Princeton Security Technologies, Inc. - FORM 10-K/A

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - Princeton Security Technologies, Inc.	princeton32-1_102010.htm
EX-31.2 - EXHIBIT 31.2 - Princeton Security Technologies, Inc.	princeton31-2_102010.htm
EX-31.1 - EXHIBIT 31.1 - Princeton Security Technologies, Inc.	princeton31-1_102010.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 2

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2009

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 333-141482

Princeton Security Technologies, Inc.

(Exact name of registrant as specified in charter)

Nevada	20-5506885
State or other jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization

303C College Road, Princeton, New Jersey 08540

(Address of principal executive offices) (Zip Code)

Issuer's telephone number, including area code: 609-924-7310

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	N/A

Securities registered pursuant to section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act

Yes x No o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 o

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained herein, and not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: The Registrant’s shares trade on the OTCBB with $0.07 bid and $0.2 ask. The bid on May 12th, 2010, was $0.07 giving the shares held by non-affiliates a market value of $960,996. The shares trade very sporadically and the bid price on any given day may not be indicative of the actual price a stockholder could receive for their shares.

As of May 12th, 2010, the Registrant had 13,728,513 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the part of the Form 10-K (e.g., part I, part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or other information statement; and (3) Any prospectus filed pursuant to rule 424(b) or (c) under the Securities Act of 1933: NONE

EXPLANATORY NOTE

This Amendment No. 2 on Form 10-K/A (the “Amendment”) amends the Annual Report on Form 10-K of Princeton Security Technologies, Inc. for the fiscal year ended December 31, 2009, originally filed with the Securities and Exchange Commission (“SEC”) on May 14, 2010 (the “Original Filing”). This Form 10-K/A does not attempt to modify or update any other disclosures set forth in the Original Filing, except as required to reflect the amended information in this Form 10-K/A. Additionally, this amended Form 10-K/A, except for the amended information, speaks as of the filing date of the Original Filing and does not update or discuss any other developments affecting us subsequent to the date of the Original Filing.

PART I

ITEM 1. BUSINESS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management. Statements in this periodic report that are not historical facts are hereby identified as forward-looking statements.

Overview

Princeton was founded in February 2005 to acquire the detector and microanalysis business of Outokumpu Oyj. In February 2005, Princeton completed the acquisition of the detector and microanalysis business from a subsidiary of Outokumpu Oyj. As part of the acquisition of the business, Princeton retained the management and scientific staff of the subsidiary’s detector business unit to continue to operate the detection and microanalysis business. Additionally, Princeton assumed the lease on the premises occupied by Outokumpu Oyj. The facilities were located in Rocky Hill, New Jersey and served as the company’s offices, manufacturing and research facilities. In March 2006, Princeton moved its offices to 303C College Road East, Princeton, New Jersey where its management, manufacturing and research and development are currently located.

As part of the goal in acquiring the detector business, following the acquisition, Princeton divested the Microanalysis business to a subsidiary of Bruker Biosciences Corp. so that management could focus on, what it believed to be, the more profitable detector business within the Homeland Security industry.

In September 2006, Princeton restructured its corporate status by creating a Nevada corporation called Princeton Security Technologies, Inc. to be the holding company of Princeton Gamma Tech Instruments, Inc. Management reincorporated in Nevada and completed a stock exchange making Princeton Gamma Tech Instruments the wholly owned subsidiary of the Nevada corporation. The creation of a Nevada parent corporation was accomplished as part of Princeton’s ongoing efforts to start seeking equity investments from outside investors. Princeton offices and facilities will continue to be located in Princeton, New Jersey. Princeton’s primary focus will continue to be on the X-ray and Gamma-ray Detectors and Spectroscopy systems, Radioactive Isotope Identifier products. Our products detect radioactive and other nuclear materials in various security and environmental settings.

Products

Through the purchase of the detector business, Princeton acquired X-ray and Gamma-ray Detectors and Spectroscopy systems, and Radioisotope Identifier products. More importantly, we also acquired the management and scientific teams responsible for the development of this technology. Currently we produce both individual detection units as well as component parts for larger units manufactured and sold by other companies.

The uses for our products encompass a variety of industrial, commercial and security concerns ranging from the homeland security need to detect concealed radioactive material, to silicon wafer fabrication companies that use our products and components to analyze silicon wafers for defects.

The nature of our technology allows our products to encompass a variety of uses. Our products typically have three basic technologies that can be combined to create a detection unit or system. Each of our products contains a sensor or a detector, electronic circuitry to process the signal from the sensor and firmware or software to analyze and interpret the processed signal. Princeton has design, development and manufacturing capability in all three technology areas. By focusing on these three core competencies used in detectors and components, we are able to design products for multiple industries and users.

As part of our core technology, we have developed the internal capability to produce a high purity germanium radiation detector, Sodium Iodide and Lanthanum Bromide scintillators, which are the key component in Gamma-ray detection systems. We do also have an internal capability to process x-ray detectors, as well. These capabilities allow us to compete with the limited number of companies who have the ability to work with these types of sensors. These sensors are most frequently used to detect radioactive isotopes.

Currently, our product line includes the following component and detectors:

-	Category 1: Radioactive Isotope Identifier Products.

The current product is termed the SAM Radioactive Isotope Identifiers (RIID). This hand-held instrument is a self-contained radiation detector, low-noise signal processor, and user interface. Our proprietary analysis software provides an intuitive color display suitable for both First Responders as well as more technically trained Health Physicists. This product and product versions are mainly used for large homeland security market applications, as well as for environmental, industrial and medical purposes. This product detects neutron and gamma radiation from over 100 isotopes. The SAM was designed to meet the latest American National Standards Institute “ANSI” and other government standards for portable radiation detection equipment.

We introduced recently a Fixed Installation unit , called Area Monitor, to our product offering. That product is being offered and used in e.g. building security applications, hospitals, industrial applications and generally in security applications where an identified area or facility needs to be secured. A new application is a vehicle and cargo Portal monitoring for security purposes.

-	Category 2: Nuclear/ Gamma-ray detectors and spectrometers:

Princeton is one of the handful of companies worldwide that manufacture High Purity Germanium Detectors and associated electronics and software for the most sensitive and accurate detection and analysis of radioactive samples in a laboratory environment. A typical application is the measurement of very low-levels of radioisotopes in soil, water or geological samples to determine the efficacy of radioactive waste cleanup or to conduct geophysics research. This type of lab-based instrumentation is also used by the nuclear power industry for on-line monitoring. Customers include Federal and State governmental authorities, research laboratories and large corporations.

-	Category 3: X-ray detectors and spectrometers.

These products address the research and industrial analysis need in the Microanalysis or XRF market. The Microanalysis Market is the branch of industry and scientific research that requires the non-destructive analysis of materials on a sub-millimeter dimensional scale.

The non-destructive testing of materials by X-ray analysis utilizes a range of detector products from small hand-held units to large systems installed on a Synchrotron and used for the fundamental research of materials. Princeton supplies both detector components as an OEM supplier and also complete X-ray spectrometer systems. Applications include quality control (e.g., for Silicon wafer fabrication), fundamental material research (e.g., on a synchrotron), and industrial control and monitoring, (e.g., engine wear analysis). A typical application is analyzing various metals for quality or research purposes.

Markets

The market for our products is broad and encompasses both industrial, commercial and security concerns. Although our products are sold world-wide, current emphasis by the United States government on homeland security measures leads us to believe the US market will be strong for many of our detectors.

Our hand held and fixed installation detectors have the ability to check for various radiation in packages, containers or environmental areas. This will allow them to be used for multiple purposes including use by homeland security companies in checking for items such as dirty bombs.

Homeland Security market generally includes: law enforcement authorities, first responders, HAZMAT teams, governmental agencies and companies that work with such agencies. This is a growing marketplace particularly in the realm of radiation and special nuclear material detection. SAM Isotope Identifier , Area Monitors and as well as some High Purity Germanium detectors are targeting this segment, which is sizeable enough to support several players.

Additionally, we produce components that are used by other companies in larger detection units in multiple discipline areas. Both Gamma-ray and X-ray detectors and systems are considered to be a part of analytical instruments market segments. Our products and systems address needs for a smaller market segment within the analytical instruments marketplace aimed at industrial and research usage.

Competition

The environment for our products and services is intensely competitive. Although the complexity of the products we produce limits the number of companies we compete with, the companies with competing technology are generally larger and often subsidiaries or divisions of very large multinational companies. Our competitors’ size and association with large multinational companies creates advantages over us in the ability to access potential customers. Many potential customers already purchase products either directly from our competitors or from another subsidiary of these large multinational companies creating natural inroads to sales that we do not possess.

Given our relative size versus our competitors, we often have to seek niche markets for our products or focus on selling components to be used in our competitors’ larger detection units. We believe, however, that our technology and experience in the detection industry allows us to be competitive in our markets. However, until we have more funding, we will be limited in our ability to expand our market penetration and to be able to introduce new products.

We believe our main competitors are ICX Technologies , a publicly held US company, with a large selection of radiation detection products and technology ; Canberra Industries, Inc., a subsidiary of French Areva group, specializing in larger nuclear projects and Radiation Identifying detector technology to the Homeland Security market; Ortec, a division of Ametek (Advanced Measurement Technology, Inc.), offering nuclear detection products to the Homeland Security market and Thermo Fisher Scientific , a large US based publicly held company , which sells Isotope Identifiers as well as other Homeland Security technology products.

In addition to the above competitors, there are several other companies that offer competing products in each of our market segments. Given the complexity of our products, we do not foresee substantial new competitors entering the broad market but instead see the current competitors becoming more aggressive as the markets continue to expand.

Future Growth Plans and Markets

By purchasing complex technology developed over the last thirty years, we believe we have the capability to enter into a growing marketplace in the Homeland Security as well as overall detector field. We are hopeful we can provide improved focus to products and related technology that was not receiving the attention or funding it required while operating as a subsidiary of a large multinational company whose primary focus was moving in another direction. We have spent the last three years improving upon the technology acquired; further developing new innovative products and refocusing our strategy on the growing need for sophisticated and dedicated detection units and components. We are hopeful this focus will allow us to be at the forefront of increased spending on detection devices for the commercial and homeland security markets. Two markets we see as new uses for our products are in the homeland security marketplace where there is an increasing need for dangerous radioactive and nuclear material to be identified by several authorities; and in the “quality control” area where testing equipment has become a crucial part of the manufacturing process.

Although security issues have been around before, there is a new and on-going need to be able to detect various radioactive isotopes in different security and environmental settings. This marketplace is expanding throughout the world. This need is being created not only from the fear of terrorism but also from the expansion of the use of various chemicals and radiation in the manufacturing environments and the need to assure radiation is not being released inadvertently into the environment. We have created several detectors and related components aimed directly at this need and will continue to work on the development of even more sophisticated devices for this expanding market.

As manufacturers continue to create more complex products relying heavily on automation, we believe that they will continue to require products such as detectors and testing equipment capable of evaluating the quality of the products produced. We have seen this in the silicon wafer fabrication process where we currently provide component parts to help detect any defects in the chips. Another new application for us is the detection of radioactive raw material in a manufacturing process within a marble industry or steel industry. We believe these “quality control” products will continue to see increasing demand and the use of our products will expand.

Princeton’s plan of operation going forward consists of a two tier approach including a marketing strategy and a sales strategy.

Our marketing strategy includes a number of defined processes, and will leverage existing marketing plans from Princeton and affiliate companies. Campaigns run on a regular basis will include a tradeshow schedule, direct mail, email, telemarketing and direct sales calls, user groups and radiation detection workshops. Furthermore, our marketing efforts will also introduce a one-to-one customer driven outline to address the network and support needs of each customer.

We intend to prioritize customer service and make it a key component of our marketing programs. We believe that providing our customers with what they want, when and how they want it, has been fundamental in the development of our reputations in the industry.

Because we want to develop close working relationships with our customers, we want to establish accounts in as personable a way as possible. It is for this reason that we will overwhelmingly emphasize in-person sales visits.

We will closely integrate all of our marketing and sales efforts to project a consistent image of our company and a consistent positioning of our products and services. Furthermore, to support our marketing initiatives and effect legislative actions, we plan to participate in several Washington DC based DHS (Department of Homeland Security) events directly or indirectly via our partners and consultants, and utilize a lobbyist in Washington DC with contacts in the security business.

Our sales strategy includes focusing initial efforts on the top level decision maker or influencer at each targeted government agency. Princeton will also work with DHS to determine which government agencies are appropriate for immediate deployment of advanced technology.

We plan to use the following business development strategies:

1) Use internal contacts in government agencies to identify key people in network solution discussions. Once this person is identified, they will then be qualified to determine if there is sales potential in their working group.

2) Once the proper Points of Contact have been qualified, an account executive or our partners will present the technology and overcome sales objections. During this time the sales person will confirm the details of the opportunity, if any. Onsite demonstrations will be critical in customer acceptance.

3) Onsite demonstrations will include an account executive and possibly a sales engineer. We currently sell to several state and federal agencies including the Environmental Protection Agency, Deportment of Energy, NASA, NIST , PNNL, Los Alamos National Laboratory, Princeton Plasma Physics Lab, Idaho National Lab, US Geological Survey, Niagra County Health Dept. and the City of Englewood NJ.

Manufacturing, Supplies, and Quality Control

Princeton utilizes a 13,000 square foot facility for the manufacture of gamma-ray and X-ray detection equipment and associated electronics. Princeton possesses equipment for vacuum pumping, thin film deposition, wet chemistry semiconductor processing, and semiconductor diffusion. Princeton holds NRC radioactive material licenses for all typical radioactive sources used for the test and calibration of gamma-ray detectors, and carries an inventory of over 60 sources for this purpose. Electronics assembly is mostly outsourced but with small-scale in-house capability including full assembly and testing of our manufactured instrumentation. Our radiation detector manufacturing equipment is suitable and adequate for the current manufacturing plans. Other manufacturing requirements resulting from business expansion, such as electronic modules, will be outsourced.

We gained ISO 9001:2000 Quality Control certifications in 2004, and will be seeking re-certification in the event of a major contract requirement.

Patents, Trademarks, and Copyrights

PGTI owns the following patents and trademarks on file with the United States Patent & Trademark Office:

US Patent #	Expiration Date	Title
5,349,193	May 20, 2013	Highly sensitive nuclear spectrometer apparatus and method.
5,393,982	May 20, 2013	Highly sensitive nuclear spectrometer apparatus and method.
5,608,222	April 7, 2015	Analog to digital conversion technique for spectroscopy.

US Trade Mark #	Expiration Date	Mark
2,768,545	January 7, 2010	EXCALIBUR

Research and Development

Princeton’s engineering and technical staff have over 200 years combined experience in gamma-ray and X-ray spectroscopy including detector development, signal processing and firmware/software development. Engineering modeling tools include detector simulation software, graphic display simulators, Computer Aided Design packages for electronics and mechanical assembly, and a suite of firmware development tools.

In addition to Princeton’s own R&D staff, it regularly uses subcontracting in software, hardware and design tasks related to new and existing product development projects.

Regulation and Environmental Compliance

Due to the nature of PGTI’s business, we are required to comply with the following agencies in order to conduct operations:

§	Nuclear Regulatory Commission licenses for the possession and distribution of radioactive sources used for testing and calibrating equipment.

§	OSHA (Occupational and Safety Health Administration) regulations relating to the handling and use of hazardous chemicals.

§	EPA (Environmental Protection Agency) regulations relating to the storage, use and disposal of hazardous substances.

§	Department of Commerce Export Administration regulations relating to the sale of equipment overseas.

§	Various State and Federal Labor laws.

As of May 12, 2010, we are currently in compliance with all state and federal agencies.

Employees

As of October 8, 2010, we had 10 full time employees and 4 part-time employees. None of our employees are represented under a collective bargaining agreement. We believe our relations with our employees to be good.

Reports to Security Holders.

You may read and copy any materials that we file with the Securities and Exchange Commission at the Securities and Exchange Commission's public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports that we have filed electronically with the Securities and Exchange Commission at their Internet site www.sec.gov.

ITEM 2. PROPERTIES

PGTI utilizes a 13,000 square foot facility for the manufacture of gamma-ray and X-ray detection equipment and associated electronics. Princeton possesses equipment for vacuum pumping, thin film deposition, wet chemistry semiconductor processing, and semiconductor diffusion. We lease this facility at an average rate of $20,000 per month and our lease has a term extending through March 31, 2011.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding. To the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or other person who may be deemed to be our “affiliate” or who is the owner of record or beneficially of more than five percent of our common stock is a party adverse to us or has a material interest adverse to us in any proceeding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No matter was submitted to a vote of our Company's stockholders during the fourth quarter of the period covered by this Annual Report or during the previous two fiscal years.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock commenced to trade on the “OTC Bulletin Board" of the National Association of Securities Dealers, Inc. ("NASD") in the first quarter of 2008 under the symbol “PSGY.” Since the shares have only been reported since the first quarter of 2008, bid and ask prices are not available for the prior two years or last quarter. The bid and ask price since the trading began has ranged from $0.04 to $1.25. Trading prices are inter-dealer quotations as reported do not necessarily reflect transactions, retail markups, mark downs or commissions. As of May 12, 2010, the bid and ask price for our stock was $0.07and $0.2 and the last trading price $0.19.

Quarter Ended	High Price	Low Price
March 31, 2010	$0.05	$0.05
December 2009	$1.01	$1.01
September 2009	$0.40	$0.4
June 2009	$0.51	$0.51
March 2009	$0.50	$0.50

Holders.

The number of record holders of our common stock as of May12, 2010, was approximately 66.

Dividends.

We have not declared any cash dividends on our common stock, and we do not intend to declare dividends in the foreseeable future. Management intends to use all available funds for the development of our product. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock.

Securities Authorized for Issuance under Equity Compensation Plans.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	0	0	0
Equity compensation plans not approved by security holders	1,600,000	$1.078	15,328,513
Total	1,600,000	$1.078	14,328,513

Recent Sales of Unregistered Securities.

In September 2006, Princeton was incorporated for the purpose of acting as the parent corporation of Princeton Gamma Tech Instruments, Inc. As part of this reincorporation, the shareholders of Princeton Gamma Tech Instruments, Inc. received shares of Princeton for their shares in Princeton Gamma Tech Instruments, Inc. Thereafter Princeton raised approximately $1.3 million through the sale of shares of its common stock. We incorporated in Nevada with a parent subsidiary relationship in an effort to provide more corporate flexibility for future operations. By having a parent subsidiary relationship, we feel we can provide flexibility in creating additional subsidiaries to house new products, offshore sales initiatives and potential new acquisitions if they should become available.

Use of Proceeds of Registered Securities.

Proceeds from the sale of registered securities received during the year ended December 31, 2007, totaled $112,550. These funds were primarily used for operating capital.

Purchases of Equity Securities by Us and Affiliated Purchasers.

There were no purchases of our equity securities by us or any affiliated purchasers during the calendar year ended December 31, 2009.

ITEM 6. SELECTED FINANCIAL DATA

Summary of Financial Information

We had revenues of $2,036,643 for 2009 and $2,504,321 for 2008. We had a net loss of $420,823 for the year ended December 31, 2009. At December 31, 2009, we had cash and cash equivalents of $21,333 and working capital of $157,566.

The following table shows selected summarized financial data for the Company at the dates and for the periods indicated. The data should be read in conjunction with the financial statements and notes included herein beginning on page F-1.

STATEMENT OF OPERATIONS DATA:
	For the Year Ended December 31, 2009			For the Year Ended December 31, 2008
Revenues	$	2,036,643		$	2,504,321
General and Administrative Expenses		619,618			730,546
Net Loss		420,823			583,950
Basic Income (Loss) per Share		(0.03	)		(0.05	)
Diluted Income (Loss) per Share		(0.03	)		(0.05	)
Weighted Average Number of Shares Outstanding		12,119,932			11,781,375
Weighted Average Number of Fully Diluted Shares Outstanding		12,119,932			11,781,375
BALANCE SHEET DATA:
	December 31, 2009			December 31, 2008
Total Current Assets	$	519,180		$	752,137
Total Assets		548,154			814,067
Total Current Liabilities		422,736			622,279
Working Capital		157,566			129,858
Stockholders’ Equity (Deficit)		86,540			(20,515	)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Plan of Operation.

General

Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that 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. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. The Company believes there have been no significant changes during the year ended December 31, 2009.

The Company’s accounting policies are more fully described in Note 1 of the consolidated financial statements. As discussed in Note 1, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from these estimates under different assumptions or conditions. The Company believes that the following addresses the Company’s most critical accounting policies.

We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. We recognize revenue as services are provided with specific long lead time orders.

Our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. For example, at December 31, 2009, every additional one percent of our accounts receivable that becomes uncollectible would reduce our operating income by approximately $2,650.

We account for income taxes in accordance with FASB ASC Topic 740, “Accounting for Income Taxes” (ASC Topic 740). Under ASC Topic 740, deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.

Our Business Growth

For the 12 month period ending December 31, 2009 our sales decreased to $2,036,6434 from $2,504,321. Although sales decreased, our net loss decreased to $420,823 compared to the same 12 months period in 2008 when our net loss was $583,950. Our Radioactive Isotope Identifiers had the biggest sales volume of all product categories with the sales of $1,091,708, and the second biggest category is the Nuclear products with the sale of $575,928 for the 12 month period. The third largest sales category are X-ray Detectors. The largest growth for the 12 month period was in Radioactive Isotope Identifiers, where the sales grew to $1,091,708 from $803,482 which is 36% growth. This was due to an enhanced sales distribution as well as introducing the new products and applications to the market, such as GPS capabilities and Neutron Detection for Radioactive Isotope Identifier market. Nuclear detectors did not grow during the 12 month period. Nuclear products sales decreased $499,344 or 46% in the 12 month period ending December 31, 2009, compared the same time period previous year. We anticipate a significant growth to continue in our Radioactive Isotope Identifier products in 2010, as our existing and new products will be introduced to the growing market of homeland security. We also expect Nuclear Products to grow because of new products will be introduced by mid 2010 to the market.

Results of Operations

Total sales decreased $467,678 for the comparable 12 month period in 2009 from 2008. Our gross profit margin improved to 39.3% due to better profitability in the growing Radioactive Isotope Identifier category. We continued to control operating expenses better, thereby reducing expenses for the year ended December 31, 2009, to $1,081,853 from $1,397,213 for the 2008 year end. As a result of the reduced expenses our net loss narrowed to $420,823 for the calendar year 2009 from a net loss of $583,950 for the same period in 2008. Our product mix helped reduce our overall losses as gross profit margins improved from approximately 33.5% in 2008 to 39.3% in 2009. The improved profit margin allowed us to have gross profits of $800,604 on sales of $2,036,643 for the year ended December 31, 2009 as compared to gross profits of $839,329 on sales of $2,504,321 in 2008. Although our gross margins improved, our overall sales were reduced by almost $500,000 as one of our products saw sales declines which could not be offset by the introduction of new products.

The narrowing of our loss was a reflection of the efforts to reduce our operating expenses, as well as move more profitable products from the research and development stage and early stage commercialization into market. As we have had a chance to work on new applications, we will be able to reduce cost of goods sold and increase our gross profit margin. We are hopeful, as our new applications gain more acceptance we are able to increase sales, improve cost of goods sold, and increase our gross margin. We still will need increased sales to reach profitability and cover all of our operating cost.

We anticipate general and administrative expenses to remain at present levels or higher in the future. General and administrative expenses decreased from $730,546 for calendar year 2008 to $619,618 for the calendar year 2009. This reduction reflects the strong restructuring efforts of our management staff. We expect general and administrative expenses to increase in future as we expand our sales revenues and our operations. Our selling and marketing costs were also reduced significantly to $95,909 in 2009 compared to $251,346 in 2008. This reduction was the result of our need to reduce overall costs to better match our available resources. Management believes to increase our sales, we will need additional sources of capital to fund marketing and manufacturing costs. At this time, management has not been able to find sources of additional capital on terms acceptable to Princeton. Until additional sources of funding can be obtained, we will have to continue to keep selling and marketing costs around present levels.

We had non operating expenses of $136,478 in 2009 which related to the payment of debt with shares of our stock as well as the settlement of certain lease obligations with stock settlements. We do not anticipate these items in the future.

Since we are in the initial phases of product sales for some new products, we are hopeful sales will increase and be able to cover operating cost. We will be dependent on sales to increase before we will be able to cover ongoing cost. Until we are able to increase sales, we may have to seek additional financing to fund operations.

Liquidity and Capital Resources

Our overall debt improved in 2009 as we were able to sell some of our inventory which allowed us to pay down our accounts payable and loans. Although our working capital position still remained very tight with $87,904 on December 31, 2008, and $57,566 on December 31, 2009, we were able to reduce our accounts payable amounts by $233,271. Additionally, we were able to eliminate our long term debt. Our overall debt was reduced from $834,582 on December 31, 2008 to $461,614 on December 31, 2009. We are hopeful we will be better able to service ongoing debt in the future as our products gain more acceptance and we are better able to manage our inventory. Additionally, our product mix has improved resulting in our ability to market higher margin products resulting in improved gross margins. In 2008, our gross profit margin was 33.5% compared to 39.3% for 2009. Even with the reduction in debt, management believes we still need additional funding to be able to more aggressively pursue the marketing of our products as well as additional research and development. With current financing limited for small companies, management has been unable to obtain long term financing and has to continue to rely on existing management and shareholders to fund any financing shortfalls. In order to grow the company and take advantage of business opportunities, long term financing will eventually have to be able to be obtained. Management believes without long term financing, we will continue to suffer losses or only be able to achieve break even revenue.

Off Balance Sheet Arrangements.

We had no off balance sheet arrangements during the year ended December 31, 2009.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company are set forth immediately following the signature page to this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company has had no disagreements with its certified public accountants with respect to accounting practices or procedures or financial disclosure.

ITEM 9A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management with the assistance of a consultant, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our CEO and principal accounting officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our CEO and principal accounting officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected; however, management believes our controls and procedures do provide reasonable assurance that the objectives of the control systems are met and our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the controls and procedures are effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based on this evaluation, our management concluded that, as of December 31, 2009, our internal control over financial reporting was effective. However, management recognized the weaknesses of inadequate segregation of duties consistent with control objectives due to our small size and limited resources but believes our established controls help mitigate this potential weakness.

This annual 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 subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Security and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in internal control over financial reporting

There have been no changes in internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND COPRORATE GOVERNANCE

The following table sets forth the name, age, and position of each executive officer and director and the term of office of each director of Princeton:

Name	Age	Position	Director Since
Juhani Taskinen	53	CEO, Director	2005
David Brown	38	Director	2005

The term of office of each director is one year and until his or her successor is elected at the annual shareholders' meeting and is qualified, subject to removal by the shareholders. The term of office for each officer is for one year and until a successor is elected at the annual meeting of the board of directors and is qualified, subject to removal by the board of directors.

Princeton does not have a standing audit, nominating or compensation committee. The size of Princeton’s board has not permitted the board of directors to divide up some of the corporate governance provisions. It is anticipated as our business expands, that board of director committees will be formed. At this time, however, the exact timing and the nature of such committees is unknown. We will form an audit and compensation committee. We currently have one independent director and will seek additional directors with financial and accounting knowledge to serve on these committees. At this time we do not know of any persons who will be nominated.

Biographical information

Set forth below is certain biographical information with respect to Princeton’s existing officer and directors.

Juhani Taskinen -- Mr. Taskinen is the founder of Princeton Gamma-Tech Instruments, Inc., and is our Chief Executive Officer and Chairman of the Board of Princeton Security Technologies, Inc. Mr. Taskinen has been the President of Finn-Partners, Inc. since 1993. Finn-Partners, Inc. is a management consulting and investment firm that specializes in management and financial consulting in the merger and acquisition field. Mr. Taskinen was also a Senior Advisor for Lehman Brothers in Scandinavia during 2003-2004, and also held executive positions within Nokia Corporation prior to founding Finn-Partners, Inc. Mr. Taskinen holds a BSc (economics) as well as an MBA from Pepperdine University.

David Brown -- Mr. Brown joined us in March 2005 as an investor and in April 2005 became a member of our board of directors. Mr. Brown has been the President of Berkeley Nucleonics Corporation since 1993. Berkeley Nucleonics specializes in nuclear detection products and instruments for Federal agencies, such as the US Secret Service, FBI, and Department of Defense as well as to the Homeland Security market. Berkeley Nucleonics has grown steadily during Mr. Brown’s presidency and has also expanded to the international market. Mr. Brown holds a BA in Entrepreneurial Management from San Francisco State University.

Trupti Mehta - Ms. Mehta joined company in September 2007 and is our Principal Accounting Officer. Prior to joining the Company she was the Finance Manager with Innovative Folding Cartons Co. Inc. Ms. Mehta holds a Bachelors Degree in Accounting from the University of Bombay, India.

There are no family relationships among our officers and directors.

Our current directors are Messrs. Taskinen and Brown. Under our bylaws, directors are elected annually at the annual meeting of shareholders to hold office for one year or until their successors are duly elected and qualified. We have not yet set the day for our first annual meeting of shareholders following this offering. Board vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director. The executive officers are appointed by the Board and serve at their discretion.

Term of Office.

The terms of office of the current directors shall continue until the annual meeting of stockholders, which has been scheduled by the Board of Directors to be held in June of each year. The annual meeting of the Board of Directors immediately follows the annual meeting of stockholders, at which executive officers for the coming year are elected.

Significant Employees.

There are no significant employees.

Family Relationships.

There are no family relationships between any of our directors or executive officers.

Involvement in Certain Legal Proceedings.

During the past five years, none of our present or former directors, executive officers or persons nominated to become directors or executive officers:

(1) Filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2) Was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his involvement in any type of business, securities or banking activities;

(4) Was found by a court of competent jurisdiction in a civil action, by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated.

Compliance with Section 16(a) of the Exchange Act.

To our knowledge, during our past fiscal year and since then, all filings required to be made by members of management or others pursuant to Section 16(a) of the Exchange Act, have been duly filed.

Code of Ethics.

We are in the process of establishing a code of ethics and should have it in place during the second quarter of 2010.

Nominating Committee.

We have not established a Nominating Committee because we believe that our two member Board of Directors is able to effectively manage the issues normally considered by a Nominating Committee.

If we do establish a Nominating Committee, we will disclose this change to our procedures by which shareholders may recommend nominees to our board of directors.

Audit Committee.

We do not have an Audit Committee separate from our Board of Directors because of our present limited operations.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth, for the fiscal years indicated, all compensation awarded to, earned by or paid to Princeton's Chief Executive Officer and each of the other executive officers that were serving as executive officers at December 31, 2009 (collectively referred to as the "Named Executives"). No other executive officer serving during 2009 received compensation greater than $100,000.

Summary Compensation Table

Name and Principal Position	Year	Salary		Bonus		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		All Other Compensation		Total
Juhani Taskinen, CEO	2009		0		0		0		0		0	$	144,000	$	144,000
	2008		--		--		--		0		--	$	132000	$	132,000
	2007		--		--		--	$	655		--	$	144,000	$	144,665

Juhani Taskinen’s consulting company, Finn-Partners, Inc., received $144,000 in revenue from Princeton in 2007, $132,000 in 2008 and $144,000 in 2009. We anticipate paying Mr. Taskinen similar compensation through Finn-Partners in upcoming periods as Mr. Taskinen continues to serve as our CEO.

Outstanding Equity Awards At Fiscal Year-End

	Option Awards								Stock Awards
Name	Number of securities underlying unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)
Juhani Taskinen		350,000 30,000		-0-		-0-	$1.10 $1.10	12/31/2011 9/30/2012		-0- -0-		-0- -0-		-0- -0-		-0- -0-
David Brown		350,000 30,000		-0- -0-		-0- -0-	$1.10 $1.10	12/31/20011 12/31/20012		-0- -0-		-0- -0-		-0- -0-		-0- -0-

________________________

The directors received 350,000 stock options on December 31, 2006, and 30,000 stock options on September 30, 2007. All options are for a term of 5 years and have an exercise price of $1.10 per share. There are no limitations on exercise by the option holders. All options are non-assignable.

Outstanding Equity Awards.

See the heading "Compensation of Directors" below. Also, see the heading “Securities Authorized for Issuance Under Equity Compensation Plans” in Part II, Item 5, above.

Board of Directors Compensation

Each director may be paid his expenses, if any, of attendance at each meeting of the board of directors. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefore. We did not compensate our directors for service on the Board of Directors during fiscal 2009.

No other compensation arrangements exist between Princeton and our Directors.

Directors Compensation

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		OptionAwards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Juhani Taskinen		--		--		-		--		--	$	144,000	$	144,000
David Brown		--		--		-		--		--	$	27,494	$	27,494

________________________

On December 31, 2006, each director received stock options to purchase 350,000 shares of common stock at an exercise price of $1.10 per share. On September 30, 2007, each director received stock options to purchase 30,000 shares of common stock at an exercise price of $1.10 per share. All options are fully vested. The options are exercisable for a period of five years.

The dollar amount of the option awards was determined using the Black-Scholes calculation relying on a current stock price of $1.10 per share and a discount rate of 4.35%.

Mr. Brown received $27,494 in compensation in 2009 via his wholly owned company Berkeley Nucleonics Corporation , no compensation 2008 ; and $2,771 in 2007 in cash related to his marketing and sales services on our behalf. Mr. Brown is involved in the marketing and sales for the Homeland Security marketplace.

Changes in Control.

Princeton does not have any employment contracts with our executive officers. No other compensatory plan or arrangements exist between Princeton and our executive officers that results or will result from the resignation, retirement or any other termination of such executive officer’s employment with Princeton or from a change-in-control of the Company.

Securities Authorized for Issuance under Equity Compensation Plans.

Equity Compensation Plan Information

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	0	0	0
Equity compensation plans not approved by security holders	1,600,000	$1.078	14,865,496
Total	1,600,000	$1.078	14,865,496

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of October 8, 2010, the names, addresses and number of shares of common stock beneficially owned by all persons known to the management of Princeton to be beneficial owners of more than 5% of the outstanding shares of common stock, and the names and number of shares beneficially owned by all directors of Princeton and all executive officers and directors of Princeton as a group (except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned).

For purposes of this table, information as to the beneficial ownership of shares of common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes general voting power and/or investment power with respect to securities. Except as otherwise indicated, all shares of our common stock are beneficially owned, and sole investment and voting power is held, by the person named. For purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares of common stock, which such person has the right to acquire within 60 days after the date hereof. The inclusion herein of such shares listed beneficially owned does not constitute an admission of beneficial ownership.

All percentages are calculated based upon a total number of 13,728,513 shares of common stock outstanding as of October 8, 2010, plus, in the case of the individual or entity for which the calculation is made, that number of options or warrants owned by such individual or entity that are currently exercisable or exercisable within 60 days.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Owner		Percentage of Outstanding Common stock
Principal Shareholders
Finn-Partners, Inc./Juhani Taskinen		5,634,000		41.04	%
Newport Beach, California
Third Letter Corporation		1,600,000		11.65	%
San Rafael California
Mikko Maijala		2,000,000		14.57	%
Espoo Finland
Ascendiant Capital Group, LLC		970,000		7.07	%
Irvine California
Officers and Directors
Juhani Taskinen		5,634,000		41.03	%
David Brown		1,600,000		11.65	%
All directors and executive officers of the Company as a group (2 individuals)		7,234,000		52.69	%

_______________________

Juhani Taskinen is an owner and principal of Finn-Partners, Inc. Mr. Taskinen has voting and investment control over the shares held in Finn-Partners, Inc. through his relationship as the principal of Finn-Partners.

David Brown is an owner and principal of Third Letter Corporation. Mr. Brown has voting and investment control over the shares held in Third Letter Corporation through his relationship as the principal of Third Letter Corporation.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Transactions with Related Persons.

We believe that all purchases from or transactions with affiliated parties were on terms and at prices substantially similar to those available from unaffiliated third parties. As part of the formation of Princeton, the founders, which consist of members of our board of directors, received eight million (8,000,000) shares of common stock for five hundred thousand dollars ($500,000). Additionally, as part of the change of parent domicile to Nevada, Princeton issued 1,500,000 shares of common stock to several individuals and companies, including Ascendiant Capital Group, LLC which has engaged in consulting services for Princeton.

Except as indicated above, there have been no material transactions, series of similar transactions or currently proposed transactions, to which our Company was or is to be a party, in which the amount involved exceeded $60,000 and in which any director or executive officer, or any security holder who is known to us to own of record or beneficially more than five percent of our common stock, or any member of the immediate family of any of the foregoing persons, or any promoter or founder had a material interest.

Transactions with Promoters and Control Persons.

Except as outlined above, there have been no material transactions, series of similar transactions or currently proposed transactions, to which our Company was or is to be a party, in which the amount involved exceeded $60,000 and in which any director or executive officer, or any security holder who is known to us to own of record or beneficially more than five percent of our common stock, or any member of the immediate family of any of the foregoing persons, or any promoter or founder had a material interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to us by our principal accountants during the calendar years ended December 31, 2009, and December 31, 2008:

Fee category	2009	2008
Audit fees	$21,000	$21,000
Audit-related fees	$ --	$ --
Tax fees	$4,000	$4,000
All other fees	$ --	$ --
Total fees	$25,000	$25,000

Audit fees. Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and the review of financial statements included in our Forms 10-Q or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

Audit-related fees. Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit fees."

Tax fees. Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All other fees. Consists of fees for products and services provided by our principal accountants, other than the services reported under "Audit fees," "Audit-related fees" and "Tax fees" above.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors.

We do not have an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.

ITEM 15. EXHIBITS, Financial Statement Schedules.

Exhibit Number	Description
3.2	Articles of Incorporation
3.3	Bylaws
31.1	302 Certification of Juhani Taskinen
31.2	302 Certification of CFO
32.1	906 Certification-CEO
32.1	906 Certification-CFO

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the Company caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRINCETON SECURITY TECHNOLOGIES, INC.

Date: October 15, 2010	By	/s/	Juhani Taskinen
			Juhani Taskinen, CEO, President and
			Chairman of the
			Board of Directors

Date: October 15, 2010	By	/s/	Trupti Mehta
			Trupti Mehta, Principal Financial and
			Accounting Officer

In accordance with the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: May 14, 2010	By	/s/	David Brown
			David Brown, Director

Princeton Security Technologies, Inc.

Consolidated Financial Statements

For the Years Ended December 31, 2009 and 2008

Princeton Security Technologies, Inc.

Consolidated Financial Statements

For the Years Ended December 31, 2009 and 2008

Contents


Report of Independent Registered Public Accounting Firm	1

Consolidated Financial Statements

Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statement of Stockholders’ Equity (Deficit)	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors

Princeton Security Technologies, Inc.

Princeton, New Jersey

We have audited the accompanying consolidated balance sheets of Princeton Security Technologies, Inc. (the Company) and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Princeton Security Technologies, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Child, Van Wagoner & Bradshaw, PLLC

Child, Van Wagoner & Bradshaw, PLLC

Salt Lake City, Utah

May 13, 2010

PRINCETON SECURITY TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2009 and 2008

ASSETS	2009			2008
Current
Cash	$	21,333		$	40,490
Accounts receivable (net of allowance for doubtful accounts of $16,426 and $16,426, respectively)		265,006			196,847
Inventory		199,949			460,741
Prepaid Expenses		32,892			54,059
Total Current Assets		519,180			752,137

Property, plant & equipment (net of depreciation of $1,375,337 and $1,353,231, respectively)		28,374			50,480
Deposits		600			11,450
Total Assets	$	548,154		$	814,067

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities	$	321,701		$	554,972
Accrued other liabilities		534			438
Accrued payroll expenses		-			9,747
Accrued vacation expenses		27,594			25,443
Credit line advances		38,878			41,954
Warranty reserve		10,500			-
Deferred sales revenue		62,407			31,679
Total Current Liabilities		461,614			664,233

Notes payable		-			170,349
Total Liabilities		461,614			834,582

Stockholders' Equity (Deficit)
Preferred stock; $.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock; $.001 par value, 90,000,000 shares authorized; 13,703,513 shares and 11,781,375 shares in 2009 and 2008 issued and outstanding, respectively		13,703			11,781
Additional paid-in capital		1,932,915			1,406,959
Retained earnings (deficit)		(1,860,078	)		(1,439,255	)
Total Stockholders’ Equity (Deficit)		86,540			(20,515	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	548,154		$	814,067

See Notes to Consolidated Financial Statements.

PRINCETON SECURITY TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2009 and 2008

	2009			2008

Revenues
Sales (net of returns)	$	2,036,643		$	2,504,321
Costs of goods sold		1,236,039			1,664,992
Gross profit		800,604			839,329

Expenses
Depreciation and amortization		22,106			24,354
Selling and marketing		95,909			251,346
General and administrative		619,618			730,546
Research and development		344,220			390,967
		1,081,853			1,397,213

Loss from operations		(281,249	)		(557,884	)

Other income/(expenses)		(136,478	)		-
Loss on currency exchange		(3,096	)		(26,066	)
Provision for income taxes		-			-

Net income (loss)	$	(420,823	)	$	(583,950	)

Basic and diluted net income (loss) per share of common stock	$	(0.03	)	$	(0.05	)

Weighted average number of common shares		12,119,932			11,781,375

See Notes to Consolidated Financial Statements.

PRINCETON SECURITY TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Years Ended December 31, 2009 and 2008

	Common stock
	Shares		Amount		Additional paid-in capital		Retained earnings (deficit)			Total stockholders’ equity (deficit)

Balance at December 31, 2007		11,781,375	$	11,781	$	1,406,959	$	(855,305	)	$	563,435

Net loss for the year		-		-		-		(583,950	)		(583,950	)

Balance at December 31, 2008		11,781,375		11,781		1,406,959		(1,439,255	)		(20,515	)

Stock issued for services		344,000		344		91,906		-			92,250

Stock issued for conversion of debt		1,578,138		1,578		434,050		-			435628

Net loss for the year		-		-		-		(420,823	)		(420,823	)

Balance at December 31, 2009		13,703,513	$	13,703	$	1,932,915	$	(1,860,078	)	$	86,540

See Notes to Consolidated Financial Statements.

PRINCETON SECURITY TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2009 and 2008

	2009			2008
Cash flow from operating activities
Net income (loss)	$	(420,823	)	$	(583,950	)
Depreciation and amortization		22,106			24,354
Provision for inventory reserves		26,000			-
Stock issued for services		92,250			-
Provision for bad debt allowance		-			(10,107	)
Change in non-cash working capital items:
Inventory		234,792			263,991
Accounts receivable		(145,990	)		177,927
Prepaid expenses		32,017			(31,876	)
Other receivables		77,831			(66,888	)
Accounts payable		(33,271	)		48,182
Accrued payroll		-			-
Accrued vacation expenses		-			-
Accrued expenses		54,703			(24,629	)
Deferred services contracts		-			(583	)
Deferred sales		30,728			(49,413	)
Accrued warranty expenses		10,500			-
Cash flow used in operating activities		(19,157	)		(252,992	)

Cash flow from investing activities
Purchase of property and equipment		-			-
Cash flow provided by investing activities		-			-

Cash flow from financing activities
Proceeds from notes payable		-			212,303
Cash flow provided by financing activities		-			212,303

Decrease in cash position		(19,157	)		(40,689	)

Cash position at beginning of year		40,490			81,179
Cash position at end of year	$	21,333		$	40,490

Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	-		$	-
Income taxes	$	-		$	-
Stock issued for conversion of debt	$	435,628		$	-

See Notes to Consolidated Financial Statements.

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

Note 1 Summary of Significant Accounting Policies

This summary of significant accounting policies of Princeton Security Technologies, Inc. (the “Company”) is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements, which are stated in U.S. Dollars.

Organization

Princeton Security Technologies, Inc. (the Company) was incorporated on September 8, 2006 in the State of Nevada. The Company is the holding company of Princeton Gamma-Tech Instruments, Inc. (PGTI). PGTI was incorporated on February 16, 2005 in the State of New Jersey. On February 19, 2005, PGTI purchased the assets and assumed the liabilities of Princeton Gamma-Tech, Inc. This acquisition included the assets, liabilities, operations, clients and intellectual property of Princeton Gamma-Tech, Inc., including its wholly-owned subsidiary in the United Kingdom, Princeton Gamma-Tech (UK) Limited. On December 28, 2006, Princeton Gamma-Tech (UK) Limited was sold. The assets and operations of Princeton Gamma-Tech (UK) Limited were sold the previous year. The Company has elected a fiscal year end of December 31st.

Business Activity

Princeton Gamma-Tech Instruments, Inc. is a leading supplier of X-ray and Gamma-ray Detectors and Spectroscopy systems, portable Radioisotope Identifiers, and portable Chemical Analyzers. The Company serves a broad customer base in scientific research, industrial materials analysis, and Homeland Security. The Company operates a full customer service and support program, backed by a modern manufacturing and service facility.

Use of Estimates in the preparation of the financial statements

The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

Depreciation and amortization

Depreciation and amortization have been provided in amounts sufficient to relate the costs of depreciable assets to operations over their estimated useful lives. The assets are depreciated using the straight line method. The lives vary from 3 to 7 years.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Currency

The functional currency of the Company’s former subsidiary, Princeton Gamma-Tech (UK) Limited is the British Pound. Assets and liabilities of the subsidiary in the accompanying consolidated financial statements are translated to United States dollars at current exchange rates and income statement accounts are translated at the average rates prevailing during the period. Related translation adjustments are reported as other comprehensive income (loss), a component of stockholders’ equity. The Company sales to foreign customers and these transactions are often paid in foreign currencies. The Company recognizes a gain or loss on the currency exchange in the statement of operations on these transactions as they happen.

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2009 and 2008

Note 1 Summary of Significant Accounting Policies (continued)

Earnings Per Share

The Company accounts for earnings per share under the provisions of ASC Topic 260, "Earnings Per Share", which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed assuming the conversion of convertible preferred stock and the exercise or conversion of common stock equivalent shares, if dilutive, consisting of unissued shares under options and warrants. Basic and diluted losses are the same as the inclusion of unissued warrants and options in the denominator would be anti-dilutive.

Inventory

The Company maintains an inventory comprised of raw materials used to make detectors and spectroscopy systems, radioisotope identifiers and chemical analyzers, work in process and finished goods, as well as service parts. Inventory is recorded at lower of cost or market and is reconciled annually at the close of each fiscal year. The Company periodically analyzes its inventory for potential impairment, assessing the appropriateness of turnover rates and recoverability of costs based on sales cycles and standard holding time for each item.

Property, Plant and Equipment

The Company capitalizes property, plant and equipment and depreciates the cost of these items over their useful lives. The useful lives run from 3 to 7 years. The cost is expensed equally over the useful life of each item.

Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. We recognize revenue as services are provided. Revenues are reflected net of coupon discounts.

Fair Value of Financial Instruments

The Financial Accounting Standards Board (“FASB”) issued ASC Topic 825, Disclosure About Fair Value of Financial Instruments. ASC Topic 825 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company’s cash and cash equivalents, accounts receivable, prepaid expenses and other current expenses, and the current portions of notes payable approximate their estimated fair values due to their short-term maturities.

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2009 and 2008

Note 1 Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Pronouncements

In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events”, SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140”, SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820). Which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASU Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASU Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No.2010-18 contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

Income taxes

The Company is subject to United States income taxes.

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. The current year produced a deferred tax asset of approximately $147,288. This is being fully offset with a valuation allowance for the same amount.

Other

The Company paid no dividends in 2009 or 2008.

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2009 and 2008

Note 2 Business acquisitions

On September 18, 2006, the Company acquired all the outstanding shares of Princeton Gamma-Tech Instruments, Inc. in exchange for 9,300,000 shares of its common stock. This acquisition is being treated as a recapitalization of PGTI. All financial statements have been restated to reflect this recapitalization as of the earliest date of the financial statements.

On February 19, 2005, PGTI acquired all the outstanding shares of Princeton Gamma-Tech (UK) Limited, a company operating in the United Kingdom. On November 18, 2005, the assets and operations of Princeton Gamma-Tech (UK) Limited were sold as part of a larger sale of PGTI’s micro-analyzer business division. This entity (without assets or operations) was sold on December 28, 2006.

Note 3 Disposition of business segment

On November 18, 2005, PGTI sold its micro-analyzer business division to another company for $1,450,000 plus a performance amount up to $435,000. This disposition included assets, operations, intellectual knowledge and client database. The sale also included the assets and operations of Princeton Gamma-Tech (UK) Limited as mentioned in note 2 above. All assets were sold at book value and the remainder has been recorded as net gain from sale of discontinued operations. The statements of cash flows show the effects on cash from discontinued operations with a decrease in cash from operating activities of $75,000 in 2006 and $883,846 in 2005 for the net gain from the sale of discontinued operations and an increase in cash from investing activities of $75,000 in 2006 and $1,450,000 for the proceeds from the sale of discontinued operations. There was no effect on cash from financing activities relating to the discontinued operations. All proceeds of the sale had been received by year-end, except the performance amount. The sale agreement had a reserve for performance that would be based on the performance of the sold assets and operations for the next 12 months. The performance would be evaluated based on set criteria and the final sale price established at the end of the 12 months, or October 2006. The reserve amount could range from nothing up to a maximum of $435,000. The actual performance reserve of $75,000 was received in November 2006.

Note 4 Commitments

The Company entered into a new 61 month lease agreement for office space on January 9, 2006, expiring March 31, 2011.

The Company is required to make minimum lease payments over the remaining terms of the leases as follows:

2010	$ 324,725
2011	81,181
Totals	$ 405,906

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2009 and 2008

Note 5 Stockholder’s Equity

On February 25, 2005, PGTI issued 8,000,000 shares of common stock for $500,000 in cash.

On September 4, 2006, PGTI issued 1,300,000 shares of common stock for $515,585 in cash. $25,837 in fees was associated with this issuance and was paid to unrelated parties. A total of $489,748 in funds was received by PGTI.

On September 8, 2006 PST issued 1,500,000 shares of common stock for $15,000 in cash.

On December 20, 2006, PST issued 700,000 shares of common stock for $286,017 in cash. $26,017 in fees was associated with this issuance and was paid to two parties. $11,917 was paid to a related party for their efforts in finding and securing the investor. A total of $260,000 in funds was received by the Company.

On December 31, 2006, the Company issued 1,110,000 stock options to various members of the board of directors and key employees in accordance with the stock option incentive plan that was ratified on October 20, 2006. These options are fully vested and carry a 5 year term. 1,050,000 options have an exercise price of $1.10 and 60,000 options have an exercise price of $1.00. The Company recognized a $13,578 expense as compensation in 2007 related to the issuance of these options in accordance with SFAS123R using the following assumptions:

Stock Price	$0.408	Volatility	30.38%
Exercise Prices	$1.00 and $1.10	Discount Rate	4.35%
Term	5 Years

On September 30, 2007, the Company issued 500,000 stock options to various members of the board of directors and key employees in accordance with the stock option incentive plan that was ratified on October 20, 2006. These options are fully vested and carry a 5 year term. 90,000 options have an exercise price of $1.10 and 410,000 options have an exercise price of $1.00. The Company recognized a $27,864 expense as compensation in 2006 related to the issuance of these options in accordance with SFAS123R using the following assumptions:

Stock Price	$0.408	Volatility	29.38%
Exercise Prices	$1.00 and $1.10	Discount Rate	4.35%
Term	5 Years

On October 20, 2007, the Company issued 281,375 shares of common stock for $112,550 in cash.

In June 2009, the Company issued 319,000 shares of common stock to two vendors in accordance with consulting agreements between such vendors and the Company. These shares were valued at $79,750. In December 2009, the Company issued 25,000 shares of common stock to a vendor in accordance with a consulting agreement between such vendor and the Company. These shares were valued at $12,500.

On December 30, 2009, Company converted its liability to its landlord in Princeton, New Jersey by issuing 400,000 of its common shares. The total amount of converted liability was $240,239.

PRINCETON SECURITY TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2009 and 2008

Note 6 Notes Payable

On July 21, 2008, the Company borrowed $153,920 on a short-term note payable with a term on 90 days. It carried an interest rate of 24%. It also carried an option to convert the debt to equity. The debt and all the accrued interest were converted into the Company’s common stock on December 8, 2009, when Company issued 1,178,138 restricted shares to the lender.

Note 7 Related Party Transactions

The Company’s president is treated as a consultant. Per a consulting agreement approved by the board of directors, the Company pays him $12,000 per month for his consulting services and reimburses him for travel related expenses. There was a balance owed to the president included in accounts payable of $14,000 and $79,217 as of December 31, 2009 and 2008, respectively.

Note 8 Subsequent Events

In January 22, 2010, the Company issued 25,000 shares of common stock to its employee in accordance with an agreement between such employee and the Company. These shares were valued at $6,000.

The Company has evaluated subsequent events from the balance sheet date through the date of this filing, and determined there are no other events that require disclosure.

Attached files

Princeton Security Technologies, Inc. Reports

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