Attached files
| file | filename |
|---|---|
| EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - VISION DYNAMICS Corp | f10ka2123112_ex31z2.htm |
| EX-32.2 - EXHIBIT 32.2 SECTION 906 CERTIFICATION - VISION DYNAMICS Corp | f10ka2123112_ex32z2.htm |
| EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - VISION DYNAMICS Corp | f10ka2123112_ex31z1.htm |
| EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - VISION DYNAMICS Corp | f10ka2123112_ex32z1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 2 to Form 10-K
X ..ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the annual period ended December 31, 2012
..TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
VISION DYNAMICS CORPORATION
(Formerly Blackbox Semiconductor, Inc.)
Nevada |
| 000-52982 |
| 74-3197968 |
(State or other jurisdiction |
| Commission File Number: |
| (IRS Employer |
of Incorporation) |
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| 1462 Erie Boulevard |
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| Schenectady, New York 12305 |
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| (Address of principal executive offices) |
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| (518) 935-2830 |
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| (Registrant’s Telephone Number) |
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Securities registered pursuant to Section 12(b) of the Act:
None.
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share on OTCBB
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes . No X .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes X . No .
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will 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. .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.
Large accelerated filer | . | Accelerated filer | . |
Non-accelerated filer | . (Do not check if a smaller reporting company) | Smaller reporting company | X . |
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Yes . No X .
The aggregate market value of 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 price of such common equity, as of the last business day of the registrant’s most recently completed second quarter: $ 495,614,823.
APPLICABLE ONLY TO CORPORATE ISSUERS
There were a total of 198,245,929 common shares outstanding, $0.001 par value, as of April 10, 2013.
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TABLE OF CONTENTS
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EXPLANATORY NOTE
Overview
Vision Dynamics Corporation is filing this amendment to its Annual Report on Form 10-K for the year ended December 31, 2012, to provide conforming signatures according to General Instruction D to Form 10-K.
Background
The Company received correspondence from the Washington, D.C. Office of the U.S. Securities and Exchange Commission (SEC), requesting that our filing be amended to provide a Signature Page that conforms with General Instruction D to Form 10-K, instructing the Company that the report should be signed not only by the registrant, but also on behalf of the registrant by our principal executive officer, principal officer, controller or principal accounting officer and at least a majority of the board of directors.
Amendment to this Form 10-K
The following section of this Form 10-K have been revised to reflect the restatement: Signatures, page 41.
Effects of Restatement
The restatement has no effect on financial statements, cash flows, liquidity or financial position.
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PART I
FORWARD-LOOKING STATEMENTS
This discussion and analysis in this Annual Report on Form 10-K should be read in conjunction with the accompanying Financial Statements and related notes and the Risk Factors contained herein. This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We do not have any material revenues or source of income as we have been focusing on increasing our intellectual property portfolio by identifying, developing or acquiring technologies that the Company believes are or will be, in demand through the next critical technology transition in industry. These statements are expressed in good faith and based upon what we believe are reasonable assumptions. There can be no assurance that these expectations will be achieved or accomplished. You can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continues" or the negative of these terms or other comparable terminology. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us.
Some specific factors and statements that are forward looking statements and necessarily subject to uncertainties include, without limitation: the success of our business, our need for money and ability to raise capital and to monetize consideration received in the transaction; the virtual inability of smaller issuers like us to raise capital in a small offering; items contemplating or making assumptions about the progress of our research and development activities; our ability to raise the necessary capital in order to sustain our operations; our ability to further identify the right technologies to invest in, and to develop and acquire these technologies, as well as our ability to exploit them or prosecute our rights; new competing technologies that arise from time to time; our ability to continue to grow our existing Inventor Network; the cost to complete the development and prosecution of technologies we develop or acquire; and the presumed size and growth of our targeted markets, all of which constitute forward-looking statements.
These risk factors should be considered in addition to our cautionary comments concerning forward-looking statements in this Report. Additional risks not described above, or unknown to us, may also adversely affect the Company or its results. Readers should reference our “Risk Factors” section below for additional substantial risks relating to our Company and securities.
Although forward-looking statements in this report reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements.
Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the “Risk Factors” section below for additional substantial risks, as well as the various disclosures made by us in our reports filed with the SEC from time to time which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows.
Forward Split and Use of Terms
Except as otherwise indicated by the context, references in this report to (i) “Parent” refers to the parent company itself, Vision Dynamics Corporation a Nevada corporation formerly known as BlackBox Semiconductor, Inc., (ii) the “Company,” “we,” “us,” or “our,” refer to the combined business of Parent, together with its operating subsidiaries (ii) “BlackBox” or “BlackBox Delaware” and “Sunpower” refers to our business of our subsidiaries, BlackBox Semiconductor, Inc., a Delaware corporation and Sunpower Technologies, LLC, respectively (iv) “Forward Split” refers to the 20 for 1 forward split of the Parent’s stock effective as of June 10, 2011, (v) “SEC” are to the United States Securities and Exchange Commission, (vi) “Securities Act” are to Securities Act of 1933, as amended, and (vii) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.
All references herein to share amounts and pricing information contained in this Report are as adjusted to give effect to the 2011 Forward Split unless otherwise specified.
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ITEM 1. BUSINESS
General
We are an aggregator of intellectual property and technologies with a primary focus in industries where new opportunities exist for innovation and patent protection that are critical for the next technology transition. Initially, we have focused our efforts in the following sectors: water purification, cleantech energy efficiency, semiconductors and bio medicine. We obtain our technologies and intellectual property by either developing them ourselves through our proprietary Inventor Network, or by licensing or acquiring them from third parties. In addition, funds permitting, we hope to assist others in developing their technologies for a fee, and to prosecute our as well as third parties’ technologies.
We intend to commercialize our technologies by sub-licensing them, reselling them, or prosecuting our rights or rights and protecting them from unauthorized use by third parties. We also may use our knowledge and resources to act as consultant or advisor to third parties in developing their technologies in exchange for a fee or royalties, or in connection with assisting in prosecution or protection of their technologies for a fee. We do not, initially, intend to be a manufacturer.
Funds and resources permitted, we hope to expand our scope our technology focus area greatly as our Inventor Network continues to grow, and as we may develop or acquire intellectual property as a residual effect of our current research in these core sectors.
While we do not generate revenues yet, in 2012, we began making our own patent filings and, we have expanded our initial network of inventors to continue to identify and develop new technologies.
We have also, in January of 2013, entered into an intellectual property engagement agreement with a consultant for intellectual property and development and disclosure preparation for up to an additional 100 patents through mid-2013.
Corporate History
In June of 2011, Parent, Vision Dynamics Corporation formerly known as BlackBox Semiconductor, Inc., a Nevada corporation, acquired Blackbox and its related intellectual property rights and business and proceeded to liquidate our other assets and businesses.
We were originally incorporated in the State of Nevada on March 2, 1998. In June of 2011 we acquired BlackBox Delaware, and changed our name in Nevada to BlackBox Semiconductor, Inc. Prior to such time, and since 2006, we were known as Visitrade, Inc.
Effective as of December 10, 2012, we effectuated a change of name of the Company from BlackBox Semiconductor, Inc., to Vision Dynamics Corporation, so as to better reflect our broadening intellectual property and general direction. The name change was effectuated by the filing of Articles of Merger effectuating a short form merger of a wholly owned subsidiary of the Company formed for such purpose, with and into the Parent corporation, resulting in a name change of the Company only and no other changes.
Between 2006 and 2007 (i.e. our Visitrade business), our primary business was the ownership and operation of a software trading platform for financial market participants. Despite continued efforts to market this alternative trading system, we ceased operations in this segment in 2007.
In October of 2007, our operations consisted of acting as an online retailer of aftermarket Triumph motorcycle parts and accessories.
In June 2011, we acquired BlackBox Semiconductor, Inc. a Delaware company from an affiliated company at the time, Shrink Nanotechnologies, Inc., in exchange for 27,030,000 shares of our common stock and $75,000 (subsequently reduced by amendment to $12,500) as more fully described below. As part of the transaction we also acquired 14,000,000 shares of Shrink which we still hold. Blackbox’s primary asset at the time was a license with the University of Chicago. While we no longer have a license to this particular technology, we used the relationships and other research garnered to springboard into more useful, and, we believe, relevant technologies and, an overall business model focused on aggregating patents and technologies. We have since expanded into water purification, cleantech, energy efficiency, semiconductors and bio-medicine which we describe in more detail below. We also believe that the least costly path towards revenues is not one of a manufacturer, but rather, of a developer/ sub-licensor and enforcer of patent and technology rights.
In 2012, directly and through our subsidiaries, we were able to develop and file various provisional patent applications, as discussed further herein, which we believe will be more viable and readily commercialized or monetized through the sale, license, sub-license as opposed to costly manufacturing. Our research and patent filings are conducted primarily by our network of inventors who have significant expertise in their particular fields of knowledge.
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Corporate restructurings in 2010 and 2011
Forward Split and Name Change
On January 15, 2011, and among other matters approved in accordance with a Schedule 14C filed in August of 2010 and as enumerated below, the Company’s Board of Directors affected a 1-for-270 reverse stock split and changed its name to BlackBox Semiconductor, Inc.
Thereafter, on March 28, 2011, the company effectuated the increase of its capitalization to 1,000,000,000 shares of common stock, par value $.001 per share and 25,000,000 shares of blank check preferred stock of which 5,000,000 were already issued and outstanding and designated as Series A Preferred Stock at the time of the capitalization increase (the “Capitalization Increase”).
Effective as the open of business on June 13, 2011, the Company effectuated the forward split of its common stock on a 20:1 basis, wherein each share of common stock outstanding was exchanged for20 new shares (the “Forward Split”). As a result, the capitalization of the Company was increased such that 89,415,760 shares were outstanding immediately after the Forward Split. Since such date, substantial additional shares have been issued such that the Company currently has outstanding 198,245,929 shares, many of which have become freely tradable in 2012. The Forward Split was effectuated by the filing by the Company of a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada as of June 10, 2011, and was approved by the Corporation’s shareholders and board.
BlackBox History and Description
Our BlackBox subsidiary was formed in Delaware on October 28, 2010 by Shrink, an affiliate of ours at the time of our acquisition, for the purposes of acquiring and holding certain licenses, specifically, those related to the University of Chicago. We acquired BlackBox effective as of June 3, 2011, as described in our Current Report on Form 8-K, dated as of such date.
Our primary asset and business immediately after the BlackBox Acquisition was and continued through mid-2012 to be, BlackBox and its intellectual property and licenses. Specifically, BlackBox’s primary asset at the time was its license from the University of Chicago (“Chicago License”) to commercialize certain technology and intellectual property that increases performance of certain solution-based, inorganic, semiconductor nanomaterials. These nanomaterials are used to create liquid semiconductor materials that can be deposited (e.g., printed or sprayed) to form certain semiconductor films and other structures for use in a multitude of semiconductor device applications.
Description of Chicago License Terms
The material terms of the Chicago License provided for a sixteen (16) year license to BlackBox for any application excluding thermoelectric devices. As consideration, we were required to pay a license fee of $25,000 per year and were required to have successfully commercialized the technology by the end of the eighth (8th) year (2018). Additional specific details relating to the Chicago License is provided in the section below titled “Management’s discussion and analysis of financial condition and results of operations.”
Change in Strategy
Our original goal was to sub-license or commercialize technologies by finding manufacturers and OEM. However, as a result of certain market trends, the success of other licensing companies that don’t manufacture, and capital limitations, our management determined that the most expeditious route towards revenues would be to broaden and re-allocate our business efforts towards becoming a developer and aggregator of a wide variety of patents and intellectual property.
To that end, in 2012, the Company allowed its Chicago License to expire. Instead, in early 2012, we deployed capital resources to study the intellectual property landscape relating to the use and application of nanoscale liquid semiconductor technology. Based on this research the Company turned its focus towards the further development of our intellectual property portfolio in the semiconductor industry regarding the use of alternative chemistries and applications relating to the preparation and use of nanoscale semiconductor technology. We no longer plan to build research facilities and manufacture products. Instead the Company’s focus is to plan to exploit our knowledge of the IP space relating to this and other technologies and, to identify and patent new applications and chemistries relating to printable semiconductor technology. Furthermore the Company plans to rapidly scale the size of our patent portfolio in order to facilitate the sale, license and sub-license to interested parties in our Focus Industries. We have identified methods and partners that will significantly accelerate this process at modest costs. However based on our study of the intellectual property landscape the Company’s management believes that it would be better served applying its resources to the development of new intellectual property in the general area of liquid semiconductor technology.
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The Company has indeed begun to follow through on this strategy in filing provisional patent applications, with three provisional patent applications filed in 2012. The Company continues to expand its Inventor Network of engineers and intends to continue an aggressive intellectual property development and patent filing strategy as its funds will permit.
Revenue Model
We expect to derive the majority of our revenue from sale, license fees, recurring royalties, material supplies associated with our technologies and advisory fees. We intend to continue our development efforts to further strengthen and expand our patent portfolio across our technology platform. We intend to derive revenues from licensing or selling our technologies, and from enforcing our rights against infringements by unauthorized third party users. In addition, directly and through our subsidiaries, we intend to assist other patent owners with the prosecution and development of their patent portfolios, the protection of their patented inventions from unauthorized use, the generation of licensing revenue from users of their patented technologies, and, if necessary, with the enforcement against unauthorized users of their patented technologies.
Strategy/Inventor Network
The intellectual property/patent paradigm and legal system, is designed to encourage and sustain innovation by providing a monopoly to inventors in exchange for sharing the invention with the public. Some of these technologies may even become core technologies in other inventions or fields, or manufacturing processes in multiple industries and categories. By way of example. an invention in one area may have multiple applications and uses in other areas. We are focusing on developing technologies in sectors with widespread use and appeal.
Often, individual scientists, engineers, inventors or smaller companies may not have the capital, know how or ability to develop, design or patent and/or protect their core business using a patent filing strategy, let along commercialize, certain technologies. Moreover, the Company may not want to invest excessively in one particular product or technology. Accordingly, we have developed, and continue to grow, our Inventor Network, consisting of scientists, engineers, professionals and other inventors, that focus on specific areas and, which have agreed to assign their intellectual property to the Company for a fee. In many instances, we may even negotiate royalty or other similar fees with these inventors, thereby allowing the inventor to benefit from our funding and other resources and allowing the company a low entry cost into certain markets. .
Our goal is to continue to expand our pool of inventors to include experts in various fields, bringing together the wisdom of leading scientists, engineers, and business advisors in the select technology verticals that we are focusing on. The Company is open to contracting with inventors, government entities, universities, private foundations, etc. in the development, protection, and commercialization of intellectual; property assets. Some of the benefits in developing in this manner are:
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Collaboration: inventors are able to work with outside individuals within our company network, to generate and patent inventions of strategic significance to our core portfolio and the portfolios of our partners and clients.
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Missing-link: “think tank” brainstorming exercises to help catapult a stalled innovation process
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Build co-invention partnerships: The ability of inventors to join forces to develop ideas.
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Patent Acquisitions: The ability to outright purchase a private inventor’s ideas if the approach proves to be the most favorable to both parties.
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Intellectual Capital: Provide funding capital to practitioners within the network on a target basis for new invention and commercialization.
As of late 2012, we had 7 inventors as part of the network and, as of the date hereof, we currently have 11 inventors, some of which have been procured through our consulting arrangement with MDB Capital Group, LLC and others for development of up to an additional 100 patents. Pursuant to contractual work for hire and similar agreements, all inventions or ideas or developments developed by our inventor consultants during the course of their research for us, belongs to the Company.
Our inventor partners and consultants include individual inventors as well as smaller technology, engineering or consulting companies who have limited resources, or who have specific resources that we may need. In a typical arrangement, we may acquire a patent portfolio or acquire rights to a patent portfolio, and, in exchange therefore, the licensor would receive either (i) an upfront payment for all patent and intellectual property rights, (ii) a a percentage of revenues or profits from the particular license we acquire, or some combination of both of the foregoing.
The amount we pay, and, whether we pay up front at all or not, are dependent on a number of subjective factors, including, our need for a particular technology, our available capital, our resources to commercialize the particular technology and the market type and conditions and amount of time to commercialize that particular technology. Finally, we may seek to enforce our patent rights or to assist others in enforcing theirs for a fee.
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Enforcement Model
Under US Law, an inventor or patent owners has the right to exclude others from making, selling or using their patented invention. Nonetheless, all too often, infringers are generally unaware of their infringement and, when confronted, unwilling to negotiate a reasonable royalty fee. Many patent infringements are conducted by larger companies or conglomerates with significant resources. Ironically, an inventor or patent owner may discover an infringing user, but may not have sufficient funds to prosecute the action against a typical manufacturer or user. We intend, where able, to assist in facilitating patent prosecutions through our network of experts, funds permitting, for a fee.
The commercialization of our patents and intellectual property is intended to be effectuated through sale, license or sub-license of our intellectual property. We may also decide to enter into one or more joint development agreements or joint ventures if we believe that the upside is sufficient to justify the added investment of resources.
Initial Technologies
Initially, we have been focusing on, and have tasked our Inventor Network to research and develop in, the following core areas that we believe will be the subject of much growth, interest over the coming years and where critical technologies are reaching a trasition point and require further innovation. These include:
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Cleantech- & Energy efficiency,
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Semiconductors, which primarily involves use of the sun for energy or other technologies,
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Water, which includes, among other things, production of potable water, hydraulic fracturing, and coal mining applications, and
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Biomedicine.
Water
Water, like air, is critical to sustaining life. With increases in population, and industrialization, and decreases of clean water supply, as well as increases of populations to areas that are bereft of fresh water supplies, or have limited clean water supplies, desalinization, and water purification have been in increasing demand.
Desalination of ocean water is a process requiring large amounts of energy and we believe is currently an impractical method for the generation of clean water, forcing industry to examine other strategies which may allow either the production or recycling of clean water. We, as well as many others, believe that more efficient, less wasteful path forward will require a combination of awareness and new technologies applied to specific areas of human health and industry in which water usage is critical. Other issues such as hydraulic fracturing (“fracking”) for oil supplies and questionable waste disposal practices also affect clean water supplies.
We hope to design or acquire novel methods and devices which will better enable the rapid filtration and recycling of water on a mass level. Some technology applications and possible solutions or technologies being explored by us and our Inventor Network are:
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Potable Water – Technologies that use ultraviolet water disinfection and next generation nano-water filters have been considered and are being studied by us, for purposes of obtaining consumable and safe water,
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Hydraulic Fracturing – We have explored Development of smart colloids as propants to achieve desired fracturing quality while decreasing toxic additives and total amount of water used as well as ultrasonic methods to increase efficiency of fracking and reducing water consumption
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Coal Mining – Technologies that utilize next generation filters for the removal of heavy metals from slurries
Our objective is for our planned inventions to be applicable and targeted for potable water supplies as we believe that this is the largest and most readily accessible market, however, we will target industrial water supplies as well.
Energy Efficiency & Cleantech
As worldwide energy demand increases, costs for energy inevitably rise. These increased costs make desirable more innovation in energy production and delivery and highlight the urgency for renewable or solar type energy origination. In addition, technologies that allow for substantial energy savings are also in high demand.
As we have started with Blackbox in 2011, we are dedicating resources to, and hope to acquire and further develop technologies in the following areas and for the following applications:
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Solar power – Use of artificial photosynthesis and light energy harvesting to form energy from sunlight.
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Fossil Fuel - Combined cycle power generation and fluidized bed coal reactor technologies are being explored for use in making energy production from existing natural fuels and petroleum based fuels more efficient.
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Consumer electronics – we are exploring more efficient ways to power consumer electronics such as smart devices, and other electronic equipment, as well as app development for smart devices and smart phones.
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Bio-Medicine
To meet the need for rapid and more accurate disease state diagnosis, novel tool sets must be developed taking advantage of micro and nanotechnologies. Technologies today are in a new paradigm, as we now know more than ever with respect to the human genome, which has recently been mapped entirely, and, have to address new worldwide threats and needs as well as emerging illness trends. In addition, because of new medical threats and the nature of health care today, a need exists for new technologies available for deployment in point of care fashion on the field (i.e. bedside, ambulance etc.) and which will be capable of screening for a host of biomarkers in a rapid accurate and multiplexed manner.
Specifically, technologies that we explore are used in personalized medicine for medical modeling, and genetic screening, and, in infectious disease detection for rapid detection of protein markers and multiplexed diagnosis of multiple markers for increased accuracy.
Next Generation Semiconductors
The term “semiconductor” describes materials that exist in a middle ground of electronic activity: they can be selectively activated to allow electricity to flow or they can be selectively de-activated to stop the flow of electricity. The semiconductor industry, which includes everything electronic such as cell phones, computers, other devices, appliances, etc., as well as many medical applications, is massive, diverse, and ubiquitous with a common mantra driving innovation that can be summed up in four simple words: Smaller. Cheaper. Faster. Cooler.
We are investing in research and technologies that we believe could provide solutions to obstacles currently being faced by information technology and lighting industries through the use of next generation semiconductor technologies. By engineering semiconductor architectures from a bottom-up approach (nanotechnology), we are hoping to offer tighter control of electron flow in next-generation semiconductor-based circuitry for information technology, as well as tighter control of manufacturing specifications for solid state lighting applications. By implementing our technologies, we will better enable circuit manufacturing to achieve their goals of producing smaller, more energy efficient chips for memory and computation, as well as giving solutions for solid state lighting to overcome quality and manufacturing issues that currently limit this technology.
No assurance can be made that we will be able to achieve our developments in the above areas or that we will have sufficient funds or resources to make these advances. In addition, even if we do develop new and useful technologies, no assurance can be made that we will be able to commercialize or otherwise monetize these technologies. We face a highly competitive environment with competitors and “in house” technology developers of large conglomerates with greater funds, resources and experience than our own, and that are more readily able to deploy their technologies over ours. Our ability to succeed is dependent on, among other factors, our ability to raise sufficient capital to continue our R&D efforts, and our ability to quickly monetize our technologies and enforce our rights, as necessary.
List of Patents
We have, in 2012, begun filing patents of our own, which are owned by us or by our subsidiaries. These patents were prepared by our Inventor Network in conjunction with other consulting and advisory firms... The below table lists the patent application number, title of patent, and date:
USPTO Docket No. |
| Title |
| Filing Date |
13722355 |
| Novel Photocatalytic Systems for the production of hydrogen |
| December 12, 2012 |
13722411 |
| Novel Photocatalyst for the production of hydrogen |
| December 12, 2012 |
13722476 |
| Novel Photocatalytic system for the reduction of CO2 |
| December 12, 2012 |
13755247 |
| Light Emitting Device with All-Inorganic Nanostructured Films |
| January 31, 2013 |
13755186 |
| Optoelectronic Devices with All-inorganic Colloidal Nanostructured Films |
| January 31, 2013 |
13755550 |
| Artificial Photosynthetic System Using Photocatalyst |
| January 31, 2013 |
13788580 |
| Oriented Photocatalytic Semiconductor Surfaces |
| March 7, 2013 |
13792698 |
| System for Harvesting Oriented Light – Water Splitting |
| March 11, 2013 |
13793383 |
| System for Harvesting Oriented Light for Carbon Dioxide Reduction |
| March 11, 2013 |
13797428 |
| Substrate for Increased Efficiency of Semiconductor Photocatalysts |
| March 12, 2013 |
13801169 |
| System for Harvesting Oriented Light for Water Splitting and Carbon Dioxide Reduction |
| March 13, 2013 |
13837412 |
| Method for Increasing Efficiency of Semiconductor Photocatalysts |
| March 15, 2013 |
13833457 |
| System for Increasing Efficiency of Semiconductor Photocatalysts Employing a High Surface Substrate |
| March 15, 2013 |
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Semiconductor Technology Overview
Semiconductor materials and devices are vital components of the wide and varied renewable energy and electronics industries, including certain transistors, sensors, solar cells, and light-emitting diodes. Semiconductor materials require certain electronic performance to be effectively used in electronic devices. To achieve high performing materials, traditional fabrication of semiconductor materials has involved capital intensive and highly controlled manufacturing techniques. These methods produce semiconductor crystalline wafers and films that are high performing but are typically limited to non-flexible and smaller area form factors.
Manufacturing of semiconductor materials from liquids has been previously developed with the expectation of lowering capital investment, lowering manufacturing costs via printing and other high throughput processes, and enabling semiconductor use for larger area and flexible substrate devices. Liquid-processed semiconductors incorporating nanomaterials have previously resulted in finished semiconductor materials with poor electronic performance that have prevented them from achieving commercialization and wide scale adoption.
Domain Registries
We have acquired the following domain names for use in connection with the Company’s business, all of which are in development.
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Visiondynamicscorp.com
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InventorNetwork.com
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InventorNetwork.biz, Inventornetwork.us, Inventornetwork.info and Inventornetwork.net
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SunpowerTechnologies.com
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Medivirontech.com
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Nextgenerationsemi.com
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Potablewatertech.com
Employees
The Company has two full time employees. In February of 2011, the Company hired David Duncan as a consultant, and eventually an executive officer of the Company, in order to meet its obligations to hire a Suitably Qualified Person as required under the Chicago License. Mr. Duncan subsequently resigned in November of 2011, and was replaced by Mr. Luis Leung. Mr. Ford Sinclair remained as president during this period. Their biography and that of all officers and directors during 2011 to date is included below in this Report under the “Management,” “Executive Compensation” and “Certain Relationships and Related Transactions and Director Independence” sections below.
The Company has been able to successfully attract scientific consultants and inventors on an at-will, independent contractor basis, where such persons are hired for specific R&D related to their respective field. As of the date hereof, the Company has access to 11 inventors , who conduct research and assist in and advise on, drafting and filing of patent or provisional patent applications.
Environmental and Governmental Regulation
Our technology might involve the use of a broad range of hazardous chemicals and materials. Environmental laws impose stringent civil and criminal penalties for improper handling, disposal and storage of these materials. In addition, in the event of an improper or unauthorized release of or exposure of employees or others to hazardous materials, we could be subject to civil damages due to personal injury or property damage caused by the release or exposure. A failure to comply with environmental laws could result in fines and the revocation of environmental permits, which could prevent us from conducting our business. Accordingly, any violation of environmental laws, increase in the scope of environmental laws or failure to properly handle, store or dispose of hazardous materials could result in restrictions on our ability to operate our business and could require us to incur potentially significant costs for personal injuries, property damage and environmental cleanup and remediation.
Recent Events
Effective as of December 10, 2012, we effectuated a change of name of the Company from BlackBox Semiconductor, Inc., to Vision Dynamics Corporation, so as to better reflect our broadening intellectual property and general direction. The name change was effectuated by consent of the board to the filing of Articles of Merger effectuating a short form merger of a wholly owned subsidiary of the Company formed for such purpose, with and into the Parent corporation, resulting in a name change of the Company only and no other changes. Copies of the Articles of Merger are filed as exhibits to this report.
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In addition, as previously disclosed, in October of 2012, the Company sold 62,500 shares of restricted common shares to a non-US based investment fund, for $25,000, or $0.40 per share. Subsequently, in December 7 of 2012, the Company sold an additional 317,500 Shares for consideration of $ 125,000.00, or $.3937 per share. These shares were not issued as of December 31, 2012. All issuances shall be exempt under the securities registration requirements of the Securities Act in that they were restricted securities sold to an overseas investor and complied in all respect, among other exemptions, with Regulation S of the rules of the SEC promulgated under the Securities Act.
Item 1A. Risk Factors.
Set forth below are some of the principal risks and uncertainties that could cause our actual business results to differ materially from any forward-looking statements contained in this report or otherwise have a detrimental effect on the Company, our business, financial condition, results of operations, cash flows and on the market price of our common stock. These risks should be considered in making any investment decisions in the Company.
The risks described below may materially impact your investment in our company and our business, financial condition and results of operations. You should carefully consider these factors with respect to your investment in our securities.
FURTHER, ANY INVESTMENT IN OUR COMPANY WOULD BE EXTREMELY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE PURSUED UNLESS THE INVESTOR COULD AFFORD TO LOSE THEIR ENTIRE INVESTMENT. BEFORE INVESTING, PLEASE CAREFULLY REVIEW THIS FILING, ALL PAST PUBLIC FILINGS WHICH CAN BE FOUND AT WWW.SEC.GOV AND CONSULT A REGISTERED BROKER DEALER OR CONTACT THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”) FOR MORE INFORMATION REGARDING LOCATING A QUALIFIED PARTY TO ASSIST IN MAKING AN INVESTMENT DECISION.
Risks Specifically Related to Our Company, Control By Management, Dilution and Technology
We may not be able to continue operations as a going concern and we need substantial additional capital.
Our independent auditors have expressed doubt about our ability to continue as a going concern. We are, for all material purposes, currently a development-stage company only with limited intellectual property assets. We have no commitments for grants and grant funds cannot, generally, be used towards commercialization and manufacturing efforts. Accordingly, we will be dependent on obtaining additional external sources of capital in order to fund operations or even continue as a going concern.
The current market environment makes capital raising a difficult task. We do not believe that we will be able to monetize the value of the Shrink shares received in the Blackbox Share Exchange for a substantial amount of money. A future capital raise could involve a private or public sales of equity securities or the incurrence of additional indebtedness. Additional funding may not be available on favorable terms, or at all. A financing will result in dilution and or result in our obligation to make periodic interest or other debt service payments and may be subject to additional restrictive covenants. If we fail to obtain sufficient additional capital in the future, we could be forced to curtail our growth strategy by reducing or delaying capital expenditures, selling assets or downsizing or restructuring our operations. If we raise additional funds through public or private sales of equity securities, the sales may be at prices below the market price of our stock, and our shareholders may suffer significant dilution as a result of such sale.
You will suffer immediate and substantial dilution; and the costs of the securities you purchase will significantly exceed the price paid by current principal shareholders and insiders.
Many of the present owners of our issued and outstanding securities acquired such securities at a cost substantially less than that of the open market. In addition, the Company currently is indebted to the Alfa Finence Fund (the “AF Fund”) for unpaid accrued fees, and loans originally made and sold by Noctua Fund Manager to the Company since 2009 or earlier, as reflected on our convertible promissory notes in the aggregate initial principal amounts totaling $3,600 plus accrued interest of $60 as of December 31, 2012, these notes and accrued interest are convertible into common stock based on conversion prices at the times of the loans (into approximately 8,400,000 shares, in aggregate as of December 31, 2012) all of which are currently in default. Therefore, the shareholders will bear a substantial portion of the risk of dilution and losses.
We will need to raise substantial additional capital in the future and if we are unable to secure adequate funds on terms acceptable to us, we may be unable to support our business requirements or build our business. The terms of any capital raise may require that we issue shares to investors at below quoted market prices, which may result in further dilution.
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We currently have no revenues and do not expect to have any revenues or cash flows until we have developed our intellectual patent portfolio and services business. We expect that we will need at least $1,000,000 in capital over the next eighteen months to further develop and commercialize our technologies. Our current cash, cash equivalents and available-for-sale securities, will be insufficient to meet our anticipated operating and capital requirements for at least the next year. We will need to raise capital in order to complete our technology development activities. We currently compensate consultants on a per diem type arrangements, to assist with IP development and patent or provisional patent filings on an as needed basis. If we run out of capital we will have to curtail these efforts. We may raise additional capital through a variety of sources, including the public equity market, private financings and debt. If we raise additional capital through the issuance of equity or securities convertible into equity, our stockholders may experience dilution. Those securities may have rights, preferences or privileges senior to those of the holders of the common stock. Additional financing may not be available to us on favorable terms, if at all. If we are unable to obtain financing, or to obtain it on acceptable terms, we may be unable to successfully support our business requirements or build our business.
We have a history of losses and may incur additional losses in the future.
We do not have income for the years ended December 31, 2012 and 2011, respectively. We have limited cash on hand and we are dependent on capital raising activities to fund our operations and R&D activities. We expect to continue incurring significant legal, marketing and general and administrative expenses in connection with our operations. As a result, we anticipate that we may incur losses in the future. No assurance can be made that we will be able to raise capital if and as needed and, our inability to do so can lead to the loss of our assets or inability to monetize our technologies.
Our future success depends on our ability to expand our organization to match the growth of our subsidiaries.
We intend to hold most of our assets, and enter into licenses through, our operating subsidiaries. As our operating subsidiaries grow, the administrative demands upon us and our operating subsidiaries will grow, and our success will depend upon our ability to meet those demands. These demands include increased accounting, management, legal services, staff support, and general office services. We may need to hire additional qualified personnel to meet these demands, the cost and quality of which is dependent in part upon market factors outside of our control. Further, we will need to effectively manage the training and growth of our staff to maintain an efficient and effective workforce, and our failure to do so could adversely affect our business and operating results
Potential acquisitions may present risks, and we may be unable to achieve the financial or other goals intended at the time of any potential acquisition.
Our future growth depends, in part, on our ability to acquire patented technologies, patent portfolios, or companies holding such patented technologies and patent portfolios. Accordingly, we intend to engage in acquisitions to expand our patent portfolios and we intend to continue to explore such acquisitions, including the potential significant acquisition of a third party with respect to which we have begun due diligence efforts. Such acquisitions are subject to numerous risks, including the following:
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our inability to enter into a definitive agreement with respect to any potential acquisition, or if we are able to enter into such agreement, our inability to consummate the potential acquisition;
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difficulty integrating the operations, technology and personnel of the acquired entity
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our inability to achieve the anticipated financial and other benefits of the specific acquisition;
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our inability to retain key personnel from the acquired company, if necessary;
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difficulty in maintaining controls, procedures and policies during the transition and integration process;
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diversion of our management's attention from other business concerns; and
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failure of our due diligence process to identify significant issues, including issues with respect to patented technologies and patent portfolios, and other legal and financial contingencies.
If we are unable to manage these risks effectively as part of any acquisition, our business could be adversely affected.
Our operating subsidiaries depend upon relationships with others to provide technology-based opportunities that can develop into profitable royalty-bearing licenses, and if they are unable to maintain and generate new relationships, then they may not be able to sustain existing levels of revenue or increase revenue.
Neither we nor our operating subsidiaries invent new technologies or products; rather, we depend upon the identification and acquisition of new patents and inventions through our relationships with inventors, universities, research institutions, technology companies and others. If our operating subsidiaries are unable to maintain those relationships and continue to grow new relationships, then they may not be able to identify new technology-based opportunities for sustainable revenue and growth.
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Our current or future relationships may not provide the volume or quality of technologies necessary to sustain our business. In some cases, universities and other technology sources may compete against us as they seek to develop and commercialize technologies. Universities may receive financing for basic research in exchange for the exclusive right to commercialize resulting inventions. These and other strategies may reduce the number of technology sources and potential clients to whom we can market our services. If we are unable to maintain current relationships and sources of technology or to secure new relationships and sources of technology, such inability may have a material adverse effect on our operating results and financial condition.
The success of our operating subsidiaries depends in part upon their ability to retain the best legal counsel to represent them in patent enforcement litigation.
The success of our licensing business depends upon our operating subsidiaries' ability to retain the best legal counsel to prosecute patent infringement litigation. As our operating subsidiaries' patent enforcement actions increase, it will become more difficult to find the best legal counsel to handle all of our cases because many of the best law firms may have a conflict of interest that prevents their representation of our subsidiaries.
We rely on representations, warranties and opinions made by third parties that, if determined to be false or inaccurate, may expose us and our operating subsidiaries to certain material liabilities.
From time to time, we may rely upon representations and warranties made by third parties from whom our operating subsidiaries acquired patents or the exclusive rights to license and enforce patents. We also may rely upon the opinions of purported experts. In certain instances, we may not have the opportunity to independently investigate and verify the facts upon which such representations, warranties, and opinions are made. By relying on these representations, warranties and opinions, our operating subsidiaries may be exposed to liabilities in connection with the licensing and enforcement of certain patents and patent rights which could have a material adverse effect on our operating results and financial condition.
In connection with patent enforcement actions conducted by certain of our subsidiaries, a court may rule that we or our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards, which may expose us and our operating subsidiaries to certain material liabilities.
In connection with any of our patent enforcement actions in the future, it is possible that a defendant may request and/or a court may rule that we have violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney's fees and/or expenses to a defendant(s), which could be material, and if we or our operating subsidiaries are required to pay such monetary sanctions, attorneys' fees and/or expenses, such payment could materially harm our operating results and our financial position.
Rum Punch Partners, Ltd (“RP Partners”) is our principal stockholder and through its general partner, Mango Bay Management, LLC (“MB Management”) and its manager, Manuel Suquilanda, has the ability to exert significant control in matters requiring stockholder vote and could delay, deter or prevent a change in control of our company. RP Partners and its principal also controls the Company by virtue of their ownership of the Series A Preferred Stock which votes on a 250 for 1 basis with a common stock.
RP Partners, which in turn is controlled by its general partner Mango Bay Management, LLC (“MB Management”) the manager of which is Manuel Suquilanda has the ability to control the Company and its policy making. Since our stock ownership and preferred stock ownership is concentrated among a limited number of holders (namely MB Management, and a few others listed in the ownership disclosure section below), those holders have significant influence over all actions requiring stockholder approval, including the election of our board of directors. Through their concentration of voting power, they could delay, cause, deter or prevent a change in control of our company or other business combinations that might otherwise be beneficial to our other stockholders. They may do so without notice to or consent of management, the Company or any shareholder. In deciding how to vote on such matters, they may be influenced by interests that conflict with other stockholders. Accordingly, investors should not invest in the Company’s securities without being willing to entrust the Company’s business decisions to such persons.
As a result, the forgoing and of our Series A Preferred Stock, members of management will be able to:
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control the composition of our board of directors; control our management and policies; veto certain actions;
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determine the outcome of significant corporate transactions, including changes in control that may be beneficial to stockholders; and
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act in each of their own interests, which may conflict with, or be different from, the interests of each other or the interests of the other stockholders.
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Conflicts of interest between the stockholders and our company or our directors and control persons could arise because we do not comply with the listing standards of any exchange with regard to director independence.
There are a variety of conflicts of interests and related party transactions with RP Partners through its general partner MG Management and its managing member which controls our Company and which control the vast majority of our shares and our board. While MB Management and its affiliates have funded our operations to date, resulting in its ownership of convertible debt and stock, these persons have the ability to exert total control over the Company. These persons have no fiduciary or other obligations to minority or other shareholders. We are not listed on a stock exchange and our Board of Directors does not comply with the independence and committee requirements which would be imposed upon us if we were listed on an exchange. In the absence of a majority of independent directors, our directors could establish policies and enter into transactions without independent review and approval. This could present the potential for a conflict of interest between the stockholders and our company or our directors.
We have a significant amount of convertible debt and shares outstanding. As these holders sell, it will likely reduce our stock price. In addition, if we issue additional shares or derivative securities to raise capital or to pay consultants from time to time, or if we issue shares to employees and consultants under our 2011 Stock Incentive Plan, you will suffer immediate and substantial dilution to your common stock.
The bylaws allow the board to issue common shares without stockholder approval. Currently, the board is authorized to issue a total of 1,000,000,000 common shares, par value $0.001 per share, of which 22%have been issued or reserved for issuance as of October 31, 2011. In addition, the board is authorized to issue up to 25,000,000 preferred shares of which 5,000,000 are already designated and issued as control shares with the remaining 20,000,000 still authorized as “blank check” preferred stock , which may be issued with rights, terms, privileges and preferences as the board, in its sole discretion may approved. In addition 198,245,929 shares of outstanding common stock and 5,000,000 shares of outstanding preferred stock, the following additional shares are reserved for issuance or may, at any time, be issued from time to time:
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8,133,348 shares may be issued upon conversion the remaining $3,660 of principal and interest outstanding under the 5% Secured NFM Note, which converts at $0.00045 per share;
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3,000,000 shares of common stock underlying common stock purchase warrants exercisable at $.075 per share, and
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20,000,000 shares of preferred stock may be designated by the Board, with such terms, conversion or issuance prices, rights, preferences, or privileges as is determined by the sole and absolute discretion of the Board and without notice of consent of any other parties,
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50,000,000 shares of common stock, that may be issued pursuant to our 2011 Stock Incentive Plan, as adopted in June 13, 2011, as Incentive Stock Options, Non-Qualified or Qualified Stock Options, at such rates and for such consideration terms as determined by our Board.
We are a development-stage company and have not generated any operating revenues and we may never achieve profitability, and we have yet to commercialize any of our technology.
We have no revenues and our technologies have not been commercialized. We also do not have any material revenues or significant assets from our prior BlackBox businesses.
As we develop and file patents, our technologies are still in development stage. We have not yet and may never fully develop the technology to allow for commercial applications. We cannot assure you that we will generate revenues or that we can achieve or sustain profitability in the future. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether our technology development can be completed, and if we can achieve market acceptance for the targeted applications. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.
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We have a history of net losses, we expect to continue to incur net losses in the foreseeable future, and may never achieve profitability.
Our losses have resulted principally from administrative expenses associated with our operations. We have not had any IP related revenues and do not anticipate commercial product sales for the next several years. We expect our losses to continue for the foreseeable future and depend on capital raises to survive. We cannot assure you that we will develop our technologies, or, if even if successfully developed, that resulting applications will be commercially viable. We expect to incur substantial additional operating losses as a result of increases in expenses related to technology and product development, manufacturing and selling, general and administrative costs. In addition, we incur substantial expenses to comply with our obligations as a public company. We may never achieve profitability. We may need additional funding for our operations and we cannot assure you that it will be available on commercially reasonable terms, if at all. Our ability to achieve profitability will depend upon many factors, including our ability to:
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further develop our technology to enable the development of products utilizing the technology,
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convince customers of the benefits of our technology for their end-use applications;
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enforce our intellectual property rights against others;
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successfully defend any allegations of infringing and avoid infringing the intellectual property rights of others;
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comply with government and environmental regulations;
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address any legal restrictions due to ethical concerns or export regulations; and
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hire, train and retain qualified personnel.
We are developing new technology for commercial end-use and, as a result, we may not be able to successfully develop our technology for commercial end-use applications.
Our inventions are new and unproven in commercial end-use applications and we are still in the early stages of determining the feasibility of using our technology to develop and integrate our products for end-use applications. To the extent we endeavor to develop prototypes or end use products they require significant and lengthy product development efforts. To date, we do not intend and have not developed any commercially available products. To the extent we venture into the product development process, we may experience technological issues that we may be unable to overcome. If we are not able to successfully develop the technology, associated manufacturing processes, and viable products for commercial partners’ end-use applications, then we will be unable to generate product revenue or build a sustainable or profitable business from those efforts.
We may need to achieve commercial acceptance of our technology and meet commercial specifications from commercial partners for our inventions to obtain product revenue and achieve profitability.
Even if our products are technologically feasible, we may not successfully develop commercially viable products according to our development schedule, if at all. It will be at least several years before our first products are commercially available and during this period, superior competitive technologies may be introduced or customer needs may change resulting in our products being unsuitable for commercialization. Our revenue growth and achievement of profitability may depend substantially on our ability to introduce new products into the marketplace that are widely accepted by customers. If we are unable to cost effectively achieve commercial acceptance of our products, our business will be materially and adversely affected.
We are dependent on few key personnel. We may suffer the loss of key personnel or may be unable to attract and retain qualified personnel to maintain and expand our business.
Our success is highly dependent on the continued services of our consultants and advisors for the advancement of our business and technology. The loss of the services of any of our key consultant or advisors would have a material adverse effect on our development plans and prospective operations. The company currently has limited personnel does not have any long-term employment agreements. Going forward, our success will depend upon, among other factors, our ability to attract, retain and motivate qualified research and development, engineering and operating personnel, generally and during periods of rapid growth, especially in those areas of our businesses focused on new products and advanced manufacturing processes. There can be no assurance that we will be able to attract and retain key employees on acceptable terms to operate our business successfully.
Even if we venture to develop commercially acceptable products, we cannot determine whether we can manufacture our products in a cost effective manner or achieve profitability.
Even if our technology and products gain commercial acceptance, we may not be able to manufacture our products, or have them manufactured, at a cost that enables us to be competitive for our commercial partners’ end use and allows us to become and remain profitable. We do not know if we will be able to use commercially available equipment to manufacture.. Further development and expense for unique or modified equipment might be required. We do not know the requirements for the equipment necessary for commercial production of our products. The design and success for any unique or modified equipment may not be technically feasible. In addition, these unique or modified requirements might not be acceptable to potential commercial partner in terms of cost or acceptable manufacturing and production specifications.
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We are dependent on the services of our inventor network, scientific consultants, contractors and strategic advisors for all of our development activities and our business could be harmed if we were unable to utilize their services.
We depend on the services of consultants and advisors to assist us with technical and business activities, and for our patent application and prosecution efforts. These individuals are not our employees and, may be employed for others, and we do not have access to all of their time or work product and may have difficulty obtaining the amount of time and attention from these strategic advisors that we need. In addition, we do not have any assurance that these strategic advisors will continue to provide services to us or, if not, that they will not provide services to our competitors. If we were unable to utilize the services of these individuals, our development efforts or our relationships with new or existing partners may be harmed.
We currently do not have insurance coverage for any claims against us.
We face the risk of loss resulting from product liability, securities, fiduciary liability, intellectual property, antitrust, contractual, warranty, environmental, fraud and other lawsuits, whether or not such claims are valid. In addition, we do not have product liability, fiduciary, directors and officers, property, natural catastrophe and comprehensive general liability insurance. To the extent we secure insurance it may not be adequate to cover such claims or may not be available to the extent we expect. If we are able to secure insurance our costs could be volatile and, at any time, can increase given changes in market supply and demand. We may not be able to obtain adequate insurance coverage in the future at acceptable costs. A successful claim that exceeds or is not covered by our policies could require us to pay substantial sums.
Risks Related to Competition and our Industry
Because or technologies are applicable to multiple large markets and multiple end-use applications, we will likely face competition from companies in multiple industries, as well as from the internal efforts of our potential commercial partners and, if we fail to compete effectively, our business could suffer.
All of our technologies are being introduced for uses that may be deployed in large business or industrial segments. Many of these technologies have similar competing technologies that are already established and are in use, or are being developed by companies with far more resources, market penetration, and capital than our own. Many of our competitors, as well as potential future academic and commercial partners, may have access to substantially greater financial, technical, operational, intellectual property, legal and other resources than we do, which may enable them to react more effectively to new market opportunities. Currently, we have no internal marketing, sales, or manufacturing infrastructure in place and our R&D is limited to our inventor network and consultants that we retain from time to time for specific purposes. Many of our competitors and potential future partners have greater name recognition and market presence than we do, which may allow them to market themselves more effectively to new customers and prevent us from achieving commercial progress. If we do not compete successfully, our ability to develop and sell our products could be harmed and our business could suffer.
Our technology includes nanoscale materials that may be viewed as being harmful to human health or the environment.
We intend to develop and commercialize liquid semiconductor-based products composed of various semiconductor, metal, and/or other materials. Because of the size of the nanostructures or because they may contain harmful elements, our products could pose a safety risk to human health or the environment. In addition, some countries have adopted regulations prohibiting or limiting the use of certain products that contain certain chemicals, which may inhibit our ability to engage with potential commercial partners, set-up operations, or sell end user products containing those materials. The regulation and limitation of the kinds of materials used in or to develop or manufacture our products could limit ability to develop commercially viable products and harm our business.
Government regulations and public perception may limit or discourage the use of nanotechnology, which could reduce our revenue and harm our business.
The subject of nanotechnology has received negative publicity. Government authorities could, for health, safety, social or other purposes, prohibit or regulate the use of nanotechnology. Ethical and other concerns about nanotechnology could adversely affect acceptance of our potential products or lead to government regulation on the manufacture or use of nanoscale materials. In addition, our inventions may be subject to export restrictions by the United States or import restrictions by other countries because of the potential use of nanostructured materials.
Risks Related to Our Intellectual Property
Our patents and patent applications may cover technologies that have few or no commercial applications.
The patents pending and patent applications that we file and may license from time to time are directed to technologies that were invented in the course of academic or government research activities, and may not have been invented with a view toward commercial applications. As a result, these licensed patents and patent applications may only cover technologies that have few or no commercial applications and may therefore provide limited or no coverage of any potential products we may develop.
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Our inability to adequately protect and maintain our intellectual property could harm our business.
Our ability to achieve commercial success will depend in part on obtaining, maintaining and defending our intellectual property as well as successfully defending our intellectual property against any third party challenges and prosecuting against infringements of our intellectual property rights. This will require us to pay the license and other commercialization costs as well as defend against use or initiate claims against third parties. If we are unable to obtain and maintain patent and trade secret protection for our technology and products, our business could be harmed. In addition, we will only be able to protect our technology and enabled products from unauthorized use by third parties where we obtain and maintain valid and enforceable patents or trade secrets.
We cannot be certain of the final issued patents or claims to technologies if we have licensed them or for future patent applications, their ability to protect our intellectual property rights, or the degree to which they will provide us competitive advantage.
Our success depends, to a significant degree, upon the protection of our proprietary technologies. While we currently have various provisional patent applications on file, and are developing others and, we may need to pursue additional protections for our intellectual property as we develop new products and enhance existing technologies. We may not be able to obtain appropriate protections for our intellectual property in a timely manner, or at all. Our inability to obtain appropriate protections for our intellectual property may allow competitors to enter our markets and produce or sell the same or similar products.
Our patents or provisional patents are currently pending and have not been issued by the respective domestic and international patent offices and regulators. We cannot predict the claims or breadth of claims that may be allowed or enforced in our future patent applications or in our licensed patents. The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep a competitive advantage. For example:
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we, or our licensors, might not have been the first to make the inventions covered by each of our pending patent applications or any future issued patents;
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our patent applications, or those we have licensed, might not have been the first to be filed for the inventions;
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pending patent applications that we file or license may not result in issued patents;
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pending patents that we have licensed or may file may not provide a basis for commercially viable products, and may not provide us with any competitive advantages;
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patent applications or patents that we have filed or licensed might fail to issue or the patents deemed invalid, or may be challenged and invalidated by third parties;
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we may not develop additional proprietary technology that is patentable; or
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the patents of others may have an adverse effect on our business.
We also rely on trade secrets to protect our technology and cannot be certain they will remain secret and provide protection or advantage to our efforts.
We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, such as confidentiality agreements and non-competition agreements, our employees, consultants, contractors, partners and other advisors may unintentionally or willfully disclose our information to competitors or use them for their own benefits. Moreover, not all consultants or service providers or other persons that may have access to our information from time to time, will necessarily be covered by confidentiality agreements. Enforcing claims that a third party illegally obtained, disclosed or is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know how that is equivalent or preferential to our trade secret practices.
We may become involved in litigation or other proceedings to defend against claims of infringement of intellectual property rights of others and the outcome could have a material adverse impact on our business.
While we are not currently involved in any legal proceedings related to intellectual property, the defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings in the United States and elsewhere are costly, time consuming to pursue and could result in the use of our limited financial, legal, and managerial resources. An adverse ruling, including an adverse decision as to the infringement of any third party intellectual property rights or the enforceability or validity of our intellectual property rights could subject us to significant damages or prevent us from using the intellectual property or selling our products. Even if we prevail, we could incur substantial costs and our intended business plans may be diverted or postponed.
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In order to protect or enforce our patent rights, we may initiate costly patent litigation against third parties which will require financial and legal resources that could jeopardize our business. The outcome of said causes would be uncertain.
We may initiate patent litigation against third parties, such as infringement suits or interference proceedings, in order to protect or enforce our patent rights. This litigation may be necessary to:
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assert claims of infringement;
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enforce our patents;
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protect our trade secrets or know-how; or
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determine the enforceability, scope and validity of the proprietary rights of others.
The result of any such litigation would be uncertain.
Any lawsuits that we initiate could be expensive, take significant time and divert management’s attention from other business concerns. Litigation also puts our patents, if any, at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. Additionally, we may provoke third parties to assert claims against us. Changes in laws concerning intellectual property would affect our ability to protect our intellectual property, if any.
Risks Relating to Our Common Stock And Dilution
Our Common Stock is highly illiquid. A liquid market may not ever develop, which could prevent you from liquidating your investment.
We have very few shareholders and almost no trading volume. In addition, there are fewer and fewer broker dealers willing to make markets in bulletin board securities, especially startups or, to even accept securities such as ours for deposit. There is only a limited public market for the Company’s common stock, and no assurance can be given that a market will continue or that a stockholder ever will be able to liquidate his investment without considerable delay, if at all. In addition, most of our stock is owned by a few people, including MB Management which is an affiliate of certain control persons of the Company. If a market should continue, the price may be highly volatile. Factors such as those discussed in this “Risk Factors” section may have a significant impact upon the market price of our common stock. Due to the low price of the securities, many brokerage firms may not be willing to effect transactions in our common stock. Even if a purchaser finds a broker willing to effect a transaction in our common stock, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of our common stock as collateral for any loans.
Even with a more developed market, it could become difficult to deposit and liquidate our securities.
There are fewer and fewer broker dealers willing to accept for deposit, hold and sell securities of bulletin board companies, especially those such as ours with limited operating history and infrastructure and limited trading. Accordingly, even if some liquidity develops, you may have difficulty liquidating your securities.
RP Partners, which is managed by MB Management, its general partner and controlled by Manuel Suquilanda it managing member is our largest shareholder and control person with over 60% ownership control of the Company, and controls Shrink as well. Shrink is also, separately and on its own, a holder of a liquid control block of over 27 million shares (approximately 19% of the Company).
RP Partners by MB Management is a successor in interest to Noctua Fund Manager, LLC beneficially owns over 60% of our common stock. RP Partners by its general partner MB Management also owns and controls all of our Series A Preferred Stock which votes on a 250 for 1 basis with our common stock and contains veto powers enabling them to change our board or change control of the Company, without notice to or consent of the Company or its shareholders or board.
There is no lock-up provision on these shares other than resale restrictions under the Securities Act. MB Management therefore, has the ability, to exert control over our management decisions and, will have the ability to sell large volumes of stock over the course of the next few years.
Our need for additional financing and the conversion of our existing convertible notes and warrants will result in immediate and substantial dilution to your investment and may adversely affect the market price of our common stock.
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Additional funding will be required in order for the company to survive as a going concern, to finance growth, and to achieve our strategic objectives. Management is actively pursuing additional sources of funding. If we do not raise sufficient funds in the future, we may not be able to fund expansion, take advantage of future opportunities, meet our existing debt obligations or respond to unanticipated requirements. Financing transactions in the future may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
The amount and timing of our future capital requirements will depend upon many factors, including the level of funding received from possible future private placements of our common stock and the level of funding obtained through other financing sources, and the timing of such funding. We intend to retain any future earnings to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
Sales of a substantial number of shares of our common stock in the public market could dilute your existing investment, depress the market price of our common stock, and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock.
In addition, your investment could be diluted and the price of our common stock could be affected by possible conversion by holders of our convertible notes into shares of common stock. The price of our common stock could be further affected by sales of our common stock by holders of our convertible notes and by hedging or arbitrage trading activity that may develop involving our common stock. As of December 31, 2012 we had convertible notes outstanding with a principle balance of $3,600 and interest of $180 convertible into approximately 8,400,000 shares of our common stock.
Holders of our common stock, convertible notes, and common stock warrants hold a substantial number of shares or rights to acquire shares, which they may be able to sell in the public market in the near future. If our existing security holders convert, or sell, or are perceived to be prepared to sell, a substantial number of shares of our common stock in the public market, the market price of our common stock could fall. In addition, the sale of these shares could impair our ability to raise capital through the sale of additional shares of stock.
The existence of our “super-voting” preferred stock may adversely affect our ability to raise capital.
Currently, 5 million shares of Series A Preferred Stock are issued and outstanding to RP Partners by MB Management. These shares vote on a 250 for one basis with our common stock and also contain certain veto-rights and powers. Accordingly, the holder of these shares has full control over the company’s board and activities at all times. There are no restrictions on assignment of all or any portion of these shares to one or more persons, which could result in an immediate change of control without notice to or consent of, the Company, its shareholders or management. These shares contain strict voting and veto rights, and other restrictive covenants. As a result, 100% of our voting control is vested through the existence of our outstanding preferred stock held by RP Partners, which is indirectly controlled by Manuel Suquilanda, its manager, may hinder our ability to raise capital at favorable prices if and as needed, or to make acquisitions.
As a result, these beneficial owners will be able to:
·
control the composition of our board of directors; control our management and policies;
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determine the outcome of significant corporate transactions, including changes in control that may be beneficial to stockholders;
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and act in each of their own interests, which may conflict with, or be different from, the interests of each other or the interests of the other stockholders.
There is limited historical information available for investors to evaluate our performance or a potential investment in our shares.
There is limited historical information available to help prospective investors evaluate our performance or an investment in our shares, and our historical financial statements are not necessarily a meaningful guide for evaluating our future performance because we have not begun to develop and market our technology and related products.
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Our registered public accounting firm to conclude that our internal control over financial reporting is not effective.
As a public company, we are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm that both addresses management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting. During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet our deadline for compliance with Section 404. Testing and maintaining internal controls can divert our attention from other matters that are important to our business. We also expect the regulations to increase our legal and financial compliance cost, make it more difficult to attract and retain qualified officers and members of our Board of Directors (particularly to serve on an audit committee) and make some activities more difficult, time consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or their effect on our operations since there is presently no precedent available by which to measure compliance adequacy. If we are unable to conclude that we have effective internal control over financial reporting or our independent auditors are unable to provide us with an unqualified report as required by Section 404, then we may be unable to continue to have our common stock traded on the Over-the-Counter Bulletin Board and investors could lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
The Company’s shareholders may face significant restrictions on their stock from both regulators and the securities industry.
The Company’s stock differs from many stocks in that it is a “penny stock.” Penny stocks are subject to significant regulation that limits their liquidity. In addition, broker dealers have increasingly been unwilling to make markets in penny stocks or to accept the same for deposit. The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:
·
3a51-1 which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;
·
15g-1 which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;
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15g-2 which details that brokers must disclose risks of penny stock on Schedule 15G;
·
15g-3 which details that broker/dealers must disclose quotes and other information relating to the penny stock market;
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15g-4 which explains that compensation of broker/dealers must be disclosed;
·
15g-5 which explains that compensation of persons associated in connection with penny stock sales must be disclosed;
·
15g-6 which outlines that broker/dealers must send out monthly account statements; and
·
15g-9 which defines sales practice requirements.
Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:
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control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
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manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
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·
“boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
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excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
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the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
The market for our stock is limited and our stock price may be volatile.
The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day.
In addition, there will be few objective metrics by which our business progress will be measured which may also cause the market price of our common stock to fluctuate significantly. We do not expect to generate substantial revenue from the sale of our liquid semiconductor products for several years, if at all. In the absence of product revenue as a measure of our operating performance, we anticipate that investors and market analysts will assess our performance by considering factors such as:
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our ability to enter into or technology development, commercialization, and other agreements with new and existing partners;
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announcements regarding the status of any or all of our collaborations or technology applications;
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general and industry specific economic conditions, which may affect our and potential partners’ development expenditures and commercialization resources;
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the success or failure of our competitors’ efforts to develop competitive technologies;
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announcements regarding developments in the semiconductor field in general;
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the issuance of competitive patents or disallowance or loss of our patent rights; and
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announcements regarding government funding and initiatives related to the development of our technology.
We will not have control over many of these factors but expect that our stock price may be influenced by them. As a result, our stock price may be volatile and you may lose all or part of your investment.
We do not anticipate paying any cash dividends, which could reduce the value of your stock.
We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
We may be the subject of securities class action litigation and/or regulatory trading halts due to future stock price volatility.
In the past, when the market price of a stock has been volatile, holders of that stock have often initiated securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. The lawsuit could also divert the time and attention to our business plan.
In addition, the SEC has halted trading in the past of companies with suspicious trading activity.
Item 2. Properties.
The Company currently leases 64 Sq. Ft. of office space at 1462 Erie Boulevard, Schenectady, New York, 12305. The lease for this space is $95.50 per month plus telecommunications costs and certain office expenses and ended on January 4, 2012, at which time it turned to month to month lease. The Company’s phone number is (518) 935-2830.
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Item 3. Legal Proceedings.
The Company is not a party to any legal proceedings.
Item 4. Mine Safety Disclosure.
Not Applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
On January 15, 2011, the Company’s Board of Directors affected a 1-for-270 reverse stock split and changed its name to BlackBox Semiconductor, Inc. Thereafter, in June of 2011, the Company completed a 20:1 Forward Split of its Common Stock whereupon 20 new shares of Common Stock were exchange for each outstanding share.
As a result, the Company’s stock symbol was temporarily modified to “VTDID” through July 12, 2011 at which time it resumed trading under the symbol “VTDI.” The common stock of the Company is currently traded over the counter and is listed on the pink sheets. The availability of historical trading prices of our common stock is limited, with periods of little or no trading activity. The following table sets forth the available approximate range of high and low bid prices for the common stock of the Company during the periods indicated. The quotations presented are adjusted to reflect splits in our common stock and reflect inter-dealer prices, without retail markup, markdown, or commissions, and may not necessarily represent actual transactions in the common stock.
As of April 10, 2013, the Company had 198,245,929 shares of common stock issued and outstanding.
2012 (1) |
| Low |
| High | ||
First Quarter |
| $ | 0.01 |
| $ | 0.15 |
Second Quarter |
| $ | 0.01 |
| $ | 0.01 |
Third Quarter |
| $ | 0.01 |
| $ | 0.01 |
Fourth Quarter |
| $ | 0.09 |
| $ | 0.51 |
2011 (1) |
| Low |
| High | ||
First Quarter |
| $ | 0.2703 |
| $ | 10.81 |
Second Quarter |
| $ | 0.011 |
| $ | 101.00 |
Third Quarter |
| $ | 0.04 |
| $ | 1.00 |
Fourth Quarter |
| $ | 0.0401 |
| $ | 0.40 |
(1)
Adjusted to reflect both the reverse and forward splits in 2011.
As of April 10, 2013, the closing quotation for our common stock was $0.11 per share.
As reflected by the high and low prices on the foregoing table, the trading price of the common stock of the Company can be volatile with dramatic changes over short periods. The trading price may reflect imbalances in the supply and demand for shares of the Company, market reaction to perceived changes in the industry in which the Company sells products and services, general economic conditions, and other factors. Investors are cautioned that the trading price of the common stock can change dramatically based on changing market perceptions that may be unrelated to the Company and its activities.
Approximate number of equity security holders
The approximate number of record holders of the Company's common stock as of January 15, 2013, was 61 which does not include shareholders whose stock is in street name or held through securities position listings, such as CEDE & Co.
Dividends
The Company did not declare or pay any cash dividends on its common stock during the past two fiscal years. The Company does not foresee a capital surplus and, if any is earned, the Company intends to invest all capital towards growth, research and development of the Company’s technologies and does not intend on declaring a dividend or other distribution in the foreseeable near future.
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Securities authorized for issuance under equity compensation plans
Effective as of June 13, 2011, the Company’s Board of Directors adopted the Vision Dynamics Corporation 2011 Stock Incentive Plan (the “Plan”). The Plan provides for the award of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock or Stock Purchase Rights (all as defined in the Plan), and 50,000,000 shares have been reserved for issuance under the Plan. If an option or Stock Purchase Right expires or becomes un-exercisable without having been exercised in full, or is surrendered for exchange, the un-purchased shares that were subject to those awards will become available for future grant or sale under the Plan. The Company intends to submit the adoption of the Plan for stockholder approval at its next annual meeting of stockholders. The foregoing is a summary only of the material terms of the Plan, a full copy of which is filed as a copy to this Report. To date, no shares or options to acquire shares under the Plan have been issued.
Purchases of equity securities by the small business issuer and affiliated purchasers
During the year ended December 31, 2012, neither the Company nor any of its affiliates purchased any equity securities of the Company or on behalf of the Company.
Recent Sales of Unregistered Securities
Effective as of August 22, 2012, the Company issued 44,000,000 of its restricted common shares to Luis J. Leung, a member of the Company’s board of directors, and the Company’s Chief Executive Officer, in exchange for discharge of all services rendered between November 14, 2012 and July 31, 2012, valued at $ 22,000.00.
In October of 2012, the Company sold 62,500 shares of restricted common shares to a non-US based investment fund, for $25,000, or $0.40 per share. Subsequently, in December 7 of 2012, the Company sold an additional 317,500 Shares for consideration of $125,000, or $.3937 per share. These shares were not issued as of December 31, 2012. All issuances shall be exempt under the securities registration requirements of the Securities Act in that they were restricted securities sold to an overseas investor and complied in all respect, among other exemptions, with Regulation S of the rules of the SEC promulgated under the Securities Act.
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This discussion and analysis in this Annual Report on Form 10-K (the “Report” or “Annual Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Report should be read in conjunction with the accompanying Financial Statements and related notes and the Risk Factors contained herein as well as the Business section. You can reference additional specific risks relating to the Company and disclosure set forth in this report as provided in the “Forward Looking Statements” section in the forepart to this Report and in the “Risk Factors” section above. The statements made herein are as of the date of filing of this Report and we do not undertake to update the same other than as required by SEC rules in subsequent filings.
OVERVIEW AND PLAN OF OPERATION
On June 3, 2011, we completed the closing of its acquisition of BlackBox Semiconductor, Inc., a Delaware corporation (“BlackBox” or sometimes “BlackBox Subsidiary” or “BlackBox Delaware”) from Shrink Nanotechnologies, Inc. (“Shrink” or the “Seller”), pursuant to a Share Exchange Agreement (the “Share Exchange”) with Shrink (the “BlackBox Acquisition”). As a result of the BlackBox Acquisition, we succeeded to the Business of BlackBox on June 3, 2011. Shrink was an entity affiliated with the Company prior to the BlackBox Acquisition. While we have allowed the Chicago License, described below and above to lapse, we have focused our efforts on developing, on our own and through our inventor network of scientific advisors, engineers, consultants and experts, various technologies and to file provisional patent applications based on these inventions.
Terms of the BlackBox Share Exchange
As consideration for the acquisition of BlackBox, we (i) originally agreed to pay $75,000 in cash within 60 days of the Closing Date, which payment due date was subsequently extended, and (ii) issued an aggregate of 27,030,000 shares of our common stock, par value $0.001 per share to Shrink (the “Exchange Shares”), or, approximately 19% of our outstanding stock as of the date immediately after the Closing Date. In exchange therefore, we received (i) all of the shares of BlackBox resulting in BlackBox becoming our wholly owned subsidiary, and (ii) 14,000,000 shares of the common stock, par value $0.001 per share, of Shrink (the “Shrink Consideration Shares”). The $75,000 payment due in December has since been reduced to $12,500 and paid in full and discharged in October 2011.
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Related Parties
At the time of the Shrink Acquisition, Shrink and the Company were both controlled by Noctua Fund Manager, LLC and the Noctua Fund, LP (NFM). Accordingly, as a result of the inherent conflicts of interest, the BlackBox Acquisition was approved by independent and disinterested directors of Shrink and of the Company. Subsequently, by April of 2012, equity interests held by NFM and Noctua Fund were subsequently ultimately sold and transferred to Rum Punch Partners, Ltd., a Texas limited liability company which is managed by Mango Bay Management, LLC (MB Partners), which is in turn indirectly controlled by an investor group managed by Manuel Suquilanda, its manager. The 2010 Secured Note was sold and assigned to a separate purchaser, Alpha Finenze Fund.
The Company intends to wind down or liquidate its current operations any remaining assets or operations as an online retailer of aftermarket Triumph motorcycle parts and accessories. The Company does not have any material liabilities from this business segment.
Accounting Treatment
As a result of our BlackBox Acquisition, we have succeeded to the business and technology development operations of BlackBox Delaware, which, until termination of the license with the University of Chicago, constituted our primary asset and operations. Accordingly, the Parent holding company, currently called Vision Dynamics Corporation, is deemed the financial acquirer for accounting related purposes, and in this Management Discussion and Analysis of Financial Condition and Results of Operations, are those of Vision Dynamics Corporation unless the context requires otherwise. At this time, we were in the process of disposing of our Sportbike-customs.com related business.
Description of Business
BlackBox is now a wholly owned subsidiary of Vision Dynamics Corporation and was originally formed in Delaware on October 28, 2010 by Shrink for the purposes of acquiring and holding certain licenses, specifically, those related to the University of Chicago. We acquired BlackBox under the BlackBox Acquisition effective as of June 3, 2011.
Our primary asset and business immediately after the BlackBox Acquisition was BlackBox and its intellectual property and licenses. Specifically, BlackBox’s primary asset was its license from the University of Chicago (“Chicago License”) to commercialize certain technology and intellectual property that increases performance of certain solution-based, inorganic, semiconductor nanomaterials. These nanomaterials are used to create liquid semiconductor materials that can be deposited (e.g., printed or sprayed) to form certain semiconductor films and other structures for use in a multitude of semiconductor device applications. While this license has since lapsed we have used our knowledge and inventor network of professionals, to begin developing “in house” through independently hired engineers, consultants, experts and scientists, with specific knowledge and experience in their fields.
We are no longer limited to liquid semiconductor technology and related solutions and have expanded our scope greatly to reflect our business, as a developer and aggregator of technologies.
Additional specific information relating to the BlackBox Acquisition and the Chicago License are all contained in the Current Report on Form 8-K, Date Of Event June 3, 2011, as amended and its exhibits, and other periodic reports that may be filed from time to time.
Additional detailed information relating to our business is set forth under the section titled “Item 1. Business” above and in the risk factors to this report.
Liquidity and Debt Restructurings in 2011
Settlement of Outstanding Debt Owed to Noctua Fund Manager; Issuance of Unsecured Note
As of March 15, 2011, the Company entered into a Letter Agreement with Noctua Fund Manager, LLC, (“NFM”) a creditor and affiliate of a principal shareholder of the Company and of Shrink at the time of the transaction, (the “NFM Letter Agreement”), pursuant to which the Company issued to NFM an unsecured convertible note in the principal amount of $274,000 and accruing interest at 2% per year, in order to settle and accrue $274,000 (the “Unsecured Note”). The Unsecured Note reflected amounts owed to NFM for past due account payables owed to NFM in connection with operational expenses, including working capital, and administrative services rendered. The remaining unconverted amount of the $274,000 2% note was, on April 5, 2012, acquired by an entity indirectly controlled by Mr. Panther, and, subsequently sold for value to Alpha Finanz, Ltd. Upon issuance, the Unsecured Note were due March 14, 2012, accrues interest at 2% per year with a default rate of 3%, and principal and interest on the Unsecured Note is convertible at a fixed price of $0.017125 per share into 16,000,000 shares as of the effective date. The Unsecured Note automatically converts by its terms in the event and to the extent that the note is assigned to anyone absent consent of the Company. In October 2011, the Company issued 16,000,000 common shares upon conversion of the Unsecured Note (which, at that time was owned by NFM) and also issued 77,013 shares in exchange for $1,319 of interest thereon. The remaining balance of $3,780 of the Unsecured Note, the 2010 Secured Note (see below) were acquired by an entity indirectly controlled by a former affiliate of the Company, and subsequently sold to our current debt holder Alpha Finanz, Ltd. (the “AF Fund”) in April of 2012.
There no amounts due under this agreement since December of 2012.
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Modification of Existing 2010 Secured Note
Effective as of January 31, 2011, the Company entered into a Loan Modification Letter (the “Loan Modification”) with NFM. Pursuant to the Loan Modification, the Company amended and replaced the previously existing 5% Secured Convertible Promissory Note Series 04012010-A1 (the “Original Secured Note”) issued to NFM on April 1, 2010, in the principal amount of $38,168.38, with a new note, in the principal amount of $45,881.00 due on March 31, 2011 (as amended. This amended secured note. (the “2010 Secured Note”) which subsequently acquired by the AF Fund. The Loan Modification reflects additional principal and certain other accommodations of the note holder so as to reflect, specifically:
·
an additional $7,000 loan disbursement made on January 11, 2011 and interest since April 1, 2010 as capitalized onto principal on the Amended Secured NFM Note,
·
an extended due date of March 31, 2011 for the entire amount due under the Amended Secured NFM Note, and
·
a fixed conversion price of $0.00045 per share for all outstanding principal and interest, which price only adjusts for corporate events such as stock splits, combinations or similar events.
As of the issuance date, the Secured NFM Note was convertible into 101,957,760 shares of the Company’s Common Stock. No other material changes have been made to the Amended Secured NFM Note. On March 22, 2011, and as part of an agreement to reduce the Company’s debt, NFM agreed to convert $36,000 of principal and interest under the Secured NFM Note, into 80,000,000 shares of the Company’s restricted common stock, and in October, the Company issued 15,173,156 common shares for payment of principal balance totaling $6,602 and accrued interest of approximately $226, leaving approximately $3,780 of principal and interest outstanding as of December 31, 2012 which are convertible into 8,400,000 shares.
Certificate of Designation – Series A Preferred Stock
As previously disclosed, the Company issued 5,000,000 shares of preferred stock for consideration on July 6, 2007. The Series A Preferred Stock does not have specific liquidation or mandatory dividend rights, but does grant the holder thereof voting rights, to vote together with common stock holders as a single class, on a 250 for one basis with the common stock (i.e. each share of Series A Preferred Stock gets 250 votes for each share of common stock outstanding and voting in such action), granting the Series A Preferred Stock holder effective control of the Company. In addition, the Series A Preferred Stock contains protective provisions that require affirmative consent of all of the Series A Preferred Stock holders for any action to:
·
Amend, alter or repeal any provision of the Articles of Incorporation or bylaws in a manner that adversely affects the powers of the Series A Preferred Stock,
·
Declare or pay any dividend or make any distributions to stockholders or to acquire for value, any common stock or other equity securities of the Company,
·
Create or authorize or obligate itself to issue shares of any class of capital stock unless it ranks junior to the Series A Preferred Stock with respect to dividends, distribution of assets on liquidation, or accrual of payment of dividends and redemption rights etc.,
·
Reclassify, alter or amend any existing security of the Company that is pari pasu with the Series A Preferred Stock in respect of distributions and liquidations that would make such other class senior to the Series A Preferred Stock, or reclassify any junior securities to become on parity with the series A Preferred Stock,
·
The making of dividends or redemptions of securities of the Company,
·
Create or authorize or issue debt security (or permit a subsidiary to take such action) which would result in aggregate indebtedness of the Company after such debt issuance to exceed $500,000 other than equipment leases or bank warehouse lines of credit without approval of the Board of Directors (but the Company can issue up to $3,000,000 of non-equity linked non-convertible debt),
·
Create or hold capital stock in any subsidiary that is not wholly owned by the Company or dispose of any capital stock of a subsidiary,
·
Initiate any action to abrogate or diminish the rights of the Series A Preferred Stock.
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Consulting Agreement With David Duncan
Effective as of February 15, 2011, the Company entered into a Consulting Agreement with David Duncan (the “Duncan Consulting Agreement”). The Duncan Consulting Agreement retained Mr. David Duncan as a consultant through May 19, 2011, with compensation of $6,000 for the first month ended March 17, 2011, and $13,000 for each month ended April 17 and May 18, 2011, respectively. Between May 2011 and his resignation on November 19, 2011, Mr. Duncan was compensated in accordance with a modification to his compensation agreement and paid $60,000 and is due $45,720 which remains in dispute.
Change in Management
On April 4, 2011, Mr. Ford Sinclair resigned from his position as Chief Executive Officer of the Company. Mr. Sinclair’s resignation was not because of any disagreement with the Company relating to the Company’s operations, policies or practices. Mr. Sinclair remained as a Director of the Company.
Immediately following his resignation, on April 4, 2011 the Company’s Board of Directors appointed Mr. David Duncan as the Company’s Chief Executive Officer and Secretary. Mr. Duncan is an operational officer with business and new market development, operations, and finance for a variety of companies. Mr. Duncan is party to a month to month consulting agreement with the Company (See “Management” section and biographies below).
On August 15, 2012, the Company appointed Milene Andrade as General Counsel and Director of the Company. Ms. Andrade was not affiliated with the Company or its management prior to appointment. As a result of Ms. Andrade’s appointment the Board of Directors of the Company currently, and as at December 31, 2012, consists of Ford Sinclair, Luis J. Leung and Milene Andrade.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The significant accounting policies that are believed to be the most critical to fully understanding and evaluating the reported financial results include recoverability of intangible assets, the recovery of deferred income tax assets and share-based compensation.
Our intangible assets consist principally of intellectual properties such as licensing rights and patents. We are currently amortizing certain intangible assets using the straight line method based on an estimated legal life, of eight years. We (our BlackBox subsidiary prior to the BlackBox Acquisition) began amortization of the electric glue related intangibles in December 2010 since the license agreement finalized and patent filings were first being filed. The Company will re-evaluate its amortization practice once products related to these patents are put into full production. When our products are placed in full production we can better evaluate market demand for our technology.
We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists. Once our intellectual property is placed into productive service, we expect to utilize a net present value of future cash flows analysis to calculate carrying value after an impairment determination.
The Company strives to save liquid capital by paying for services or satisfying liabilities, whenever able, by issuance of stock and stock options to consultants and services providers. We also may grant stock options, restricted stock units and restricted stock to directors and consultants.
We measure compensation cost for all stock-based awards at fair value on date of grant and recognize compensation over the requisite service period for awards expected to vest. The fair value of restricted stock and restricted stock units is determined based on the number of shares granted and the quoted price of our common stock on the date of grant. The determination of grant-date fair value for stock option awards is estimated using a Black-Scholes model, which includes variables such as the expected volatility of our share price, the anticipated exercise behavior of our employees, interest rates, and dividend yields. These variables are projected based on our historical data, experience, and other factors. Changes in any of these variables could result in material adjustments to the expense recognized for share-based payments.
Such value is recognized as an expense over the requisite service period, net of estimated forfeitures, using the straight-line attribution method. The estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.
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As part of the process of preparing our financial statements, we must estimate our actual current tax liabilities together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the balance sheet. We must assess the likelihood that the deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, a valuation allowance must be established. To the extent we establish a valuation allowance or increase or decrease this allowance in a period, the impact will be included in the tax provision in the statement of operations.
Results of Operations for the years ended December 31, 2012 and December 31, 2011
Revenue
The Company, including its subsidiaries, has not had any revenues in 2012 or 2011, as it is a development stage company.
Operating Expenses
Vision Dynamics Corporation had total operating expenses of $ 81,998 for the year ended December 31, 2012 as compared to $194,496 for the year December 31, 2011. The decrease in total operating expenses is attributed to a general decrease of professional fees and administrative costs. We expect operating expenses to increase as we expand our operations and invest into research and development activities.
General and Administrative Expenses. Our general and administration expenses increased to $29,656 for the year ended December 31, 2012 as compared to $117,676 the year ended December 31, 2011. This decrease was mainly due to a decrease in officer salaries.
Professional Fees. Professional fees are generally related to public company reporting and governance expenses as well as costs related to our acquisition and consulting arrangements with our Inventor Network and scientists. Our costs for professional fees decreased to $52,342 for the year ended December 31, 2012, as compared to $71,550 for the year ended December 31, 2011. The change was due to a decrease in legal costs and accounting fees. We expect an increase in our professional and research and development costs as we increase our inventor network, acquire new technologies from time to time, and file patent or provisional patent applications.
Amortization. Our amortization expenses decreased to $nil for the year ended December 31, 2012, as compared to $5,270 for the year ended December 31, 2011. The decrease in amortization expenses was due to the write off of the licensing agreement with the University of Chicago.
Interest Expense. Interest expense decreased to $537 for the year ended December 31, 2012 as compared to $217,552 for the year ended December 31, 2011. The decrease in interest expenses is related to conversion of the NFM Note into common stock in 2011.
Gain(Loss) on Debt Settlement. On August 22, 2012, the Company converted $22,000 of accounts payable to Luis J. Leung, the CEO of the Company, into 44,000,000 shares of common stock. The shares issued, based on the previous day’s closing price, were valued at $114,400. A loss on conversion of $92,400 was recorded accordingly (see Note 8).
We expect operating expenses to continue as we invest further in business development activities and invest into our patent research and development. We do not have capital commitments yet to cover any of our operating expenses and to date. To date, our capital needs for Vision Dynamics Corporation have been funded by our principals, and private investors.
We have limited cash on hand, and to the extent we are able to negotiate with parties with whom we enter into business agreements with to accept stock in lieu of cash, these issuances could dilute the ownership of our shareholders.
Net Loss
For the year ended December 31, 2012, we had a net loss of $174,934 as compared to $351,408 for the year ended December 31, 2011. Management attributes the decrease in net loss to reduction in interest expenses as well as reduction of professional fees and administrative costs.
We anticipate continued losses relating to investment into our development activities relating to Vision Dynamics Corporation, and to our capital raising activities. We intend to fund our inventor network, patent creation and technology development activities, through potential government grants, partnerships and arrangements with universities and equity and debt financings.
28
Liquidity and Capital Resources
Our cash on hand at December 31, 2012, and December 31, 2011, was $106,998 and $40,392, respectively. The increase in cash is primarily attributable to financing commitments made during the year ended December 31, 2012.
Given our current commitments and working capital, we cannot support our operations for the next 12 months without additional capital (See “Need for Additional Capital” below).
The following table provides detailed information about our net cash flow for all financial statement periods presented in this Report.
Cash Flow (All amounts in U.S. dollars) |
| The Year Ended December 31, 2012 |
| The Year Ended December 31, 2011 | ||
|
|
|
|
|
|
|
Net cash provided (used) in operating activities |
| $ | (63,269) |
| $ | (114,453) |
Net cash provided (used ) by investing activities |
|
| (20,125) |
|
| 3,225 |
Net cash provided by financing activities |
|
| 150,000 |
|
| 150,619 |
|
|
|
|
|
|
|
Net Increase in Cash and Cash Equivalents |
|
| 66,606 |
|
| 39,392 |
Cash and Cash Equivalent at Beginning of the Year |
|
| 40,392 |
|
| 1,000 |
Cash and Cash Equivalent at End of the Year |
| $ | 106,998 |
| $ | 40,392 |
Operating Activities
Net cash used in operating activities was $63,269 for the year ended December 31, 2012, as compared to $114,453 provided in operating activities for the year ended December 31, 2011. The change in net cash used in operating activities was mainly due to reduction of management and accounting costs. We expect our operating activities to increase as we increase the level of our inventor network spending and spending on patent applications and provisional patent applications.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2012 was $20,125 as compared to $3,225 net cash used in investing activities for the year ended December 31, 2011. The change in net cash used in investing activities was mainly due to the work in progress for the patents.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2012 was $150,000 as compared to $150,619 net cash provided by financing activities for the year ended December 31, 2011. Management will look toward raising further capital through financing activities during the fiscal year ended 2013.
In October of 2012, the Company sold 62,500 shares of restricted common shares to a non-US based investment fund, for $25,000, or $0.40 per share. Subsequently, in December 7 of 2012, the Company sold an additional 317,500 Shares for consideration of $ 125,000.00, or $.3937 per share. These shares were not issued as of December 31, 2012. All issuances shall be exempt under the securities registration requirements of the Securities Act in that they were restricted securities sold to an overseas investor and complied in all respect, among other exemptions, with Regulation S of the rules of the SEC promulgated under the Securities Act.
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Because of the Company has not yet generated revenues and the excess of current liabilities over current assets at the period ended, there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on obtaining additional outside financing. The Company has funded losses from operations primarily from the issuance of equity and debt. The Company believes that the issuance of debt will continue to fund operating losses in the short-term until the Company can generate revenues sufficient to fund its operations.
We intend to retain any future earnings to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
29
Our expectations are based on certain assumptions concerning the anticipated costs associated with any new projects. These assumptions concern future events and circumstances that our officers believe to be significant to our operations and upon which our working capital requirements will depend. Some assumptions will invariably not materialize and some unanticipated events and circumstances occurring subsequent to the date of this Report.
The amount and timing of our future capital requirements will depend upon many factors, including the level of cash needed to continue our research program, fulfill our obligations under license agreements, or fund initial production efforts.
We intend to retain future earnings, if any, to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
The Company estimates that it will need at least $1,000,000 in capital over the next eighteen months to further develop its Inventor Network, patent portfolio and services business and that substantial additional costs will be incurred in order to invent and potentially develop prototypes for new technologies. The Company is not aware as to how much, if any, of these funds will be obtainable from private parties, government grants and/or offset by joint venturing development of our inventions.
License Agreement with University of Chicago
The primary asset of BlackBox included the exclusive Chicago License entered into as of November 30, 2010, with the University of Chicago, granting to BlackBox Delaware the exclusive, worldwide right to use and sublicense Chicago’s patent-pending Materials and Methods for the Preparation of Nanocomposites (US PTO Application No. PCT/US10/32246) and future patent applications filed by the University of Chicago based on certain other patentable technologies described in the Chicago License. The Company allowed the Chicago License to lapse in mid-2012 as we did not believe it was in the best interest of our shareholders to allocate sufficient capital to pursue and maintain it, and, because the Company’s management elected to use its new relationships and knowledge in order to retain professional scientists to assist in inventing and aggregating new technologies directly on behalf of the Company.
Properties
The Company currently leases 64 Sq. Ft. of office space at 1462 Erie Boulevard, Schenectady, New York, 12305. The lease for this space is $95.50 per month plus telecommunications costs and certain office expenses and ended on January 4, 2012, at which time it turned to month to month lease. The Company’s phone number is (518) 935-2830.
Need for Additional Financing
The Company does not have capital to continue operations as a going concern through the end of 2013 and, has been dependent to date upon funding provided by selling equity and debt securities. Additional funding will be required in order for the company to survive as a going concern and to finance growth and to achieve our strategic objectives. Management is actively pursuing additional sources of funding. If we do not raise sufficient funds in the future, we may not be able to fund expansion, take advantage of future opportunities, meet our existing debt obligations or respond to unanticipated requirements. Financing transactions in the future may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
The market for private equity finance in public companies, whom need small capital raises is extremely limited, and, the Company does not currently have any commitments for capital raising.
We intend to retain any future earnings, if any, to retire any existing debt, finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes.
Going Concern
The accompanying financial statements have been prepared assuming we will continue as a going concern. We have had substantial operating losses for the past years and are dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to raise necessary funds from shareholders to satisfy the expense requirements of the Company.
Off Balance Sheet Financings
The Company does not have any off balance sheet arrangements or financings.
30
Employees
We currently has two full time employees. We also currently hire engineers, advisors, inventors, consultants and scientists to conduct research and development and patent filing assistance, on an as-needed basis, as independent contractors on our behalf. We intend to hire additional full time employees and independent contract labor on an as needed basis.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
31
Item 8. Financial Statements and Supplementary Data.
CONTENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Vision Dynamics Corporation
(f/k/a Blackbox Semiconductor, Inc.)
We have audited the accompanying consolidated balance sheet of Vision Dynamics Corporation (formerly known as BlackBox Semiconductor, Inc.), a Nevada corporation, as of December 31, 2012, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended and for the period from inception (October 28, 2010) through December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements as and for the year ended December 31, 2011 were audited by other auditors who issued an unqualified opinion on April 13, 2012.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vision Dynamics Corporation as of December 31, 2012 and the results of its operations and its cash flows for the year then ended and for the period from inception (October 28, 2010) through December 31, 2012, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Vision Dynamics Corporation will continue as a going concern. As discussed in Note 2 to the financial statements, Vision Dynamics Corporation suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
April 15, 2013
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Vision Dynamics Corporation
(f/k/a/ Bl;ackbox Semiconductor, Inc.)
(f/k/a Visitrade, Inc)
We have audited the accompanying balance sheet of Vision Dynamics Corporation (formerly known as BlackBox Semiconductor, Inc.), a Nevada corporation, as of December 31, 2011, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vision Dynamics Corporation as of December 31, 2011, and the results of its operations and its cash flows for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that Vision Dynamics Corporation. will continue as a going concern. As discussed in Note 2 to the financial statements, Vision Dynamics Corporation suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Hamilton, PC
/s/ Hamilton, PC
Denver, Colorado
April 13, 2012
F-3
VISION DYNAMICS CORP. | |||||
(f/k/a Blackbox Semiconductor, Inc.) | |||||
(A Development Stage Company) | |||||
CONSOLIDATED BALANCE SHEETS | |||||
| |||||
|
|
|
|
|
|
|
|
| December 31, |
| December 31, |
ASSETS |
| 2012 |
| 2011 | |
Current Assets |
|
|
|
| |
| Cash and cash equivalents | $ | 106,998 | $ | 40,392 |
| Deposits and prepaid expenses |
| 1,250 |
| 1,250 |
Total Current Assets |
| 108,248 |
| 41,642 | |
|
|
|
|
|
|
Securities available for sale |
| 21,000 |
| 36,400 | |
Loan to Shrink Nanotechnologies, Inc. |
| 10,000 |
| - | |
Intangible assets, net – See Note 8 |
| - |
| 44,853 | |
Work in Progress - Patents |
| 20,125 |
| - | |
| TOTAL ASSETS | $ | 159,373 | $ | 122,895 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
| |
Current Liabilities |
|
|
|
| |
| Accounts payable | $ | 94,468 | $ | 87,744 |
| Due to related parties - related party |
| 56,000 |
| 56,000 |
| Other payables |
| 190,000 |
| 190,000 |
| Accrued interest |
| 720 |
| 180 |
| Convertible notes payable, default - related party |
| 3,600 |
| 3,600 |
Total Current Liabilities |
| 344,788 |
| 337,524 | |
|
|
|
|
|
|
| TOTAL LIABILITIES |
| 344,788 |
| 337,524 |
|
|
|
|
|
|
Commitments and Contingencies - See Note 12 |
|
|
|
| |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
| |
| Preferred stock, $.001 par value; 25,000,000 shares authorized; 5,000,000 and 0 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively |
| 5,000 |
| 5,000 |
| Common stock, $.001 par value; 1,000,000,000 shares authorized; 198,245,929 and 154,245,929 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively |
| 198,246 |
| 154,246 |
| Additional paid-in capital |
| 891,536 |
| 671,136 |
| Other comprehensive loss |
| (753,813) |
| (693,560) |
| Accumulated deficit |
| (526,385) |
| (351,451) |
Total stockholders' equity |
| (185,415) |
| (214,629) | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 159,373 | $ | 122,895 | |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | |||||
F-4
VISION DYNAMICS CORP. | ||||||
(f/k/a Blackbox Semiconductor, Inc.) | ||||||
(A Development Stage Company) | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| ||||||
|
| For the |
| For the |
| From October 28, 2010 |
|
| Year ended |
| Year ended |
| (date of inception) |
|
| December 31, |
| December 31, |
| through |
|
| 2012 |
| 2011 |
| December 31, 2012 |
Revenue | $ | - | $ | - | $ | - |
|
|
|
|
|
|
|
Professional fees |
| 52,342 |
| 71,550 |
| 123,892 |
General and administrative |
| 29,656 |
| 119,176 |
| 148,833 |
Amortization |
| - |
| 5,270 |
| 5,672 |
Total operating expenses |
| (81,998) |
| (195,996) |
| (278,397) |
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
Gain on debt settlement |
| - |
| 62,500 |
| 62,500 |
Loss on conversion of debt into stock |
| (92,400) |
| - |
| (92,400) |
Interest expense |
| (537) |
| (217,552) |
| (218,089) |
Total other income (expense) |
| (92,937) |
| (155,052) |
| (247,989) |
|
|
|
|
|
|
|
Loss from continuing operations |
| (174,934) |
| (351,048) |
| (526,385) |
Provision for income taxes |
| - |
| - |
| - |
|
|
|
|
|
|
|
Net loss | $ | (174,934) | $ | (351,048) | $ | (526,385) |
|
|
|
|
|
|
|
Net loss per common share-basic and diluted | $ | (0.00) | $ | (0.00) | $ | (0.00) |
|
|
|
|
|
|
|
Weighted average common shares outstanding |
| 169,994,563 |
| 141,685,795 |
| 122,837,733 |
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
Securities available for sale fair value adjustment |
| (21,770) |
| (693,560) |
| (715,330) |
Asset writedown |
|
|
|
|
|
|
Comprehensive loss | $ | (196,704) | $ | (1,044,608) | $ | (1,241,715) |
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | ||||||
F-5
VISION DYNAMICS CORP. | |||||||||||||||
(f/k/a Blackbox Semiconductor, Inc.) | |||||||||||||||
(A Development Stage Company) | |||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||||||||||||||
From October 28, 2010, date of inception, through December 31, 2012 | |||||||||||||||
| |||||||||||||||
|
|
|
|
|
|
|
|
| Additional |
|
|
| Other |
| Total |
| Preferred Stock |
| Common Stock |
| Paid-In |
| Accum. |
| Comprehensive |
| Stockholders' | ||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Equity |
Issuance of founder shares | - | $ | - |
| 27,030,000 | $ | 27,030 | $ | (26,030) | $ | - | $ | - | $ | 1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2010 | - |
| - |
| - |
| - |
| - |
| (403) |
| - |
| (403) |
Balance at December 31, 2010 | - | $ | - |
| 27,030,000 | $ | 27,030 | $ | (26,030) | $ | (403) | $ | - | $ | 597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse acquisiton of Blackbox Semiconductor, Inc. | 5,000,000 |
| 5,000 |
| 88,965,760 |
| 88,966 |
| 421,074 |
| - |
| - |
| 515,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares founder shares exchange of $20,000 | - |
| - |
| 6,750,000 |
| 6,750 |
| 13,250 |
| - |
| - |
| 20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares for services at $0.049 per share | - |
| - |
| 250,000 |
| 250 |
| 12,000 |
| - |
| - |
| 12,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partial conversion of convertible note and interest at $0.017 per share | - |
| - |
| 12,227,560 |
| 12,228 |
| 197,169 |
| - |
| - |
| 209,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued for conversion of notes at $0.0038 per share | - |
| - |
| 19,022,609 |
| 19,023 |
| 53,673 |
| - |
| - |
| 72,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale fair value adjustment | - |
| - |
| - |
| - |
| - |
| - |
| (693,560) |
| (693,560) |
Net loss for the period ended December 31, 2011 | - |
| - |
| - |
| - |
| - |
| (351,048) |
| - |
| (351,048) |
Balance at December 31, 2011 | 5,000,000 | $ | 5,000 |
| 154,245,929 | $ | 154,246 | $ | 671,136 | $ | (351,451) | $ | (693,560) | $ | (214,629) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-6
(continued) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
| Other |
| Total |
| Preferred Stock |
| Common Stock |
| Paid-In |
| Accum. |
| Comprehensive |
| Stockholders' | ||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Equity |
Securities available for sale fair value adjustment | - |
| - |
| - |
| - |
| - |
| - |
| 6,370 |
| 6,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset writedown | - |
| - |
| - |
| - |
| - |
| - |
| (44,853) |
| (44,853) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of liability into stock | - |
| - |
| 44,000,000 |
| 44,000 |
| 70,400 |
| - |
| - |
| 114,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale fair value adjustment | - |
| - |
| - |
| - |
| - |
| - |
| (21,770) |
| (21,770) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common shares at $0.40 per share (not issued) | - |
| - |
| - |
| - |
| 25,000 |
| - |
| - |
| 25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of commons shares at $0.3937 per share (not issued) | - |
| - |
| - |
| - |
| 125,000 |
| - |
| - |
| 125,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss | - |
| - |
| - |
| - |
| - |
| (174,934) |
| - |
| (174,934) |
Balance at December 31, 2012 | 5,000,000 | $ | 5,000 |
| 198,245,929 | $ | 198,246 | $ | 891,536 | $ | (526,385) | $ | (753,813) | $ | (185,416) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited financial statements. | |||||||||||||||
F-7
VISION DYNAMICS CORP. | |||||||
(f/k/a Blackbox Semiconductor, Inc.) | |||||||
(A Development Stage Company) | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| |||||||
|
|
|
|
|
|
| From |
|
|
| For the |
| For |
| October 28, 2010 |
|
|
| Year ended |
| Year ended |
| (date of inception) |
|
|
| December 31, |
| December 31, |
| through |
|
|
| 2012 |
| 2011 |
| December 31, 2012 |
NET CASH FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| |
| Net loss | $ | (174,934) | $ | (349,557) | $ | (526,385) |
| Adjustments to reconcile net loss to net cash |
|
|
|
|
|
|
| provided by operating activities: |
|
|
|
|
|
|
| Loss of conversion of debt into stock |
| 92,400 |
|
|
| 92,400 |
| Gain(loss) on debt settlement |
| - |
| (62,500) |
| (62,500) |
| Debt discount accretion |
| - |
| 216,917 |
| 216,917 |
| Non-cash share based payments |
| - |
| 12,250 |
| 12,250 |
| Amortization |
| - |
| 5,270 |
| 5,672 |
| Changes in assets and liabilities, net of effects from acquisitions |
|
|
|
|
| - |
| Increase in deposits and prepaid expenses |
| - |
| (1,250) |
| (1,250) |
| Decrease in liabilities |
| 22,000 |
| - |
| 22,000 |
| Increase in accounts payable and accrued expenses |
| 7,265 |
| 65,730 |
| 72,941 |
| Increase in due from Shrink Nanotechnologies, Inc. |
| (10,000) |
| 233 |
| 32,231 |
Net cash provided (used) by operating activities |
| (63,269) |
| (112,907) |
| (135,725) | |
NET CASH FROM INVESTING ACTIVITIES: |
|
|
|
|
|
| |
| Work in Progress - Patents |
| (20,125) |
| - |
| (20,125) |
| Cash paid for share exchange |
| - |
| (12,500) |
| (12,500) |
| Cash purchased at acquisition |
| - |
| 24,252 |
| 24,252 |
| Purchase of intangible assets |
| - |
| (8,527) |
| (50,524) |
Net cash provided (used) by investing activities |
| (20,125) |
| 3,225 |
| (58,897) | |
|
|
|
|
|
|
|
|
NET CASH FROM FINANCING ACTIVITIES: |
|
|
|
|
|
| |
| Cash advances PPM |
| 150,000 |
| 150,000 |
| 300,000 |
| Proceeds from subsidiary prior to merger |
| - |
| 619 |
| 619 |
| Proceeds from issuance of common stock |
| - |
| - |
| 1,000 |
Net cash provided by financing activities |
| 150,000 |
| 150,619 |
| 301,619 | |
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
| 66,606 |
| 40,937 |
| 106,998 | |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD |
| 40,392 |
| 1,000 |
| - | |
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 106,998 | $ | 41,937 | $ | 106,998 | |
| Interest expense | $ | - | $ | - | $ | - |
| Income taxes | $ | - | $ | - | $ | - |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
| |||
| Settlement of debt | $ | 22,000 | $ | 62,500 | $ | 84,500 |
| Stock to be issued for conversion of debt | $ |
| $ | 72,696 | $ | 72,696 |
| Stock issued for conversion of debt | $ | - | $ | 209,397 | $ | 209,397 |
| Liabilities assumed through share exchange | $ | - | $ | 483,940 | $ | 483,940 |
| Non-cash assets assumed through share exchange | $ | - | $ | 729,960 | $ | 729,960 |
| Issuance of stock for payment of debt acquired | $ | - | $ | 20,000 | $ | 20,000 |
The accompanying notes are an integral part of these financial statements. | |||||||
F-8
Vision Dynamics Corporation
Notes to the Financial Statements
For the years ended December 31, 2012 and 2011
Note 1. Organization
Vision Dynamics Corporation (“the Company,” “we,” or “us”) was incorporated in the state of Nevada on March 2, 1998.
On September 25, 2012, the Company formed SunPower Technologies, LLC (“SunPower”), a Delaware limited liability company, as a wholly-owned subsidiary. SunPower hold certain filed patents and will hold future intellectual properties.
Our BlackBox subsidiary was formed in Delaware on October 28, 2010 by Shrink Nanotechnologies, Inc., an affiliate of ours at the time of our acquisition, for the purposes of acquiring and holding certain licenses, specifically, those related to the University of Chicago. We acquired BlackBox effective as of June 3, 2011, as described in our Current Report on Form 8-K, dated as of such date.
Effective as of December 10, 2012, the Company changed its name in the state of Nevada to Vision Dynamics Corporation to better reflect its broader scope of research and intellectual property aggregation.
Note 2. Change in Strategy
In 2012, the Company allowed its Chicago License to expire. Instead, in early 2012, the Company deployed capital resources to study the Intellectual Property landscape relating to the use and application of nanoscale liquid semiconductor and other technologies. Based on this research the Company turned its focus towards the pursuit of developing its Inventor Network and developing its intellectual property portfolio with an initial focus in the sectors of semiconductors, clean tech- energy efficiency, water purification and biomedicine industries. Pursuant to this strategy, the Company no longer plans to build research facilities and manufacture a product. Instead the Company’s focus is to plan to exploit its knowledge of the IP space relating to technologies in the focus sectors to identify and patent new technologies, applications, systems and chemistries.. Furthermore the Company plans to rapidly scale the size of its patent portfolio in order to facilitate sale, licenses as well as prototype development through partnerships to interested parties in its focus sectors. We have identified methods and partners that will significantly accelerate this process at modest costs.
The Company has begun to follow through on this strategy expanding its Inventor Network and by filing provisional patent applications, with four (4) provisional patent applications filed in 2012. The Company continues to expand its expert network of scientists, engineers, industry professionals and intends to continue an aggressive intellectual property development and patent filing strategy as its funds will permit.
Note 3. Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Because of the recurring operating losses, no revenues and the excess of current liabilities over current assets, there is substantial doubt about the Company’s ability to continue as a going concern.
As a result of the aforementioned conditions the Company may be unable to meet certain obligations to fund future technology and business development activities. The Company’s continuation as a going concern is dependent on obtaining additional outside financing, as it is not anticipated that the Company will have profitable operations from its current operations during the near term. The Company believes that the issuance of equity and debt will be needed to fund operating losses in the short-term until the Company can generate revenues sufficient to fund its operations. If management can’t achieve its plans there is a possibility that operations will discontinue.
Note 4. Significant Accounting Policies
Development Stage Enterprise
The Company is a development stage company as defined by the Financial Accounting Standards Board (the “FASB”). The Company is devoting substantially all of its present efforts to establish a new business, and its planned principal operations have not yet commenced. All losses accumulated since inceptions have been considered as part of the Company’s development stage activities.
F-9
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions principally relate to the fair value and forfeiture rates of stock based transactions, and long-lived asset depreciation and amortization, and potential impairment.
Income Taxes
We account for income taxes under the provision of Accounting Standards Codification 740, “Income Taxes”, or ASC 740. As of December 31, 2012 and 2011, there were no unrecognized tax benefits included in the consolidated balance sheets that would, if recognized, affect the effective tax rate. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at December 31, 2012 and 2011, respectively and have not recognized interest and/or penalties in the consolidated statement of operations for the years ended December 31, 2012 and 2011. We are subject to taxation in the United States and California.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.
Concentrations of Credit Risk
A financial instrument which potentially subjects the Company to concentrations of credit risk is cash. The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. In addition to the basic insurance deposit coverage, the FDIC is providing temporary unlimited coverage for noninterest-bearing transaction accounts from December 31, 2011 to December 31, 2012. At December 31, 2012, there were no uninsured deposits.
Securities Available for Sale and Other Comprehensive Income
Our accounting policy is to book all restricted and publicly tradable securities under Securities Available for Sale and, as such, are carried at fair value based on quoted market prices. The Company owns restricted common stock representing approximately a 5.8% interest in Shrink Nanotechnologies, Inc., its former parent and a publicly traded company. These shares are valued at their quoted market price. Unrealized holding gains and losses for securities available for sale are excluded from earnings and reported as a separate component of stockholder’s equity as other comprehensive income, until the securities are disposed of. Upon disposal, the changes accumulated in other comprehensive income are to be recognized in income. Under this method, the Company’s share of the earnings or losses of the investments are not included in the Consolidated Balance Sheet or Statement of Operations.
The balance of $21,000 in securities available for sale on the Balance Sheet reflects a $15,400 mark to market decrease adjustment in relation to the December 31, 2011 balance of $36,400.
Fair Value Measurements
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. US GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes the use of inputs used in valuation methodologies into the following three levels:
·
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
·
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
·
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
F-10
Basic Net Loss per Share of Common Stock
Basic net loss per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Common stock equivalents resulting from the issuance of stock warrants and convertible notes have been considered, but have not been included in the per share calculations because such inclusion would be anti-dilutive due to the Company’s net loss. Common stock issuable is considered outstanding as of the original approval date for purposes of earnings per share computations.
Accounts Payable
Accounts payable consisted of the following at:
|
| December 31, 2012 |
| December 31, 2011 | ||
Accounts payable |
| $ | 94,468 |
| $ | 87,744 |
Total |
| $ | 94,468 |
| $ | 93,744 |
Concentration of Risk
A financial instrument which potentially subjects the Company to concentrations of credit risk is cash. The Company places its cash with financial institutions deemed by management to be of high credit quality.
Note 5. Recent Accounting Pronouncements
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2012 through the date these financial statements were issued.
Note 6. Income Taxes
The Company is subject to taxation in the United States and California. The Company does not have any income tax provision for the years ended December 31, 2012 and 2011 due to current and historical losses.
The provision for income taxes using the statutory federal income tax rate of 34% as compared to the company’s effective tax rate is summarized as follows:
|
| For the Year Ended December 31, 2012 |
| For the Year Ended December 31, 2011 | ||
Federal taxes |
| $ | (59,478) |
| $ | (41,153) |
State taxes |
|
| (15,464) |
|
| (11,606) |
Adjustments, note discount amortization |
|
| - |
|
| (86,279) |
Taxes |
|
| - |
|
| - |
Change in Valuation Allowance |
|
| 74,942 |
|
| 139,037 |
Income Tax Expense |
| $ | - |
| $ | - |
F-11
At December 31, 2012 and 2011, the Company had deferred tax assets of $74,942 and $139,197, respectively. Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset the net deferred tax asset. Additionally, the future utilization of the Company’s net operating loss to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code Section 382, as a result of ownership changes that may have occurred previously or that could occur in the future. The Company has not performed a Section 382 analysis to determine the limitation of the net operating loss and research and development credit carry forwards.
Significant components of the company’s deferred tax assets are as follows:
|
| December 31, 2012 |
| December 31, 2011 | ||
NOL Carryforward |
| $ | 74,942 |
| $ | 52,918 |
Adjustments, note discount amortization |
|
| - |
|
| 86,279 |
Valuation Allowance |
|
| (74,942) |
|
| (139,197) |
Net deferred tax assets |
| $ | - |
| $ | - |
Realization of the deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $74,942 and $139,037 in 2012 and 2011, respectively.
As of December 31, 2012 and December 31, 2011, the Company had federal and California net operating loss carry forwards of approximately $ 174,934 and $332,000, respectively. The federal and California tax loss carry forwards will begin to expire in 2022 and 2021, respectively, unless previously utilized.
The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has 50% or less likelihood of being sustained upon examination. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at December 31, 2012 and 2011, and has not recognized interest and/or penalties in the consolidated statements of operations for the years ended December 31, 2012 and 2011. The Company’s tax years for 2010 and forward are subject to examination by the United States and state tax authorities due to the carry forward of unutilized net operating losses
Note 7. Reverse Acquisition, Principles of Consolidation – Related Party
On June 3, 2011, the Company entered into and completed a reverse acquisition following a share exchange agreement (the “Share Exchange”) in which the Company, then known as Blackbox Semiconductor, a Nevada corporation (the accounting acquire for such transaction, “Vision Parent”) acquired 100% ownership of BlackBox Semiconductor Inc., a Delaware corporation (the accounting acquirer, “BlackBox Subsidiary”) and 14,000,000 shares of the of restricted common stock of Shrink Nanotechnologies, Inc. at a fair value of $729,960, which included a Discount Factor of 35% taken from the quoted market price at the effective date. In exchange, the Company issued to Shrink Nanotechnologies, Inc. 27,030,000 shares of common stock representing approximately 19.9% ownership in the Company and $75,000 which was originally to be paid by December 31, 2011.
In October of 2011, the Company agreed to settle the payable of $75,000 due in December 2011 to Shrink Nanotechnologies, Inc. as related to the Share Exchange for immediate payment of $12,500. This amount was paid on October 25, 2011, and there are no other amounts are due as related to this agreement and the Company recorded a gain of $62,500 related to debt settlement.
The Share Exchange was an interested party transaction as both the Company and Shrink Nanotechnologies, Inc. were indirectly controlled by an affiliate at that time, Noctua Fund Manager, LLC and with, Mark L. Baum, Esq., a former president and CEO and control person of both companies (“Baum”). These were the same principals that controlled Shrink Nanotechnologies, Inc. Luis Leung, our current CEO and Director, is also a director for Shrink Nanotechnologies, Inc. Given the percentage of ownership of Shrink Nanotechnologies, Inc. and our operating plan to liquidate the shares to raise additional funds, the investment should be accounted for as Available for sale.
F-12
The Company did not record a gain or loss related to the Share Exchange. This transaction was accounted for as a reverse acquisition. As a result, all financial information prior to June 3, 2011 is that of BlackBox Subsidiary. Following the merger, a reverse merger adjustment was made to reflect Vision Parent’s capital structure. All of the assets and liabilities acquired in the reverse acquisition were recorded at cost.
The consolidated balance sheets include the accounts of BlackBox Subsidiary and its wholly owned subsidiary, Vision Parent thereby reflecting the transactions related to the June 3, 2011 effective date of the Share Exchange. The consolidated statements of operations include the operations (which consisted mostly of research and development) of the predecessor entity, BlackBox Subsidiary from inception on October 28, 2010 and the Company from June 3, 2011, the effective date of the acquisition of the Vision Parent business. All significant intercompany accounts and transactions have been eliminated in consolidation.
The following is a condensed balance sheet disclosing the fair values of the Vision Dynamics Corporation Business assets and liabilities acquired.
Total assets |
| $ | 70,077 |
Total liabilities |
| $ | 343,658 |
Total stockholders’ equity |
|
| (273,581) |
Total liabilities and stockholders’ deficit |
| $ | 70,077 |
|
| For the year ended December 31, 2011 |
| For the year ended December 31, 2010 | ||
|
|
|
|
|
|
|
Net Loss |
| $ | (336,665) |
| $ | (153,508) |
Earnings per share |
| $ | (0.00) |
| $ | (0.00) |
Note 8. Intangible Asset Writedown
The Company entered into an exclusive agreement with the University of Chicago on November 30, 2010 wherein the Company licensed the exclusive, worldwide right to use and sublicense Chicago’s patent-pending Materials and Methods for the Preparation of Nanocomposites and future patent applications filed by the University of Chicago based on certain other patentable technologies described in the Chicago License. This intangible asset had a book value of $ 44,853 as of December 31, 2011. The Company does not have adequate capital to meet continuing requirements of the University Chicago License and hence we have been given notice that our license has been terminated. However based on our study of the intellectual property landscape we believe that the company would be better served applying its resources to the development of new intellectual property in the general area of liquid semiconductor technology. As a result, the Company wrote down the full book value of this intangible asset.
Note 9. Due to Related Party
Vision Parent previously subleased space from Business Consulting Group Unlimited, Inc. (“BCGU”), an entity co-owned by our former affiliates, pursuant to which the Company leased approximately 3,000 square feet of office and administrative space, as well as use of, among other things, internet, postage, copy machines, electricity, furniture, fixtures etc. at a rate of $2,000 per month. The lease term with BCGU expired October 1, 2009, and continued based on a month to month term thereafter. This agreement was terminated on January 31, 2011. On April 4, 2012, this note was sold to an unrelated third party. As of December 31, 2012, the Company had a balance of $ 56,000 due to such party. As of December 31, 2011, the balance was 56,000. There was no change because the agreement was terminated.
On August 22, 2012, the Company converted $22,000 of accounts payable into 44,000,000 shares of common stock to the CEO of the Company, Luis J. Leung (see Note 12).
Note 10. Other Payables – Related Party
In anticipation of the closing of the Share Exchange, Vision Parent began capital raising efforts to meet the $75,000 cash obligation due at closing and other capital funding needs. At the date of the Share Exchange, Vision Parent had raised $40,000 as a loan, $20,000 in a sale of stock do Dan Landry, a scientific advisor to the Company, which were recorded as founder shares, and following the Share Exchange the Company raised an additional $150,000 in exchange for a bridge promissory note and/or future share issuances of which the terms have not been finalized. There are no terms or repayment date associated with the $190,000 debt. The debt is owed to Noctua Fund Manager, LLC.As of December 31, 2012 the balance in Other Payables was $190,000, compared to $190,000 as of December 31, 2011.
F-13
Note 11. Convertible Notes, Warrants, Commitments – Related Party Transactions
We recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert his debt into common stock at a price per share that is less than the trading price to the public on the day the loan is made to the Company. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures. This feature is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.
A.
Convertible Note Payable– Related Party Transactions – Partial Conversion
On April 1, 2010 BlackBox Parent issued a 5% convertible note with a principal amount of $36,168 to Noctua Fund Manager, LLC. The note matured on October 1, 2010. The note was issued in exchange for cash advances totaling $36,168. The note held a conversion option, whereby the principal and interest on the note was convertible into shares of our common stock at the conversion price of $.027 (the market price of our stock at the issuance of the note) per share if both: (i) the Company’s authorized common stock has been increased to not less than 1,000,000,000 shares and (ii) the Principal Amount and all interest and penalties accrued have not been paid in full. On January 31, 2011, the Company and Noctua Fund Manager, LLC agreed to amend certain terms found in its 5% Convertible Note agreement. All the previous terms remained unchanged with the exception of the following: the Note became convertible into common stock at a conversion rate of $.00045, the conversion provisions with respect to our authorized share amount and payments were eliminated, the Note’s default provision was cured, the principal amount of the Note was increased to $45,881 to reflect previous accrued interest and in exchange for $7,000 in cash advances owed to Noctua Fund Manager, LLC, and a new maturity date of June 30, 2011.
Vision Parent evaluated these modifications to the Note and they have been considered significant in particular the terms of an embedded conversion option. The change in fair value of the embedded conversion option is over the 10 percent of the carrying amount of the original debt instrument immediately before the modification. As result on January 31, 2011, prior to the merger, the Company applied debt extinguishment accounting to record a loss on extinguishment of debt of $45,881. This was recorded as an increase in additional paid in capital and expensed at the time of the note modification.
On March 21, 2011, Vision Parent issued 80,000,000 shares of common stock to Noctua Fund Manager, LLC, as conversion of $36,000 of principal balance and accrued interest of this convertible note. On August 30, 2011 the Company received conversion demands for the $6,602 principal balance and accrued interest of $226, the total common share equivalent is 15,173,156. As of September 30, 2012, the remaining balance was $3,179.
The foregoing notes and shares have been sold and transferred to a third party as discussed below and are no longer controlled by said persons.
B.
Convertible Note Payable, Warrants – Related Party Transactions – Converted
Vision Parent obtained certain administrative, bookkeeping and management services from Noctua Fund Manager, LLC for a fee of $10,000 per month. On January 31, 2011, Vision Parent terminated this operating agreement with Noctua Fund Manager, LLC. On March 15, 2011, the Company issued a $274,000 principal balance convertible note to Noctua Fund Manager, LLC, in exchange for all outstanding debt related to these fees totaling $274,000. The note accrues interest at 2% and matures on March 15, 2012. The note can convert into common stock at a conversion rate of $0.017 per share. Noctua Fund Manager, LLC also received 3,000,000 detachable, callable common stock purchase warrants, exercisable at $.075 a share, these warrants have a maturity date of March 14, 2014. The warrants are exercisable in cash at any time, and, shall be exercisable via cashless exercise commencing nine months after the issuance date.
The warrants are valued at $274,000 and were recorded as discount on the issuance. The discount is being accreted over the 12 month life of the note. The warrants were valued using a Black-Scholes valuation model. The variables used in this option-pricing model included: (1) discount rates of 1.08% (2) expected warrant life was 3 years, (3) expected volatility of 300% and (4) zero expected dividends.
On June 15, 2011, the Company issued 12,227,560 shares of common stock as conversion of $209,397 of principal balance and accrued interest of this convertible note. As a result of the early conversion request and subsequent decrease in the principal balance of the note, the discount accretion was accelerated and the Company recognized an expense of $147,654 at the date of share issuance. On August 30, 2011, the Company received conversion demands for the balance due and accrued interest of $375, the total common share equivalent is 3,849,453, at that time the Company recorded the remaining discount accretion of $41,270.
F-14
The following summarizes stock purchase warrants at December 31, 2012:
|
| Number of Warrants |
| Weighted Average Exercise Price |
| Remaining life | |
Outstanding December 31, 2009 |
| - |
| $ | - |
| - |
Expired/Retired |
| - |
|
| - |
| - |
Exercised |
| - |
|
| - |
| - |
Issued |
| - |
|
| - |
| - |
Outstanding December 31, 2010 |
| - |
| $ | - |
| - |
Expired/Retired |
| - |
|
| - |
| - |
Exercised |
| - |
|
| - |
| - |
Issued |
| 3,000,000 |
|
| 0.075 |
| 2.25 |
Outstanding December 31, 2011 |
| 3,000,000 |
| $ | 0.075 |
| - |
Expired/Retired |
| - |
|
| - |
| - |
Exercised |
| - |
|
| - |
| - |
Issued |
| - |
|
| - |
| - |
Outstanding December 31, 2012 |
| 3,000,000 |
| $ | 0.075 |
| 1.25 |
Notes Payable for the periods ended, consists of the following:
|
| December 31, |
| December 31, |
| December 31, |
|
| 2012 |
| 2011 |
| 2010 |
5% Note payable due June 30, 2011 |
| - |
| 45,881 |
| 36,168 |
2% Note payable due March 14, 2012 |
| 3,600 |
| 274,000 |
| - |
Less: discounts |
| - |
| - |
| - |
Less: payments |
| - |
| (316,281) |
| - |
Total notes payable |
| 3,600 |
| 3,600 |
| - |
Less: current portion |
| (3,600) |
| (3,600) |
| - |
Long term portion |
| - |
| - |
| - |
As of December 31, 2012, the Company had a note payable with a remaining principal balance due of $3,600 and as of December 31, 2011 the balance was $3,500. This note is currently in default due to non-payment is classified as current liabilities on the balance sheet.
Note 12. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of January 15, 2013, there were no pending or threatened lawsuits.
Other
On January 5, 2011, Vision Parent entered into a sublease agreement with a third party. And pursuant to the Share Exchange the Company acquired this lease agreement and leases approximately 64 square foot executive office space at a rate of $96 per month, which includes additional variable charges for telephone and internet usage. The lease term ended on January 5, 2012 and shall create a month-to-month tenancy thereafter. The Company’s rent expense for the nine months ended September 30, 2012 and 2011 was $1,685 and $0, respectively.
On June 14, 2012, the Company entered into an Intellectual Property Development Agreement with MDB Capital Group, LLC (“MDB”), an investment banking and intellectual property consulting company, whereas MDB will provide intellectual property development research for the Company.
On October 15, 2012, the Company and Norman Meier entered into a consulting agreement for services through December 15, 2012 (see Note 14).
On January 5, 2011, BlackBox Parent entered into a sublease agreement with a third party. And pursuant to the Share Exchange the Company acquired this lease agreement and leases approximately 64 square foot executive office space at a rate of $96 per month, which includes additional variable charges for telephone and internet usage. The lease term ended on January 5, 2012 and is on a month to month tenancy thereafter.
F-15
The Company’s rent expense for the year ended December 31, 2012 and 2011 was $2,266 and $831, respectively.
Note 13. Common Stock
All share amounts have been restated to reflect a 1 for 270 reverse stock split affected on January 15, 2011 and, the subsequent 20 for 1 Forward Split, effected on June 13, 2011.
Pursuant to the reverse merger the Company issued 27,030,000 shares of common stock to Shrink Nanotechnologies, Inc at a $0.0019 price per share. Reverse merger accounting requires these shares to be shown retroactively as though a stock split had occurred. Therefore this issuance adjusted the initial issuance to the founders at inception.
Pursuant to this same reverse acquisition, the statement of stockholders equity is then adjusted to reflect the shareholders of the public entity (89,415,760 common shares at $0.00573 per share) while establishing the equity of the parent Company. The retained deficit of the parent Company is removed and reorganized to reflect only the history of the subsidiary.
In June 2011, the Company issued 12,227,560 shares of common stock to Income Opportunity Capital, LLC, at $ 0.01712 per share, as an automatic conversion of $209,397 of principal balance and accrued interest of a convertible note.
In June 2011, the Company issued 6,750,000 shares at $0.00296 per share of common stock to Dan Landry, in exchange for $20,000 of cash paid to the Company prior to the Share Exchange and as founder shares in the new operations of BlackBox Semiconductor, Inc., a Delaware corporation.
In June 2011, the Company issued 250,000 shares at $0.049 per share of common stock valued at $12,250 to Ford Sinclair, our president and a member of our board of directors, as payment for services rendered.
In August 2011, the Company received conversion notices related to convertible debt with principal balances totaling $72,148 and accrued interest of $601. The common share equivalent for the conversion demands is equal to 19,022,609 common shares at $0.003822 per share. The shares were issued in October 2011.
On August 22, 2012, the Company converted $22,000 of accounts payable to Luis J. Leung, the CEO of the Company, into 44,000,000 shares of common stock at $0.0026 per share. The shares issued, based on the previous day’s closing price, were valued at $114,400. A loss on conversion of $92,400 was recorded accordingly (see Note 8).
At December 31, 2012, 198,245,929 shares of common stock were issued and outstanding, not including 380,000 shares issuable pursuant to subscription agreements executed and accepted in the end of 2012 for an aggregate of 198,615,929 shares. The 380,000 shares issuable are related to a sale of 62,500 shares of restricted common shares to a non-US based investment fund, for $25,000, or $0.40 per share on October of 2012 and 317,500 Shares for consideration of $125,000, or $.3937 per share, sold on December 7 of 2012. As of April 15, 2013, these shares were not issued.
Note 14. Preferred Stock
Pursuant to the reverse acquisition, the statement of stockholders equity is adjusted to reflect the preferred shareholders of the public entity (5,000,000 preferred shares) while establishing the equity of the parent Company. The retained deficit of the parent Company is removed and reorganized to reflect only the history of the subsidiary.
At December 31, 2012, the Company was authorized to issue 25,000,000 shares of Preferred Stock, par value $.001, of which 5,000,000 shares have been issued and are currently outstanding.
The Series A Preferred shares are non-convertible and maintain a 250 for one voting preference such that a holder of the Series A Preferred shall be entitled to vote 250 shares for every one share of Series A Preferred held by such shareholder.
Note 15. Work in Progress
As of December 31, 2012, the Company had $20,125 in work in progress related to the development of multiple patents. The Company expects to continue investing in the development of new patents as part of its change in strategy.
Note 16. Subsequent Events
On January 25, 2013 the Company paid $5,000 to a law firm for fees related to acquisition of patents. Since the patents have yet been issued, the Company has classified this disbursement as Work in Progress.
On February 20, 2013 the Company paid $31,5000 to a law firm for fees related to acquisition of patents. Since the patents have yet been issued, the Company has classified this disbursement as Work in Progress.
On January 23, 2013, the Company paid $ 7,500 for the development of a new website. The Company shall disburse an estimated additional $10,000 for the completion of the website.
F-16
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
(1)
On January 29, 2013, the Company received notice from its independent registered public accounting firm, Hamilton, P.C. (the “Former Accountant”) that the Former Accountant was discontinuing their audit practice.
The report of the Former Accountant as of and for the fiscal years ended December 31, 2011 (and December 31, 2010) contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Company ability to continue as a going concern. During the fiscal years ended December 31, 2011 and 2010, and through each subsequent period, there have been on disagreements with Former Accountant on an matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Former Accountant would have caused them to make reference thereto in connection with their report on the financial statements for such years.
(2)
Effective February 9, 2013, the Company engaged DKM Certified Public Accountants (“DKM”) to serve as the Company’s new independent registered public accounting firm. The engagement of DKM as the Company’s new independent registered public accounting firm was approved by the Company’s Board of Directors.
Item 9A. Controls and Procedures.
(A)
Evaluation of disclosure controls and procedures.
We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K is recorded, processed, summarized and reported within the time periods specified by the SEC. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. In our original filing of this Form 10-K, our management did not include a firm conclusion regarding their belief that the disclosure controls and procedures were effective. At such time, management was of the belief that such disclosure controls and procedures were effective, however, considering such conclusion was not included in the original filing of this Form 10-K, for that reason and that reason alone, management believes that, as of December 31, 2012, the Company’s disclosure controls and procedures were ineffective. The Company plans to remedy this issue by completing their assessment of internal controls over financial reporting in a timely manner in their next 10-K for the year ending December 31, 2012 and including a firm conclusion as to such assessment.
(B)
Management’s report on internal controls over financial reporting.
The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act). Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that assessment, management believes that, as of December 31, 2012, the Company’s internal control over financial reporting was ineffective based on the COSO criteria, due to the following material weakness listed below.
Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the year ended December 31, 2012, the company internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact these duties were performed oftentimes by the same people, a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
Insufficient corporate governance policies. Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management.
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We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies and we intend to consider the results of our remediation efforts and related testing as part of our next year-end assessment of the effectiveness of our internal control over financial reporting.
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 Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
(C)
Changes in internal controls over financial reporting.
During the period covered by this report, there were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Not Applicable.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
Directors and Executive Officers.
The following table sets forth, as of the date of this report, name, age and other information of our current director and executive officers, as well as persons that were executive officers or directors at any time in 2011.
Officers and Directors
|
|
|
|
|
Name |
| Age |
| Position |
|
|
|
|
|
Luis Leung |
| 44 |
| Principal Executive Officer, Principal Financial Officer, and Secretary |
Ford Sinclair |
| 45 |
| Director |
Milene Andrade |
| 34 |
| Director, General Counsel |
The backgrounds of our directors, executive officers and significant employees are as follows:
Luis Leung, Chief Executive Officer, Principal Financial Officer, Secretary, Director
Mr. Leung, 43, currently maintains an international software development company and Microsoft Partner, Advent Corporation, which he co-founded in 2001 and which has since become one of the largest Microsoft Great Plains implementation practices in Texas. Mr. Leung is and has been the CFO and Systems Architect of Alba Spectrum Corporation since March of 2004. Mr. Leung previously served in various executive officer and director capacities of Shrink Nanotechnologies, Inc., an entity affiliated with the Company and its control persons, between December 16, 2006 and March 29, 2009, at which time he resigned as director and from all other positions. Mr. Leung also served as a director of PNG Ventures, Inc., a Delaware corporation, between May 2008 and December 7, 2008. Between 1997 and 2001 Mr. Leung was a consultant to companies such as Hein & Associates, LLP, Houston, TX (Project Manager), and Grant Thronton, LLP as Consulting Manager where he facilitated various multi- country technology system implementations. Prior to such time and between 1988 and 1997, Mr. Leung worked in various capacities, and ultimately as CIO and Comptroller, for Smar Enterprizes, a Brazilian based company, for which he help establish US, European and Singapore operating divisions. Mr. Leung received a B.S. degree in Science from instituto Tecnologico Aerospacial, Brazil in 1987.
Prior to joining the Company, Mr. Leung provided IT and related services to the Company, specifically, installation and configuration of server infrastructure, implementation of Accounting Systems, transfer of accounting information to new servers and hosting services.
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Ford Sinclair, President
Mr. Sinclair is our President and has been since April of 2010. Mr. Sinclair is not a full time employee and has other outside commitments. Mr. Sinclair brings an impressive background of success to the Company, specializing in business development, mergers and acquisitions, and new market development for a variety of companies. In 2000 through to 2004, Mr. Sinclair has been directly responsible for completing successful acquisitions of Global Golf Holdings. Since 2004, Mr. Sinclair has been the President and CEO for Banis Business Development Group, a management and consulting firm. Mr. Sinclair currently also serves as Director for Ice House Data Centers, Inc. Mr. Sinclair does not beneficially own any Company securities. Mr. Sinclair devotes approximately 10-20 hours per week to the Company’s business and management.
Milene Andrade
Ms. Milene Andrade, 34, was appointed to the board as of August 15, 2012. Ms. Andrade was a senior partner at Fagundes Advogados in Sao Paulo, Brazil since 2002. She has extensive experience in complex legal matters and tax law in Brazil and is admitted to practice law in Brazil. Ms. Andrade worked for the Attorney General of Ribeirao Preto, SP, Brazil from 2001 to 2002. Ms. Andrade received her law degree from Universidade Paulista, Brazil in 2001.
Audit Committee.
We do not have an audit committee. We do not have a financial expert serving on our board of directors.
Code of Ethics
We have adopted a Code of Ethics and Business Conduct on December 31, 2007 authorizing the establishment of a committee to ensure that our disclosure controls and procedures remain effective. Our Code also defines the standard of conduct expected by our officers, directors and employees.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of our common stock. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. To our knowledge, based solely on review of the copies of such reports furnished to us for the year ended December 31, 2012, the following Section 16 Reports were not filed timely: a Form 3 with respect to Mr. Leung at appointment and upon receipt of shares in mid-2012 was filed late and Ms. Andrade, a director appointed in mid 2012 has not filed a Form 3. In addition, a Form 4 describing divestiture by a former affiliate of almost all of his holdings resulting in him no longer being subject to the Section 16 reporting requirements in April of 2012, was filed late.
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Item 11. Executive Compensation
The following table summarizes all of the annual compensation paid to all of the company’s named executive officers for the years ended December 31, 2012 and 2011:
Name and Position | Year | Salary ($) | Bonus ($) | Stock Awards $ | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total (Shares) |
|
|
|
|
|
|
|
|
|
|
Luis Leung(1) | 2012 | 24,000(1) | - | - | - | - | - | - | - (1) |
Principal Executive Officer (commencing November 19, 2011) | 2011 | 4,000(1) | - | - | - | - | - | - | - |
|
|
|
|
|
|
|
|
|
|
David Duncan(2) | 2011 | 60,000(2) | - | - | - | - | - | - | - |
Former Principal Financial and Executive |
|
|
|
|
|
|
|
|
|
Officer (April 2011 and Resigning November 19, 2011) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ford Sinclair.(3) | 2011 | - | - | 12,250 | - | - | - | 12,250 | 250,000 |
President | 2010 | - | - | - | - | - | - | - | - |
|
|
|
|
|
|
|
|
|
|
Milene Andrade | 2012 | - | - | - | - | - | - | - | - |
Director, General Counsel |
|
|
|
|
|
|
|
|
|
(1)
Mr. Luis Leung was appointed November 19, 2011, after the resignation of Mr. Duncan. Mr. Leung has an employment agreement with the Company where he is entitle to receive a salary of $2,000 per month through December 31, 2012 and $5,000 per month thereafter (the “Base Salary”), in accordance with the general payroll practices of the Company. To date the salary accrues at a rate of $2,000 per month. Effective as of August 22, 2012, the Company issued 44,000,000 of its restricted common shares to Luis J. Leung, a member of the Company’s board of directors, and the Company’s Chief Executive Officer, in exchange for discharge of all services rendered between November 14, 2012 and July 31, 2012, valued at $ 22,000.
(2)
Mr. Duncan was appointed February 2011, and received month to month compensation of $13,000 through May 13, and thereafter, received payment of compensation of $60,000 and is due a total of $45,720 which remains in dispute.
(3)
On April 1, 2010, Mr. Ford Sinclair was appointed as our Chief Executive Officer, Secretary, Treasurer and sole Director, and, at such time, was principal financial and principal executive officer of the Company. Mr. Sinclair received 250,000 shares in June 2011 as compensation for services from April 1, 2011 through June 2011. The presumed value of these shares was $12,250. Mr. Sinclair was the only board member at the time of this issuance.
Option Exercise In Last Fiscal Year And Fiscal Year End Option Values
Our executive officers were not issued any options which could have been exercised during the fiscal years ended December 31, 2012 or 2010.
Duncan Consulting Agreement
On February 15, 2011, the Company entered into a Consulting Agreement with David Duncan. The Duncan Consulting Agreement retains Mr. David Duncan as a consultant through May 19, 2011, with compensation of $6,000 for the first month ended March 17, 2011, and $13,000 for each month ended April 17 and May 18, 2011, respectively. Mr. Duncan’s services to be completed during the term of the engagement include, among other things, completion of a website, preparation and refinement of the Company’s solar and semiconductor business plan and investor presentations, and assistance in retention of executive management and strategic investors.
35
Luis Leung Compensation Agreement
Mr. Luis Leung was appointed November 19, 2011, after the resignation of Mr. Duncan. Mr. Leung has an employment agreement with the Company where he is entitle to receive a salary of $2,000 per month through December 31, 2012 and $5,000 per month thereafter (the “Base Salary”), in accordance with the general payroll practices of the Company.
Effective as of August 22, 2012, the Company issued 44,000,000 of its restricted common shares to Luis J. Leung, in exchange for discharge of all services rendered between November 14, 2012 and July 31, 2012, valued at $ 22,000.00.
Directors' Compensation
Our directors have not received any compensation for the year ended December 31, 2012. All Directors during the fiscal year ended December 31, 2011 have been listed in the Executive Compensation table above. All directors may receive reimbursement for reasonable out-of-pocket expenses in attending board of directors meetings.
Compensation Committee
We have not formed an independent compensation committee.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding the beneficial ownership of common stock of the Company as of January 16, 2012 by: (i) each person who, to the Company’s knowledge, owns more than 5% of its common stock; (ii) each of the Company’s named executive officers and directors; and (iii) all of the Company’s named executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules and regulations of the Commission. If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of January 16, 2012, we treat the common stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate that stockholder’s percentage ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power with respect to shares of common stock and the address is c/o the Company, 1462 Erie Blvd, Schenectady, New York, 12305. As of April 24, 2012, the Company had a total of 198,245,929 shares of Common Stock issued and outstanding.
|
|
|
|
|
Name and Address of Owner |
| Shares |
| % |
Directors and Officers | ||||
Luis Leung |
| 44,000,000 |
| 22.2% |
Ford Sinclair |
| 250,000 |
| * |
Milene Andrade |
| - |
| * |
David Duncan (resigned Nov. 19, 2011) |
| - |
| * |
Total of Directors and Officers as a Group |
| 44,250,000 |
| 23.4% |
5% Security Holders | ||||
Manuel Suquilanda (3) |
| 80,000,000 (4) |
| 40.35% |
|
|
|
|
|
Total (includes 5% holders) |
| 198,245,929 |
| 63.74% |
*Under 1%
(1)
In computing the outstanding shares of common stock, the Company has excluded all shares of Common Stock subject to options, warrants or other securities that are not currently exercisable or convertible within 60 days and are therefore not deemed to be outstanding and beneficially owned by the person holding the options, warrants or other securities for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. For each beneficial owner above, any options, warrants or other derivative securities, exercisable or convertible within 60 days have been included in the number of shares above and in the numerator denominator for such person.
(2)
The address for Luis Leung, Ford Sinclair and Ms. Milene Andrade is, c/o the Company at 1462 Erie Boulevard Schenectady, New York 12305.
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(3)
Indicates shares held by Rum Punch Partners, Ltd., a Texas corporation, which is a fund controlled by its general partner Mango Bay Management, LLC and managed by Mr. Manuel Suquilanda its manager, and an indirect beneficial owner of Mango Bay Management, LLC. Mr. Suqilanda is a limited partner of RP Partners and disclaims the majority of its beneficial and economic ownership of RP Fund. The address for Mr. Suquilanda, MB Management and RP Partners is: c/o Mango Bay Management, LLC, Avenida Republica Del Salvador, N35-82, Portugal, EDF Twin Towers Pico 8.
(4)
Includes 80,000,000 shares of common stock. Does not include (i) 5,000,000 shares of non-convertible Series A Preferred Stock which controls the Company and its board as a result of the ability to vote on a 250 for 1 basis with the common stock holders of the Company and to veto certain actions of the Board. Manuel Suquilanda and MB Management disclaims all beneficial ownership of shares of the Company held by Shrink.
Changes of Control and Certain Conflicts of Interest
As a result of the ownership and control by MB Partners and its control persons of over 40% of the voting stock of the Company, in addition to the 5,000,000 shares of Series A Preferred Stock which votes on a 250 – for- 1 basis with the common stock and caries veto and consent rights, such persons have the ability to control all aspects of our business and operations, as well as the right to veto actions taken by the board or other shareholders. As a result, and among other things, MB Partners may add or remove officers unilaterally, amend our certificate of incorporation from time to time, change our capitalization, cause the Company to purchase, acquire, or encumber assets from time to time, or to make and receive loans or equity investments and, to take any and all other actions that are in their best interest without regard for other shareholders, and without any notice to, or consent of, members of the board of directors, the Company itself, or any other shareholders.
MB Partners may also cause the Company to make loans or accept loans from time to time, and, as a result of indebtedness owed to them, may foreclose on assets of the Company or its business. See “Item 13. Certain Relationships and Related Transactions and Director Independence.” below for additional information relating to conflicts of interest.
MB Partners may also sell, transfer or assign any of their shares, their “super voting” Series A Preferred Stock, or dilutive NFM Note or Secured NFM Note, without any consent of the Company, its board or any other shareholders. Any of the foregoing actions could cause immediate and substantial dilution, and/or a change of control of the Company.
We do not have any form of shareholder voting agreement or voting trust with respect to any securities owned by RP Partners by its general partner MB Partners or its management which has absolute control over securities held by it. Accordingly, such persons can also effect a change of control without notice to or consent from the Company, its shareholders and management.
As a result of the foregoing control, MB Partners has inherent conflicts of interest in that it has acquired its securities at a low price and can exert control the Company. Persons should not consider an investment in the Company unless they are willing to entrust full control of our operations over to MB Partners and its management.
Item 13. Certain Relationships and Related Transactions and Director Independence.
Transactions with Related Persons, Promoters and Certain Control Persons
Shrink was, at all relevant times through April 5, 2012, an entity that is indirectly controlled by and affiliated Noctua Fund Manager, LLC and with, Messrs. Mark L. Baum, Esq.. After such time, beneficial interests in securities or convertible debt of the Company and Shrink where acquired by RP Partners and indirectly by its manager MB Managment. All notes and securities were subsequently sold and assigned to AF Fund and MB Management, respectively.
In addition, Mr. Leung has worked for other entities affiliated with, or controlled by such persons. Until April of 2012, NFM owned 68% of our common stock, in addition to all 5,000,000 shares of series A Preferred Stock that vote on a 250 for 1 basis with our common stock. Therefore, Until early 2012, NFM had full control over the Company and its management (See Certificate of Designation- Series A Preferred Stock” and preceding sub sections relating to indebtedness to NFM above commencing page 20, “Risk Factors”, above, Security Ownership of Certain beneficial Owners and Management” and “Changes of Control” below). Accordingly, all consents and approvals on the part of Shrink and the Company were approved by, and negotiated by, disinterested members of the board of directors of Shrink.
The Company had, during or before 2011, entered into a number of transactions with NFM and its affiliates with respect to its debt restructuring, as well as the BlackBox Acquisition, all of which have a value that exceeds $120,000. See also, the subsection titled “Related Parties” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”, above. The following is a brief list and description of transactions with related persons:
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BlackBox Related Party Transaction
As consideration for the acquisition of BlackBox, we (i) originally agreed to pay $75,000 in cash within 60 days of the Closing Date, which payment due date was subsequently extended to December 31, 2012, and (ii) issued an aggregate of 27,030,000 shares of our common stock, par value $0.001 per share to Shrink (the “Exchange Shares”), or, approximately 19% of our outstanding stock as of the date immediately after the Closing Date. In exchange therefore, we received (i) all of the shares of BlackBox resulting in BlackBox becoming our wholly owned subsidiary, and (ii) 14,000,000 shares of the common stock, par value $0.001 per share, of Shrink (the “Shrink Consideration Shares”). The $75,000 payment due in December has since been reduced to $12,500 and paid in full and discharged in October 2011.
Modification of Existing 2010 Secured Note
Effective as of January 31, 2011, the Company entered into a Loan Modification with NFM, which subsequently assigned to the AF Fund. Pursuant to the Loan Modification, the Company amended and replaced the previously existing 5% Secured Convertible Promissory Note Series 04012010-A1 (the “Original Secured NFM Note”) issued to NFM on April 1, 2010, in the principal amount of $38,168.38, with a new note, in the principal amount of $45,881.00 due on March 31, 2011 (as amended, the “2010 Secured Note”). The Loan Modification reflects additional principal and certain other accommodations of NFM so as to reflect, specifically:
·
an additional $7,000 loan disbursement made on January 11, 2011 and interest since April 1, 2010 as capitalized onto principal on the 2010 Secured Note,
·
an extended due date of March 31, 2011 for the entire amount due under the 2010 Secured Note, and
·
a fixed conversion price of $0.00045 per share for all outstanding principal and interest, which price only adjusts for corporate events such as stock splits, combinations or similar events.
As of the issuance date, the 2010 Secured Note was originally convertible into 101,957,760 shares of the Company’s Common Stock. No other material changes have been made to the 2010 Secured Note. On March 22, 2011, and as part of an agreement to reduce the Company’s debt, NFM agreed to convert $36,000 of principal and interest under the Secured NFM Note, into 80,000,000 shares of the Company’s restricted common stock, and in October, the Company issued 15,173,156 common shares for payment of principal balance totaling $6,602 and accrued interest of $226, leaving approximately $3,780 of principal and interest outstanding as of December 31, 2012 that are convertible into 8,400,000 shares. See the “Liquidity and Debt Restructurings in 2011” subsection of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,.” above for more information on this transaction.
The 2010 Secured Note and Unsecured Note were subsequently, in April of 2012, transfered to AF Finanz, which, based on information provided to the Company and otherwise than as related to the shares underlying the note, is not an affiliate of the Company, Shrink, Mr. Baum or Mr. Panter.
Settlement of Outstanding Debt; Issuance of Unsecured NFM Note
As of March 15, 2011, the Company settled outstanding debt with NFM and issued to NFM, an unsecured convertible note in the principal amount of $274,000 and accruing interest at 2% per year, in order to settle and accrue $274,000 of past due account payables owed to NFM. The Unsecured NFM Note was to become due in March of 2012, but was converted early in accordance with its terms, in exchange for 16,000,000 common shares upon conversion of the Unsecured NFM Note and also issued 77,013 shares in exchange for $1,319 of interest thereon. See the “Liquidity and Debt Restructurings in 2011” subsection of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”, above for more information on this transaction.
Item 14. Principal Accounting Fees and Services.
Audit Fee
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal account for the audit of our annual financial statement and review of financial statements included in our 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $ 12,000 for fiscal year ended 2012 and $12,500 for fiscal year ended 2011.
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Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported above were $-0- for fiscal years ended 2012 and 2011.
Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were approximately $-0- for fiscal year ended 2012 and consisted of tax compliance services and $-0- for fiscal year ended 2011 and consisted of tax compliance services.
All Other Fees
There were no other aggregate fees billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.
Our audit committee which consists of our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
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Item 15. Exhibits.
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|
|
Exhibit # |
| Title |
3.1(i) |
| Articles of Incorporation. (Attached as an exhibit to our Form 10-SB filed with the SEC on December 17, 2007 and incorporated herein by reference). |
3.1(ii) |
| Certificate of Amendment to Articles of Incorporation dated July 7, 2003 (Attached as an exhibit to our Form 10-SB filed with the SEC on December 17, 2007 and incorporated herein by reference). |
3.1(iii) |
| Certificate of Amendment, filed June 9, 2011, relating to Forward Split (Incorporated by reference from Exhibit 3.1 to Current Report on Form 8-K, Date of Event June 3, 2011) |
3.1(iv) |
| Articles of Merger, as filed with the Secretary of State of the State of Nevada on December 10, 2012, with respect to change of name of Company from BlackBox Semiconductor, Inc. to Vision Dynamics Corporation. |
3.2 |
| Bylaws (Attached as an exhibit to our Form 10-SB filed with the SEC on December 17, 2007 and incorporated herein by reference). |
10.1 |
| Letter of Intent, dated February 23, 2011, among the Registrant, Shrink Nanotechnologies, Inc. and BlackBox Semiconductor, Inc. (Delaware) (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.2 |
| Loan Modification Letter, dated January 31, 2011, between the Registrant and Noctua Fund Manager, LLC (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.3 |
| Amended Secured Convertible Promissory Note issued to Noctua Fund Manager, LLC on January 31, 2011 (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.4 |
| Letter Agreement, dated March 15, 2011, between the Registrant and Noctua Fund Manager, LLC (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.5 |
| Unsecured Convertible Promissory Note issued to Noctua Fund Manager, LLC on March 15, 2011 (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.6 |
| Consulting Agreement, dated February 15, 2011, between the Registrant and David Duncan (Attached as an exhibit to our Form 8-K filed with the SEC on March 28, 2011and incorporated herein by reference). |
10.7 |
| Share Exchange Agreement between the Company, BlackBox Semiconductor, Inc., and Shrink Nanotechnologies, Inc, as seller, dated as of June 3, 2011. (Incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K, Date of Event June 3, 2011) |
10.8 |
| BlackBox Semiconductor, Inc. 2011 Stock Incentive Plan, adopted June 13, 2011. (Incorporated by reference from Exhibit 10.2 to Current Report on Form 8-K, Date of Event June 3, 2011). |
10.9 |
| License Agreement between Shrink Nanotechnologies, Inc., BlackBox Semiconductor, Inc., and the University of Chicago, dated as of November 30, 2011. (Incorporated by reference from Exhibit 10.3 to Current Report on Form 8-K, Date of Event June 3, 2011). |
10.10 |
| Form of Securities Purcvhase Agreement, Dated as of October 13, 2012 (Incorporation by reference from Current Report on Form 8-K filed October 18, 2012) |
14.1 |
| Code of Ethics. (Attached as an exhibit to our Form 10-KSB filed with the SEC on October 14, 2008 and incorporated herein by reference). |
21 |
| Subsidiaries |
31.1 |
| Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
| Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
| Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 |
| Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
40
Signatures
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report on Form 10-K/A for the fiscal year ended December 31, 2012, to be signed on its behalf on March 5, 2014, to be signed on its behalf by the undersigned, and in the capacities indicated, thereunto duly authorized.
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| VISION DYNAMICS CORPORATION | |
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| (Registrant) | |
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| By: | /s/ Luis Leung |
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| Luis Leung |
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| Chief Executive Officer, Principal Executive |
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| Officer, Principal Accounting Officer and |
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| Principal Financial Officer |
Directors’ Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 5, 2014 |
| By: | /s/ Luis Leung |
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| Name: Luis Leung |
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| Titles: Director, Chief Executive Officer, |
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| Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer |
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Date: March 5, 2014 |
| By: | /s/ Milene Andrade |
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| Name: Milene Andrade |
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| Titles: Director |