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Brampton Crest International, Inc.

FORM 10-K ANNUAL REPORT

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

TABLE OF CONTENTS

 

8

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Company Locations and Facilities

The Company is currently headquartered in Miami, Florida pursuant to a month-to-month arrangement which runs through April 30, 2010.  See "Item 2."  The management intends to sign a new lease with economically more favorable terms.  However, the existence of corporate relationships, back up facilities, and remote operations capabilities will frequently necessitate key personnel to be located elsewhere.

Market Analysis

Today, we are experiencing rapid growth in both the need for emergency information on a timely basis and the need to distribute video feeds less expensively than traditional methods.

In the emergency communications arena, the ability of government officials to communicate vital emergency information directly to the public, the media, government agencies, non-governmental organizations, and/or other entities is critical and challenging during a crisis.  There are three separate communications systems – each with different goals – at work in a disaster situation:

a. Intra-government communications systems;

 

b. Public emergency alert dissemination systems; and

 

c. Public emergency information dissemination systems

Intra-Government Communications Systems

First responders need to be able to talk to each other – firemen to policemen, for example. Or, when a natural disaster knocks out traditional communications links, FEMA needs to be able to reach local officials. Numerous government initiatives are underway to link the various disaster-response agencies, and this type of agency-to-agency communication is not the focus of AEN’s design. However, the AEN design provides emergency managers with a mechanism to distribute their briefings to the media when traditional communications systems have failed. Widespread dissemination of such emergency information and instructions can aid first responders – and government operations in general – as well as the general public.

 

Public Emergency Alert Dissemination Systems

In today’s world of iPods, satellite radio and other non-mainstream-media entertainment systems, there is an increased risk that people will not get the word that a tornado is bearing down or some other high-risk event is transpiring.  Numerous plans have been put forth by government and private companies to solve even a slice of this problem, including using the digital signals of public television stations and, of course, a variety of systems to distribute messages to cell phones.

As previously noted, the WARN Act (passed by Congress in 2006) directed the FCC to create a standard for sending short alert message via the mobile-phone SMS system.  The first step in creating that standard was issued by the FCC in April 2008. In the aggregate, the new, digital alerting systems are called the Integrated Public Alert and Warning System, or IPAWS.

These systems, real and proposed, are designed to alert the public that a high-risk event is imminent or underway, and that they should take action or seek additional information. The messages are short (the new FCC standard only allows 90 characters) and similar to a news headline or synopsis.  The systems are not designed for, nor can they carry, complex instructions, explanations, or video.

Public Emergency Information Dissemination Systems

In contrast to both intra-governmental communications and the public-alert short messages described above, public emergency information  dissemination systems convey the practical, detailed information and instructions that people need to understand what has happened and (of equal or more importance) what their governmental officials are instructing them to do.  America’s Emergency Network is designed to carry this type of critical information.  AEN’s design envisions a reliable, centralized database and distribution system for national distribution of official disaster-related news briefings, and viewing of that information via live streaming (as the information is delivered) or by access to archives of the video streams.

Traditionally, in the United States, commercial broadcasters – radio and television – have been the main conduits for government emergency information to reach the public.  For instance, when the National Weather Service issues bulletins with important warnings about severe weather, those advisories are communicated over news-oriented media outlets, and somewhat less often on entertainment stations.  In large-scale emergencies, officials hold news conferences with instructions and information for the public.  The media disseminates the information to the extent it is able, given physical, technical, and personnel limitations. When traditional media resources are limited, which they always are after a disaster, the distribution of emergency information can be delayed or degraded. That is not the case with the AEN design, which would not be subject to such traditional limitations.

 

America’s Emergency Network – on the internet and television – is designed to fill the critical need to get information from responsible officials to the public during an emergency.  Government cannot serve residents and businesses without the means to communicate with them, and those means must be robust, secure, and storm-resistant.  Without AEN, or a similar system (no others have been proposed, to our knowledge), the communications gap will continue.  In addition, the general economic climate is putting pressure on budgets in all industries making the cost-saving aspect of AEN technology attractive.

 

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Business Strategies

Strategic Overview

America’s Emergency Network was designed to become the primary conduit for emergency-management communications.   That is, a robust system which will continue to function when traditional emergency communications systems break down – as often happens during disasters and times of crisis.  AEN’s design focuses on the technology and the communication network that distributes the video streams, the means by which video feeds containing critical information and instructions are distributed by the government to the public, the media, and other agencies.  In addition, the same technology can be used to send video from a school or university to media outlets and the internet, among numerous other applications.

Operational Strategy

Media coverage of a disaster situation suffers greatly from a lack of credible information.  Reporters are, in general, rooted in one place due to the difficulty of moving around in a disaster zone.  As a result, they communicate what they see and know based on the perspective of their immediate location and secondhand reports.  At best, they receive sporadic reports from the large city halls and/or major emergency management offices, but normally they have no link with suburban or outlying areas, even if they are only a few miles away.  Sometimes, they have no access to any official information, even secondhand.

After Hurricane Katrina, this problem was acute in the smaller, lower-profile parishes and counties outside of New Orleans and coastal Mississippi.  Days went by while no reports came from those areas because all available media manpower was concentrated in the high-profile cities.  These other affected areas suffered from a communications blackout because there was no functioning infrastructure with which officials could transmit their message.  Instead, they waited for days for the media to come to them – days when no vital information from those communities was being broadcast. AEN’s design allows all areas to be served equally, from the biggest city to the smallest town, eliminating communications dead-zones.

Information that might be distributed and stored by the AEN system, even if the media is rooted in the big cities, would be available so reporters would still have access to emergency messages from the surrounding communities. If each municipality had a presence on the internet, residents who have evacuated would be able to stay informed about what’s going on back home by monitoring news briefings and bulletins being “broadcast” on media websites connected via AEN to their town, county or parish’s video stream.

In the years since Katrina, blogs and social-networking websites have dramatically increased their role in the emergency-communications process.  The information that is dispensed through these mechanisms, however, is often incomplete or inaccurate.  AEN is designed to provide municipalities and government agencies a conduit for the distribution of official information and instructions to counteract the rumors and misinformation that are often circulating in a disaster situation.

The same underlying technology used to develop the government system can also be used to send video to websites or broadcast outlets from sporting events, conference halls, schools and universities, health-care facilities, and other fixed locations.  The cost of sending video using the AEN design is a fraction of traditional transmission costs.  This savings is accomplished by utilizing newly available dedicated-bandwidth satellite data channels, as opposed to standard, costly video transmission systems.

Physical Infrastructure Strategy

When a disaster occurs, the ability of government officials to communicate with the affected public is restricted by the post-event state of the technical systems of surviving local broadcasters, including the physical, electronic connections between city and county emergency management centers and the radio and television stations that cover that area.

Currently, when phone and cable lines, cellular-phone towers and the power grid are knocked out during a disaster, most emergency management offices, city halls and other functioning government agencies are isolated and unable to reach the public (either directly or through the media) with vital instructions and information.  There are a number of programs underway to ensure that government officials – fire rescue, police, FEMA, the Coast Guard, etc. – can communicate with each other (the term is “interoperability”), meaning that emergency managers will have a better picture of the disaster.  But, without a robust communications infrastructure that connects emergency operations centers to the surviving media and the public, the information and instructions they produce will most often not reach the people who need it.

 

The creation of the Department of Homeland Security, and the accompanying systems and procedures, has made the problem even more acute.  Now, most cities of any size have an emergency operations center where instructions and information are generated for the community.  Previously, in much of the United States, only relatively large (geographically or in population) governmental entities have had a centralized operation that activated during disasters.  The post-9/11 configuration means that full media coverage is impractical, especially in large metropolitan areas.  No news organization has the resources to send crews to every municipality.  After a disaster, 24/7 coverage of big-cities’ emergency operations centers challenges local-media resources, let alone covering all of the new suburban EOCs, of which there are likely dozens in a major metro area.  AEN is designed to be the conduit for all governments to send their video feeds to the media instead of waiting and hoping for the media to come to them.

 

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Not all emergencies knock out communications, but even if the wires stay up, Americans are more vulnerable without a dedicated emergency communications system.  Most people don’t realize it, but if a tanker car overturns and a neighborhood needs to be evacuated, there is no system that responsible public officials can use to immediately communicate the exact boundaries, evacuation routes, shelters and other critical details to the local media, and thereby to the public.  The necessary organized, structured, direct connection between government officials and the media (and therefore the public) is missing.  AEN is designed to bridge that gap.

When hundreds of thousands of residents of the New Orleans area and southern Mississippi found themselves away from home after Hurricane Katrina, they had no access to official, local information from their hometowns.  Some surviving TV and radio stations were streaming on the internet, but seeing those feeds required high-speed internet access, and, worse, those news stations did not have connections to the cut-off areas to get accurate information to pass along.

In addition, most radio stations and many TV stations have no news-gathering capabilities (they carry entertainment programming or play music 24 hours a day) and have no way to receive the detailed information from emergency operations centers so it can be relayed.  AEN solves this problem.

AEN is designed to provide the organization, physical infrastructure, and the distribution framework so government officials can instantly distribute a detailed message to the media (and therefore to the public) on a timely basis.  AEN can connect all emergency management offices to all media outlets using readily available, proven technology.  No matter how far away from the affected city the control point of the radio station might be, the station operator can receive an official notification and broadcast the emergency-information feed from the local authorities.  An operator in Dallas, for example, that is controlling a radio station in Minot, North Dakota, would know to switch to an AEN-distributed live announcement from Minot city hall at the prescribed time if there were a disaster in that station’s coverage area.  In addition, the announcement would be stored on media websites so it could be retrieved and repeated as required.

Business Development

The success of AEN’s government communications system depends on the cooperation and support of the emergency management community, local municipalities, and government agencies.  Like C-SPAN, the content on AEN will be unedited, government-generated information.  But, unlike C-SPAN where, in general, the cameras are simply showing events that would happen even if there was no coverage, the convenience and reliability of the AEN communications system will enable emergency managers to hold news briefings much more frequently than in the past.  

 

During the beta-test period, the technical infrastructure of the central AEN database was assembled, tested and refined, and access to AEN-gathered emergency information was sent to a limited number of media websites.  After the initial test at the Florida Division of Emergency Management in Tallahassee, that agency generated an assessment report from input it received from inside and outside the organization.

When a critical mass of information from government entities is available in the Central Database – sufficient to sustain a viable and credible 24/7 television channel – AEN-TV is planned to be launched.  The television channel is expected to lag full-production (as opposed to beta-test) internet distribution by more than a year while the number of emergency offices feeding into the system increases.

A secure and robust connection to television outlets will be accomplished through a private satellite IP network which is a key part of the AEN system design.  Each TV station or network will need to have a 1.2 meter satellite dish and an IP receiver (purchased through AEN) to receive the broadcast-resolution streams.  Radio stations will be able to receive the audio portion of the emergency feeds by connecting to the websites that are streaming the live news briefings.  Stations which install a back-up satellite connection will continue to have access to the feeds after a disaster even if terrestrial communications systems have failed with AEN widely deployed.

AEN’s decision to distribute the streams to media websites for distribution to the public will assure that the information is available during heavy traffic periods.  Media websites are already designed for large fluctuations in traffic, and distributing the streams through multiple sites will assure the demand is spread over many servers.

In addition to the government initiatives, the Company envisions developing products for the private marketplace.  The products would be similar to or based on the government products, and have the same technological base.  In many cases the same IP network, which was especially designed for video distribution, would be utilized in serving the education, healthcare, and corporate markets.

AEN’s business model is to sell its stream-broadcasting hardware and to charge a recurring subscription fee for access to its distribution network to government agencies and other entities which want to communicate directly to the public through the media.  In addition, revenue is envisioned from distributing the content through media websites, either by charging those outlets subscription fee for the unique video content AEN provides or through an advertising revenue-share arrangement with the websites.  In 2010, subject to availability of additional financing to meet our capital resource needs, AEN is expected to begin distributing live video feeds for television broadcast over its network.  This service will also be sold on a hardware plus recurring subscription-fee basis.

 

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Strategic Alliances

In the modern world there is an ever-growing list of audio, data, and video communication devices that people use. This growing trend requires that emergency messages be distributed and delivered through a multitude of channels and in a variety of technical formats for the information to reach the general public.  This requires undertaking strategic alliances with “best of breed” communications businesses that can broaden the reach of the emergency messages, for the benefit of AEN and the public.  Conversely, the AEN alliance will bring credibility, added importance and public relations benefits to the strategic partners. The Company has already developed several key alliances, and is continually in the process of developing additional such relationships.

 

Hughes Network Systems, LLC.   AEN has a contract with Hughes Network Systems, LLC (HNS) under which, among other things, HNS provides IP satellite service, a key component of the AEN design.  AEN was the first customer on Hughes’ new SPACEWAY3 satellite in June 2008.  This unique state-of-the-art satellite provides a high-bandwidth channel so video feeds can be distributed from remote locations to media websites and television outlets.  For the first time, broadcast-ready video can be inexpensively sent from any location via an IP feed over SPACEWAY3.  The strategic relationship with HNS permits the AEN design to provide the benefits associated with the reliability of satellite communication and transmission (which service operates even when terrestrial internet connections are down) and broadcast-ready feeds at a lower price than was previously possible.

VBrick Systems. The Company has developed a close and ongoing relationship with VBrick Systems, Inc., the world leader of live, online networked video solutions.  VBrick is an industry leader in providing equipment possessing the design, specifications, and capabilities necessary for emergency communications.  Specifically, VBrick provides the Company with the encoders necessary to convert analog video and audio into streams that can be then reliably distributed through AEN’s distribution network.

Weather Channel/NBC:  In 2009, the Weather Channel carried AEN Network feeds on its website (weather.com).

Weather Decisions Technologies (WDT) :  WDT places high-value video content on media websites and markets AEN’s government-agency live video feeds nationally.

The Company intends to pursue additional strategic relationships with important vendors, technology partners, and key distributors.  

  

Employees

The Company’s team currently consists of three (3) employees and several independent contractors.  Each management hire has been carefully selected to address immediate needs in particular functional areas, but also with consideration of the Company’s future needs during a period of expected growth and expansion.  Value is placed not only on outstanding credentials in specific areas of functional expertise, but also on cross-functionality, collegiality, a strong knowledge of content acquisition and distribution, along with hands-on experience in scaling operations from initial beta and development stage through successful commercial deployment.

WHERE YOU CAN FIND MORE INFORMATION

You are advised to read this Form 10-K in conjunction with other reports and documents that we file from time to time with the SEC.  In particular, please read our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we file from time to time.  You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330.  In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.

 

ITEM 1A - Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information contained in this Annual Report on Form 10-K, before investing in our common stock. If any of the events anticipated by the risks described below occur, our results of operations and financial condition could be adversely affected which could result in a decline in the market price of our common stock, causing you to lose all or part of your investment.

 

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OUR BUSINESS PLAN CALLS FOR EXTENSIVE AMOUNTS OF FUNDING AND WE MAY NOT BE ABLE TO OBTAIN SUCH FUNDING WHICH COULD ADVERSELY AFFECT OUR BUSINESS, OPERATIONS, AND FINANCIAL CONDITION.

 

We will be relying on additional external equity and/or debt financing and funding. While we have accepted a subscription agreement to receive up to six tranches of $250,000 each, to this date we have received $20,000 and an additional $230,000 is due to be paid the week of April 19, 2010 under the terms of the agreement.  We can provide no assurances that we will receive said additional funding or other financing on terms satisfactory to us.  If we cannot achieve the requisite financing and complete the projects as anticipated, this could adversely affect our business, the results of our operations, prospects, and financial condition.

 

OUR BUSINESS PLAN RELIES ON SIGNIFICANT REVENUE FROM NATIONAL, STATE AND LOCAL GOVERNMENTS AND REDUCTION IN GOVERNMENT REVENUE COULD EFFECT OUR BUSINESS PLAN

A significant portion of our business plan relies upon our ability to successfully charge licensing and other fees to governmental agencies, universities and others for our services.    The recent worldwide financial crisis, coupled with dramatic reductions in state revenues due to reduced property values and the economic downturn, creates substantial additional uncertainty in both the size and administration of governmental, school and other-entity budgets.  In turn, our business plan may be adversely affected if these budgets are reduced, if any limitations or restrictions are placed upon the acquisition of new products or services like ours (such as a “freeze” on new products or services) or if expenditure priorities are changed, particularly if budgets available for emergency management services are reduced.  We can provide no assurances that our business plan to develop the AEN network will be successful or that our operation will be successful.

 

 FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND OPERATING RESULTS.

 

It is time consuming, difficult and costly for us to develop and implement the additional internal controls, processes, written and reporting procedures required by the Sarbanes-Oxley Act.  We have identified material weaknesses which are described under Item 9A. We have hired an outside firm to attempt to cure these material weaknesses. We also may need to hire additional financial reporting, internal auditing, and other finance staff in order to be in compliance with Section 404. If we are unable to comply with these requirements of the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant certifications that the Sarbanes-Oxley Act requires of publicly traded companies.

 

If we fail to comply in a timely manner with the requirements of Section 404 of the Sarbanes-Oxley Act regarding internal control over financial reporting or to remedy any material weaknesses in our internal controls that we may identify, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our common stock.

 

Pursuant to Section 404 of the Sarbanes-Oxley Act and current SEC regulations, we are required to prepare assessments regarding internal controls over financial reporting and furnish a report by our management on our internal control over financial reporting. The requirement to document and test our internal control procedures in order to satisfy these requirements has resulted in increased general and administrative expenses and has shifted management time and attention from revenue-generating activities to compliance activities. While our management has expended significant resources in this effort, there is no assurance that our auditors will be able to issue for year ended December 31, 2010 an unqualified opinion on management’s assessment of the effectiveness of our internal controls over financial reporting. Failure to achieve and maintain an effective internal control environment or complete our Section 404 obligations could have a material adverse effect on our stock price.

 

In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we have discovered (and may in the future discover) “material weaknesses” in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The PCAOB defines “significant deficiency” as a deficiency that results in more than a remote likelihood that a misstatement of the financial statements that is more than inconsequential will not be prevented or detected.

 

In the event that a material weakness is identified in the future, we will employ qualified personnel and adopt and implement policies and procedures to address any material weaknesses that we identify. However, the process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we will take will remediate any material weaknesses that we may identify or that we will implement and maintain adequate controls over our financial process and reporting in the future.

 

Any failure to complete our assessment of our internal control over financial reporting, to remediate material weaknesses that we have identified (or will identify in the future) or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of the periodic management evaluations of our internal controls and, in the case of a failure to remediate any material weaknesses that we may identify, would adversely affect the annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that are required under Section 404 of the Sarbanes-Oxley Act. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

 

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SEC INVESTIGATION INTO THE COMPANY'S COMPLIANCE WITH SECTION 404(A) OF THE SARBANES-OXLEY ACT OF 2002 AND DISCLOSURES MADE TO THE PUBLIC UNDER CERTAIN EXCHANGE ACT FILINGS.

In March 2010, the SEC subpoenaed certain records of the Company and Bryan Norcross, Chief Executive Officer, and Brad Hacker, our former Chief Financial Officer, in connection with its review of the Company' Exchange Act filings and, in particular, statements made in Exchange Act filings with respect to compliance with Section 404(a) of the Sarbanes-Oxley Act of 2002, as amended (the "SOA"). Such individuals also were subpoenaed and gave testimony to the SEC on April 8, 2010 primarily with respect to compliance with Section 404(a) of the SOA Act. We can provide no assurances that the SEC investigation will not result in adverse actions taken against the Company and its current and/or former officer.  In the event that action is taken by the SEC against the Company and its current and/or former officers, such action may adversely affect the trading price of our Common Stock.

BRAMPTON CREST INTERNATIONAL, INC.  AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		December 31,				December 31,
		2009				2008
ASSETS
Current Assets:
Cash		$	165,101			$	375,058
Marketable securities			—				1,025,000
Accounts receivable-net			10,000				31,147
Total Current Assets			175,101				1,431,205
PROPERTY AND EQUIPMENT, net			326,843				355,220
Other Assets:
Deposits and prepaid expenses			4,758				6,294
Trademarks			-				10,650
Total Other Assets			4,758				16,944
TOTAL ASSETS		$	506,702			$	1,803,369
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
Current Liabilities
Accounts payable		$	272,689			$	25,391
Accrued expenses			151,000				-
Due to related party			95,926				95,926
Current portion of notes payable			1				-
Total Current liabilities			519,616				121,317
COMMITMENTS AND CONTINGENCIES			-				-
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $.001 par value; 25,000,000 shares authorized, -0- shares issued and outstanding as of December 31, 2008 and 2009			-				-
Common stock, $.001 par value; 950,000,000 shares authorized, 232,854,881shares issued and 160,054,881 shares outstanding at December 31, 2009 and 221,854,881 shares issued and outstanding at December 31, 2008			160,055				221,854
Additional paid in capital			14,040,861				13,959,063
Accumulated deficit			(14,213,830	)			(12, 498,865	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIENCY)			(12,914)				1,682,052
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIENCY)		$	506,702			$	1,803,369

 

See accompanying notes to the Consolidated Financial Statements

 

 

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

			Years Ended December 31,
			2009				2008
Revenue		$	120,132			$	172,909
Cost of Sales			89,650				84,019
Gross Profit			30,482				88,890
Selling, General and
Administrative Expenses			1,717,163				1,149,996
Impairment of Asset			10,650				10,415,747
Loss From Operations			(1,697,331	)			(11,476,853	)
Other Income (Expense):
Interest Expense			(22,000)				-
Interest Income			4,366				25,209
Total Other Income (Expense)			(17,634)				25,209
Loss Before Income Taxes			(1,714,965	)			(11,451,644	)
Provision for Income Taxes			—				—
Net Loss		$	(1,714,965	)		$	(11,451,644	)
Net Loss Per Share-
Basic and Diluted		$	(0.01	)		$	(0.07	)
Weighted Average Common Shares
Outstanding - Basic and Diluted			182,547,528				163,825,550

 

See accompanying notes to the Consolidated Financial Statements

 

 

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 2009 and 2008

 

										Additional								Total
		Common Stock								Paid-In				Accumulated				Stockholder’s
		Shares				Amount				Capital				Deficit				Equity
BALANCE, DECEMBER 31, 2007			51,518,710			$	51,518			$	1,589,900			$	(1,047,221	)			594,197
Common Stock Issued for Private Placement and
Exercise of Stock Warrants Net of Issuance Costs			70,336,171				70,336				2,369,163				—				2,439,499
Common Stock Issued for Acquisition			100,000,000				100,000				10,000,000								10,100,000
Net Loss for the year ended December 31, 2008			—				—				—				(11,451,644	)			( 11,451,644	)
BALANCE, DECEMBER 31, 2008			221,854,881			$	221,854			$	13,959,063			$	( 12,498,865	)		$	1,682,052
Exercise of Stock Warrants Net of Issuance Costs			200,000				200				(200	)							-
Common Stock Issued for Private Placement			11,000,000				11,001				208,998				-				219,999
Common Stock Cancelled			(25,000,000	)			(25,000	)			25,000				-				-
Common Stock Redemption			(48,000,000	)			(48,000	)			(152,000	)			-				(200,000	)
Net Loss for the year ended December 31, 2009			—				—				—				(1,714,965	)			( 1,714,965	)
BALANCE, DECEMBER 31, 2009			160,054,881			$	160,055			$	14,040,861			$	(14,213,830	)		$	(12,914	)

 

See accompanying notes to the Consolidated Financial Statements

 

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Years Ended December 31,
		2009				2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,714,965	)		$	(11,451,644	)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation			109,178				96,402
Loss on disposal of assets							—
Impairment of trademarks			10,650
Impairment of goodwill from acquisition							10,415,747
Changes in operating assets and liabilities:
Decreases (increases) in assets
Accounts receivable			21,147				(31,147	)
Prepaid expenses and deposits			1,536				5,328
Increases (decreases) in liabilities
Accounts payable			247,298				(85,347	)
Accrued expenses			151,000				-
Net Cash Used in Operating Activities			(1,174,156	)			(1,050,661	)
Cash Flows From Investing Activities:
Cash acquired at acquisition			—				19,349
Marketable securities redeemed (purchased)			1,025,000				(675,000	)
Fixed assets purchased			(80,801	)			(389,608	)
Net Cash Provided By (Used In) Investing Activities			944,199				(1,045,259	)
Cash Flows From Financing Activities:
Repurchase of common stock			(200,000	)			—
Proceeds from notes payable			1				—
Proceeds from sale of common stock, net of issuance costs			219,999				2,439,499
Net Cash Provided by Financing Activities			20,000				2,439,499
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(209,957	)			343,579
CASH, BEGINNING OF YEAR			375,058				31,479
CASH, END OF YEAR		$	165,101			$	375,058
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Acquisition of America’s Emergency Network, LLC:
Goodwill		$				$	10,415,749
Accounts Payable							(108,927	)
Cash acquired at acquisition							19,349
Fixed assets							61,194
Other assets							12,900
Loan payable							(204,337	)
Officer loan							(95,926	)
		$				$	10,100,000
OTHER SUPPLEMENTAL INFORMATION:
Interest Paid		$	22,000			$	—
Income Taxes Paid		$	—			$	—

 

See accompanying notes to the Consolidated Financial Statements

 

F-5

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND CAPITALIZATION

Brampton Crest International, Inc. (the “Company"), a Nevada corporation, was originally organized as Selvac Corporation, a Delaware corporation. On June 28, 1982, Selvac Corporation restated its Certificate of Incorporation and changed its name to Mehl/Biophile International Corporation. On March 22, 2000, the Company reorganized as Hamilton-Biophile Companies. On November 26, 2001, the Company re-domiciled to Nevada. Hamilton Biophile Companies changed their name to Brampton Crest International, Inc., effective on November 18, 2004.

The Company filed a Form 10-SB on December 16, 2004, and on May 17, 2005 became a reporting company pursuant to the Securities Exchange Act of 1934, as amended.

Effective March 2, 2007, the Company announced that it had formed a wholly owned subsidiary, White Peak Capital Group, Inc., a Florida corporation (“White Peak”) that would focus on making secured short and medium term loans. Effective July 2007, White Peak changed its name to Laurentian Peak Capital Group (Laurentian).  Laurentian’s corporate structure and marketing plan remained the same as it was with White Peak.

Laurentian, as a licensed mortgage lender, sought to develop its loan business through an established network of finance industry contacts developed by its management and by seeking the participation by other originators known to the company management. Laurentian loans were to be both short and medium term, secured by accounts and trade receivables, real estate, credit card receivables, equipment letters of credit and shares of stock. The originators from whom Laurentian were to purchase participations were established companies known to Laurentian management. Currently Laurentian is an inactive Company. Prior to becoming inactive in this line of business, Laurentian made a loan totaling $200,000 to America's Emergency Network, LLC. As a result of this loan transaction, the Company became interested in acquiring AEN.

 

On March 19, 2008, the Company, America’s Emergency Network, LLC, a Florida limited liability company ("AEN"), Bryan Norcross, in his capacity as a member and representative of the members of America’s Emergency Network, LLC, Max Mayfield, a member of America’s Emergency Network, LLC, Matthew Straeb, a member of the America’s Emergency Network, LLC, Robert Adams, a member of America’s Emergency Network, LLC, and Brampton Acquisition Subsidiary Corp., a Florida corporation and a wholly owned subsidiary of the Company, entered into an Agreement and Plan of Merger whereby America’s Emergency Network, LLC was merged into the Company such that AEN continued as a wholly owned subsidiary corporation of the Company. As a result of this transaction, the Company issued a total of 100,000,000 shares of Common Stock to the former members of AEN. Shortly after the Company's acquisition of AEN, the loan origination business of Laurentian ceased to concentrate the Company's resources on the business of AEN.

Pursuant to the terms and conditions of the Merger Agreement, the members of America’s Emergency Network, LLC received an aggregate of 100,000,000 shares of Company Common Stock.

 

The following table sets forth the allocation of the purchase price for tangible and intangible assets associated with the above 2008 acquisition and acquired assets and liabilities assumed as of March 19, 2008:

Goodwill		$	10,415,747
Cash			19,349
Fixed assets			61,194
Other assets			12,900
Accounts payable			(108,927	)
Officer Loan			(95,926	)
Loan Payable			(204,337	)
Total Stock Issued for Purchase		$	10,100,000

America's Emergency Network is designed to link Emergency Operations Centers (EOC's) in cities, towns, counties, school boards, and other government entities with the general public, media outlets, first responders, and other government agencies. The system is designed to send video feeds of news briefings by emergency officials issued at any EOC in any location over the internet to the public and the media instantly. The design of the system includes a satellite component so it will continue to operate before and after disasters, even when telephone, cell phone, and terrestrial internet systems have failed. In addition, during short-fuse emergencies (tanker accidents, bio-hazards, etc.), America's Emergency Network is designed to provide an instant-communications link directly to all subscribing media outlets. With AEN deployed nationally, critical information would reach the public much sooner since all subscribing media outlets would receive the video feeds at once.

 

F-6

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND CAPITALIZATION (CONTINUED)

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, America’s Emergency Network, Inc. and Laurentian Peak Capital.  All material intercompany balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

 

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. At December 31, 2009 and December 31, 2008, the Company had cash equivalents in the amount of approximately $165,000, and $375,000, respectively, all in low risk investments.

MARKETABLE SECURITIES

 

The Company holds marketable securities with a financial institution. The investments are highly liquid, short-term securities and the fair value of these securities has little or no change from the original purchase price. The amounts held at December 31, 2009 and December 31, 2008 were $0 and $1,025,000, respectively.

                                    

ACCOUNTS RECEIVABLE

Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable the receivable will not be recovered.  The Company had accounts receivable of $10,000 at December 31, 2009 and $31,147 at December 31, 2008.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for the impairment of long-lived assets in accordance with ASC Topic 360, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“ASC Topic 360”) requires write-downs to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

If the long-lived assets are identified as being planned for disposal or sale, they would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. As of December 31, 2009 this does not apply.

GOODWILL AND OTHER INTANGIBLE ASSETS

ASC Topic 350, “Intangibles – Goodwill and Other,” addresses financial accounting and reporting for acquired goodwill

Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited, with a weighted average useful life of 15 years.

F-7

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BRAMPTON CREST INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND CAPITALIZATION (CONTINUED):

In performing this assessment, management uses the income approach and the similar transactions method of the market approach to develop the fair value of the acquisition in order to assess its potential impairment of goodwill. The income approach is based on a discounted cash flow model which relies on a number of factors, including operating results, business plans, economic projections and anticipated future cash flows. Rates used to discount future cash flows are dependent upon interest rates and the cost of capital at a point in time. The similar transactions method is a market approach methodology in which the fair value of a business is estimated by analyzing the prices at which companies similar to the subject, which are used as guidelines, have sold in controlling interest transactions (mergers and acquisitions). Target companies are compared to the subject company, and multiples paid in transactions are analyzed and applied to subject company data, resulting in value indications. Comparability can be affected by, among other things, the product or service produced or sold, geographic markets served, competitive position, profitability, growth expectations, size, risk perception, and capital structure. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in the future.

The Company had reviewed the value of the intangible assets of goodwill as of December 31, 2008 and  determined as of the filing and subsequent amended filings to impair the value of goodwill. Based on the operating losses for 2008 and projected losses in 2009 and breakeven not projected until 2010 the Company decided to impair the entire balance of $10.4 million as of year ended December 31, 2008.

REVENUE RECOGNITION

The Company recognizes revenue in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” (“SAB No. 104”). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The Company also follows the guidance in ASC Topic 980, Revenue Arrangements with Multiple Deliverables ("ASC Topic 980"), in arrangements with multiple deliverables.

The Company recognizes revenues when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.

The Company receives revenue for consulting services, video streaming services, equipment sales and leasing, installation, content licensing, and maintenance agreements. Sales and leasing agreement terms generally are for one year, and are renewable year to year thereafter. Revenue for consulting services is recognized as the services are provided to customers. For upfront payments and licensing fees related to contract research or technology, the Company determines if these payments and fees represent the culmination of a separate earnings process or if they should be deferred and recognized as revenue as earned over the life of the related agreement. Milestone payments are recognized as revenue upon achievement of contract-specified events and when there are no remaining performance obligations. Revenues from monthly video streaming agreements, as well as equipment maintenance, are recorded when earned. Operating equipment lease revenues are recorded as they become due from customers. Revenues from equipment sales and installation are recognized when equipment delivery and installation have occurred, and when collectability is reasonably assured.

In certain cases, the Company enters into agreements with customers that involve the delivery of more than one product or service. Revenue for such arrangements is allocated to the separate units of accounting using the relative fair value method in accordance with ASC Topic 980. The delivered item(s) is considered a separate unit of accounting if all of the following criteria are met: (1) the delivered item(s) has value to the customer on a standalone basis, (2) there is objective and reliable evidence of the fair value of the undelivered item(s) and (3) if the arrangement includes a general right of return, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. If all the conditions above are met and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on their relative fair values.

 

Explicit return rights are not offered to customers; however, the Company may accept returns in limited circumstances. There have been no returns through December 31, 2009 and 2008. Therefore, a sales return allowance has not been established since management believes returns will be insignificant.

 

F-8

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