UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB |
X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the Quarterly Period Ended April 30, 2006 | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the Transition Period From to | ||||||||
Commission File Number 0-14200
CPVD
COMPUSONICS VIDEO CORPORATION
(Exact name of Registrant as specified in its charter)
Colorado 84-1001336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
37735 Enterprise Ct, Suite 600-B
Farmington Hills, MI 48331
(Address of principal executive offices)
Registrant's telephone number, including area code:(248) 994-0099
Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes No X
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No X
The number of shares outstanding of the registrant’s common stock as of June 20, 2006 was 160,006,250.
PART 1
Item 1. Financial Statements
CompuSonics Video Corporation & Subsidiaries
Consolidated Balance Sheets
(In US dollars)
April 30, 2006 | ||||
Assets | (Unaudited) | July 31, 2005 | ||
Current Assets | ||||
Cash | $ | 918 | $ | 3,095 |
Accounts Receivable | 100 |
| ||
Total Current Assets | 1,018 | 3,095 | ||
Property and Equipment | ||||
Equipment | 7,149 | 6,719 | ||
Accumulated Depreciation Equipment | (2,534) | (1,498) | ||
Property and Equipment, Net | 4,615 | 5,221 | ||
Other Assets | ||||
Licenses and Agreements | 1,395,000 | 1,395,000 | ||
Accumulated Amortization | (131,859) | (88,634) | ||
Licenses and Agreements, Net | 1,263,141 | 1,306,366 | ||
Total Assets | 1,268,774 |
| 1,314,682 | |
Liabilities and Stockholders’ Equity | ||||
Current Liabilities | ||||
Accounts Payable and Accrued Liabilities | 50,817 |
| 33,008 | |
Accounts Payable-Related Party | 254,745 | 182,455 | ||
Notes Payable - Related Parties | 38,000 | - | ||
Total Liabilities | 343,562 | 215,463 | ||
Stockholders’ Equity | ||||
Preferred Stock-Series B Convertible, 20,000,000 Shares Authorized, 4,000,000 Shares Issued and Outstanding. | 400,000 | 400,000 | ||
Preferred Stock-Series D Convertible, 20,000,000 Shares Authorized, 2,000,000 Shares Issued and Outstanding. | 2,000 | 2,000 | ||
Preferred Stock-Series E Convertible, 24,000,000 Shares Issued and Outstanding. | 400,000 | 400,000 | ||
Common Stock. $0.01 Par Value, 300,000,000 Shares Authorized, 160,006,250 Shares Issued and Outstanding. | 160,006 | 160,006 | ||
Paid-in Capital | 2,085,997 | 2,085,997 | ||
Paid -in-Capital Public Warrants | 411,000 | 411,000 | ||
Accumulated Deficit | (2,533,791) | (2,359,784) | ||
Total Stockholders’ Equity | 925,212 | 1,099,219 | ||
Total Liabilities & Stockholders’ Equity | $ | 1,268,774 | $ | 1,314,682 |
See accompanying notes to consolidated financial statements
CompuSonics Video Corporation & Subsidiaries
Consolidated Statements of Operations (Unaudited)
(In US dollars)
For the three month periods ended April 30, | For the nine month periods ended April 30, | ||||||
2006 | 2005 | 2006 | 2005 | ||||
Revenues | |||||||
Sales | $ - | $ - | $ 2,630 | $ - | |||
Total Revenues | - | - | 2,630 | ||||
General and Administrative Expenses | |||||||
Consulting Fees Related Party | 19,998 | 20,998 | 62,694 | 65,433 | |||
Professional fees | 7,047 | 13,858 | 51,906 | 29,118 | |||
Depreciation | 357 | 256 | 1,036 | 753 | |||
Amortization | 14,408 | 23,250 | 43,225 | 69,750 | |||
Research and Development | - | 9,000 | 24,300 | 48,946 | |||
Other General & Administrative Expenses | 13 | 120 | 412 | 868 | |||
Total General and Administrative Expenses | 41,823 | 67,482 | 183,573 | 214,868 | |||
Loss from operations | (41,823) | (67,482) | (180,943) | (214,868) | |||
Other Income | - | - | 8,076 | 12,591 | |||
Interest Expense Related Party | (640) | - | (1,140) | - | |||
Total other Income (Expense) | (640) | - | 6,936 | 12,591 | |||
Net Loss before income taxes | (42,463) | (67,482) | (174,007) | (202,277) | |||
Income tax expense (benefit) | - | - | - | - | |||
Net Loss | (42,463) | (67,482) | (174,007) | (202,277) | |||
Weighted Average Number of Common Shares Issued and Outstanding | 160,006,250 | 160,006,250 | 160,006,250 | 160,006,250 | |||
Basic and Diluted Loss per Share | $ (0.000) | $ (0.000) | $ (0.001) | $ (0.001) | |||
See accompanying notes to consolidated financial statements
CompuSonics Video Corporation & Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In US dollars)
For the nine-month periods ended April 30, | |||
| 2006 | 2005 | |
Operating Activities | |||
Net Loss | $ (174,007) | $ (202,277) | |
Adjustments to Reconcile Net Loss to Net Cash Used in | |||
Operating Activities | |||
Depreciation | 1,036 | 753 | |
Amortization | 43,225 | 69,750 | |
Change in: | |||
Accounts Receivable | (100) | - | |
Accounts Payable and Accrued Liabilities | 17,809 | (53,080) | |
Accounts Payable-Related Party | 72,290 | 16,770 | |
Total Adjustments | 134,260 | 34,193 | |
Net Cash Used In Operating Activities | (39,747) | (168,084) | |
Investing Activity | |||
Purchase of Equipment | (430) | (413) | |
Net Cash Used in Investing Activities | (430) | (413) | |
Financing Activities | |||
Issuance of stock | - | 400,000 | |
Proceeds from Notes Payable - Related Party | 38,000 | - | |
Repayments of notes payable | - | (206,300) | |
Net Cash Provided by Financing Activities | 38,000 | 193,700 | |
Increase (Decrease) in Cash | (2,177) | 25,203 | |
Cash, beginning of period | 3,095 | 5,228 | |
Cash, end of period | $ 918 | $ 30,431 | |
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements (Unaudited)
Note 1: Financial Statements.
The financial data presented herein are unaudited, but in the opinion of management reflect those adjustments necessary for a fair presentation of the results of operations and financial condition of CompuSonics Video Corporation. Results for interim periods should not be considered indicative of results for a full year. Reference should be made to the financial statements contained in our Annual Report on Form 10-KSB for the year ended July 31, 2005. For purposes of this report, "CPVD", the "Company", "we", "our", "us" or similar references mean CompuSonics Video Corporation, Inc, unless the context requires otherwise. Certain prior period amounts have been reclassified to conform to current period presentation.
Note 2: Property and Equipment
Property and equipment is stated at cost. Depreciation is computed for financial reporting purposes on a straight-line basis over an estimated life. At April 30, 2006, total cost of property and equipment was $7,149, accumulated depreciation was $2,554.
Note 3: Intangible Assets
TreeSoft USA, Inc, subsidiary of the Company owns an intangible asset, called “License Agreement”. This asset represents the rights to distribute ERP, CRM and Electrical –CAD (E-CAD) software products in the NAFTA region, the rights to use the trademarks, product names, logos, artwork and sales promotion material, patents and product documentation, and all other rights specified in the License Agreement dated March 25, 2003.
The Company believes that the estimated useful life of this license agreement should be 24 years starting at March 31, 2004. The Company is using the straight-line method of amortization. Accumulated amortization on this intangible asset was $131,859 at April 30, 2006.
Notes to Consolidated Financial Statements (continued)
Note 4: Notes Payable - Related Party.
The Company restructured its note payable to First Equity Corporation (FEC) during the nine-months ended April 30, 2006, resulting in additional borrowings of $22,000 for total payable of $33,000 as of April 30, 2006. The note is due in June 2006, bears interest at 7% per annum, and can be extended at the option of the Company.
Note 5: Accounts payable - Related Party.
The balance of accrued consulting fees owed to each First Equity Corporation (FEC), and Quorum Capital Inc (DWI) was $79,992 and $49,995 at April 30, 2006 and July 31, 2005, respectively. On May l, 2003, CPVD entered into separate consulting agreements with DWI and FEC. Both agreements identically provide for monthly consulting fees of $3,333 to each of these parties until April 30, 2008.
The balance of accrued consulting fees owed to TreeCAD Engineering (TreeCAD) was $89,465 and $82,465 at April 30, 2006 and July 31, 2005, respectively. On March 25, 2003, CPVD entered into a consulting agreement with TreeCAD, a Cypriot company. The President of TreeCAD, Harald Engels has been engaged as a consultant and Vice Chairman of the Board of Directors and Chairman of the Executive Committee of CPVD since March 25, 2003. This agreement provides for an annual compensation to TreeCAD charged on a time and material basis and is limited to $120,000 per year, starting July 1, 2003. TreeCAD Engineering has a direct ownership in CPVD through 2 million shares of Class D Preferred Stock convertible into 45,400,000 shares of common stock. CPVD paid no consulting fees to TreeCAD during the quarter ended April 30, 2006. CPVD has determined that 90% of costs incurred for TreeCAD are considered r esearch and development costs.
Note 6: Stockholders' Equity
Convertible Preferred Stock
Under the Company's Certificate of Incorporation, up to 75 million shares of preferred stock, with classes and terms as designated by the Company, may be issued and outstanding at any point in time. The Company had 300,000 authorized shares of Series A Convertible Preferred Stock ($.001 par value) issued and outstanding at July 31, 1988. In September 1988, all the outstanding shares of Preferred Stock were converted at $.001 per share, at the holder's option, into 30 million shares of common stock.
Notes to Consolidated Financial Statements (continued)
Series B Convertible Preferred Stock.
In April 2001 the Company issued 4 million shares of Series B preferred convertible stock, convertible at 10 to 1 into 40 million shares of common stock, to Dearborn Wheels, Inc. and First Equity Corporation, in exchange for the extinguishments of the indebtedness to these related parties in the amount of $412,117.
Series D Convertible Preferred Stock.
On March 31, 2004 the Company delivered to TreeCAD Engineering, Ltd. 2 million shares of series D preferred convertible stock, par value $0.001 per share, convertible at 1 for 22.7 rate into 45.4 million restricted or legended shares of common stock, within five years of the closing date, at the holder’s discretion. These shares are represented on the face of the statement of assets and liabilities. There are another two million shares of the same type of stock held in escrow, pending fulfillment of certain requirements by TreeCAD Engineering, Ltd. that are expected to be released in the near future.
Series E Convertible Preferred Stock.
In October 2004, $400,000 was invested in the Company from various accredited investors through the sale of 24 million shares of class E preferred convertible stock and 24 million shares of warrants. Class E preferred convertible stock is convertible into 24 million shares of common stock (Rate of 1 to 1). One newly issued warrant entitles the holder to purchase one share of common stock at a price of $0.018 during the five-year period ending October 31, 2009.
Rights, preferences, privileges and restrictions of the Series B, D, and E of Preferred Convertible Stock.
See Exhibit 1.
Notes to Consolidated Financial Statements (continued)
Public Offering of Common Stock and Warrants
In December 1985, the Company completed a public offering of 30,000,000 units, each consisting of one share of the Company's common stock, $.001 par value, and one Class A purchase warrant. One Class A warrant entitles the holder to purchase one share of common stock plus a Class B warrant for $.05 during the twelve month period originally ending November 27, 1986 and currently extended to June 30, 2006. The Company may redeem the Class A warrants at $.001 per warrant if certain conditions are met.
One Class B warrant entitles the holder to purchase one share of the Company's Common Stock for $.08 per share for a twelve-month period originally ended November 27, 1987 and currently extended to June 30, 2006. The offering was made pursuant to an underwriting agreement whereby the units were sold by the Underwriter on a "best efforts, all or none" basis at a price of $.03 per unit. The Underwriter received a commission of $.003 per unit and a non-accountable expense allowance of $27,000.
The public offering was successfully completed on December 13, 1985 and the Company received $727,971 as the net offering proceeds for the 30,000,000 units sold. 6,250 Class A warrants have been exercised for total proceeds of $313, as of April 30, 2006.
Incentive Stock Option Plan
On October 4, 1985, the Company's Board of Directors authorized an Incentive Stock Option Plan covering up to 7,000,000 shares of the Company's common stock for key employees. The Board of Directors is authorized to determine the exercise price, the time period, the number of shares subject to the option and the identity of those receiving the options. As of April 30, 2006, no options have been granted under this plan.
Additional Paid in Capital-Public Warrants
Based on SFAS 123(R), the Company must record additional warrant expense for the incremental difference in fair value of the outstanding warrants, each time these warrants are extended. No incremental value is recognized as of April 30, 2006 because the fair value of the warrants at that date was lower than the initial value of the warrants of $411,000.
Notes to Consolidated Financial Statements (continued)
Note 7. Legal Proceedings
CPVD is a co plaintiff with First Equity and CompuSonics Video Corporation vs. Target Holding, B.V., Senol Halfar, George Burmann, and Gunnallen Financial, Inc., Case Number: 05-CV-70341-DT. The complaint was filed at the Eastern District Court of Michigan, Southern Division on January 31, 2005, and amended on August 9, 2005. The Plaintiff’s First Amended Verified Complaint alleges claims for breach of contract, breach of fiduciary duties, fraud and, or constructive fraud and conspiracy to defraud. The claims have withstood two motions to dismiss.
Defendants initially established, in 2001, a securities account with Defendant, Gunn Allen Financial. The account was managed by Defendant George Burmann, manager of the Gunn Allen Financial branch in Orlando. The purpose of this account was to receive shares of CPVD common stock from Plaintiff, First Equity Corporation and other CPVD shareholders. Target could receive approximately 32 million of such shares, pay Plaintiff, First Equity, and others, if any, for shares at prices ranging from one cent to two cents per share, so that those shares of CPVD could then be sold by Defendants Halfar, Burmann, and Gunn Allen for higher prices in the market for profit purposes. Plaintiffs have requested damages in whatever amount the Court deems appropriate, as permitted by law. The Case is presently in the facilitation stage.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations.
Three-months ended April 30, 2006 compared to three-months ended April 30, 2005.
The Company had no revenues during the three-months ended April 30, 2006 and 2005.
The Company incurred $19,998 and $20,998 in consulting fees for the three-months ended April 30, 2006 and 2005, respectively.
The Company incurred $7,047 and $13,858 of professional fees for the three-months ended April 30, 2006 and 2005, respectively. The decrease in 2006 is mainly due to the accounting and legal expenses.
Research and development costs were $0 and $9,000 for the three-months ended April 30, 2006 and 2005, respectively. These costs are calculated at 90% of total billings from TreeCAD. The cost is related to the amount of time TreeCAD devotes to CPVD. Since the software product CRM is still in development stage, no billings were incurred for the three-month period ended April 30, 2006 on behalf of TreeCAD.
The Company recorded $357 and $256 in depreciation expense for the three-months ended April 30, 2006 and 2005, respectively.
The Company recorded $14,408 and $23,250 in amortization expense for the three-months ended April 30, 2006 and 2005, respectively. The license is amortized over a 24-year period starting March 31, 2004. The change is due to the change in estimated useful life of the license agreement in the 4th quarter of the fiscal year ended July 31, 2005.
Other general and administrative expenses were $13 and $120 for the three-months ended April 30, 2006 and 2005, respectively.
Results of Operations.
Nine-months ended April 30, 2006 compared to nine-months ended April 30, 2005.
The Company realized $2,630 in revenues from the sales of TreeSoft CRM software for the nine-months ended April 30, 2006.
The Company incurred $62,694 and $65,433 in consulting fees for the nine-months ended April 30, 2006 and 2005, respectively. The slight decrease is due to lower consulting fees for TreeCAD for this period.
The Company incurred $51,906 and $29,118 in professional fees for the nine-months ended April 30, 2006 and 2005, respectively. The increase in 2006 is mainly due to the accounting and legal expenses.
Research and development costs were $24,300 and $48,946 for the nine-months ended April 30, 2006 and 2005, respectively. These costs are calculated at 90% of total billings from TreeCAD. The cost is related to the amount of time TreeCAD devotes to CPVD. The CRM software product is in the development stage presently.
Management's Discussion and Analysis or Plan of Operation (continued)
The Company recorded $1,036 and $753 in depreciation expense for the nine-months ended April 30, 2006 and 2005, respectively. This minor change is related to the purchase of new equipment for this period.
The Company recorded $43,225 and $69,750 in amortization expense for the nine-months ended April 30, 2006 and 2005, respectively. The license is amortized over a 24-year period, starting March 31, 2004. The change is due to a change in the estimated life of the license agreement in the 4th quarter of the fiscal year ended July 31, 2005.
Other general and administrative expenses were $412 and $868 for the nine-months ended April 30, 2006 and 2005, respectively.
Liquidity and Capital Resources.
CPVD is in the stage of marketing the TreeSoft CRM software to small and mid size markets in the USA. Management is confident that this software product is the best in the pool of the CRM products, and the most cost effective. CPVD has spent over 24 months in research and development activities involving translation and localization of the software from its German version. Such activities caused a negative cash flow for CPVD during the past two years. Management plans to create sales revenue from this software that should support the company’s daily operations for the next 12 months by turning a positive net cash flow. Concurrently with the sales revenue, related party loans should continue to support any additional cash needs.
CPVD has no current plans to purchase or sell plants or equipment for the next 12 months. CPVD plans to hire, or contract additional work force in the marketing department during the next 12 months.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
The Company’s Chief Excecutive Officer and Chief Financial officer have performed an evaluation of the Company’s disclosure controls and procedures as of April 30, 2006, as those terms are defined in Rules 13a-15(e) and 15d-15(e)of the Securities and Exchange Act of 1934 as amended (the “Exchange Act”), and each has concluded that such disclosure controls and procedures are effective to ensure that the information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission’s rules and regulations.
Changes in Internal Controls
There have been no changes in the Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f)under the Exchange Act) during the quarter ended April 30, 2006, to which this report relates, that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits
See Exhibit 1.
Form 10-QSB
For the quarter ended April 30, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COMPUSONICS VIDEO CORPORATION & SUBSIDIAIRES
(Company)
June 22, 2006 /s/ Thomas W. Itin Chairman of the Board of Directors, President, CEO
Thomas W. Itin
RULE 15D-14(A) CERTIFICATION OF CEO
I, Thomas W. Itin certify that:
1. | I have reviewed this Report on Form 10-QSB of CompuSonics Video Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
CEO Certification (continued)
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: June 22, 2006
|
/s/ Thomas W. Itin |
Chief Executive Officer |
RULE 15D-14(A) CERTIFICATION OF CFO
I, Majlinda Xhuti, certify that:
1. | I have reviewed this Report on Form 10-QSB of CompuSonics Video Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
CFO Certification (continued)
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: June 22, 2006
|
/s/ Majlinda Xhuti |
Chief Financial Officer |
SECTION 1350 CERTIFICATION OF CEO
I, Thomas W. Itin, Chief Executive Officer of CompuSonics Video Corporation (the “Company”), hereby certify pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code that to my knowledge:
| 1. | the Company’s Report on Form 10-QSB for the period ended April 30, 2006, to which this statement is furnished as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| ||
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: June 22, 2006
/s/Thomas W Itin. | |
Chairman of the Board of Directors and | |
Chief Executive Officer |
SECTION 1350 CERTIFICATION OF CFO
I, Majlinda Xhuti, Chief Financial Officer of CompuSonics Video Corporation (the “Company”), hereby certify pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code that to my knowledge:
| 1. | the Company’s Report on Form 10-QSB for the period ended April 30, 2006, to which this statement is furnished as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| ||
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: June 22, 2006
/s/Majlinda Xhuti. | |
Chief Financial Officer |
EXHIBIT 1
Rights, Preferences, Privileges and Restrictions of the Series B Convertible Preferred Stock
No Dividends.
Holders of the series B preferred stock are not entitled to dividends on their shares of series B of preferred stock.
Liquidation Preference.
Upon the liquidation of the company the holders of the series B preferred stock are entitled to receive out of the assets of the company a distribution of respectively $0.02 and $.10 for each share of series A and B preferred stock held.
Conversion.
Each share of series B preferred stock is convertible into ten shares of common stock.
Voting Rights.
The holders of the series B preferred stock have voting rights as if the conversion to common stock had taken place, and votes together with the common stock as a single voting group except and to the extent the Colorado Business Corporation Act provides for voting rights as a separate class under section 7-110-104 or any successor statutory provision or as provided below.
An affirmative vote of at least 60 percent of the holders of the series B preferred stock is required for a) change in the rights, preferences or privileges of the series B preferred stock, b) an authorization, or issuance of additional shares of the same series, c) any change in the percent of series B preferred stock required to approve the forgoing.
No Preemptive Rights.
The series B preferred stock should have no preemptive rights as to any series of preferred stock issued subsequent to it.
Registration Rights.
On one occasion at the request of the holders of at least 60% of the series B preferred stock, the Company shall register the shares of common stock issued or issuable upon conversion of the series B preferred stock with the Securities and Exchange Commission. In addition, if the company proposes to file a registration statement with the SEC under the securities act with respect to an offering of securities of the Company, then the Company shall give the holders of the series B preferred stock notice of its intention and an opportunity to include all or a portion of the shares of common stock issuable upon conversion of the series B preferred stock in the proposed registration statement.
Exhibits (continued)
Notices
Any notice, request, demand, consent, approval or the other communication required or permitted hereunder shall be in writing and shall be delivered by personal service or agent, by registered or certified mail, return receipt requested, with postage thereon fully prepaid.
Rights, Preferences, Privileges and Restrictions of the Series D Convertible Preferred Stock
No Dividends
Holders of the series D preferred stock are not entitled to dividends on their shares of series D preferred stock.
Liquidation Preference.
Upon the liquidation of the Company the holders of the series D preferred stock are entitled to receive out of the assets of the Company a distribution of $.10 for each share of series D preferred stock held.
Conversion.
Each share of series D preferred stock is convertible respectively into 22.7 shares of common stock.
Voting Rights.
The holders of the series D preferred stock have voting rights as if the conversion to common stock had taken place, and votes together with the common stock as a single voting group except and to the extent the Colorado Business Corporation Act provides for voting rights as a separate class under section 7-110-104 or any successor statutory provision or as provided below.
An affirmative vote of at least 60 percent of the holders of the series D preferred stock is required for a) change in the rights, preferences or privileges of the series D preferred stock, b) an authorization, or issuance of additional shares of the same series, c) any change in the percent of series D preferred stock required to approve the forgoing.
No Preemptive Rights.
The series D preferred stock should have no preemptive rights as to any series of preferred stock issued subsequent to it.
Registration Rights.
On one occasion, at the request of the holders of at least 60% of the series D preferred stock, the Company shall register the shares of common stock issued or issuable upon conversion of the series D preferred stock with the Securities and Exchange Commission (“SEC”).
Exhibits (continued)
In addition, if the company proposes to file a registration statement with the SEC under the securities act with respect to an offering of securities of the Company, then the Company shall give the holders of the series D preferred Stock notice of its intention and an opportunity to include all or a portion of the shares of common Stock issuable upon conversion of the series D preferred stock in the proposed registration statement.
Notices.
Any notice, request, demand, consent, approval or any other communication required or permitted hereunder shall be in writing and shall be delivered by personal service or agent, by registered or certified mail, return receipt requested, with postage thereon fully prepaid.
Rights, Preferences, Privileges and Restrictions of the Series E Convertible Preferred Stock
No Dividends.
Holders of the series E preferred stock are not entitled to dividends on their shares of series E preferred stock.
Liquidation Preference.
Upon the liquidation of the Company the holders of the series E preferred stock are entitled to receive out of the assets of the Company a distribution of $.10 for each share of series E preferred stock held.
Conversion.
Each share of series E preferred stock is convertible into (1) one share of common stock.
Voting Rights.
The holders of the series E preferred stock have voting rights as if the conversion to common stock had taken place, and votes together with the common stock as a single voting group except and to the extent the Colorado Business Corporation Act provides for voting rights as a separate class under section 7-110-104 or any successor statutory provision or as provided below.
An affirmative vote of at least 60 percent of the holders of the series E preferred stock is required for a) change in the rights, preferences or privileges of the series E preferred stock, b) an authorization, or issuance of additional shares of the same series, c) any change in the percent of series E preferred stock required to approve the forgoing.
No Preemptive Rights.
The series E preferred stock have no preemptive rights as to any series of preferred stock issued subsequent to it.
Exhibits (continued)
Registration Rights.
On one occasion, at the request of the holders of at least 60% of the series E preferred stock, the Company shall register the shares of common stock issued or issuable upon conversion of the series E preferred stock with the Securities and Exchange Commission (“SEC”). In addition, if the company proposes to file a registration statement with the SEC under the securities act with respect to an offering of securities of the Company, then the Company shall give the holders of the series E preferred stock notice of its intention and an opportunity to include all or a portion of the shares of common stock issuable upon conversion of the series E preferred stock in the proposed registration statement.
Notices.
Any notice, request, demand, consent, approval or any other communication required or permitted hereunder shall be in writing and shall be delivered by personal service or agent, by registered or certified mail, return receipt requested, with postage thereon fully prepaid.
