Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. MSGI TECHNOLOGY SOLUTIONS, INC (14280) 10-Q published on Feb 22, 2011 at 4:23 pm
Reporting Period: Dec 30, 2010
Historically, the Company has funded its operations, capital expenditures and acquisitions primarily through private placements of equity and debt transactions. The Company currently has limited capital resources, has incurred significant historical losses and negative cash flows from operations and has no current revenues. At December 31, 2010, the Company had approximately $31,000 in cash and no accounts receivable. The Company believes that funds on hand will not be adequate to finance its operations and enable the Company to meet its financial obligations and payments under its convertible notes and promissory notes for the next twelve months. All of our promissory notes and other notes payable are currently either past due or due within the next 12 months. There are no assurances that any further capital raising transactions will be consummated. Although certain transactions have been successfully closed in the past, failure of our operations to generate sufficient future cash flow and failure to consummate our strategic transactions or raise additional financing could have a material adverse effect on the Company's ability to continue as a going concern and to achieve its business objectives. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability of the carrying amount of recorded assets or the amount of liabilities that might result should the Company be unable to continue as a going concern. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. If we are unable to obtain additional funds, or if the funds cannot be obtained on terms favorable to us, we will be required to delay, scale back or eliminate our plans to continue to develop and expand our operations or in the extreme situation, cease operations altogether.
During March 2010, the holders certain of these convertible promissory notes provided the Company with letters of agreement that the various notes shall be extinguished and that the principal balances of these notes of approximately $1.9 million, plus any and all accrued interest thereon, would be converted into shares of common stock of the Company at an exchange rate of $0.20 per share. Further, it was agreed that these shares will be locked up and will not be eligible for trading until at least December 31, 2010. As of December 31, 2010, the exchange shares have not been issued to the lenders by the Company and the notes will remain reported as debt until such time as said shares are issued. It is expected that the shares will be issued to the lenders sometime during the third quarter of fiscal year 2011 ending on March 31, 2011, pending approval for an increase to the number of authorized shares of common stock by a vote of the shareholders of the Company.
Due to the default event, commencing on June 17, 2009, the interest rate is now at the default rate of 18%. While the notes are technically in default at September 30, 2010, the lender has made no claim of default.
The Company’s collaborative relationship with NASA was begun in August 2009 with the execution of a Space Act Agreement (SAA) forming a partnership between MSGI and the Ames Research Center (ARC) located at Moffet Field in California. The purpose of this collaboration between MSGI and NASA is to develop new prototype chemical sensors using NASA’s nano-sensor technology to meet MSGI’s need in sensor commercialization in security, biomedical and other areas. This sensor technology platform could potentially be used in efforts such as chemical leak detection and hazardous material detection. MSGI intends to develop this technology for commercial applications, homeland security applications, and medical diagnostic applications for type I diabetes (acetone detection) at first and possibly other applications in future years. There can be no assurances that we will be successful in commercializing such applications.
In August 2009, the Company announced the formation of its first subsidiary for NASA based technology. The subsidiary, named Nanobeak Inc. (Nanobeak) is a nanotechnology company focused on carbon based chemical sensing for gas and organic vapor detection. Some potential space and terrestrial applications for this technology include cabin air monitoring onboard the Space Shuttle and future spacecraft, surveillance of global weather, forest fire detection and monitoring, radiation detection and various other critical capabilities. The commercial applications of these nanotech chemical sensors relate specifically to efforts in Homeland Security and defense, medical diagnostics and environmental monitoring and controls. Nanobeak seeks to offer products in these market sectors beginning in the current fiscal year ending June 30, 2011, but the timing of such offers may be affected by unforeseen difficulties in development and commercialization efforts. In September 2009, the Company announced that it is developing its first product derived from the NASA nanotechnology, a handheld diagnostic device designed for medical and environmental testing and detection using breakthroughs in nanotechnology and chemical sensing. Nanobeak intends to take the handheld sensor from prototype to commercial production and international distribution.
1. A vote was held in order to change the name of the Company to MSGI Technology Solutions, Inc. The total number of votes cast was 68,350,971 with 68,216,402 voted in favor, 132,038 voted against and 2,531abstained. The conclusion was that this vote passed.
2. A vote was held to amend the Amended and Restated Article of Incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 300,000,000. The total number of votes cast was 68,350,971 with 64,224,736 voted in favor, 4,033,911 voted against and 92,324 abstained. There were a total of 15,319,451 shares not voted. As the required vote for this proposal was a majority of the outstanding shares of the voting stock, this proposal was approved with 81.69% of outstanding shares having voted and a majority of those having voted being in favor.