | |||||
Cash flows from investing activities: | ||||||||
Purchase of fixed assets | (135,143 | ) | (2,683 | ) | ||||
Net cash used in investing activities | (135,143 | ) | (2,683 | ) | ||||
Cash flows from financing activities: | ||||||||
Payments made on related party advance | - | (50,000 | ) | |||||
Proceeds from issuance of stock | 301,574 | - | ||||||
Proceeds from shareholder contributions | 23,443 | 32,826 | ||||||
Net cash provided by financing activities | 325,017 | (17,174 | ) | |||||
Net change in cash | 89,481 | 103 | ||||||
Cash, beginning of period | 103 | - | ||||||
Cash, end of period | $ | 89,584 | $ | 103 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | - | $ | 6,000 | ||||
Cash paid for taxes | $ | - | $ | - | ||||
Non-cash investing and financing ativities: | ||||||||
Common stock gifted by officer | $ | 1,903 | $ | - |
The accompanying notes are an integral part of these financial statements.
- 39 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
1. | DESCRIPTION OF BUSINESS AND HISTORY |
Description of business – Meganet Corporation, (the “Company” or “Meganet”) is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company’s data security solutions include a patented encryption algorithm which enhances security exponentially. The Company out-sources the manufacture of its counter-IED products, including bomb jammers, dismounted backpack portable jammers and facility jammers. The Company also develops and sells cell phone, satellite and wireless interceptors. Other data security solutions include encrypted cell phones, land lines, fax, PDA, radio, and satellites. Intelligence and counter-intelligence solutions include the development of SPY and RAT phones and devices for intelligence gathering. Counter-intelligence solutions include bugs, bug detectors, bomb sniffers, miniature cameras and digital video recorders. The Company maintains technology development, executive and sales offices in Las Vegas, Nevada.
History – Meganet Corporation was incorporated in Nevada on March 26, 2009. Prior to the formation of the current entity, a now dissolved entity under the name Meganet Corporation was incorporated in California with common ownership and similar business objectives. The integration of the Company’s operations from the now dissolved California company to the Nevada company is considered a recapitalization due to the common ownership resulting in the assets and liabilities being recorded at a carryover basis as determined under accounting principles generally accepted in the United States of America. The former entity had been dissolved before incorporation on March 26, 2009.
2. | SUMMARY OF SIGNIFICANT POLICIES |
Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash and cash equivalents – Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value.
Revenue recognition – The Company’s revenue consists primarily of revenue from the sale of jamming and interceptor hardware and data security software. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. The Company recognizes revenue from the sale of hardware products (e.g., jammers and cell phone interceptors) and software included with hardware that is essential to the functionality of the hardware, in accordance with general revenue recognition accounting guidance. The software inherent to the functionality of the hardware is inseparable from the hardware component and does not have a standalone fair market value.
In addition to the software essential to the hardware that is sold, the Company sells off the shelf software to customers that is not related to the hardware that is sold. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software and (ii) sales of software upgrades.
Generally, the Company requires customers to deposit 50% of the gross sales price upon execution of a formal intent to sell with the remaining 50% due upon delivery of the product. The Company records deferred revenue when it receives payments in advance of the delivery of products.
- 40 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
2. | SUMMARY OF SIGNIFICANT POLICIES – (CONTINUED) |
Shipping costs – Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are included in cost of revenue.
Software development costs – Research and development costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. The Company’s products are released soon after technological feasibility has been established. Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred.
Costs of revenue – Cost of revenue includes raw materials, component parts, and shipping supplies. Shipping and handling costs are not a significant portion of the cost of revenue.
Property and equipment - Property and equipment are stated at the lower of cost or fair value. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which do not exceed the lease term for leasehold improvements, as follows:
Description | Estimated Life |
Equipment | 5 yr |
Computers | 5 yr |
Leasehold improvements | 5 yr |
Office furniture | 5 yr |
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the statements of operations. There were no dispositions during the periods presented.
The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with related accounting standards. For assets to be held and used (including projects under development), fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the “asset group”). Secondly, the Company estimates the undiscounted future cash flows that are directly associated with and expected to arise from the completion, use and eventual disposition of such asset group. The Company estimates the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. There were no impairments during the periods presented.
- 41 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
2. | SUMMARY OF SIGNIFICANT POLICIES – (CONTINUED) |
Income taxes – The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.
The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance.
Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.
Earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. There were no potentially dilutive securities outstanding during the periods presented.
Stock-based compensation – The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Fair value of financial instruments – The carrying amounts reflected in the consolidated balance sheets for cash, prepaid expenses, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.
Concentration of credit risk – Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash. The Company places its cash with financial institutions with high-credit ratings.
Recent Accounting Pronouncements – The Company has evaluated recent pronouncements through Accounting Standards Updates “ASU” 2011-04 and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows.
- 42 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
3. | GOING CONCERN |
Going concern – The accompanying financial statements have been prepared 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 incurred losses since inception and has a cumulative retained deficit of $1,233,935 as of March 31, 2011. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
Management anticipates that that there will be sales sufficient to cover the next 12 months of cash operating expenses; however, there can be no surety and anticipated sales will materialize. In order to mitigate the risk related with this uncertainty, the CEO has agreed to contribute additional amount to capital as needed to cover operating expenses. Additionally, the Company plans to distribute additional shares of common stock in exchange for equity capital during the next 12 months.
4. | PREPAID EXPENSES |
Prepaid expenses consist of the following as of March 31, 2011 and 2010:
2011 | 2010 | |||||||
Rent paid in advance | $ | 43,900 | $ | - | ||||
Professional fees | 14,590 | - | ||||||
Property taxes | 650 | - | ||||||
$ | 59,140 | $ | - |
5. | PROPERTY AND EQUIPMENT, NET |
Property and equipment consist of the following as of March 31, 2011 and 2010:
2011 | 2010 | |||||||
Furniture and equipment | $ | 2,264,648 | $ | 2,205,366 | ||||
Leasehold improvements | 78,543 | 2,683 | ||||||
2,343,191 | 2,208,049 | |||||||
Less: accumulated depreciation | (884,933 | ) | (441,074 | ) | ||||
$ | 1,458,258 | $ | 1,766,975 |
Depreciation expense for the years ending March 31, 2011 and 2010 was $443,860 and $441,073, respectively.
6. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Accounts payable and accrued liabilities consist of the following as of March 31, 2011 and 2010:
2011 | 2010 | |||||||
Accounts payable | $ | 654 | $ | 40,000 | ||||
Accrued payroll | 218,865 | 121,714 | ||||||
Accrued payroll tax | 57,676 | 34,489 | ||||||
$ | 277,195 | $ | 196,203 |
- 43 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
7. | INCOME TAXES |
The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. |
FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $503,094 which is calculated by multiplying a 35% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:
For the period ended March 31, | 2011 | 2010 | ||||||
Book loss for the year | $ | (595,605 | ) | $ | (638,330 | ) | ||
Adjustments: | ||||||||
Unpaid salaries | 114,738 | 148,177 | ||||||
Tax depreciation under (over) book | (112,427 | ) | (331,067 | ) | ||||
Non-deductible stock compensation | 12,500 | - | ||||||
Non-deductible portion of meals and entertainment | 2,371 | 556 | ||||||
Non-deductible penalties | 5,600 | 8,026 | ||||||
Tax loss for the year | $ | (572,823 | ) | $ | (812,638 | ) | ||
Estimated effective tax rate | 35 | % | 35 | % | ||||
Deferred tax asset | $ | 200,488 | $ | 284,423 |
The total valuation allowance is $497,117. Details for the last two periods are as follows:
For the period ended March 31, | 2011 | 2010 | ||||||
Deferred tax asset | $ | 497,117 | $ | 296,629 | ||||
Valuation allowance | (497,117 | ) | (296,629 | ) | ||||
Current taxes payable | - | - | ||||||
Income tax expense | $ | - | $ | - |
Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire.
Year | Amount | Expiration |
2011 | $497,117 | 2031 |
2010 | $231,809 | 2030 |
8. STOCKHOLDERS’ EQUITY
Common Stock - The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock. As of March 31, 2011, all authorized shares were issued and outstanding.
On March 26, 2009, the date of inception, the Company issued 100,000,000 shares of common stock to the founding shareholders, valued at $0.021833 per share or $2,205,365 as consideration for equipment with a historical net book value of $2,205,365. This equipment was initially purchased by a company owned by the founding shareholders of Meganet. In addition to the assets, the Company inherited a $50,000 debt to a former officer and net revenue of $28,014 to the former Meganet.
- 44 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
8. STOCKHOLDERS’ EQUITY – (CONTINUED)
During the year ended March 31, 2010 the majority shareholder advanced $32,826 to the Company to fund operating expenditures. Since there is no formal agreement between the Company and the majority shareholder that provides for repayment of the advance and the majority shareholder has indicated to the Company that there is no intent to be repaid the Company has classified the advance as an increase to additional paid-in capital.
During the year ended March 31, 2011 the Company received total cash consideration of $301,574 from shareholders of the Company. These funds were received when the president and CEO of the Company allowed other shareholders to buy some of his stock. The cash received has been accounted for as a contribution of capital These shares were issued in connection with the exercise of options to acquire stock in the Company issued by a company owned previously by the founding shareholders of the Company.
On February 16, 2011, the Company issued 25,000 shares of common stock valued at $0.50 per share or $12,500 as consideration for consulting services provided by an independent contractor. Fair value was determined based on the value of the services received by the Company.
During the year ended March 31, 2011 the majority shareholder advanced $23,443 to the Company to fund operating expenditures. Since there is no formal agreement between the Company and the majority shareholder that provides for repayment of the advance and the majority shareholder has indicated to the Company that there is no intent to be repaid the Company has classified the advance as an increase to additional paid-in capital.
9. | OPERATING LEASE |
Lease obligations – On January 1, 2010, the Company entered into a 60 month lease for its 10,000 square foot office space located in Las Vegas Nevada. The lease required no security deposit and provides for monthly payments of $10,000. The lease provides for a 60 month renewal period at the expiration to the lease period which the Company anticipates to exercise. In negotiating the lease, the lessor agreed to add approximately $250,000 in leasehold improvements to the property. In exchange, the lessor also agreed to change the rate terms from 120 months at $5,000 per month to 60 months at $10,000 per month. The remaining aggregate lease payments under the operating lease for the facilities as of March 31, 2011 are as follows:
2012 $ 120,000
2013 $ 120,000
2014 $ 120,000
2015 $ 90,000
Rental expense, resulting from operating lease agreements, for the years ending March 31, 2011 and 2010 respectively was $120,000 and $44,340.
10. | RELATED PARTY TRANSACTIONS |
Advances - Prior to inception on March 26, 2009, the former Meganet of California received an advance of $50,000 from the former president of the Company. The advance was used by the founding shareholders to purchase the equipment included in the initial capitalization of the Company (the Corporation as currently formed). This advance was unsecured, with no payment terms and did not provide for interest. During the year ended March 31, 2010, the Company repaid the advance in full, which included interest of $6,000 paid as a courtesy to the former officer.
- 45 -
MEGANET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
10. | RELATED PARTY TRANSACTIONS – (CONTINUED) |
Employment Agreements – as of March 31, 2011 the Company had only one employment agreement which was with the President and majority shareholder. The employment agreement stipulates that the President is to receive a base salary of $120,000 per annum. The agreement also contains a provision allowing for a commission to be paid equal to 10% of gross sales achieved by the President. The total expense related to this agreement was $159,620 and $313,836 as of March 31, 2011 and 2010, respectively. As of March 31, 2011, $218,865 of total compensation was unpaid and accrued in current liabilities.
The Company has accrued for unpaid payroll taxes related to these payroll expenses which amount to $58,984 as of March 31, 2011. These accruals do not include any interest or penalties related to the late status of these payments. Nonetheless, the Company anticipates that it will reasonably be able to negotiate the total past due amount of payroll taxes in order to effectively eliminate any penalties and interest.
11. | STOCK OPTIONS |
Prior to inception of the Company the founding shareholders of the Company granted 1,877,928 fully vested stock options to certain individuals at exercise prices ranging from $0.10 to $0.50 per share. Each of the options granted expire upon the filing of an initial registration statement on Form S-1 by Meganet. Since these options were granted prior to inception of the Company no expense has been recorded by the Company with respect to these options. No options were exercised during the period from inception (March 26, 2009) through March 31, 2010.
Stock options employees and directors – The Company did not issue any options to employees or directors during the years ended March 31, 2011 and 2010.
Stock options non-employees – During the years ended March 31, 2011 and 2010, the Company did not issue any options to non-employees.
The following is a summary of option activity including the weighted average exercise price for the year ended March 31, 2011:
Balance, March 31, 2010 | 1,877,928 | 0.16 | ||||||
Options granted | - | |||||||
Options expired | - | |||||||
Options canceled | - | |||||||
Options exercised | (1,877,928 | ) | 0.16 | |||||
Balance, March 31, 2011 | - |
12. SUBSEQUENT EVENTS
The Company has reviewed its subsequent events pursuant to the requirements of ASC Topic 855 and has determined that there are no events to report.
- 46 -
Until ______, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
- 47 -
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses expected to be incurred in connection with the issuance and distribution of common stock registered hereby, all of which expenses, except for the Securities and Exchange Commission registration fee, are estimated.
Securities and Exchange Commission registration fee | $ | 11,610.00 | ||
Miscellaneous expenses | 500.00 | |||
Legal | 25,000.00 | |||
Accounting fees and expenses | 25,000.00 | |||
Total | $ | 62,110.00 |
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the three years preceding the filing of this registration statement, Registrant has not sold securities without registration under the Securities Act of 1933, except as described below.
Meganet Corporation was incorporated in Nevada on March 26, 2009. Prior to the formation of the current entity, a now dissolved entity under the name Meganet Corporation was incorporated in California with the same ownership, business objectives, and assets as the current company. On March 26, 2009, the date of inception, the Company issued 100,000,000 shares of common stock to the founding shareholders, valued at $0.021833 per share or $2,183,379 as consideration for equipment with a historical net book value of $2,205,365, liability of $50,000 and other net receivables of $28,014. The valuation was determined based upon the predecessor value of the assets and liabilities which were contributed to the Company in exchange for the shares of common stock. Each shareholder received the same number of shares held in the prior company. Ownership in the new company was the same as ownership in the old company with the same assets, objectives, capital structure, shareholders and management. There was no new investment but rather a change in domicile.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following exhibits are filed with this registration statement:
Exhibit No. | Description | |
3.1 | Articles of Incorporation * | |
3.2 | Bylaws * | |
4.1 | Specimen Common Stock Certificate of Registrant * | |
5.1 | Opinion of Gary R. Henrie, Attorney at Law regarding the legality of the common stock being registered * | |
10.1 | Lease Agreement * | |
10.2 | Employment Agreement with Mr. Backal * | |
10.3 | Government Certification | |
21.1 | List of Subsidiaries * | |
23.1 | Consent of HJ & Associates, L.L.C. | |
23.2 | Consent of Gary R. Henrie (included in Exhibit 5.1) * | |
23.3 | Powers of attorney (included in signature page) | |
99.1 | NASDAQ Rule 4200(a)(15) regarding Director Independence |
* Filed as an exhibit with the original Form S-1 filing on August 12, 2011.
(b) Financial Statement Schedules
See the Index to Financial Statements included on page 28 for a list of the financial statements included in this prospectus.
- 48 -
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our bylaws. Under the NRS, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation that is not the case with our articles of incorporation. Excepted from that immunity are:
(1) | a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; |
(2) | a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful); |
(3) | a transaction from which the director derived an improper personal profit; and |
(4) | willful misconduct. |
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
(1) | such indemnification is expressly required to be made by law; |
(2) | the proceeding was authorized by our Board of Directors; |
(3) | such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or |
(4) | such indemnification is required to be made pursuant to the bylaws. |
Our bylaws provide that we will advance all expenses incurred to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request. This advanced of expenses is to be made upon receipt of an undertaking by or on behalf of such person to repay said amounts should it be ultimately determined that the person was not entitled to be indemnified under our bylaws or otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding; or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to our best interests.
- 49 -
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(a) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
(b) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement, or most recent post-effective amendment, which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
(c) | To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in the registration statement. |
2. | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
3. | To remove from registration by means of a post-effective amendment any of the securities being registered hereby, which remain unsold at the termination of the offering. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933, and we will be governed by the final adjudication of such issue.
- 50 -
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, State of Nevada, on October 6, 2011.
MEGANET CORPORATION | ||||
By: | /s/Saul Backal | |||
Saul Backal | ||||
Chief Executive Officer | ||||
(Principal Executive Officer) |
- 51 -
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Saul Backal his or her true and lawful attorney-in-fact and agent with full power of substitution and re-substitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all (1) amendments (including post-effective amendments) and additions to this Registration Statement and (2) Registration Statements, and any and all amendments thereto (including post-effective amendments), relating to the offering contemplated pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
/s/Saul Backal Saul Backal | Chief Executive Officer and Director (Principal Executive, Financial and Accounting Officer) | 10-6-2011 | ||
/s/ Roni Backal Roni Backal | Director | 10-6-2011 | ||
/s/ Orna Mizrahi Orna Mizrahi | Director | 10-6-2011 |
- 52 -