Depreciation expense for the six months ended April 30, 2009 and 2008 totaled $36,722 and $2,350, respectively.
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
6.
ACQUISITIONS
A)
Failed Acquisition of Ignition Media Group, LLC. As previously reported in a Form 8-K filing dated August 25, 2006, a wholly-owned subsidiary of FC entered into an Asset Purchase Agreement (“ASP”), dated August 22, 2006, to acquire substantially all of the assets of Ignition Media Group, LLC (“IMG”), a Pennsylvania limited liability company. The Registrant was not a signatory to such ASP. The wholly-owned subsidiary of the Registrant agreed to purchase the assets of IMG for $1,000,000 in cash and an aggregate of 6,818,182 shares of the parent Registrant’s Common Stock. The $1,000,000 was to have been paid in twelve equal monthly installments of $83,333.33 each. The initial installment payment was made at closing. The 6,818,182 shares of the Registrant’s Common Stock were represented as having an agreed aggregate value of $1,500,000. Thus, the aggregate consideration to be paid by the subsidiary for the assets of IMG amounted to $2,500,000 plus the assumption of $180,000 in debt.
As reported in a Form 8-K filing dated November 13, 2007, the Registrant and IMG entered into a Settlement Agreement and Release (“SAR”) dated November 9, 2007. Such SAR resolved all issues involved in a February 1, 2007, lawsuit initiated by IMG against the subsidiary and counterclaims interposed by the Registrant on May 14, 2007. The Registrant was not named as a party defendant in the action initiated by IMG. However, then counsel for the Registrant named the Registrant as the plaintiff in the counterclaim interposed in the action initiated by IMG. The SAR obligated IMG to return to the Registrant for cancellation an aggregate of 3,318,182 shares of the initial 6,818,182 shares issued to IMG pursuant to the ASP. The SAR acknowledged that the Registrant was not then current in its required 1934 Act filings and that, therefore, Rule 144 was not applicable to the remaining 3,318,182 shares. The SAR also obligated the Registrant to pay to IMG the additional sum of $100,000, which is reflected as loss on investments.
On June 13, 2008, Henry C. Lo, the former Chief Financial Officer of Friendlyway Corporation, completed his obligations pursuant to a settlement agreement executed in November, 2007, that terminated litigation instituted by the Registrant against him. Mr. Lo delivered to the Registrant 700,000 shares of Registrant’s Common Stock and $20,000 in cash. The settlement agreement did not purport to extinguish any claims by the Registrant arising out of the FWI transaction and the resolution thereof. See Note 6 (“Acquisitions”).
B)
Failed Acquisition of Big Fish Marketing. As previously disclosed, on August 7, 2006, the Company acquired substantially all of the assets of Big Fish Marketing Group, Inc, a Colorado corporation (“Big Fish”) pursuant to an Agreement and Plan of Reorganization (the “Purchase Agreement”) effective July 26, 2006. In consideration for the Purchase Agreement, the Company paid to Big Fish $150,000 (the “Cash Consideration”) in cash and delivered 4,952,380 shares of the Company’s common stock (having an agreed-upon aggregate value of $1,350,000). The purchased assets consisted of all of the assets used by Big Fish including but not limited to quotes, customer lists, accounts receivable, contracts, office furnishings, trademarks and other registered marks, all deposits including cash on hand, all intellectual property, domain names and rights owned by Big Fish against third parties. During the year ended October 31, 2008, the Company determined that there was a material failure to satisfy the closing conditions, in addition to the Purchase Agreement having been executed by a party not having the power to do so. As a result, the transaction has been rescinded, removing all transactions and operations of Big Fish Marketing from the Company’s books and records.
7.
LITIGATION
A)
On April 27, 2007, FWAG, a German corporation that had received 6,000,000 of the aggregate of 18,000,000 shares issued by the Company effective December 10, 2004, in exchange for 100% of the capital stock of friendlyway, Inc. (“FWI”), sued the Company in California Superior Court in response to the Company’s attempted cancellation of the shares received by FWAG. The Company then instituted a separate action in California Federal District Court (No. C 07 02869 SBA) on June 1, 2007, against FWAG in which the Company alleged that it was fraudulently induced to acquire FWI and to issue 18,000,000 shares of its Common Stock in exchange therefore. The Company sought rescission of the FWI transaction and, to prevent irreparable harm, moved on June 5, 2007, for a temporary restraining order to attempt to preserve the status quo. (The named defendants in the Federal action were believed to own an aggregate of 15,576,000 of the 18,000,000 shares.)
11
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
The law is settled that a party seeking a temporary restraining order must demonstrate either (a) the combination of probable success on the merits or (b) serious issues being raised and the balance of hardships being in favor of the movant.& The Court ruled that the Company failed to show a likelihood of success on the Merits, that the securities fraud and breach of contract claims were time-barred, and that its allegations of fraud were precatory and, therefore, unsupported.
Subsequently, the Company was constrained to execute settlement agreements with each of the four named defendants. Such settlements resolved the litigation instituted both by AG and by the Company. Each such settlement agreement differed in content and result and in the disposition of the shares of Common Stock in issue. In sum, the settlements resulted in the net cancellation of 4,401,906 shares of Common Stock and the release of AG claims to an additional 18 million shares thereof. The Company believes it to be significant that its then counsel did not raise the issues of (a) failure to deliver consideration by the shareholders of FWI and (b) damages sustained by the Company as the proximate cause of all AG-appointed Company directors resigning in December, 2006, resulting in only one director of the Company remaining and that such one director initiated the transaction that resulted in the dissipation of Company assets, the decline in the Company’s stock price, and the necessity that present management (from January, 2007) be compelled to effect a reorganization of the Company.
B)
Additional litigation matters are discussed in Note 6 (Acquisitions).
8.
DEBT
Round A Secured Term Loans
In August 2006, the Company entered into secured term notes (“Round A Notes”) with several unrelated parties totaling $282,500. The Round A Notes were due on February 18, 2009 and incurred an interest rate of the greater of 12% per annum or the prime interest rate plus 4%. Among other provisions, the Round A Notes provided for monthly repayments of principal and interest over a 28 month period commencing in October 2006. The Company failed to make the required payments at that time. Pursuant to the default provisions of the note, the Company incurred a 25% default penalty payment of the then outstanding balance. The Company recorded a $43,750 penalty during the year ended October 31, 2006 which it reflected as additional interest expense.
In connection with the Round A Notes, the Company also issued warrants to purchase 4,900,000 shares of the Company’s common stock at an exercise price of $.01. The warrants may be exercisable at any time for a period of 7 years. In connection with the issuance of the warrants, the Company has reflected a value for the warrants of $96,023. The fair value of the warrant grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: expected volatility of 15%, risk free interest rate of 4.86%; and expected lives of 5 years. The warrants meet the requirements to be classified as equity. The value of the warrants was reflected as additional interest and expensed on the date of issuance.
In August 2007, the Company entered into exchange agreements with the holders of the Round A Notes whereby the notes were converted into 2,280,500 shares of the Company’s common stock.
Round B-1 Convertible Term Loans
In July 2006, the Company entered into convertible term notes (“Round B-1 Notes”) with several unrelated parties totaling $830,000. The Round B-1 Notes were due on January 19, 2009 and incurred an interest rate of 14% per annum. Among other provisions, the Round B-1 Notes provided for monthly repayments of principal and interest over a 28 month period commencing in October 2006. The Company failed to make the required payments at that time. Pursuant to the default provisions of the note, the Company incurred a 25% default penalty payment of the then outstanding balance. The Company recorded a $207,500 penalty during the year ended October 31, 2006 which it reflected as additional interest expense.
In connection with the Round B-1 Notes, the Company also issued warrants to purchase 1,976,191 shares of the Company’s common stock at an exercise price of $.19. The warrants may be exercisable at any time for a period of 5 years. In connection with the issuance of the warrants, the Company has reflected a value for the warrants of $41,912. The fair value of the warrant grant was estimated on the date of the grant using the Black-Scholes option-
12
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
pricing model with the following weighted average assumptions: expected volatility of 15%, risk free interest rate of 5.06%; and expected lives of 2.5 years. The warrants meet the requirements to be classified as equity. The value of the warrants was reflected as additional interest and expensed on the date of issuance.
In August 2007, the Company entered into exchange agreements with the holders of the Round B-1 Notes whereby the notes were converted into 8,300,000 shares of the Company’s common stock. In addition, the warrants were exchanged for new warrants to purchase 1,976,191 shares of the Company’s common stock which may be exercised at any time over a 5 year period at an exercise price of $.19 per share. No additional expense was recorded for these warrants as the additional cost was not material.
Round B-2 Convertible Term Loans
In October 2006, the Company entered into convertible term notes (“Round B-2 Notes”) with several unrelated parties totaling approximately $960,000. The Round B-2 Notes were due on November 11, 2009 and incurred an interest rate of 14% per annum. Among other provisions, the Round B-2 Notes provided for monthly repayments of principal and interest over a 28 month period commencing in December 2006. The Company failed to make the required payments at that time. Pursuant to the default provisions of the note, the Company incurred a 25% default penalty payment of the then outstanding balance. The Company recorded a $240,000 penalty during the year ended October 31, 2007 which it reflected as additional interest expense.
In connection with the Round B-2 Notes, the Company also issued warrants to purchase 2,047,634 shares of the Company’s common stock at an exercise price of $.19. The warrants may be exercisable at any time for a period of 5 years. In connection with the issuance of the warrants, the Company has not reflected a value for the warrants as the value was not material. The fair value of the warrant grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: expected volatility of 15%, risk free interest rate of 5.06%; and expected lives of 2.5 years.
In August 2007, the Company entered into exchange agreements with the holders of the Round B-1 Notes whereby the notes were converted into 9,599,980 shares of the Company’s common stock. In addition, the warrants were exchanged for new warrants to purchase 2,047,634 shares of the Company’s common stock which may be exercised at any time over a 5 year period at an exercise price of $.19 per share. No additional expense was recorded for these warrants as the additional cost was not material.
Bridge Loans
In February and March 2007, the Company entered into notes (“Bridge Notes”) with several unrelated parties totaling approximately $325,000. The Bridge Notes were due on November 11, 2009 and incurred an interest rate of 12% per annum.
In August 2007, the Company entered into exchange agreements with the holders of 300,000 of the Bridge Notes whereby the notes were converted into 3,000,000 shares of the Company’s common stock. The remaining $25,000 was converted into 208,333 shares of common stock in December 2008.
In May and June of 2008, the Company entered into a new series of Bridge Notes with several unrelated parties totaling $470,000. The Bridge Notes are due six months from the date of issuance and incur interest at the rate of 10% per annum. The notes are convertible by the holder at any time at a conversion price equal to the per share price of a new issuance.
In connection with the Bridge Notes, the Company also issued warrants to purchase 470,000 shares of the Company’s common stock at an exercise price of $.15, and warrants to purchase 470,000 shares of the Company’s common stock at an exercise price of $.25. The warrants may be exercisable at any time for a period of 5 years. In connection with the issuance of the warrants, the Company has reflected a value for the warrants totaling $47,112. The fair value of the warrant grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: expected volatility of 15%, risk free interest rate of 4.86%; and expected lives of 5 years.
In March 2009, the Company obtained interest free advances from two of its officers totaling $40,000.
13
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
In April 2009, the Company entered into additional bridge note agreements aggregating $30,000. The terms and conditions of the notes are substantially identical with the Bridge Notes issued in May and June 2008. The Company also issued warrants to purchase 30,000 shares of the Company’s commons stock at an exercise price of $.15 per share and warrants to purchase 30,000 shares of the Company’s common stock at an exercise price of $.25 per share. No expense was recorded for these warrants as the additional cost was not material.
Round D Loans
Commencing May through October 2007, the Company entered into notes (“Round D Notes”) with several unrelated parties totaling approximately $2,766,000. The Round D Notes incur interest at rates ranging from 12% to 14% per annum, payable semi-annually and are due 3 years from the date of issuance.
In connection with the Round D Notes, the Company also issued warrants to purchase 7,221,500 shares of the Company’s common stock at an exercise price of $.15. The warrants may be exercisable at any time for a period of 5 years. In connection with the issuance of the warrants, the Company has reflected a value for the warrants totaling $549,011. The fair value of the warrant grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: expected volatility of 15%, risk free interest rate of 3.57%; and expected lives of 5 years.
The Company issued Round D notes aggregating $150,000 in November 2008. In connection with the notes, a warrant to purchase 412,500 shares of stock were granted to the holder. The terms and conditions of the note and warrant are identical to those described above. No expense was recorded for these warrants as the additional cost was not material.
Shelter Island Opportunity Fund Notes
In August 2006, the Company entered into a note agreement for the payment of consulting fees to an unrelated party totaling $98,770. The note is due on October 31, 2008 with 11 monthly payments commencing on January 31, 2007 and incurs interest at the rate of 12.25% per annum. Interest on the notes were payable on a monthly basis commencing November 30, 2007. Although the Company did not make the monthly payments as prescribed by the loan agreement, all accrued interest had been paid through October 31, 2008.
Miller Financial Network Note
In June 2006, the Company entered into a note agreement with an unrelated party totaling $100,000. The note incurred interest at the rate of 10% per annum. In January 2007, the Company was notified that the note was in default and the holder had elected to accelerate the note. The Company has been making payments monthly payments towards the interest, legal costs and principal on the note. At October 31, 2008, there was $41,268 in principal remaining on the note.
14
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
9.
COMMITMENTS
Operating Leases
The Company leases office space and equipment under a non-cancelable operating lease agreement expiring in November 2012.
The minimum rental commitments under noncancelable operating leases that have remaining noncancelable lease terms in excess of one year at October 31, 2008 are as follows:
| | | |
| | | |
Years Ending October 31 | | Future
Minimum Lease
Payments |
2009 | | $ | 24,732 |
2010 | | | 24,732 |
2011 | | | 24,732 |
2012 | | | 2,061 |
Total | | $ | 76,257 |
| | | |
Total rent expense for these operating leases was approximately $36, 931and $48,967 for the six months ended April 30, 2009 and 2008, respectively.
10.
INCOME TAXES
The Company has not filed federal or state tax returns for the years ended October 31, 2006, 2007 and 2008. The Company did not believe it owes material federal or state taxes for these fiscal years as a result of its operating losses. At October 31, 2008, the Company had an operating loss carry forward of approximately $8,750,100 for federal tax purposes state tax purposes, which expire through 2028.
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating losses and tax credit carryforwards. The significant components of net deferred income tax assets for the Company are:
| | | | | | | |
| | April 30, | | October 31, | |
| | 2009 | | 2008 | |
Deferred tax assets: | | | | | |
Net operating loss carryforward | | $ | 3,716,070 | | $ | 3,494,790 | |
Accrued expenses not currently deductible | | | 410,883 | | | 344,183 | |
Fixed asset writedown | | | 96,120 | | | 96,120 | |
Inventory reserve | | | 98,099 | | | -- | |
Deferred tax assets before valuation | | | 4,321,172 | | | 3,935,093 | |
Valuation allowance | | | (4,321,172 | ) | | (3,935,093 | ) |
Net deferred income tax assets | | $ | — | | $ | — | |
Generally accepted accounting principles requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of operating losses, management has provided a valuation allowance equal to its net deferred tax assets.
15
PSI CORPORATION
NOTES TO FINANCIAL STATEMENTS
11.
SUBSEQUENT EVENTS
Round F loans
In November 2009, the Company entered into a series of convertible notes aggregating $319,000. The notes are due one year from the date of issuance and incur interest at the rate of 10% per annum. In connection with the notes, the Company issued five year warrants to purchase 9,114,286 shares of the Company’s common stock at an exercise price of $.05 per share. In January 2010, the Company issued an additional note totaling $100,000. The terms and conditions of the note are identical to the notes issued in November 2009.
Short Term Financings
Subsequent to April 30, 2009, the Company repurchased approximately 2.5 million shares in exchange for approximately 5 million restricted shares. These shares were subsequently resold.
Subsequent to April 30, 2009, the Company issued approximately 7.1 million shares of the Company’s common stock in exchange for services.
Subsequent to April 30, 2009, the Company issued approximately 4 million shares of common stock for the payment of interest accrued on its notes payable.
In January 2010, the Company issued 5 million shares to an investor pursuant to anti-dilution provisions in the investor’s agreement.
16
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The discussion of the financial condition and results of operations of the Company set forth below should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act. When used in this Form 10-Q, or in the documents incorporated by reference into this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “intend” and “expect” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding the Company’s strategy, future sales, future expenses, future liquidity and capital resources. All forward-looking statements in this Form 10-Q are based upon information available to the Company on the date of this Form 10-Q, and the Company assumes no obligation to update any such forward-looking statements. The Company’s actual results could differ materially from those discussed in this Form 10-Q. Factors that could cause or contribute to such differences (“Cautionary Statements”) include, but are not limited to, those discussed in Item 1. Business — “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K, which are incorporated by reference herein and in this report. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on the Company’s behalf, are expressly qualified in their entirety by the Cautionary Statements.
Overview
PSI Corporation, doing business as Pantel Systems, Inc. (“PSI” or “the Company”) is a full service kiosk and digital signage company that specializes in the placement and management of self-service kiosks throughout the country. The e-banking kiosks follow a “general store” concept with multiple functions and profit centers. These kiosks come standard with the ability to process money transfers, cash dispensing, debit card dispensing and reloading, as well as bill payment.
Our kiosks provide consumers with information and functionality needed to perform any of their banking needs and more. Digital signage screens attached to the kiosks provide advertising opportunities for both national and local advertisers.
We have two vertical products: full motion video digital signage and full service e-banking kiosks.
Our full service e-banking kiosks are fully functional automated teller machines, allowing consumers to process balance inquiries, withdrawals from checking and savings accounts as well as credit cards and the ability to receive cash in multiple denominations with a multilingual interface. Consumers can cash payroll checks, with real-time visual and biometric validation. When cashing a payroll check, consumers can choose to receive cash instantly or load funds onto a debit card. 24-hour customer support is available via the attached handset. In addition, consumers can choose from hundreds of gift cards to purchase, may purchase pre-paid debit cards, may pay online bills with cash, check or credit card and may purchase domestic and international calling cards or talk time for cell phones.
Results of Operations
The Company earned revenue of $14,148 in the three months ended April 30, 2009, compared to no revenue in the previous year’s quarter. The Company’s net loss for three months ended April 30, 2009 was $1,140,050, compared to a net loss of $342,256 in the three months ended April 30, 2008.
The net loss increase in 2009 was due primarily due to the increase of administrative expenses from $324,811 to $946,020 primarily from consulting and payroll costs.
Liquidity and Capital Resources
17
Cash Flows
Cash used in operating activities was $501,070 for the six months ended April 30, 2009 compared to $893,361 of cash used in operating activities for the six months ended April 30, 2008.
Net cash provided by financing activities was $455,529 for the six months ended April 30, 2009, compared to $709,362 of net cash provided by financing activities in the six months ended April 30, 2008. The cash provided by financing activities in the second quarter of 2009 decreased due to the issuance of $512,000 less of long-term debt from same period in 2008 (see Note 8 to the financial statements).
As discussed in Note 8 to the financial statements, we are in default of a number of our promissory notes, including, but not limited to, the Round A Notes, the Round B-1 Notes and the Round B-2 Notes (as such terms are defined in Note). We have and continue to accrue material and significant penalties and interest expense as a result of these defaults. There is no guaranty we will ever be able to cure these defaults and repay the notes including interest and penalties. These defaults raise a substantial concern regarding our ability to continue as a going concern.
From November 2009 through January 2010, we entered into a series of convertible notes aggregating $419,000. The notes are due one year from the date of issuance and incur interest at the rate of 10% per annum. In connection with the notes, we issued five year warrants to purchase 9,114,286 shares of our common stock at an exercise price of $.05 per share.
In March 2009, we obtained interest free advances from two of its officers totaling $40,000.
In April 2009, we entered into additional bridge note agreements aggregating $30,000. The convertible bridge note is due six months from the date of issuance and incurs interest at the rate of 10% per annum. The note is convertible by the holder at any time at a conversion price equal to the per share price of a new issuance. We also issued warrants to purchase 30,000 shares of our commons stock at an exercise price of $.15 per share and warrants to purchase 30,000 shares of our common stock at an exercise price of $.25 per share.
Cash and cash equivalents
We had cash and cash equivalents of $85,372 as of April 30, 2009.
Due to the substantial doubt of our ability to meet our working capital needs, history of losses and current shareholders’ deficit, in their report on the annual financial statements for the fiscal year ended October 31, 2008, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors.
Critical Accounting Policies and Procedures and Recent Accounting Pronouncements
The Company’s critical accounting policies and procedures and recent accounting pronouncements are set forth in the Notes to our Financial Statements set forth in Item 1 hereof.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
18
Item 4.
Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based upon their evaluation as of the end of the period covered by this report, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be included in the Company’s periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes in the Company's internal control over financial reporting have come to management's attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.
19
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings
From time to time the Company may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of business.
We are not currently involved in any legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations.
Item 1A.
Risk Factors
There have been no material changes to our risk factors as previously disclosed in our most recent 10-K filing.
Item 2.
Unregistered Sales Of Equity Securities And Use Of Proceeds.
During the quarter ended April 30, 2009, we issued warrants to purchase 30,000 shares of the Company’s common stock at an exercise price of $.15 per share and warrants to purchase 30,000 shares of the Company’s common stock at an exercise price of $.25 per share. The issuances of the securities were made pursuant to an exemption from registration requirements under Regulation D and/or Section 4(2) of the Securities Act of 1933 (the “Act”) and will be “restricted securities” upon exercise as such term in defined in the Act..
Additionally, during the quarter ended April 30, 2009, we issued to the following entities and individuals shares of our common stock in the amounts and for the services indicated:
·
3,3100,000 shares of common stock to SOS Resources Services Inc. for services related to capital and strategic corporate advisement;
·
1,100,000 shares of common stock to Gary Levi for services related to the introduction of certain strategic partners;
·
300,000 shares of common stock to Jacob Nissenbaum for services related to the installation and maintenance of our kiosks in various locations;
·
500,000 shares of common stock to Samuel Davidovics for services related the development of our proprietary kiosk software; and
·
150,000 shares of common stock to Dana Hariton for services related to the introduction of certain strategic partners.
These issuances of the securities were made pursuant to an exemption from registration requirements under Rule 701 of the Act and are “restricted securities”.
Item 3.
Defaults Upon Senior Securities
None. Please see Note 8 to our Financial Statements for a complete discussion of all defaults with respect to various promissory notes issued by us that have occurred prior to this fiscal quarter.
20
Item 4.
Submission of Matters to a Vote of Security Holders
None.
Item 5.
Other Information
This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subjected to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.
Item 6.
| | | |
Exhibits | | |
| | |
EXHIBIT | | |
NUMBER | | DESCRIPTION |
31.1 | | Certification of Principal Executive Officer pursuant to Sarbanes-Oxley Section 302 |
31.2 | | Certification of Principal Financial Officer pursuant to Sarbanes-Oxley Section 302 |
32.1 | | Certification of Principal Executive Officer pursuant to Sarbanes-Oxley Section 906 |
32.2 | | Certification of Principal Financial Officer pursuant to Sarbanes-Oxley Section 906 |
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | |
| PSI Corporation | |
| | | |
| By: | /s/ David Foni | |
| Name: | David Foni | |
| Title: | Chief Executive Officer | |
| Date: | May 27, 2010 | |
| |
By: | /s/ Eric Kash |
Name: | Eric Kash |
Title: | Chief Financial Officer |
Date: | May 27, 2010 |
