Attached files
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EX-31.2 - CERTIFICATION - DIRECTVIEW HOLDINGS INC | ex31-2.htm |
EX-31.1 - CERTIFICATION - DIRECTVIEW HOLDINGS INC | ex31-1.htm |
EX-32.1 - CERTIFICATION - DIRECTVIEW HOLDINGS INC | ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
For the
quarterly period ended September 30, 2009
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT
For the
transition period from __________ to __________
COMMISSION
FILE NUMBER: 000-53741
DIRECTVIEW HOLDINGS,
INC.
(Name
of Registrant as specified in its charter)
DELAWARE
|
20-5874633
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
of organization)
|
Identification
No.)
|
7700 West Camino Real, Suite
403, Boca Raton, FL 33443
(Address
of principal executive office)
(561)
750-9777
Not
applicable
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
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 [√] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes [ ] No [
]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
|
[ ]
|
Accelerated
filer
|
[ ]
|
Non-accelerated
filer
(Do
not check if smaller reporting company)
|
[ ]
|
Smaller
reporting company
|
[√]
|
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act) Yes [ ] No [√]
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date. 5,411,579 shares of common
stock are issued and outstanding as of November 11, 2009.
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
FORM
10-Q
September
30, 2009
TABLE
OF CONTENTS
Page
No.
|
||
PART
I. - FINANCIAL INFORMATION
|
||
Item
1.
|
Financial
Statements
Consolidated
Balance Sheets as of September 30, 2009 (Unaudited) and December 31,
2008
Consolidated
Statements of Income for the Three and Nine Months Ended September 30,
2009 and 2008 (unaudited)
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30, 2009 and
2008 (unaudited)
Notes
to Unaudited Consolidated Financial Statements.
|
4
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
16
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
25
|
Item
4T.
|
Controls
and Procedures.
|
25
|
PART
II - OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings.
|
25
|
Item
1A.
|
Risk
Factors.
|
25
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
25
|
Item
3.
|
Default
upon Senior Securities.
|
25
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
25
|
Item
5.
|
Other
Information.
|
25
|
Item
6.
|
Exhibits.
|
26
|
OTHER
PERTINENT INFORMATION
Unless
specifically set forth to the contrary, "DirectView," "we," "us," "our" and
similar terms refer to DirectView Holdings, Inc., a Delaware corporation, and
each of our subsidiaries.
When used
in this report the following terms have the following meanings related to our
subsidiaries.
|
·
|
“DirectView
Video” refers to DirectView Video Technologies, Inc. a company organized
under the laws of the state of
Florida.
|
|
·
|
“DirectView
Security” refers to DirectView Security Systems, Inc. a company organized
under the laws of the state of
Florida.
|
|
·
|
“Ralston”
refers to Ralston Communication Services, Inc. a company organized under
the laws of the state of Florida.
|
|
·
|
“Meeting
Technologies” refers to Meeting Technologies Inc., a company organized
under the laws of the state of
Delaware.
|
2
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain
statements in this report contain or may contain forward-looking statements that
are subject to known and unknown risks, uncertainties and other factors which
may cause actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. These forward-looking statements were based on
various factors and were derived utilizing numerous assumptions and other
factors that could cause our actual results to differ materially from those in
the forward-looking statements. These factors include, but are not limited to,
our ability to raise sufficient capital to fund our ongoing operations and
satisfy our obligations as they become due, our ability to generate any
meaningful revenues, our ability to compete within our market segment, our
ability to implement our strategic initiatives, economic, political and market
conditions and fluctuations, government and industry regulation, interest rate
risk, U.S. and global competition, and other factors. Most of these factors are
difficult to predict accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any forward-looking
statements that may be made herein. Readers are cautioned not to place undue
reliance on these forward-looking statements and readers should carefully review
this report in its entirety, as well as our annual report on Form 10/A for the
year ended December 31, 2008 including the risks described in Part I. Item 1A.
Risk Factors of that report. Except for our ongoing obligations to disclose
material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this report, and you
should not rely on these statements without also considering the risks and
uncertainties associated with these statements and our business.
3
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
(1) | |||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ | 2,989 | $ | - | ||||
Accounts
Receivable - Net
|
37,215 | 34,835 | ||||||
Other
Current Assets
|
23,778 | 23,344 | ||||||
Total
Current Assets
|
63,982 | 58,179 | ||||||
PROPERTY
AND EQUIPMENT - Net
|
14,293 | 18,275 | ||||||
OTHER
ASSETS
|
8,901 | 8,901 | ||||||
Total
Assets
|
$ | 87,176 | $ | 85,355 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Bank
Overdraft
|
$ | - | $ | 1,575 | ||||
Notes
Payable
|
62,000 | 17,000 | ||||||
Accounts
Payable
|
386,715 | 323,933 | ||||||
Accrued
Expenses
|
701,040 | 607,441 | ||||||
Deferred
Revenue
|
8,542 | 9,333 | ||||||
Due
to Related Parties
|
140,406 | 451 | ||||||
|
||||||||
Total
Current Liabilities
|
1,298,703 | 959,733 | ||||||
LONG-TERM
LIABILITIES:
|
||||||||
Note
Payable
|
- | 45,000 | ||||||
Deferred
Revenue
|
865 | 2,152 | ||||||
Due
to Related Parties
|
- | 55,251 | ||||||
Total
Liabilities
|
1,299,568 | 1,062,136 | ||||||
STOCKHOLDERS'
DEFICIT:
|
||||||||
Preferred
Stock ($0.0001 Par Value; 5,000,000 Shares Authorized;
|
||||||||
None
Issued and Outstanding)
|
- | - | ||||||
Common
Stock ($0.0001 Par Value; 100,000,000 Shares Authorized;
|
||||||||
5,378,329
and 25,500,032 shares issued and outstanding at
|
||||||||
September
30, 2009 and December 31, 2008, respectively)
|
538 | 2,550 | ||||||
Additional
Paid-in Capital
|
10,828,517 | 10,797,802 | ||||||
Accumulated
Deficit
|
(12,041,447 | ) | (11,777,133 | ) | ||||
Total
Stockholders' Deficit
|
(1,212,392 | ) | (976,781 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 87,176 | $ | 85,355 |
(1)
Derived from Audited Financial Statements
|
See
accompanying notes to consolidated financial
statements.
|
4
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
For
the Three Months Ended
|
For
the Nine Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
NET
SALES
|
$ | 35,873 | $ | 81,553 | $ | 107,401 | $ | 188,622 | ||||||||
COST
OF SALES
|
3,502 | 11,060 | 38,553 | 50,474 | ||||||||||||
GROSS
PROFIT
|
32,371 | 70,493 | 68,848 | 138,148 | ||||||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
Depreciation
|
1,326 | 1,313 | 3,981 | 3,939 | ||||||||||||
Bad
Debt Expenses
|
1,398 | - | 1,398 | 7,000 | ||||||||||||
Professional
Fees
|
(14,790 | ) | 990 | 21,496 | 104,595 | |||||||||||
Compensation
and Related Taxes
|
53,127 | 53,939 | 177,983 | 236,235 | ||||||||||||
Other
Selling, General and Administrative
|
58,516 | 72,488 | 159,804 | 199,951 | ||||||||||||
Total
Operating Expenses
|
99,577 | 128,730 | 364,662 | 551,720 | ||||||||||||
LOSS
FROM OPERATIONS
|
(67,206 | ) | (58,237 | ) | (295,814 | ) | (413,572 | ) | ||||||||
OTHER
INCOME (EXPENSES):
|
||||||||||||||||
Other
Income
|
- | - | 38,345 | 9,131 | ||||||||||||
Interest
Expense
|
(2,188 | ) | (1,785 | ) | (6,845 | ) | (5,617 | ) | ||||||||
Total
Other (Expense) Income
|
(2,188 | ) | (1,785 | ) | 31,500 | 3,514 | ||||||||||
NET
LOSS
|
$ | (69,394 | ) | $ | (60,022 | ) | $ | (264,314 | ) | $ | (410,058 | ) | ||||
NET
LOSS PER COMMON SHARE:
|
||||||||||||||||
Basic
and Diluted
|
$ | (0.01 | ) | $ | - | $ | (0.01 | ) | $ | (0.02 | ) | |||||
WEIGHTED
AVERAGE COMMON SHARES
|
||||||||||||||||
OUTSTANDING
- Basic and Diluted
|
12,016,000 | 25,000,000 | 20,974,999 | 25,000,000 |
See
accompanying notes to consolidated financial statements.
5
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
For
the Nine Months Ended
|
||||||||
September
30,
|
||||||||
2009
|
2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
Loss
|
$ | (264,314 | ) | $ | (410,058 | ) | ||
Adjustments
to Reconcile Net Loss to Net Cash Flows
|
||||||||
Used
in Operating Activities:
|
||||||||
Depreciation
|
3,982 | 3,940 | ||||||
Common
stock issued for services
|
31,250 | 50,000 | ||||||
Cancellation
of common stock issued for services
|
(50,000 | ) | - | |||||
Bad
debt expenses
|
1,398 | 7,000 | ||||||
(Increase)
Decrease in:
|
||||||||
Accounts
receivable
|
(3,778 | ) | (16,045 | ) | ||||
Other
current assets
|
(434 | ) | (14,940 | ) | ||||
Increase
(Decrease) in:
|
||||||||
Accounts
payable
|
62,782 | 41,359 | ||||||
Accrued
expenses
|
96,991 | 223,197 | ||||||
Customer
deposits
|
- | (26,100 | ) | |||||
Deferred
revenue
|
(2,078 | ) | (1,015 | ) | ||||
Net
Cash Flows Used in Operating Activities
|
(124,201 | ) | (142,662 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property and equipment
|
- | (232 | ) | |||||
Net
Cash Flows Used in Investing Activities
|
- | (232 | ) | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Bank
overdraft
|
(1,575 | ) | 1,925 | |||||
Proceeds
from notes payable
|
- | 110,500 | ||||||
Proceeds
from sale of common stock
|
47,453 | 15,000 | ||||||
Repayments
of related party advances
|
(790 | ) | (7,593 | ) | ||||
Due
to related parties
|
82,102 | 700 | ||||||
Net
Cash Flows Provided by Financing Activities
|
127,190 | 120,532 | ||||||
Net Increase
(Decrease) in Cash
|
2,989 | (22,362 | ) | |||||
Cash
- Beginning of Period
|
- | 23,054 | ||||||
Cash
- End of Period
|
$ | 2,989 | $ | 692 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | - | $ | - | ||||
Income
Taxes
|
$ | - | $ | - | ||||
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Issuance
of Common Stock for Notes Payable and Accrued Interest
|
$ | - | $ | 185,014 |
See
accompanying notes to consolidated financial statements.
6
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
DirectView
Holdings, Inc., (the “Company”), was incorporated in the State of Delaware on
October 2, 2006. On October 9, 2006, the Company entered into a Subsidiary Stock
Purchase Agreement with GS Carbon Trading Inc. (“GS”) formerly DirectView, Inc.,
a publicly held company. GS sold its subsidiaries to the Company in
return for the assumption by the Company of a portion of GS’ liabilities and all
trade credit and other liabilities incidental to these subsidiaries'
operations.
For
financial reporting purposes, the assets, liabilities, historical earnings
(deficits), and additional paid in capital of the acquired subsidiaries are
reflected in the Company’s financial statements.
The
Company has the following four wholly-owned subsidiaries: DirectView Video
Technologies Inc., DirectView Security Systems Inc., Ralston Communication
Services Inc., and Meeting Technologies Inc.
The
Company is a full-service provider of teleconferencing services to businesses
and organizations. The Company's conferencing services enable its clients
to cost-effectively conduct remote meetings by linking participants
in geographically dispersed locations. The Company's primary focus is to
provide high value-added conferencing services to organizations such as
professional service firms, investment banks, high tech companies, law
firms, investor relations firms, and other domestic and multinational
companies.
Basis of
presentation
The
consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US
GAAP"). The consolidated financial statements of the Company include
the Company and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in consolidation.
These financial statements should be read in conjunction with the audited
consolidated financial statements and related footnotes as of and for the year
ended December 31, 2008.
In the
opinion of management, all adjustments (consisting of normal recurring items)
necessary to present fairly the Company's financial position as of September 30,
2009, and the results of operations and cash flows for the nine months ending
September 30, 2009 have been included. The results of operations for the nine
months ended September 30, 2009 are not necessarily indicative of the results to
be expected for the full year.
7
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Use of
Estimates
In
preparing the consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statements of financial condition, and
revenues and expenses for the periods then ended. Actual results may
differ significantly from those estimates. Significant estimates made by
management include, but are not limited to, the allowance for doubtful accounts,
stock-based compensation and the useful life of property and
equipment.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. The Company places its
cash with a high credit quality financial institution. The Company’s account at
this institution is insured by the Federal Deposit Insurance Corporation
("FDIC") up to $250,000. For the nine months ended September 30, 2009 and for
the year ended December 31, 2008, the Company has not reached bank balances
exceeding the FDIC insurance limit. To reduce its risk associated with the
failure of such financial institution, the Company evaluates at least annually
the rating of the financial institution in which it holds deposits.
Fair Value of Financial
Instruments
The
Company adopted the new guidance on fair value measurements. The new guidance
clarifies the definition of fair value, prescribes methods for measuring fair
value, and establishes a fair value hierarchy to classify the inputs used in
measuring fair value as follows:
Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities available at the measurement date.
Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in
active markets, quoted prices for identical or similar assets and liabilities in
markets that are not active, inputs other then quoted prices that are
observable, and inputs derived from or corroborated by observable market
data.
Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own
assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information.
The
carrying amounts reported in the balance sheet for cash, accounts receivable,
accounts payable, accrued expenses, notes payable and due to related parties
approximate their estimated fair market value based on the short-term maturity
of these instruments. The carrying amount of the notes approximates the
estimated fair value for these financial instruments as management believes that
such notes constitute substantially all of the Company's debt and the interest
payable on the notes approximates the Company's incremental borrowing
rate.
Accounts
Receivable
The
Company has a policy of reserving for questionable accounts based on its best
estimate of the amount of probable credit losses in its existing accounts
receivable. The Company periodically reviews its accounts receivable
to determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an account
may be in doubt. Account balances deemed to be uncollectible are
charged to the bad debt expense after all means of collection have been
exhausted and the potential for recovery is considered remote. At
September 30, 2009 and December 31, 2008, management determined that an
allowance is necessary which amounted to $52,892 and $51,494, respectively.
During the nine months ended September 30, 2009 and 2008, the Company wrote-off
$1,398 and $7,000, respectively of uncollectible accounts
receivable.
Advertising
Advertising
is expensed as incurred. Advertising expenses for the nine months ended
September 30, 2009 and 2008 totaled approximately $2,570 and $2,127,
respectively.
8
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Shipping
costs
Shipping
costs are included in other selling, general and administrative expenses and
amounted to $139 and $1,078 for the nine months ended September 30, 2009 and
2008, respectively.
Property and
equipment
Property
and equipment are carried at cost. The cost of repairs and maintenance is
expensed as incurred; major replacements and improvements are
capitalized. When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition. The
Company examines the possibility of decreases in the value of fixed assets when
events or changes in circumstances reflect the fact that their recorded value
may not be recoverable. Depreciation is calculated on a straight-line basis over
the estimated useful life of the assets.
Impairment of Long-Lived
Assets
The
Company periodically reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable. The Company recognizes an impairment loss
when the sum of expected undiscounted future cash flows is less than the
carrying amount of the asset. The amount of impairment is measured as the
difference between the asset’s estimated fair value and its book value. The
Company did not consider it necessary to record any impairment charges during
the nine months ended September 30, 2009 and 2008.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities, and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Deferred tax assets are reduced by a valuation allowance, when in the
Company's opinion it is likely that some portion or the entire deferred tax
asset will not be realized.
Pursuant
to accounting standards related to the accounting for uncertainty in income
taxes, the evaluation of a tax position is a two-step process. The first step is
to determine whether it is more likely than not that a tax position will be
sustained upon examination, including the resolution of any related appeals or
litigation based on the technical merits of that position. The second step is to
measure a tax position that meets the more-likely-than-not threshold to
determine the amount of benefit to be recognized in the financial statements. A
tax position is measured at the largest amount of benefit that is greater than
50% likelihood of being realized upon ultimate settlement. Tax positions that
previously failed to meet the more-likely-than-not recognition threshold should
be recognized in the first subsequent period in which the threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
criteria should be de-recognized in the first subsequent financial reporting
period in which the threshold is no longer met. FIN 48 also provides guidance on
de-recognition, classification, interest and penalties, accounting in interim
periods, disclosures, and transition. The adoption had no effect on
the Company’s consolidated financial statements.
9
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Revenue
recognition
The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectibility is reasonably assured. When a
customer order contains multiple items such as hardware, software, and services
which are delivered at varying times, the Company determines whether the
delivered items can be considered separate units of
accounting. Delivered items should be considered separate units of
accounting if delivered items have value to the customer on a standalone basis,
there is objective and reliable evidence of the fair value of undelivered items,
and if delivery of undelivered items is probable and substantially in the
Company’s control.
The
following policies reflect specific criteria for the various revenues streams of
the Company:
Revenue
is recognized upon completion of conferencing services. The Company generally
does not charge up-front fees and bills its customers based on
usage.
Revenue
for video equipment sales is recognized upon delivery and
installation.
Revenue
from periodic maintenance agreements is generally recognized ratably over the
respective maintenance periods provided no significant obligations remain and
collectibility of the related receivable is probable.
Stock Based
Compensation
Stock
based compensation is accounted for based on the requirements of the Share-Based
Payment topic of the FASB Accounting Standards Codification. This FASB
Accounting Standards Codification requires recognition in the financial
statements of the cost of employee and director services received in exchange
for an award of equity instruments over the period the employee or director is
required to perform the services in exchange for the award (presumptively the
vesting period). The FASB Accounting Standards also requires measurement of the
cost of employee and director services received in exchange for an award based
on the grant-date fair value of the award. For the nine months ended September
30, 2009 and 2008, the Company did not grant any stock options.
Concentrations of Credit
Risk and Major Customers
Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and trade accounts receivable. The Company
places its cash with high credit quality financial institutions. Almost all
of the Company's sales are credit sales which are primarily to
customers whose ability to pay is dependent upon the industry economics
prevailing in these areas; however, concentrations of credit risk with
respect to trade accounts receivables is limited due to generally short
payment terms. The Company also performs ongoing credit evaluations of its
customers to help further reduce credit risk.
Subsequent
Events
For
purposes of determining whether a post-balance sheet event should be evaluated
to determine whether it has an effect on the financial statements for the period
ending September 30, 2009, subsequent events were evaluated by the Company as of
November 16, 2009, the date on which the unaudited consolidated financial
statements at and for the period ended September 30, 2009, were available to be
issued.
10
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Recent Accounting
Pronouncements
In June
2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally
Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB
Accounting Standards Codification (“the Codification” or “ASC”) as the official
single source of authoritative U.S. generally accepted accounting principles
(“GAAP”). All existing accounting standards are superseded. All other accounting
guidance not included in the Codification will be considered non-authoritative.
The Codification also includes all relevant Securities and Exchange Commission
(“SEC”) guidance organized using the same topical structure in separate sections
within the Codification.
Following
the Codification, the Board will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to
update the Codification, provide background information about the guidance and
provide the basis for conclusions on the changes to the
Codification.
The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification is effective for our third-quarter
2009 financial statements and the principal impact on our financial statements
is limited to disclosures as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. In order to
ease the transition to the Codification, we are providing the Codification
cross-reference alongside the references to the standards issued and adopted
prior to the adoption of the Codification.
In April
2009, the FASB issued FASB Staff Positions FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments” (ASC Topic 320-10-65).
This update provides guidance for allocation of charges for other-than-temporary
impairments between earnings and other comprehensive income. It also revises
subsequent accounting for other-than-temporary impairments and expands required
disclosure. The update was effective for interim and annual periods ending after
June 15, 2009. The adoption of FAS 115-2 and FAS 124-2 did not have a material
impact on the results of operations and financial condition.
In April
2009, the FASB issued FSP SFAS 107-1 and APB 28-1, “Interim Disclosures About
Fair Value of Financial Instruments” (ASC Topic 320-10-65). This update requires
fair value disclosures for financial instruments that are not currently
reflected on the balance sheet at fair value on a quarterly basis and is
effective for interim periods ending after June 15, 2009. The
Company’s financial instruments include cash and cash equivalents, accounts
receivable, accounts payable, accrued expenses and notes payable. At
September 30, 2009 and December 31, 2008 the carrying value of the Companies
financial instruments approximated fair value, due to their short term
nature.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC Topic 855). This
guidance is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. It is effective for
interim and annual reporting periods ending after June 15, 2009. The
adoption of this guidance did not have a material impact on our consolidated
financial statements. The Company evaluated all events and
transactions that occurred after September 30, 2009 up through November 16,
2009. During this period no material subsequent events came to our
attention.
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (ASC Topic 810-10). This updated guidance requires a qualitative approach
to identifying a controlling financial interest in a variable interest entity
(VIE), and requires ongoing assessment of whether an entity is a VIE and whether
an interest in a VIE makes the holder the primary beneficiary of the VIE. It is
effective for annual reporting periods beginning after November 15, 2009. We are
currently evaluating the impact of the pending adoption of SFAS No. 167 on our
consolidated financial statements.
11
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue
Arrangements.” This ASU establishes the accounting and reporting guidance for
arrangements including multiple revenue-generating activities. This ASU provides
amendments to the criteria for separating deliverables, measuring and allocating
arrangement consideration to one or more units of accounting. The amendments in
this ASU also establish a selling price hierarchy for determining the selling
price of a deliverable. Significantly enhanced disclosures are also required to
provide information about a vendor’s multiple-deliverable revenue arrangements,
including information about the nature and terms, significant deliverables, and
its performance within arrangements. The amendments also require providing
information about the significant judgments made and changes to those judgments
and about how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.
In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements
That Include Software Elements.” This ASU changes the accounting model for
revenue arrangements that include both tangible products and software elements
that are “essential to the functionality,” and scopes these products out of
current software revenue guidance. The new guidance will include factors to help
companies determine what software elements are considered “essential to the
functionality.” The amendments will now subject software-enabled products to
other revenue guidance and disclosure requirements, such as guidance surrounding
revenue arrangements with multiple-deliverables. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.
NOTE
2 – GOING CONCERN CONSIDERATIONS
The
accompanying consolidated financial statements are prepared assuming the Company
will continue as a going concern. At September 30, 2009, the Company
had an accumulated deficit of $12,041,447, and a working capital deficiency of
$1,234,721. Additionally, for the nine months ended September 30, 2009, the
Company incurred net losses of $264,314, and had negative cash flows from
operations in the amount of $124,201. The ability of the Company to continue as
a going concern is dependent upon increasing sales and obtaining additional
capital and financing. During the nine months ended September 30,
2009, the Company received related party advances of approximately $82,000 for
working capital purposes. Management intends to attempt to raise
additional funds by way of a public or private offering. While the
Company believes in the viability of its strategy to increase sales volume and
in its ability to raise additional funds, there can be no assurances to that
effect. The Company's limited financial resources have prevented the Company
from aggressively advertising its products and services to achieve consumer
recognition.
NOTE 3 - PROPERTY AND EQUIPMENT
Property
and equipment consisted of the following:
Estimated
life
|
September
30,
2009
|
December
31,
2008
|
|||||||
Furniture
and fixtures
|
3
years
|
$
|
2,771
|
$
|
2,771
|
||||
Leasehold
improvements
|
5
years
|
24,986
|
24,986
|
||||||
27,757
|
27,757
|
||||||||
Less:
Accumulated depreciation
|
(13,464
|
)
|
(9,482
|
)
|
|||||
$
|
14,293
|
$
|
18,275
|
For the
nine months ended September 30, 2009 and 2008, depreciation expense amounted to
$3,982 and $3,940, respectively.
12
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
4 – NOTES PAYABLE
During
the year ended December 31, 2008, the Company issued senior secured promissory
notes aggregating $85,500. These notes are payable either in cash or security
equivalent at the option of the Company. The notes payable bear 8% interest per
annum and shall be payable on April 1, 2009. The principal and accrued interest
is convertible at the option of the note holder into shares of our common stock
at a conversion price of $0.50 per share. During fiscal 2008, the Company issued
139,562 shares in connection with the conversion of principal amount of $68,500
and accrued interest of $1,280 of these notes payable. The fair value of such
shares issued amounted to approximately $69,780 or $0.50 per share. The balance
of the senior secured promissory note amounted to $17,000 as of September 30,
2009. In October 2009, the Company and the note holder agreed to extend the
maturity date from April 2009 to April 2010.
During
the year ended December 31, 2008 and 2007, the Company issued unsecured notes
payable aggregating $25,000 and $132,500, respectively. These notes are payable
either in cash or security equivalent at the option of the Company. The notes
payable bear 3% interest per annum and mature three years from the date of
issuance. The Company may prepay these notes in cash or equivalent securities at
any time without penalty. During fiscal 2008, the Company issued 230,470 shares
in connection with the conversion of principal amount of $112,500 and accrued
interest of $2,735 of these notes payable. The fair value of such shares issued
amounted to approximately $115,235 or $0.50 per share.
During
the nine months ended September 30, 2009, the Company classified $45,000 3%
unsecured notes payable from long-term to short-term. As of September 30, 2009,
notes payable - current portion amounted to $62,000.
Accrued
interest on the 3% and 8% notes payable amounted to approximately $5,045 and
$3,011 as of September 30, 2009 and December 31, 2008, respectively and is
included in accrued expenses.
Future
maturities of long-term debt are as follows:
Period
Ended
September
30, 2009
|
Year
Ended
December
31, 2008
|
|||||||
2010
(current liability)
|
$ | 62,000 | $ | 17,000 | ||||
2011
|
45,000 | |||||||
$ | 62,000 | $ | 62,000 |
NOTE
5 - STOCKHOLDERS’ DEFICIT
In April
2009, the Company issued 50,000 shares of common stock in connection with
accounting services rendered. The Company valued these common shares at the fair
market value on the date of grant at $0.50 per share or $25,000 based on the
recent selling price of the Company’s common stock which has been recognized as
professional expense.
In April
2009, the Company received proceeds of $10,000 from the sale of 20,000 shares of
the Company's common stock.
In May
2009, the Company issued 12,500 shares of common stock in connection with
business and general advisory services rendered during first quarter of fiscal
2009. The Company valued these common shares at the fair market value on the
date of grant at $0.50 per share or $6,250 based on the recent selling price of
the Company’s common stock. The Company has recorded accrued consulting expense
of $6,250 during the first quarter of fiscal 2009.
In
July 2009, the Company cancelled 20,717,500 shares of common stock previously
issued to the Company’s CEO as founder shares. In connection with the return of
the 20,717,500 shares of common stock, the Company valued the cancelled shares
at par value of $0.0001 per share and recorded it against paid in
capital.
In July
2009, the Company cancelled 100,000 shares of common stock previously issued for
professional legal service. In connection with the return of the 100,000 shares
of common stock, the Company valued the cancelled shares at fair value of $0.50
per share or $50,000 based on the recent selling price of the Company’s common
stock and recorded a corresponding decrease in professional fees during the nine
months ended September 30, 2009.
13
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
5 - STOCKHOLDERS’ DEFICIT
In July
2009, the Company entered into a Stock Purchase Agreement with Redrock
Strategies, Inc. (“Redrock”), a British Virgin Island Corporation. Pursuant to
this agreement, Redrock shall purchase up to 3,000,000 shares of the Company’s
common stock until December 31, 2010. In accordance with the Share Deposit
Escrow Agreement, the Company agreed to place in escrow 3,000,000 shares which
will be used to disburse and deliver the shares upon purchase and receipt of
proceeds. The Company shall sell the shares at a purchase price which is 10% of
the net proceeds received by Redrock from selling the Company’s common stock. As
defined in the Stock Purchase Agreement, Redrock shall assign the voting rights
of all the Company’s common stock related to this agreement to our Board of
Directors. Between August 7, 2009 and September 30, 2009, the Company received
proceeds of approximately $37,000 from the sale of 613,297 shares of the
Company's common stock.
NOTE
6 - RELATED PARTY TRANSACTIONS
Due to Related
Parties
During
2007 and 2006, the Company’s principal officer loaned $39,436 and $14,400,
respectively to the Company for working capital purposes. This debt carries 3%
interest per annum and matures in July 2010. The amount due to such related
party including accrued interest at September 30, 2009 and December 31, 2008 was
$56,440 and $55,251, respectively. As of September 30, 2009, this note was
reflected as a short term debt.
The Chief
Executive Officer of the Company, from time to time, provided advances to the
Company for operating expenses. At September 30, 2009 and December 31, 2008, the
Company had a payable to the Chief Executive Officer of the Company amounting to
$29,864 and $451, respectively. These advances are short-term in nature and
non-interest bearing.
The Chief
Financial Officer of the Company, from time to time, provided advances to the
Company for operating expenses. At September 30, 2009, the Company had a payable
to the Chief Financial Officer of the Company amounting to $4,900. These
advances are short-term in nature and non-interest bearing.
In March
2009, the Company issued a promissory note amounting to $20,000 to the Chief
Executive Officer of the Company. This note is payable in cash or security
equivalent at the option of the note holder. The note payable bears 12% interest
per annum and was payable in September 2009. In October 2009, the Company and
the Chief Executive Officer of the Company agreed to change the term of this
promissory note into a demand note.
In May
2009, the Company issued a promissory note amounting $5,000 to the Chief
Executive Officer of the Company. This note is payable in cash or security
equivalent at the option of the note holder. The note payable bears 12% interest
per annum and shall be payable in November 2009. In November 2009, the Company
and the Chief Executive Officer of the Company agreed to change the term of this
promissory note into a demand note.
In June
2009, the Company issued a promissory note amounting $22,000 to the Chief
Executive Officer of the Company. This note is payable either in cash or
security equivalent at the option of the note holder. The note payable bears 12%
interest per annum and shall be payable in June 2010.
Accrued
interest on the notes payable to the Chief Executive Officer of the Company
amounted to $2,202 as of September 30, 2009 and is included in due to related
parties in the Company’s balance sheet.
The
Company had accrued salaries payable to the Chief Executive Officer and a
Principal Officer of the Company as of September 30, 2009 and December 31, 2008
totaling to $499,084 and $404,737, respectively and has been included in accrued
expenses.
NOTE
7 - ACCRUED PAYROLL TAXES
As of
September 30, 2009, the Company recorded a liability related to unpaid payroll
taxes for the year ended December 31, 2007 to September 30, 2009 for $41,823 and
since that date through November 11, 2009 unpaid payroll taxes due is
approximately $42,000. Such amount has been included in accrued payroll expense
in the accompanying consolidated financial statements.
14
DIRECTVIEW
HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009
NOTE
8 - SUBSEQUENT EVENTS
In
October 2009, the Company received proceeds of $1,927 from the sale of 33,250
shares of the Company's common stock.
In
October 2009, an unrelated party loaned $10,000 to the Company. This loan is
payable in cash or security equivalent at the option of the holder. This loan is
non interest bearing and is due on demand.
15
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
Our
operations are conducted within two divisions:
|
∙
|
Our
video conferencing divisions which is a full-service provider of
teleconferencing products and services to businesses and organizations,
and
|
|
∙
|
Our
security division which provides surveillance systems, digital video
recording and services to businesses and organizations.
|
Our video
conferencing products and services enable our clients to cost-effectively
conduct remote meetings by linking participants in geographically dispersed
locations. Our primary focus is to provide high value-added conferencing
products and services to organizations such as commercial, government, medical
and educational sectors. We generate revenue through the sale of conferencing
services based upon usage, the sale and installation of video equipment and the
sale of maintenance agreements.
We
are also a provider of the latest technologies in surveillance systems, digital
video recording and services. The systems provide onsite and remote
video and audio surveillance. We generate revenue through the sale and
installation of surveillance systems and the sale of maintenance
agreements.
Our
company was formed in October 2006. Immediately thereafter we
acquired Ralston Communication Services and Meeting Technologies from
DirectView, Inc., a Nevada corporation of which Mr. and Mrs. Ralston were
officers and directors immediately prior to such acquisition, in exchange for
the assumption by us of these subsidiaries working capital deficiencies and any
and all trade credit and other liabilities. Both of these entities
had historically provided the video conferencing services we continue to
provide. Thereafter, in February 2007 we formed DirectView Security
Systems, Inc. and in July 2007 we formed DirectView Video. Directview
Security began offering services and products immediately from
inception.
Our net
sales are not sufficient to fund our operating expenses. We have
relied upon funds from the issuance of notes, the sale of common stock and
advances from our executive officers to provide working capital to our
company. These funds, however, are not sufficient to pay all of our
expenses nor to provide the additional capital we believe is necessary to permit
us to market our company in an effort to increase our sales. We are
always looking for opportunities with new dealers, and plan to evaluate the
market for our products throughout 2009 to determine whether we should hire
additional employees in our sales force. We seek to establish brand identity for
our company, communicate our brand and its values to investors and customers,
build a relationship and reinforce existing relationships and further trigger
recognition through telemarketing and hiring additional sales people to our
sales staff. We believe that these strategies will provide an avenue for us to
increase consumer usage of our technology, increase demand for our products and
generate revenues. No assurance can be provided that we will successfully
implement our strategy. We are subject to significant business risks and may
need to raise additional capital in order to realize and effectuate the above
strategy.
We
will need to raise approximately $500,000 in additional capital to fund our
operating expenses, pay our obligations as they become due and to market our
company. As a privately held company, our experience has demonstrated
that our ability to raise capital is generally limited. Following the
effectiveness of our registration statement, we became subject to the reporting
obligations of the Securities Exchange Act of 1934 and require us to file
quarterly and annual reports, among other filings, with the Securities and
Exchange Commission, and we hope to obtain a quotation of our common stock on
the OTC Bulletin Board. We believe that both of these actions
will increase our opportunities to raise the necessary capital to continue our
business in that there will be public information available on our company and
our financial condition and a trading market for our common
stock. There are no assurances, however, that our assumption is
correct. We may not be successful in obtaining the quotation of our
common stock on the OTC Bulletin Board and even if we are successful there are
no assurances a meaningful market for our common stock will
develop. The uncertainty in the capital markets, the small size of
our company and the low barriers to entry in our market make our company less
attractive to prospective investors and we may never be successful in raising
the needed capital. In addition, our operating expense will increase
in future periods because we will incur higher professional fees to comply with
the reporting requirements of the Securities Exchange Act of 1934. If
we are unable to raise the necessary capital, we will not be able to expand
our business and our ability to continue as a going concern will be in
jeopardy.
16
Critical
Accounting Policies and Estimates
Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses. These
estimates and assumptions are affected by management's applications of
accounting policies. Critical accounting policies for our company include
revenue recognition and accounting for stock based compensation.
Revenue
Recognition
We follow
the guidance of the Securities and Exchange Commission's Staff Accounting
Bulletin 104 for revenue recognition. In general, we record revenue when
persuasive evidence of an arrangement exists, services have been rendered or
product delivery has occurred, the sales price to the customer is fixed or
determinable, and collectibility is reasonably assured. When a customer order
contains multiple items such as hardware, software, and services which are
delivered at varying times, we determine whether the delivered items can be
considered separate units of accounting. Delivered items should be considered
separate units of accounting if delivered items have value to the customer on a
standalone basis, there is objective and reliable evidence of the fair value of
undelivered items, and if delivery of undelivered items is probable and
substantially in our control. The following policies reflect specific criteria
for our various revenues streams:
|
∙
|
Revenue
is recognized upon completion of conferencing services. We generally do
not charge up-front fees and bill our customers based on
usage.
|
|
∙
|
Revenue
for video equipment sales is recognized upon delivery and
installation.
|
|
∙
|
Revenue
from periodic maintenance agreements is generally recognized ratably over
the respective maintenance periods provided no significant obligations
remain and collectibility of the related receivable is
probable.
|
Stock
based Compensation
Stock
based compensation is accounted for based on the requirements of the Share-Based
Payment topic of the FASB Accounting Standards Codification. This FASB
Accounting Standards Codification requires recognition in the financial
statements of the cost of employee and director services received in exchange
for an award of equity instruments over the period the employee or director is
required to perform the services in exchange for the award (presumptively the
vesting period). The FASB Accounting Standards also requires measurement of the
cost of employee and director services received in exchange for an award based
on the grant-date fair value of the award.
Use
of Estimates
The
preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported net sales and expenses during the reporting
periods. On an ongoing basis, we evaluate our estimates and assumptions. We base
our estimates on historical experience and on various other factors that we
believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
Account
Receivable
We have a
policy of reserving for uncollectible accounts based on its best estimate of the
amount of probable credit losses in its existing accounts
receivable. We periodically review our accounts receivable to
determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an account
may be in doubt. Account balances deemed to be uncollectible are
charged to the allowance after all means of collection have been exhausted and
the potential for recovery is considered remote.
Inventories
Inventories,
consisting of finished goods related to our products are stated at the lower of
cost or market utilizing the first-in, first-out method.
17
Property
and Equipment
Property
and equipment are carried at cost. The cost of repairs and maintenance is
expensed as incurred; major replacements and improvements are
capitalized. When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition. The
Company examines the possibility of decreases in the value of fixed assets when
events or changes in circumstances reflect the fact that their recorded value
may not be recoverable. Depreciation is calculated on a straight-line basis over
the estimated useful life of the assets.
Income
Taxes
Income
taxes which is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in our financial statements or tax returns. The
charge for taxation is based on the results for the year as adjusted for items,
which are non-assessable or disallowed. It is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet
date.
Deferred
tax is accounted for using the balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax
basis used in the computation of assessable tax profit. In principle,
deferred tax liabilities are recognized for all taxable temporary differences,
and deferred tax assets are recognized to the extent that it is probably that
taxable profit will be available against which deductible temporary differences
can be utilized.
Deferred
tax is calculated using tax rates that are expected to apply to the period when
the asset is realized or the liability is settled. Deferred tax is charged or
credited in the income statement, except when it is related to items credited or
charged directly to equity, in which case the deferred tax is also dealt with in
equity.
Deferred
tax assets and liabilities are offset when they relate to income taxes levied by
the same taxation authority and we intend to settle our current tax assets
and liabilities on a net basis.
Pursuant
to accounting standards related to the accounting for uncertainty in income
taxes, a tax position is recognized as a benefit only if it is “more likely than
not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount
of tax benefit that is greater than 50% likely of being realized on examination.
For tax positions not meeting the “more likely than not” test, no tax
benefit is recorded. The adoption had no effect on our financial
statements.
Recent
accounting pronouncements
In
June 2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally
Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB
Accounting Standards Codification (“the Codification” or “ASC”) as the official
single source of authoritative U.S. generally accepted accounting principles
(“GAAP”). All existing accounting standards are superseded. All other accounting
guidance not included in the Codification will be considered non-authoritative.
The Codification also includes all relevant Securities and Exchange Commission
(“SEC”) guidance organized using the same topical structure in separate sections
within the Codification.
Following
the Codification, the Board will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to
update the Codification, provide background information about the guidance and
provide the basis for conclusions on the changes to the
Codification.
The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification is effective for our third-quarter
2009 financial statements and the principal impact on our financial statements
is limited to disclosures as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. In order to
ease the transition to the Codification, we are providing the Codification
cross-reference alongside the references to the standards issued and adopted
prior to the adoption of the Codification.
In
April 2009, the FASB issued FASB Staff Positions FAS 115-2 and FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments” (ASC Topic
320-10-65). This update provides guidance for allocation of charges for
other-than-temporary impairments between earnings and other comprehensive
income. It also revises subsequent accounting for other-than-temporary
impairments and expands required disclosure. The update was effective for
interim and annual periods ending after June 15, 2009. The adoption of FAS 115-2
and FAS 124-2 did not have a material impact on the results of operations and
financial condition.
18
In
April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, “Interim Disclosures
About Fair Value of Financial Instruments” (ASC Topic 320-10-65). This update
requires fair value disclosures for financial instruments that are not currently
reflected on the balance sheet at fair value on a quarterly basis and is
effective for interim periods ending after June 15, 2009. The
Company’s financial instruments include cash and cash equivalents, accounts
receivable, accounts payable, accrued expenses and notes payable. At
September 30, 2009 and December 31, 2008 the carrying value of the Companies
financial instruments approximated fair value, due to their short term
nature.
In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC Topic 855).
This guidance is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. It is effective for
interim and annual reporting periods ending after June 15, 2009. The
adoption of this guidance did not have a material impact on our consolidated
financial statements. The Company evaluated all events and
transactions that occurred after September 30, 2009 up through November 16,
2009. During this period no material subsequent events came to our
attention.
In
June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (ASC Topic 810-10). This updated guidance requires a qualitative approach
to identifying a controlling financial interest in a variable interest entity
(VIE), and requires ongoing assessment of whether an entity is a VIE and whether
an interest in a VIE makes the holder the primary beneficiary of the VIE. It is
effective for annual reporting periods beginning after November 15, 2009. We are
currently evaluating the impact of the pending adoption of SFAS No. 167 on our
consolidated financial statements.
In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue
Arrangements.” This ASU establishes the accounting and reporting guidance for
arrangements including multiple revenue-generating activities. This ASU provides
amendments to the criteria for separating deliverables, measuring and allocating
arrangement consideration to one or more units of accounting. The amendments in
this ASU also establish a selling price hierarchy for determining the selling
price of a deliverable. Significantly enhanced disclosures are also required to
provide information about a vendor’s multiple-deliverable revenue arrangements,
including information about the nature and terms, significant deliverables, and
its performance within arrangements. The amendments also require providing
information about the significant judgments made and changes to those judgments
and about how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.
In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements
That Include Software Elements.” This ASU changes the accounting model for
revenue arrangements that include both tangible products and software elements
that are “essential to the functionality,” and scopes these products out of
current software revenue guidance. The new guidance will include factors to help
companies determine what software elements are considered “essential to the
functionality.” The amendments will now subject software-enabled products to
other revenue guidance and disclosure requirements, such as guidance surrounding
revenue arrangements with multiple-deliverables. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.
Results
of Operations
Three
and Nine Months Ended September 30, 2009 Compared to the Three and Nine Months
Ended September 30, 2008
Net
Sales
Overall,
our net sales for the three and nine months ended September 30, 2009 decreased
approximately 56% and 43%, respectively from the comparable periods in
2008. The following table provides comparative data regarding the
source of our net sales in each of these periods:
Three
Months Ended
September
30, 2009
|
Three
Months Ended
September
30, 2008
|
||||||||||||
(unaudited)
|
(unaudited)
|
||||||||||||
$
|
%
of Total
|
$
|
%
of Total
|
||||||||||
Video
conferencing services
|
23,971
|
67%
|
66,025
|
81%
|
|||||||||
Security
services
|
11,902
|
33%
|
15,528
|
19%
|
|||||||||
Total
|
35,873
|
100%
|
81,553
|
100%
|
19
Nine
Months Ended
September
30, 2009
|
Nine
Months Ended
September
30, 2008
|
||||||||||||
(unaudited)
|
(unaudited)
|
||||||||||||
$
|
%
of Total
|
$
|
%
of Total
|
||||||||||
Video
conferencing services
|
95,244
|
89%
|
137,616
|
73%
|
|||||||||
Security
services
|
12,157
|
11%
|
51,006
|
27%
|
|||||||||
Total
|
107,401
|
100%
|
188,622
|
100%
|
Net sales
of our videoconference services for the three and nine months ended September
30, 2009 decreased approximately 64% and 31%, respectively as compared to the
three and nine months ended September 30, 2008. Revenue was down
substantially, on reduced videoconference product sales, leading us to seek cost
reductions throughout the organization. Videoconference product
revenue fell during the three and nine months ended September 30, 2009 due to
reduced orders from three customers. We believe that the current economic
downturn of the economy have negatively affected our
revenues. Maintenance, service and video conference room and
equipment rental income decreased by approximately $10,100 or 24% during the
nine months ended September 30, 2009 as compared to the same period in 2008.
Additionally, during the nine months ended September 30, 2009, our sales force
was decreased by two employees, one of them being our former
President.
Net sales
of security services for the three and nine months ended September 30, 2009
decreased as compared to the same period in 2008. Net sales of security services
for the three and nine months ended September 30, 2009 decreased by
approximately 23% and 76%, respectively as compared to the same period in 2008.
We believe that the current economic downturn of the economy have negatively
affected our revenues in the security division. Furthermore, during the nine
months period ended September 30, 2009, we focus our efforts on our
videoconferencing operations.
Additionally,
we experienced increased competition from competitors that sell similar
products. We believe that the current economic downturn of the economy has
negatively affected our revenues. In an effort to increase our sales in
future periods, we need to hire additional sales staff to initiate a
telemarketing campaign and we need to obtain leads from various lead sources
such as lead generating telemarketing lists, email marketing campaigns and other
sources. However, given our lack of working capital, we cannot assure that we
will ever be able to successfully implement our current business strategy or
increase our revenues in future periods. Although we recognized sales during the
three and nine months ended September 30, 2009, there can be no assurances that
we will continue to recognize similar revenues in the future.
Cost
of sales
Cost of
sales for video conferencing services includes product and delivery costs
relating to the delivery of videoconference products. Cost of sales
for security services includes product cost and installation/labor cost.
Overall, cost of sales as a percentage of revenues increased approximately 9%
for the nine months ended September 30, 2009 from the comparable period in
2008. The following table provides information on the cost of sales
as a percentage of net sales for the nine months period ended September 30, 2009
and 2008:
Nine
Months Ended
September
30,
|
|||||||
Cost
of Sales as a Percentage of Net Sales
|
2009
|
2008
|
|||||
(unaudited)
|
|||||||
Video
conferencing services
|
33%
|
22%
|
|||||
Security
services
|
3%
|
5%
|
|||||
Total
|
36%
|
27%
|
During
the nine months ended September 30, 2009, our cost of sales for our
videoconferencing division as a percentage of net sales increased due to a
decrease in videoconference maintenance and service income as compared to the
nine months ended September 30, 2008.
During
the nine months ended September 30, 2009, our cost of sales for our security
division as a percentage of net sales slightly decreased as compared to the nine
months ended September 30, 2008.
20
Total
operating expenses for the three months ended September 30, 2009 were $99,577, a
decrease of $29,153, or approximately 23%, from total operating expenses for the
comparable the three months ended June 30, 2008 of $128,730. Total operating
expenses for the nine months ended September 30, 2009 were $364,662, a decrease
of $40,147, or approximately 20%, from total operating expenses for the
comparable the nine months ended September 30, 2008 of $551,720. This decrease
is primarily attributable to:
• a
decrease of $5,602, or 80%, in bad debt expenses due to the decrease in
write-off of our accounts receivable during the nine months ended September 30,
2009;
• a
decrease of $15,780 or 1594% and $83,099 or 79% in professional fees
during the three and nine months ended September 30, 2009, respectively, the
decrease is primarily related to a decrease in accounting and legal fees. In
addition, we cancelled 100,000 shares of common stock previously issued for
legal service. In connection with the return of the 100,000 shares of common
stock, we valued the cancelled shares at par value of $0.50 per share or $50,000
based on the recent selling price of our common stock and recorded a
corresponding decrease in professional fees during the three and nine months
ended September 30, 2009.
• a
decrease of $812 or 2% and $58,252 or 25%, in compensation expense during the
three and nine months ended September 30, 2009, respectively, which is primarily
attributable to a decrease in commission expenses during the three and nine
months ended September 30, 2009 as a result of decreased net sales as compared
to the 2008 period. Additionally, during the nine months ended September 30,
2009, our sales force was decreased by two full time employees as compared to
the same period in 2008.
• a
decrease of $13,972 or 19% and $40,147, or approximately 20%, during
the three and nine months ended September 30, 2009, respectively, in
other selling, general and administrative expenses as summarized
below:
Three
Months Ended
September
30,
|
||||||||
2009
|
2008
|
|||||||
Advertising
and promotion
|
$
|
1,134
|
$
|
1,133
|
||||
Auto
expense
|
6,726
|
4,736
|
||||||
Health
insurance
|
4,847
|
5,590
|
||||||
Telephone
and communications
|
8,170
|
11,948
|
||||||
Travel
and entertainment
|
3,299
|
17,710
|
||||||
Rent
|
14,529
|
28,578
|
||||||
Other
|
19,811
|
2,793
|
||||||
$
|
58,516
|
$
|
72,488
|
Nine
Months Ended
September
30,
|
||||||||
2009
|
2008
|
|||||||
Advertising
and promotion
|
$
|
2,570
|
$
|
2,127
|
||||
Auto
expense
|
14,785
|
12,524
|
||||||
Health
insurance
|
14,672
|
17,633
|
||||||
Telephone
and communications
|
26,422
|
44,540
|
||||||
Travel
and entertainment
|
10,620
|
26,076
|
||||||
Rent
|
43,589
|
42,788
|
||||||
Other
|
47,146
|
54,263
|
||||||
$
|
159,804
|
$
|
199,951
|
21
The
decrease in other selling, general and administrative expenses is primarily
attributable to the following changes in these expenses from the three and nine
months ended September 30, 2009 as compared to the three and nine months ended
September 30, 2008:
1) Advertising
expense slightly increased during the three and nine months period September 30,
2009, respectively, due to increase expense in web
design.
2) Auto
expenses increased by $1,990 or 42% and $2,261 or 18% during the three and nine
months period September 30, 2009, respectively, as a result of increased auto
insurance expense.
3) Health
insurance expense decreased by $743 or 13% and $2,961 or 17% during the three
and nine months period September 30, 2009, respectively due to a decrease in
health insurance coverage as a result of a decrease in full time
employees.
4) Telephone
and communications expenses decreased by $3,778 or 32% and $18,118 or 41% during
the three and nine months period September 30, 2009, respectively, due to cost
cutting measures.
5) Travel
and entertainment expenses decreased by $14,411 or 81% and $15,456 or 59% during
the three and nine months period September 30, 2009, respectively, due to
decreased sales-related travel.
6) a
minimal increase of $801, or approximately 2%, in rent expense for the nine
months ended September 30, 2009.
7) Other
selling, general and administrative expenses, which includes postage, general
insurance, and office supplies, utilities and expenses decreased overall by
$7,117 or 13% during the nine months period September 30, 2009, respectively,
due to cost cutting measures.
We
presently anticipate that operating expenses for the remainder of fiscal 2009
will increase as a result of becoming a public company, subject to our ability
to generate operating capital.
Loss
from operations
We
reported a loss from operations of $67,206 and $295,814 for the three and nine
months ended September 30, 2009, respectively as compared to a loss from
operations of $58,237 and $413,572 for the three and nine months ended September
30, 2008. An increase of $8,969 or 15% for the three months ended September 30,
2009 and a decreased of $117,758 or 28%, for the nine months ended September 30,
2009.
Other
Income (Expenses)
Total
other income (expense) was ($2,188) and $31,500 for the three and nine months
ended September 30, 2009 as compared to other income (expense) of ($1,785) and
$3,514 for the three and nine months ended September 30, 2008, respectively. An
increase of other expense of $403 for the three months ended September 30, 2009
and an increased of other income of $27,986, for the nine months ended September
30, 2009 is primarily attributable to:
• $38,345
and $9,131 of other income for the nine months ended September 30, 2009 and
2008, respectively, was attributable to the reduction of accounts payable over
four years old that management has deemed forgiven;
• An
increase of $403 and $1,228 in interest expense for the three and nine months
ended September 30, 2009 and 2008, respectively as compared to the same periods
in 2008 which reflects interest incurred in borrowings under the 3% and 8% notes
payable issued during fiscal year 2008.
Net
loss
We
reported a net loss of $69,394 and $264,314 for the three and nine months ended
September 30, 2009, respectively, as compared to a net loss of $60,022 and
$410,058 for the three and nine months ended September 30, 2008,
respectively.
22
Liquidity
and Capital Resources
Liquidity
is the ability of a company to generate funds to support its current and future
operations, satisfy its obligations, and otherwise operate on an ongoing basis.
At September 30, 2009, we had a cash balance of $2,989. Our working capital
deficit increased to $1,234,721 at September 30, 2009 from a working capital
deficit of $901,554 at December 31, 2008.
We
reported a net increase in cash for the nine months ended September 30, 2009 of
$2,989. While we currently have no material commitments for capital
expenditures, at September 30, 2009 we owed $62,000 under various notes
payable. During fiscal 2008, the holders of $181,000 of notes have
converted those notes into an aggregate of 370,032 shares of our common stock
and we have raised an additional $15,000 through the sale of our securities.
Subsequent to December 31, 2008, we have borrowed an aggregate of $47,000 from
our Chief Executive Officer under various notes payable agreement and received
proceeds from sale of stock of $47,000 between April 2009 and September 2009 and
approximately $1,900 in October 2009. We do not presently have any external
sources of working capital.
At
September 30, 2009 we owed Mr. and Mrs. Michele Ralston, executive officers and
directors of our company $140,406 for amounts they have advanced to us for
working capital. Of this amount, $29,864 and $4,900 which is owed to
Mr. Roger Ralston and Mrs. Michele Ralston, respectively are
short-term and non-interest bearing. Due on demand notes payable aggregating
$25,000 and a $22,000 note payable maturing in June 2010 plus accrued interest
of $2,202 is owed to Mr. Ralston which bears interest at 12%, and the
remaining $56,440, which includes accrued interest is due Mrs. Michele
Ralston under a note bearing interest at 3% per annum and due in July
2010.
Accrued
liabilities as of September 30, 2009 consist of the following:
· Accrued
salaries to our officers and certain employees amounting to
$570,456
· Accrued
commissions to certain employees amounting to $60,590
· Accrued
payroll taxes of $41,824
· Sales
tax payable of $17,353
· Accrued
expenses of $10,817
Our
net sales are not sufficient to fund our operating expenses. We will
need to raise significant additional capital to fund our operating expenses, pay
our obligations, and grow our company. We will need to raise approximately
$500,000 in additional capital to fund our operating expenses, pay our
obligations as they become due and to market our company. We reported a net loss
of $527,088 and $364,173 in fiscal 2008 and 2007 respectively. At
September 30, 2009 we had a working capital deficit of $1,234,721 and net loss
of $264,314. We do not anticipate we will be profitable in fiscal
2009. Therefore our future operations will be dependent on our
ability to secure additional financing. We will be required to raise
additional capital to fund our future operations within the next 12 months.
Furthermore we have debt obligations, which must be satisfied. If we
are successful in securing additional working capital, we intend to increase our
marketing efforts to grow our revenues. We do not presently have any
firm commitments for any additional capital and our financial condition as well
as the uncertainty in the capital markets may make our ability to secure this
capital difficult. There are no assurances that we will be able to continue our
business, and we may be forced to cease operations in which event investors
could lose their entire investment in our company. Included in our Notes to the
financial statements for the years ended December 31, 2008 and 2007 as well as
the interim financial statements for the period ending September 30, 2009 a
discussion regarding Going Concern.
Operating
activities
Net cash
flows used in operating activities for the nine months ended September 30, 2009
amounted to $124,201 and was primarily attributable to our net losses of
$264,314, offset by depreciation of $3,982, bad debts of $1,398, stock based
expenses of $31,250, total changes in assets and liabilities of $153,483 and add
back of $50,000 related to cancellation of common stock issued for services. Net
cash flows used in operating activities for the nine months ended September 30,
2008 amounted to $142,662 and was primarily attributable to our net losses
of $410,058 , offset by depreciation of $3,940, stock based expense of
$50,000, bad debts of $7,000, and total changes in assets and liabilities of
$206,456.
Investing
activities
Net
cash used in investing activities was $232 in the 2008 period and represented
the purchase of an equipment.
23
Financing
activities
Net cash
flows provided by financing activities was $127,190 for the nine months ended
September 30, 2009. We received net proceeds from advances from related parties
of $82,102, sale of stock of $47,453, offset by repayments on related party
advances of $790 and bank overdraft of ($1,575). Net cash flows provided by
financing activities was $120,532 for the nine months ended September 30, 2008.
We received net proceeds from notes payable and sale of stock of $125,500 and
$700, respectively, offset by repayments on related party advances of $7,593 and
bank overdraft of $1,925.
Stock
Purchase Agreement with Redrock Strategies, Inc.
In
July 2009, the Company entered into a Stock Purchase Agreement with Redrock
Strategies, Inc. (“Redrock”), a British Virgin Island Corporation. Pursuant to
this agreement, Redrock shall purchase up to 3,000,000 shares of our stock until
December 31, 2010. In accordance with the Share Deposit Escrow Agreement, we
agreed to place in escrow 3,000,000 shares which will be used to disburse and
deliver the shares upon purchase and receipt of proceeds. We shall sell the
shares at a purchase price which is 10% of the net proceeds received by Redrock
from selling our shares. As defined in the Stock Purchase Agreement, Redrock
shall assign the voting rights of all the stock related to this agreement to our
Board of Directors. Between August 7, 2009 and October 31, 2009, we received
proceeds of approximately $37,000 from the sale of 613,297 shares of our stock
to Redrock.
Contractual
Obligations
We have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.
The
following tables summarize our contractual obligations as of September 30, 2009,
and the effect these obligations are expected to have on our liquidity and cash
flows in future periods.
Payments Due by
Period
|
||||||||||||||||||||
Total
|
Less than 1
year
|
1-3
Years
|
4-5
Years
|
5 Years
+
|
||||||||||||||||
Contractual
Obligations:
|
||||||||||||||||||||
Short
term loans- unrelated party
|
$ | 62,000 | — | 62,000 | — | — | ||||||||||||||
Short
term loans- related party
|
$ | 140,406 | 61,966 | 78,440 | — | — | ||||||||||||||
Operating
Leases
|
$ | 97,598 | — | 97,598 | — | — | ||||||||||||||
Purchase
Obligations
|
$ | — | — | — | — | — | ||||||||||||||
Total
Contractual Obligations:
|
$ | 300,004 | 61,966 | 238,038 | — | — |
Off-balance Sheet
Arrangements
We have
not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
stockholder’s equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity.
24
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Not
required for smaller reporting companies.
ITEM 4T.
CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures. We maintain "disclosure controls and
procedures" as such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934. In designing and evaluating our disclosure controls and
procedures, our management recognized that disclosure controls and procedures,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of disclosure controls and procedures
are met. Additionally, in designing disclosure controls and procedures, our
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible disclosure controls and procedures. The
design of any disclosure controls and procedures also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Under the supervision and with the participation of
our CEO and CFO, or the persons performing similar functions, our management has
evaluated the effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. Based on that evaluation,
our CEO and CFO, has concluded that our disclosure controls and procedures were
effective in providing reasonable assurance that information required to be
disclosed in our reports under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods prescribed by SEC
rules and regulations, and that such information is accumulated and communicated
to our management, including our chief executive officer and chief financial
officer to allow timely decisions regarding required disclosure.
Changes
in Internal Control over Financial Reporting. There have been no changes in our
internal control over financial reporting during our last fiscal quarter that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART II - OTHER
INFORMATION
ITEM
1. LEGAL PROCEEDINGS.
None.
ITEM 1A.
RISK FACTORS.
Not
required for smaller reporting companies.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
Between
August 2009 and September 2009, we sold an aggregate of 613,297 shares of our
common stock for gross proceeds of approximately $37,000 to an accredited
investor in private transactions exempt from registration under the Securities
Act of 1933 in reliance on exemptions provided by Section 4(2) of that
act.
In
October 2009, we sold an aggregate of 33,250 shares of our common stock
for gross proceeds of approximately $1,900 to an accredited investor in
private transactions exempt from registration under the Securities Act of 1933
in reliance on exemptions provided by Section 4(2) of that act.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM
5. OTHER INFORMATION.
None.
25
ITEM 6.
EXHIBITS
31.1 Rule
13a-14(a)/15d-14(a) certification of Chief Executive Officer
31.2 Rule
13a-14(a)/15d-14(a) certificate of Principal Financial Officer
32.1 Section
1350 certification of Chief Executive Officer and Chief Financial
Officer
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIRECTVIEW HOLDINGS, INC. | |||
Date:
November 16, 2009
|
By:
|
/s/ Roger Ralston | |
Roger Ralston, Chief Executive Officer | |||
Date: November 16, 2009 |
By:
|
/s/ Michele Ralston | |
Michele Ralston, Chief Financial Officer |
26