Attached files

file filename
EX-23.1 - EX 23.1 AUDITOR CONSENT - Meganet Corpauditorconsent.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
(Amendment No. 7 )
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

MEGANET CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)

5045
(Primary Standard Industrial Classification Code)

2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
Telephone: (702) 987-0087
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Saul Backal
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
Telephone: (702) 987-0087
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies of Communications to:
Gary R. Henrie, Esq.
3518 N. 1450 W.
Pleasant Grove, Utah 84062
Tel: (801) 310-1419
Email: grhlaw@hotmail.com
 
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this registration statement.
 
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.

CALCULATION OF REGISTRATION FEE

Title of Each Class of
Securities To Be Registered
 
Amount to
be
Registered
 
Proposed Maximum
Offering Price
Per Share
 
Proposed Maximum
Aggregate
Offering Price
 
Amount of
Registration Fee
Common stock, par value $.001 per share
 
10,000,000 shares
 
$10.00 (1)
 
$100,000,000
 
$290.25(2)

(1)
This share price is the offering price of the common stock.
(2)
The registration fee was paid in connection with the original filing of the registration statement.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting offers to buy these securities in any state where such offers are not permitted.

Subject to completion,
October _____, 2012

 
- 1 -

 

PROSPECTUS

10,000,000 Shares

MEGANET CORPORATION

Common Stock

We are registering 10,000,000 shares of common stock of Meganet Corporation, a Nevada corporation (“Meganet”), held by the selling stockholders. The selling stockholders will receive all of the proceeds from the sale of the shares. We will pay all expenses incident to the registration of the shares under the Securities Act of 1933, as amended.

At the present time our common stock is currently not quoted on any exchange or listed in any listing venue. Until such time as our common stock is quoted on the OTC Bulletin Board or other quotation or trading or listing venue, all selling stockholders will sell at the stated fixed price of $10.00 per share. Thereafter the shares will be sold at prevailing market prices or privately negotiated prices.
 
We are an "emerging growth company" as defined in Section 101 of the Jumpstart Our Business Startups Act, or JOBS Act.

Investing in our common stock involves risks, which are described in the “Risk Factors” section beginning on page 7 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is October _____, 2012.

 
- 2 -

 

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus. We have not authorized any person to provide you with any information or represent anything not contained in this prospectus, and, if given or made, any such other information or representation should not be relied upon as having been authorized by us. The selling stockholders are not offering to sell, or seeking offers to buy, our common stock in any jurisdiction where the offer or sale is not permitted. You should not assume that the information provided in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.

   
Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
4
PROSPECTUS SUMMARY
 
5
RISK FACTORS
 
7
USE OF PROCEEDS
 
12
DETERMINATION OF OFFERING PRICE
 
12
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
13
BUSINESS
 
18
MANAGEMENT
 
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
22
VOTING SECURITIES AND PRINCIPAL HOLDERS
 
23
SELLING STOCKHOLDERS
 
23
PLAN OF DISTRIBUTION
 
25
DESCRIPTION OF CAPITAL STOCK
 
27
LEGAL MATTERS
 
27
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
 
27
EXPERTS
 
28
WHERE YOU CAN FIND MORE INFORMATION
 
28
INDEX TO FINANCIAL STATEMENTS
 
29


 
- 3 -

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this prospectus contains forward-looking statements. The words “forecast”, “eliminate”, “project”, “intend”, “expect”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

·
Our ability to achieve our business of producing and selling products;
·
Our ability to develop new products of interest to our client base;
·
Our ability to attract, retain and motivate qualified employees and management. The impact of federal, state or local government regulations;
·
Competition in the electronic defense technology industry;
·
Availability and cost of additional capital;
·
Litigation in connection with our business;
·
Our ability to protect our trademarks, patents and other proprietary rights;
·
Other risks described from time to time in our periodic reports filed with the Securities and Exchange Commission

This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative but not exhaustive. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.

Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

 
- 4 -

 

PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus. It is not complete and does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors” and our consolidated financial statements and accompanying notes. Any references to “Meganet”, “we”, “us” or “our” refer to Meganet Corporation, a Nevada corporation.
 
All disclosure in this prospectus is the responsibility of management.  Neither the SEC nor any other regulatory authority has certified or otherwise approved the offering or the offering disclosure documents including this prospectus.  Explanations by management of the registration process, including the fact that a registration statement is declared effective by the SEC, do not mean that the SEC has approved the offering or has determined that the disclosure in the registration statement is truthful or complete.
 
Our Business

Meganet is in the business of inventing, developing, producing and marketing data security, intelligence/counter-intelligence and military operational devices. Meganet’s products include among other things encryption devices, bomb jammers, communication interceptors, devices that render communications secure and spy phones. Meganet’s success is largely dependent upon selling products to the U.S. military and the U.S. intelligence agencies.

The purchasers of our products are predominantly governments and militaries which can create sporadic sales cycles typified by large purchases separated by low or quiet periods in between. For example, during times of war which can happen quickly, a country will have immediate need of products for military defense such as bomb jammers. During times of peace, bomb jammers may not be needed for many years. To the contrary, as a country develops and implements a long term homeland security strategy, it may put out bids for certain types of intelligence and counter-intelligence products that may stay out to bid for one to two years. These sales dynamics create times when the Company markets its products for many months without monthly revenue or cash flow. It also creates the potential circumstance of a large sale on the spur of the moment. Accordingly, sales and cash flow are difficult to predict with large sales always being a possibility with periods of low or no sales also being a possibility.

Our Offices

Meganet Corporation is a Nevada corporation organized on March 26, 2009. Our principal executive offices are located at 2510 E. Sunset Rd. Unit 5-777, Las Vegas, NV 89120. The telephone number of our principal executive offices is (702) 987-0087.

Our Website

Our Internet address is www.meganet.com. Information contained on our website is not part of this prospectus.
 
Emerging Growth Company Status
 
We are an "emerging growth company", as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements which are applicable to other public companies which are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligation regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. At this time, we shall not take advantage of any of these exemptions. If at any time we do take advantage of any of these exemptions, we do not know if some investors will find our common stock less attractive as a result. The result may be a less active trading market for our common stock and our stock price may be more volatile.
 
In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
 
We could remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date upon which we become a "large accelerated filer" as defined in Rule 12B-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date upon which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
 

 
- 5 -

 
The Offering

Shares of common stock offered by us: None.

Shares of common stock that may be sold by the selling stockholders: 10,000,000.

At the present time our common stock is currently not quoted on any exchange or listed in any listing venue. Until such time as our common stock is quoted on the OTC Bulletin Board or other quotation or trading or listing venue, all selling stockholders will sell at the stated fixed price of $10.00 per share. Thereafter the shares will be sold at prevailing market prices or privately negotiated prices.

Use of proceeds:

We will not receive any proceeds from the resale of the shares offered hereby, all of which proceeds will be paid to the selling stockholders.

Risk factors:

The purchase of our common stock involves a high degree of risk. You should carefully review and consider “Risk Factors” beginning on page 7.

We will pay all expenses incident to the registration of the shares under the Securities Act.

Summary Financial Information

The tables and information below are derived from Meganet’s unaudited financial statements for the three month period ended June 30, 2012 , and its audited financial statements for the years ended March 31, 2012 , and March 31, 2011 .

Balance Sheet Summary
 
June 30, 2012
   
March 31, 2012
   
March 31, 2011
 
   
(Unaudited)
   
(Audited)
   
(Audited)
 
                   
Cash
  $ 92,164     $ 488     $ 89,584  
Prepaid expenses
    64,593       990       59,140  
Property and equipment, net
    1,127,675       1,242,615       1,458,258  
Total assets
    1,284,432       1,244,093       1,606,982  
Total liabilities
    845,950       565,722       287,195  
Total stockholders’ equity
    438,482       678,371       1,319,787  


Statement of Operations Summary
 
Three Months Ended
June 30, 2012
   
Year Ended March 31, 2012
   
Year Ended March 31, 2011
 
   
(Unaudited)
   
(Audited)
   
(Audited)
 
                   
Revenues
  $ 1,161     $ 81,317     $ 386,203  
Gross profit
    1,055       45,765       235,194  
Operating expenses
    240,945       939,391       830,799  
Net loss
    (245,534 )     (899,267 )     (595,605 )


 
- 6 -

 
RISK FACTORS

This offering involves a high degree of risk. You should carefully consider the risks and uncertainties described below in addition to the other information contained in this prospectus before deciding whether to invest in shares of our common stock. If any of the following risks actually occur, our business, financial condition or operating results could be harmed. In that case, the trading price of our common stock could decline and you may lose part or all of your investment. In the opinion of management, the risks discussed below represent the material risks known to the company. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also impair our business operations and adversely affect the market price of our common stock.

Meganet may cease as a going concern.

The report of our independent registered public accounting firm points out that the Company has suffered recurring losses, used significant cash in support of its operating activities and, based upon current operating levels, requires additional capital or significant restructuring to sustain its operation for the foreseeable future. The auditors therefore believe that it is possible that Meganet may cease as a going concern in which event it is possible that investors would lose their investments. Management estimates it will need $180,000 in additional capital to sustain business operations over the next twelve months.

At the present time Meganet does not have additional authorized securities that it may sell in order to raise additional capital.

It is possible that Meganet may need to sell stock in the next 12 months in order to raise additional working capital. At the present time, Meganet has 100,000,000 shares of common stock issued and outstanding which constitutes all of the equity capital that is authorized and that Meganet may issue. Accordingly, in order to sell additional stock, that stock would first require approval by Meganet’s board of directors and shareholders and certain filings would need to be made with the Office of the Secretary of State of the State of Nevada. This could have the effect of slowing down the ability to obtain additional funding in an expedited manner. However, management is committed to not increase the number of authorized shares but to obtain any additional needed capital by borrowing the same from the Company’s CEO, Mr. Saul Backal. This presents the risk that needed capital would not be available to the Company if something should happen to Mr. Backal or if for any reason he is not available to the Company for purposes of making the loans needed.

If we lose our government certification, we would lose the ability to market to the U.S. Military and federal agencies.

The U.S. military and U.S. federal agencies comprise almost our entire sales market. We have the right to market to these agencies because we are certified as a government supplier. If we should ever lose this certification, it is almost certain that our business would fail.

If we fail to convince the market place that we have competitive products, we will not be commercially successful.

Even if we are successful in designing products competitive to those of our competitors, it is an ongoing need for us to educate and convince the market place of that competitiveness. If we are unable to do so, we will not be able to achieve the market penetration necessary to remain commercially successful and our investors may lose their investments.

If third party manufacturers do not perform in a commercially reasonable manner, Meganet may not be successful.

The Company relies on third parties to manufacture the hardware components of its products while our software components and products are created in house by our CEO, Mr. Saul Backal. The Company does not have supply contracts with the hardware manufacturers and instead works on an order-by-order basis. By not having supply contracts, the Company runs the risk that its current suppliers of hardware components will opt to discontinue their relationship with the Company thereby interrupting the flow of hardware components and limiting the Company’s ability to operate its business. If alternative third party manufacturers could not be located in a timely manner, the Company would go out of business and investors would lose their entire investment.

 
- 7 -

 
Our primary competitors are large department of defense contractors who have established names, products and almost unlimited resources to develop new products.

There are approximately five dominant defense contractors in our industry. They include Lockheed Martin, General Dynamics, Northrop Grumman, Harris Corporation and ITT Corporation. They have been able to successfully launch their products, and penetrate the marketplace. While we hope to design and market products that are competitive with those offered by these contractors, there is no assurance that we will be able to do so. Unless we are able to persuade government agencies that we have products superior to those of these dominant defense contractors, we will be unable to generate sufficient sales of our products to continue to be successful. Further, these contractors have numerous contracts within the government and its agencies, who may be unwilling to switch their buying habits to our Company.

Claims by others that our products infringed their patents or other intellectual property rights could adversely affect our financial condition.

Any claim of patent or other proprietary right infringement brought against us would be time consuming to defend and would likely result in costly litigation, diverting the time and attention of our management. Moreover, an adverse determination in a judicial or administrative proceeding could prevent us from developing, manufacturing and/or selling some of our products, which could harm our business, financial condition and operating results. Claims against our patents may cost the Company significant expenses to defend and if our patents are not upheld, the Company may not be able to continue operations and the investors may lose their entire investment.

We may not be able to protect our patent rights, trademarks, and other proprietary rights.

We believe that our patent rights, trademarks, and other proprietary rights are important to our success and our competitive position. While we have patents and licenses with respect to certain of our products, there is no assurance that they are adequate to protect our proprietary rights. Furthermore, manufacturers in third world countries have a reputation for abusing such rights, which abuse is almost impossible to prevent. Accordingly, we plan to devote substantial resources to the maintenance of these rights. However, the actions taken by us may be inadequate to prevent others from infringing upon our rights which could compromise any competitive position we may develop in the marketplace.

Military and intelligence operations are government agencies which are subject to budgetary constraints, which may inhibit sales.

Government agencies are generally subject to budgets which limit the amount of money that they can spend on weapons and device procurement. It may be that although a government agency is interested in acquiring our products, it will be unable to purchase our products because of budgetary constraints. Further, the lead time for an agency acquiring new weapons and receiving approval to acquire them may delay sales to such agencies. Any such delay will have an adverse effect upon our revenues.

If we cannot retain or hire qualified personnel, our business could fail.

Our business is a technical and highly specialized area of the military and intelligence supply industry. We are dependent on the genius and skills of our CEO and founder Mr. Saul Backal. The loss of Mr. Backal could disrupt our research and development and product promotion activities. We believe that our future success will depend in large part upon our ability to retain the services of Mr. Backal or attract and retain highly skilled, scientific and managerial personnel to replace him if that ever became necessary. We face intense competition for these kinds of personnel from other companies and organizations. We might not be successful in hiring or retaining the personnel needed for our company to be successful.

 
- 8 -

 
Our CEO and founder, Mr. Saul Backal, is an at-will employee and could leave Meganet’s employ upon his own volition.

Mr. Backal has an employment contract with Meganet. However, the contract provides that Mr. Backal’s employment is at-will and that he can leave Meganet at any time should he decide to do so. Should Mr. Backal leave Meganet’s employ at this time or in the near future, it would be very disruptive to the immediate future economic prospects of Meganet and probably the long term economic prospects as well.

Because our common stock is not traded, your ability to sell your shares is limited

Our common stock is not traded or listed on any market. Consequently, the liquidity of our common stock is impaired and/or nonexistent. Any investors in our stock will only be able to liquidate their investment if we are successful in developing a market for our stock in the future.

Purchasers in this offering will experience immediate and substantial dilution of their investment.

We expect that the offering price per share of the shares being sold by the Selling Stockholders will exceed the net tangible book value per share of the outstanding common stock. Accordingly, purchasers of common stock in this offering would pay a price per share that exceeds the value of our assets after subtracting our liabilities.

We do not intend to pay any cash dividends on common stock in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock.

We have never paid a cash dividend on our common stock. We do not intend to pay cash dividends on our common stock in the foreseeable future and, therefore, any return on your investment in our common stock must come from increases in the fair market value and trading price of our common stock.

 
- 9 -

 
In the event Meganet’s common stock ever has a market price at below $5.00 per share, the stock will be subject to the “penny stock” rules of the SEC which could make transactions in Meganet’s stock cumbersome and may reduce the value of an investment in Meganet’s stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to Meganet, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

·
that a broker or dealer approve a person’s account for transactions in penny stocks; and
·
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

·
obtain financial information and investment experience objectives of the person; and
·
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form:

·
sets forth the basis on which the broker or dealer made the suitability determination; and
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of Meganet’s common stock and cause a decline in the market value of Meganet’s common stock.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 
- 10 -

 
Meganet’s officers and directors own over 50% of Meganet’s shares of common stock and can effectively control Meganet’s affairs.

Meganet’s officers and directors own approximately 54 % of Meganet’s shares of common stock. As a result, they are able to control matters requiring approval by Meganet’s shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. The officers and directors may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of Meganet, could deprive Meganet’s shareholders of an opportunity to receive a premium for their shares of common stock as part of a sale of Meganet and might ultimately affect the market price of Meganet’s common stock.

If the controlling shareholders sell a large number of shares all at once or in blocks, the value of Meganet’s shares would most likely decline.

The three officers and directors own approximately 54,000,000 of the 100,000,000 common shares that are issued and outstanding. Approximately 5,400,000 of those shares are being registered as a part of this registration and must be sold at a fixed price of $10.00 per share until such time as they are quoted on the OTC Bulletin Board or other quotation system or stock exchange. Meganet’s common stock is presently not traded on any market or securities exchange, but should a market develop, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of large numbers of shares at any price may cause the market price to fall.
 
Information released by the Company during the pre-filing quiet period may result in liability to the Company and/or the Selling Shareholders.
  
The time period commencing with the beginning of the preparation of a registration statement including the audited financial statements that will be a part of the registration statement and ending when the registration statement is first filed with the SEC is known as the pre-filing quiet period.  During this quiet period there can be no offers or sales of the securities being registered or information given out that could be construed to be an offer of securities or information given out that could be construed to be a prospectus making an offer of securities.  Any violation of this quiet period is a potential violation of Sections 5 and 12 of the Securities Act of 1933 and is often referred to as “gun-jumping”.  A company violating these sections is subject to sanction by the SEC.  In addition, any stock sales resulting from gun-jumping are subject to rescission and other potential liability.  During the pre-filing quiet period in this registration the Company released information about the upcoming registration in violation of the pre-filing quiet period.  Any purchaser of stock in this Offering claiming he or she was wrongly influenced by information received during the quiet period could have recourse back against the Company and the applicable selling shareholder if the purchaser is damaged and can show loss causation.
   
Meganet’s sales are sporadic making it impossible to sustain a steady cash flow from month to month.

The purchasers of our products are predominantly governments and militaries which can create sporadic sales cycles typified by large purchases separated by low or quite periods in between. In the event Meganet does not have a larger sale over a long period of time, the Company will not have the business revenue necessary to sustain business operations without obtaining capital from sources other than from business operations.

Meganet’s business operations suffer in a down world economy.

Meganet’s clients are predominantly governments and militaries that often have budget cut backs during a down economy due to declines in tax revenue. Management believes Meganet’s sales have been less over the past several years than they otherwise would have been because of the down world economy. Unless the world economy improves, it is possible that it will be difficult for the Company to obtain larger product sales in the future.
 
During the pendency of the Registration Statement on Form S-1 of which this prospectus is a part, the Company posted statements on its website that were inconsistent with the information in the Registration Statement.
 
The Federal Securities Laws provide that statements to investors or potential investors by an issuer may not be inconsistent with the information provided in a registration statement.   Such inconsistent statements violate Section 12(a) of the Securities Act of 1933.  The Company posted tweets on its website predicting inaccurately when the Registration Statement would be declared effective and discussed market capitalization prior to a market existing for the Company’s stock.  Such inconsistencies are not appropriate and could result in liability for the Company.
 


 
- 11 -

 

USE OF PROCEEDS

Shares totaling 10,000,000 offered by this prospectus are being offered solely for the account of the selling stockholders. We will not receive any proceeds from the sale of the shares by the selling stockholders.

DETERMINATION OF OFFERING PRICE

The $10.00 per share offering price of our common stock was arbitrarily determined. It bears no relationship to our earnings, net worth or other objective criteria of value.

We will seek to engage a market maker to make an application in our behalf and apply for a listing of our common stock on the OTC Bulletin Board. There is no assurance that we will be successful in engaging a market maker or that our application will be approved. We intend to file a registration statement under the Securities Exchange Act of 1934 (the “Exchange Act”) in order that we become a reporting company under the Exchange Act concurrently with the effectiveness of the registration statement of which this prospectus forms a part. If a market for our stock develops as a result of becoming listed on the OTC Bulletin Board, we anticipate the actual price of sale will vary according to the market for our stock at the time of resale.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

There is no “established trading market” for our shares of common stock. We are not listed on the OTC Bulletin Board nor the Pink Sheets of the Financial Industry Regulatory Authority (“FINRA”)” nor on any exchange. The Company has no common equity that is subject to outstanding options or warrants to purchase, or securities convertible into, common equity. The Company has 100,000,000 common shares issued and outstanding, 42,000,000 of which could be sold at this time pursuant to Rule 144 promulgated under the Securities Act.

Holders

As of September 25, 2012 , the number of record holders of the Company’s common stock is 684 .

Dividends

Holders of shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by the Board of Directors out of funds legally available therefore. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and the financial condition of Meganet.

Securities Authorized for Issuance under Equity Compensation Plans

We have no equity compensation plans.

 
- 12 -

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Business Operations

Meganet is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company has developed and does develop products that it believes are attractive and important to these markets.

Working with government in a business capacity can be a long and arduous process. Governments and their agencies have constant budget restraints and lengthy product procurement processes. In many if not in most cases, a bidding process is required before an order for goods can be placed with a private supplier. Before products can be sold to the U.S. Government or to any of its agencies, the product and/or its supplier must be certified by the U.S. Government, which certification is not easy to obtain. From the time a product is developed until the time it is actually shipped to an agency in return for payment can be months if not years.

The financial statements that form part of this prospectus have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our independent accountants that audited the financial statements observed that the Company requires capital for its contemplated operational and marketing activities and that the Company’s ability to raise additional capital through the future issuances of common stock is unknown and that the obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of profitable operations are necessary for the Company to continue operations. The independent accountants concluded that the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.

Our management has been with Meganet from its inception and has in the past shepherded all software products from the development stage through the government procurement process to final delivery and payment. Management believes that despite the Company’s current illiquid position, the Company is in a strong position with respect to the upcoming 18 to 24 months of operations estimating Meganet has more than $10,000,000 of potential product sales in the so-called product pipeline. Being in the pipeline does not mean that product has necessarily been bought, sold or ordered. It does mean that products are somewhere in the bidding and/or procurement process and in management’s opinion have a reasonable chance of becoming orders, having a portion of those orders delivered and thereby producing collected revenues for the Company in material amounts within the next 18 to 24 months. Management reasonably expects 50% of the potential product sales in its pipeline to produce revenue. At the present time Meganet has confirmed sales to two third world countries, one in the amount of $30,000,000 and one in the amount of $25,000,000. However, Meganet has not received the up-front cash deposit for either order that it requires before Meganet will begin filling the order. It is the potential of these two orders that account for much of the $10,000,000 pipeline estimate set forth earlier in this paragraph.  These two orders have been delayed due to budgetary issues within the respective countries.
 
During parts of March and April, 2012, our CEO was in Asia for the purpose of confirming the $30,000,000 and the $25,000,000 product sales and scheduling a beginning to their implementation.  Implementation begins when Meganet receives an initial cash deposit in connection with an order and thereupon begins production of the product.  Implementation ends when the final product is delivered and paid for.  The cash deposit necessary to begin the implementation of each sale is $5,000,000.  Our CEO believes both deposits will be received before the end of March, 2013 .  With regard to the $30,000,000 sale, the implementation will take 18 months.  The product for this sale will not be delivered and accepted until approximately 18 months after Meganet receives the cash deposit to begin work.  Accordingly, revenue for this sale will not be booked for 18 months after receipt of the initial deposit.  With regard to the $25,000,000 sale, implementation will take approximately 14 months.  In this case, product will be produced and delivered from time to time during the 14 month period.  The initial product delivery valued at more than $5,000,000 will take place approximately six months after the receipt of the $5,000,000 deposit.  Accordingly, the initial deposit of $5,000,000 will be booked as revenue upon the acceptance of that initial product shipment.  It should be noted that when the initial deposits are made is under the sole control of the countries to whom the sales have been made.           

 
- 13 -

 
Liquidity

At June 30, 2012 , the Company had cash in the amount of $92,164 compared to $403,895 in accounts payable and accrued liabilities. On a monthly basis the Company has fixed expenditures including without limitation rent and salary in the approximate amount of $25,000. This $25,000 includes the $10,000 monthly salary of our CEO which he does not take but rather accrues if money is not available for payment of the salary. Taking this into consideration, the Company needs $15,000 per month which equals $180,000 for 12 months to sustain operations and estimates it will need $180,000 in additional capital to sustain business operations over the next twelve months. Our CEO will lend the full $180,000 to Meganet, if cash is not otherwise available within the Company. Two thirds or 67% of this amount will pay rent, approximately 13% will pay property taxes, approximately 5% will pay utilities, 10% will pay salary and the remaining 5% will pay for maintenance and miscellaneous office expenses such as mail and shipping expense and office supplies. During the three month period ended June 30, 2012 , our CEO advanced to the Company the net amount of $307,026 to meet the financial needs of the Company and give the Company a net increase in cash for the period of $91,676.

It is common for companies to resolve illiquid positions by attempting to raise additional working capital through the sale of equity capital or short term borrowing. However, our management does not believe this will be necessary. Rather management believes there will be sales sufficient to cover the next 12 months of cash operating expenses; however, there can be no surety that anticipated sales will materialize. In order to mitigate the risk related with this uncertainty, the CEO has agreed to contribute additional amounts to capital as needed to cover operating expenses.

Background to Understanding the Financial Results for the Past Two Years
 
To understand Meganet’s financial results for the past two years, it is necessary to understand its sales cycle which is different from traditional companies that may have sales on a daily, weekly and/or monthly basis. Meganet’s sales cycle is highly sporadic as a result of its product lines and its customer mix.
 
Product Lines
 
Meganet is a technology company supplying world markets with products primarily instrumental in military defense, personal protection, data protection, home land security and other intelligence and counter-intelligence uses. Examples of products for these uses are bomb jammers and cell phone interceptors.
 
This product base lends itself to sporadic sales cycles for the following reasons. In times of war which can come upon a country quickly, a country will have immediate need of products for military defense uses such as bomb jammers. In times of peace, bomb jammers may not be needed for many years. To the contrary, as a country develops and implements a long term homeland security strategy, it may put out bids for certain types of intelligence and counter-intelligence products that it may leave out to bid for one to two years. To participate in such a bidding process, Meganet must maintain protectable state of the art technologies over a lengthy bidding process that it can deliver in quick fashion in the event it is awarded the bid for a particular product.
 
 
- 14 -

 
Customer Mix
 
Meganet’s focus is on government and military markets which has advantages and disadvantages. Advantages include the fact that governments have deep pockets and when they really need a product they can procure it and pay for it. Also, when a company such as Meganet has a technology that a government really needs, the product can sustain a large margin in the sales price. In addition, technology is often scalable. Once developed, products based upon a technology can bring close to a 100% return.
 
Disadvantages in selling to governments and militaries include the fact that there is fierce competition for these lucrative markets and large suppliers are notorious for using underhanded methods. Also, governments are subject to budgetary issues and budgetary crises and ever changing priorities for fixed budgeted funds. Governments have bidding requirements. This can be good and bad. Bidding does allow for companies such as Meganet to bid against the large suppliers. However, it makes for lengthy and unwieldy sales cycles that make it difficult to predict and sustain cash flow.
 
Examples Illustrative of Meganet’s Sales Cycle
 
A good way to understand Meganet’s sales cycle is to see examples of past sales. Meganet obtained its product base and its business plan from a company called Meganet Corporation, a California corporation (“Meganet California”). In 2002, Meganet California made a sale to the U.S. Department of Labor. After soliciting the U.S. Dept of Labor for over a year, Meganet California received a software order for $4,200,000. Development costs of the software had been expensed as they were incurred and since it was software it had no production cost. Therefore the sale was virtually 100% profit to the company at the time it was realized. However, in the 12 months leading to this sale, total sales were only $100,000.
 
Another example is Meganet California’s sale to the U.S. Department of Transportation (the “DOT”) in 2005. After pursuing a sale for only three months which would typically be just the beginning of a solicitation cycle, an internal security breach at the DOT heightened security concerns and it issued Meganet California a $10,000,000 contract immediately. In the 12 months prior to the sale, Meganet California had sales of under $1,000,000 dollars total.
 
A third example is a sale to the U.S. Department of Veteran Affairs (the “DVA”) in 2007. Meganet California had been soliciting the DVA’s business for three years trying to sell a biometric USB storage device without success. One day without prior notice, Meganet California was selected as the sole source provider of biometric USB storage devices nationwide to over 5,000 facilities. Like before, sales for the prior 12 months had been under $1,000,000.
 
 
- 15 -

 
Prior Two Years
 
For the past two years, Meganet has been working hard toward securing some large sales which it believes will materialize in the near future. However, the financial statements included in this prospectus show only sales totaling $1,161 for the three months ending June 30, 2012 and $81,317 for the year ending March 31, 2012 .  However, this pattern of sporadic sales is typical for this Company.
 
Our sporadic sales cycle is not the only reason for the lack of sales in the prior two years. The global economic crisis has made many of our customers put purchases on hold. The U.S. government in particular has had many departments put projects on hold, cancel some existing projects and in many cases simply run out of budget for new products. Also in the private sector, the economic downturn has made the purchase of products like ours not a possibility at this time.
 
Meganet is a company that goes from one large sale to the next with low or quite periods in between.

Results of Operations for Fiscal Year Ended March 31, 2012
 
During the fiscal year ended March 31, 2012 , Meganet realized gross profit of $45,765 . This was offset by operating expenses of $939,391 resulting in a net loss of $899,267 .  However, $505,668 of the operating expense was non-cash depreciation expense. Nevertheless there was an operating cash shortfall during the year. The shortfall was covered in part by  a net increase in officer loans to the Company of $135,029. Even so, there was a negative  net change in cash for the year in the amount of $89,096 .

The Company’s revenue consists primarily of revenue from the sale of jamming and interceptor hardware and data security software. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. The Company recognizes revenue from the sale of hardware products (e.g., jammers and cell phone interceptors) and software included with hardware that is essential to the functionality of the hardware, in accordance with general revenue recognition accounting guidance. The software inherent to the functionality of the hardware is inseparable from the hardware component and does not have a standalone fair market value.

The Company has no continuing obligations, such as providing software updates, subsequent to the delivery of its products. This is true of software products as well as of hardware products for which software is a component. Accordingly, revenue recognition takes place pursuant to the guidelines in the preceding paragraph without any adjustments that would otherwise be required because of an ongoing obligation to maintain software.

In addition to the software essential to the hardware that is sold, the Company sells off the shelf software to customers that is not related to the hardware that is sold. The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software and (ii) sales of software upgrades.

Generally, the Company requires customers to deposit 50% of the gross sales price upon execution of a formal intent to sell with the remaining 50% due upon delivery of the product. The Company records deferred revenue when it receives payments in advance of the delivery of products.

 
- 16 -

 
Comparison of the Fiscal Years Ended March 31, 2012 and 2011

Operating results for the fiscal years ended March 31, 2012 and 2011 yielded gross profit  of $45,765 and $235,194 respectively, operating expenses  of $939,391 and $830,799 respectively and net loss of 899,267 and $595,605 respectively.  The decrease in gross profit for  the year ended March 31, 2012 is indicative of the Company's sporatic sales discussed earlier in this prospectus making it impossible to forecast revenues or to sustain a steady flow of revenue from month to month.  The $108,592 increase  in operating expenses was a result of an increase of $61,808 in deprreciation expense and an increase of $87,784 in general and administrative expense, offset by a reduction of $28,723 in compensation expense. The $87,784 increase in general and administrative expense was due principally to expenses associated with the preparation of this registration statement and the associated financial statements and the auditing thereof.

Comparison of the Three Month Periods Ended June 30, 2012 and 2011

Revenues for the three month period ended June 30, 2012 totaled $1,161 compared to $44,102 for the three month period ended June 30, 2011 . This fluctuation is due to the long governmental sales cycles discussed above.  During both time periods Meganet was working on procuring two large international sales contracts which it hopes to begin realizing revenue on by the end of March, 2013 .  Operating expenses during the three month periods ended June 30, 2012 and 2011 were fairly uniform at $240,945 and $249,610 respectively.
 
Contractual Obligations

The Company has no long-term debt obligations, capital lease obligations, purchase obligations or other long-term liabilities other than the lease of its office and shop space for 60 months at $10,000 per month commencing January 1, 2010.

Off-balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

 
- 17 -

 
BUSINESS

History

Meganet was organized under the laws of the State of Nevada on March 26, 2009. On March 26, 2009, the Company issued 100,000,000 shares of common stock to the founding shareholders, valued at $0.021833 per share or $2,183,379 as consideration for equipment with a historical net book value of $2,205,365, liabilities of $50,000 and other net receivables of $28,104. The valuation was determined based upon the predecessor value of the assets and liabilities which were contributed to the Company in exchange for the shares of common stock. Each shareholder received the same number of shares held in the prior company. Meganet is an inventor, developer and marketer of data security, intelligence/counter-intelligence and military operational devices. Its customers include governments including the military of and the intelligence agencies of the United States and NATO as well as private enterprise.

Our Products

Meganet’s products are divided into five main categories.

Encryption

The Company is an assignee of patent rights (U.S. Patent # 6,219,421) to an encryption algorithm which has yet to be broken or compromised and which the Company believes is the most powerful on the market. Using this algorithm, the Company has developed a line of products using what Meganet calls Virtual Matrix Encryption or VME. These products have the capacity to protect data in biometric USB storage devices, computer files, email, chat, File Transfer Protocol (FTP), and more. VME also has digital signature applications and an electronic file shredder that allows for the secure shredding of confidential files, folders and disks.

Bomb Jamming

A bomb jammer prevents the detonation of an improvised explosive device (IED) also known as a roadside bomb. Meganet’s bomb jammers include motorcade applications for protecting convoys and soldier backpack applications for protecting foot patrols. Meganet has sold bomb jammers to the U.S. military, the U.S. intelligence agencies and for purposes of NATO applications. Meganet can also sell its bomb jammers outside the U.S. with a proper export license issued under the International Traffic in Arms Regulations (“ITAR”).

Communication Interception

The Company’s products include real-time cell phone, WiFi and other communication interceptors. Our client base for interceptors is the U.S. military and certain U.S. intelligence agencies and other countries and agencies of those countries upon obtaining the necessary export licensing under ITAR.

Secure Communications

The Company’s secure communication applications include encrypted cell phones, encrypted land lines, encrypted fax, encrypted PDA, encrypted radios, encrypted satellite phones and more. These are sold to and used by the U.S. military and select federal agencies and worldwide under ITAR licensing.

Intelligence/counter-intelligence Products

In addition to products already described in other categories, Meganet has a plethora of tools enabling the intelligence/counter-intelligence world to better perform its duties. In this realm, the Company provides bugs, bug detectors, bomb sniffers, miniature cameras and SPY and RAT phones. SPY phones include such functions as the carrier being able to activate the phone for purposes of recording and/or transmitting the proceedings of face to face meeting or conferences without any indication that the phone is active or has been activated. Also, other SPY phones allow for an outside party to activate a phone for the same purposes without even the carrier being aware that the phone has been activated.

 
- 18 -

 
Patents and Trademarks

As mentioned earlier, the Company is an assignee of patent rights (U.S. Patent # 6,219,421) to an encryption algorithm that supports Meganet’s encryption products. This patent was granted ten years ago and will therefore expire in April of 2021. Even after the expiration of the patent, Meganet will still be able to produce and sell the products based upon this patent. Meganet will just lose some of its competitive edge because others will also be able to use the technology after that time.

Meganet has also applied for patent protection on a technology it calls T-Sequence. A patent on this technology has not been granted but is pending. T-Sequence is also an encryption related technology. Meganet has one product at the present time based upon this technology.

Meganet has the following registered trademarks that it uses to identify its products and ideas in the marketplace: Secure Information is Power ™, Virtual Matrix Encryption ™, Meganet Corporation ™, Solutions for a Large Universe ™, VME ™, Ciphertext ™, Cipherlock ™, and Cipherfile ™.

Our Business Structure

Much of the value of our company and its products is based upon our intellectual property that provides, for example, the effectiveness of our encryption products and interceptor products. The intellectual property is normally in the form of software. The hardware such as USB storage devices or phones that we sell are typically comprised of off the shelf technology. However, when the hardware component is loaded with our proprietary software, the data on the storage device or the communications on the phones become encrypted to an extent that the product obtains it value. Though some of our intellectual property is protected by patent rights, much of it is protected by trade secrets. Accordingly, to protect our intellectual property from a rogue employee for example, access to our intellectual property is very limited within the Company.

The manufacturing of the hardware components of our products is conducted by independent third parties. We have no production contracts with these parties but rather order product via purchase orders when we have obtained an order from a client. We have manufacturers that over time we have come to trust, that deliver superior hardware product, whose identities we even consider as trade secrets. However, as stated previously, when the hardware product reaches us, it is superior product but does not go beyond what would be considered off the shelf technology. The software component that Meganet is assigned is then loaded into the product and shipped.

With the exception of the creation and production of our 59 software products which are created in house by our CEO, Mr. Saul Backal, many elements of our business operations from hardware manufacturing to sells to shipping are handled by third parties pursuant to purchase orders or invoicing without ongoing contractual arrangements. In this way, the Company has the flexibility to change suppliers as needed and the Company’s intellectual property is protected. Because of this, Meganet has only two employees. However, because of these two employees and the reliable third parties at the Company’s disposal, the ability of the Company to handle product orders is scalable and almost any size of a product order can be handled. It is possible that as the Company grows, additional employees will become necessary.

 
- 19 -

 
Marketing

Meganet actively markets its products. It is difficult, however, to track immediate results from specific marketing activities since our products typically have a long sales cycles. We market direct via a federal government GSA (U.S. General Services Administration) schedule, via a government SEWP (Solutions for Enterprise-Wide Procurement), via our website, via email, via electronic catalogs and domestic and international distributors.

We use database marketing to create personalized communications to customers or potential customers. We accumulate all data in the database and then use analytical tools to target a new product at the best matching customers or potential customers. We also use traditional marketing tools such as newspapers, TV interviews and mailings. We reach out with new products to potential markets through press releases and other trade show and/or media events. We network heavily with existing clients and potential clients that we know can benefit from new products or improved products we are bringing to market.

Competition

Our competition consists principally of other defense industry contractors. Of this group, the five that are among the largest and constitute our main competition are Lockheed Martin, General Dynamics, Northrop Grumman, Harris Corporation and ITT Corporation. Because of the effectiveness of the VME Technology that supports our encryption products and which is protected by U.S. Patent # 6,219,421, and the effectiveness of certain of our real-time interceptor products that to date, no one we know of has been able to duplicate, Meganet feels it does not have competition in relation to these products. However, because of the effectiveness of some of these products and because of their importance in military and intelligence applications, our markets in some products are limited to the U.S. military and certain federal agencies. However, with most of our products our market is worldwide after obtaining the necessary export license under ITAR. If these entities are not purchasing these products at a particular time or if we have supplied them all that they need at any particular time, our opportunity to sell product is limited, even if we do not have competition with respect to these products.

Government Regulation

The U.S. military and other federal agencies are almost the exclusive end-users of many of our products. To market to the military and these agencies, it is necessary that we have proper certifications from the U.S. government which we do have at this time. We are also subject to import/export laws which prohibit us from selling our products to anyone other than U.S. federal agencies and military unless we obtain proper export licensing under ITAR. It is necessary for us to continue to comply with these rules and regulations to which we are subject.

Research and Development

Our products have been and are development through the fertile and genius mind of our founder and CEO. When he conceives of a hardware component the Company needs in connection with a new product, he orders the hardware from one of the manufacturers in whom he has come to trust. If the manufacturer does not have the type of hardware needed as a ready product, the engineers of the manufacturer develop the product in order to fill the order to Meganet. Therefore the cost of the engineering work is included in the cost of the product to Meganet and is not borne directly by the customer. The cost of the development of the software by our CEO is merely a component of his salary. It is possible that the Company may outsource development work and incur research and development expense in that manner. However, it has not done so during the last two years. Our CEO spends 30% of his full working time on research and development. Accordingly, that is the amount of time spent by Meganet on research and development.
Properties
 
On January 1, 2010, the Company entered into a 60 month lease for its 10,000 square foot office and shop space located in Las Vegas Nevada. The lease required no security deposit and provides for monthly payments of $10,000. The lease provides for a 60 month renewal period at the expiration to the lease period which the Company anticipates to exercise.
 
Legal Proceedings
 
The Company is not involved in any legal proceedings.

 
- 20 -

 
MANAGEMENT

Executive Officers and Directors

Set forth below is certain information with respect to our executive officers and directors:

Name
 
Age
 
Position
Saul Backal
 
48
 
Chairman & CEO
Merav Backal
 
45
 
Vice President & Director
Orna Mizrahi
 
44
 
Treasurer & Director
         
Saul Backal

Saul Backal is our Chairman and CEO and has held these positions since the inception of the Company on March 26, 2009. Prior thereto from 1997 to 2009, Mr. Backal was the Chairman and CEO of Meganet Corporation, a California corporation, which was also engaged in encryption, jamming, interception, biometric products and government & military products. With both companies, Mr. Backal was over management, organizational structure, finance, sales and marketing. Because of Mr. Backal’s intimate knowledge of Meganet, its products, clients, technologies and business operations, it is a natural fit for Mr. Backal to serve as Chairman of our board of directors.

Merav Backal

Merav Backal is vice president of the Company working with international sales, marketing, distribution, and production. She is also a director of Meganet. She has held this position since June, 2012. For approximately the past 20 years, Ms . Backal owned with her husband  a large publishing house in Europe. This ownership has given Ms . Backal vast business experience in sales, marketing and international trade, all of which is helpful to our company and qualifies her as a member of our board of directors.

Orna Mizrahi

Orna Mizrahi is treasurer of the Company working with financial management and planning, accounting and controller duties. She has held this position since the inception of the Company in 2009. Prior thereto she held the same position in Meganet Corporation, the California corporation from 1999 to 2009. She is also a member of our board of directors. Ms. Mizrahi has worked as a CPA in Europe for approximately 20 years. During this time she has served as the controller for the European operations of large international companies including Sony Electronics, DES Electronics, and RAFA Pharmaceuticals. Because of this experience she is valuable to Meganet as treasurer and as a member of the board of directors.

Saul Backal and Orna Mizrahi are siblings.  Merav Backal is their sister-in-law.
 
 
- 21 -

 
Director Compensation

The Company does not compensate its directors for serving on the board of directors.

Executive Compensation

Summary Compensation Table

Name and principal position
Year
Salary ($)
Commissions($)
Stock Awards ($)
Total ($)
Saul Backal, CEO (1)
2012
2011
2010
$120,000
$120,000
$120,000
$9,168
$39,620
$193,835
$0
$0
$0
$129,168
$159,620
$313,835

(1)
Mr. Backal has an employment agreement which provides he is to receive a base annual salary of $120,000. In addition he is to receive 10% of the gross product sales he brings to the Company. Mr. Backal has declined to take earned compensation when the Company is not in a cash position to pay it. In 2010 Mr. Backal was paid $192,121 of his total compensation of $313,835 which means $121,714 was accrued. In 2011 Mr. Backal was paid $62,470 of his total compensation of $159,620 which means $97,150 was accrued.   In 2012 Mr. Backal had total compensation of $129,168 all  of  which was accrued.  However, during 2012 he received cash payment of $43,173 which was payment toward prior year compensation accruals .  As of March 31, 2012, $304,859 of Mr. Backal’s total compensation was unpaid and accrued in current liabilities. Pursuant to his employment agreement, Mr. Backal is an at-will employee and may terminate his employment at any time. Also pursuant to his employment agreement, Mr. Backal has the authority to increase his own salary and the discretion to pay himself a bonus if he believes major progress in being made with the company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Advances

Prior to inception on March 26, 2009, the former Meganet of California received an advance of $50,000 from the former president of the Company. The advance was used by the founding shareholders to purchase the equipment included in the initial capitalization of the Company (the Corporation as currently formed). This advance was unsecured, with no payment terms and did not provide for interest. During the year ended March 31, 2010, the Company repaid the advance in full, which included interest of $6,000 paid as a courtesy to the former officer.

Employment Agreement

As of September 25, 2012 the Company had only one employment agreement which was with the President and majority shareholder. The employment agreement stipulates that the President is to receive a base salary of $120,000 per annum. The agreement also contains a provision allowing for a commission to be paid equal to 10% of gross sales achieved by the President.

Director Independence

Meganet is not listed on a national securities exchange or in an inter-dealer quotation system which has independent director requirements. We have three directors, none of which are considered independent directors. The definition Meganet uses to determine whether a director is independent is NASDAQ Rule 4200(a)(15). A copy of that rule is attached to this filing as Exhibit 99.

 
- 22 -

 

VOTING SECURITIES AND PRINCIPAL HOLDERS

As of September 25 , 2012, we had 100,000,000 shares of common stock outstanding, which are our only outstanding voting securities. The following table sets forth information regarding the beneficial ownership of our common stock as of September 25, 2012, by:

·
each person who is known by us to own beneficially more than 5% of our common stock;
·
each of our executive officers;
·
each of our current directors; and
·
all officers and directors as a group.
Beneficial Owner
 
Amount and Nature of
Beneficial Ownership
 
Percentage
         
Saul Backal
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
 
51,687,550 Direct
 
52 %
Roni Backal
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
 
1,000,000 Direct
 
1%
Orna Mizrahi
2510 E. Sunset Rd. Unit 5-777
Las Vegas, NV 89120
 
1,000,000 Direct
 
1%
All directors and executive officers as a group (3 persons)
 
53,687,550
 
54%


SELLING STOCKHOLDERS
 
This prospectus relates in part to the offer and sale from time to time by the selling stockholders of 10,000,000 shares of common stock that have been issued. There can be no assurance that the selling stockholders will sell any or all of their common stock offered by this prospectus. We do not know if, when, or in what amounts, the selling stockholders may offer the common stock for sale. Our common stock is not currently quoted in any current quotation medium. We will seek to engage a market maker to make an application in our behalf and apply for a listing of our common stock on the OTC Bulletin Board. There is no assurance that we will be successful in engaging a market maker or that our application will be approved. Furthermore, even if our common stock becomes listed on the OTC Bulletin Board, it is not known at this time if and when a market for our common stock will develop.
 
Selling Stockholders

The following table sets forth:

·
the names of the selling stockholders;
·
the number of shares of common stock owned by each of the selling stockholders;
·
the percentage of the class of common stock owned by each of the selling stockholders; and
·
the number of shares of common stock being offered by the selling stockholders in this prospectus.
·
the controlling person if not an individual
·
the way in which the stock was acquired

This table is based on information furnished to us by or on behalf of the selling stockholders. As of September 25, 2012  there were 100,000,000 shares of common stock outstanding. To the extent that any successor(s) to the named selling stockholder(s) wish to sell under this prospectus, we will file a prospectus supplement identifying such successors as selling stockholders.


.

 
- 23 -

 



Selling Stockholder
Shares
Beneficially
Owned Before
the Offering
 
Shares Being
Registered
Shares Beneficially Owned
After the Offering
Number
Percentage
2005 Todd & Alexandra Leone Revocable Trust
30,300
 
3,030
27,270
*
Edward & June Abramson Family Trust
6,000
 
600
5,400
*
Jeff Ackerman
50,000
 
5,000
45,000
*
Kurt J. Ackerman
85,850
 
8,585
77,265
*
Jesse B. Adams
85,500
 
8,550
76,950
*
Trent D. Adams
35,125
 
3,512
31,613
*
Zion & Valerie J. Adani
16,667
 
1,666
15,001
*
Yitzhak Aharoni
13,000
 
1,300
11,700
*
Haim Ahroni
16,834
 
1,683
15,151
*
Yael Aizik
17,835
 
1,783
16,052
*
Barbara R. Aldridge
12,120
 
1,212
10,908
*
Allan Lipkowitz Revocable Living Trust
327,240
 
32,724
294,516
*
Ben Alter
346,944
 
34,694
312,250
*
Fred Alter
52,000
 
5,200
46,800
*
Kelly Michael Alton
26,260
 
2,626
23,634
*
Ambos Pty Ltd ATF Threlfall Superannuation Fund
10,000
 
1,000
9,000
*
Arie Lourie & Dina Lourie Trust
50,500
 
5,050
45,450
*
Dean S. and Etasha W. Arnold
5,050
 
505
4,545
*
Robert Paul & Cheng Shu Aronson
64,320
 
6,432
57,888
*
Yuval Atias
6,375
 
637
5,738
*
Aviv & Hana Avishay
46,250
 
4,625
41,625
*
Gideon Avrami
10,000
 
1,000
9,000
*
Azrieli Group LTD
100,000
 
10,000
90,000
*
B.A.S.K. Investment Assoc.
35,350
 
3,535
31,815
*
Bret Bacciocco
50,500
 
5,050
45,450
*
Ron Backal
1,000,000
 
100,000
900,000
*
Merav  Backal (1)
1,000,000
 
100,000
900,000
*
Saul Backal (1)
51,687,550
 
5,168,755
46,518,795
46.5 %
Tova Backal
1,000,000
 
100,000
900,000
*
Harel & Sadowsky, Ronit Bahalul
12,500
 
1,250
11,250
*
Laith & Lisa M. Bakoo
50,500
 
5,050
45,450
*
Louie & Christina Bakoo
2,020
 
202
1,818
*
Saleem and Julie Bakoo
12,120
 
1,212
10,908
*
Altug Bal
10,000
 
1,000
9,000
*
Zohar & Bali, Galit Loeb Bali
10,000
 
1,000
9,000
*
Moises Banuelos
25,000
 
2,500
22,500
*
Anat Barashy
10,050
 
1,005
9,045
*
Calvin Barnes
28,140
 
2,814
25,326
*
Robert or Teri Barros
5,050
 
505
4,545
*
Ben Bass
60,600
 
6,060
54,540
*
Michael B., SEP Batlan
18,938
 
1,893
17,045
*
Amir Bazak
5,000
 
500
4,500
*
Mauricio Becerra
25,250
 
2,525
22,725
*
James F. & Ama E. Beeler
101,000
 
10,100
90,900
*
Isaac Behar
175,000
 
17,500
157,500
*
Paraskevi Belogianneas
12,500
 
1,250
11,750
*
Scotty & Janie Bem
40,400
 
4,040
36,360
*
Menashe Ben Zur
10,000
 
1,000
9,000
*
Banjamin Benakote
120,000
 
12,000
108,000
*
Ziv Ben-Dor
12,500
 
1,250
11,250
*
Yochanan Ben-Ner
336,667
 
33,666
303,001
*
Chad M. Bennett
5,025
 
502
4,523
*
Eli Ben Zur
80,000
 
8,000
72,000
*
Razu & Arueka Bergman
12,625
 
1,262
11,363
*
Loie M. Bering
16,667
 
1,666
15,001
*
Elon Berk
7,500
 
750
6,750
*
Robert Beutum 20,200   2,020 18,180   *
Ilona Beutum 5,050   505 4,545 *
Joseph G. Binder
12,500
 
1,250
11,250
*
Heidi M. Blair
53,000
 
5,300
47,700
*
Mila or Paul Blinder
82,063
 
8,206
73,857
*
David Blumberg 37,500   3,750 33,750 *
Jaime Bocanegra
1,000
 
100
900
*
Boomerang Capital Pty Ltd.
30,300
 
3,030
27,270
*
Caroline Botsford
25,125
 
2,512
22,613
*
Kenneth J. Bowman
74,385
 
7,438
66,947
*
Kenneth J. Bowman
5,000
 
500
4,500
*
Kenneth J. Bowman
615
 
61
554
*
Dale A. Bradley
5,050
 
505
4,545
*
Larry R. Bradley 3,125   312 2,813 *
Brian Brassil
244,425
 
24,442
219,983
*
Donna F. Brassil
35,014
 
3,501
31,513
*
Jerry L. Bregman
801,158
 
80,115
721,043
*
John A. Brooks 16,667   1,666 15,001 *
Gerald Brost
10,000
 
1,000
9,000
*
Peter & Effie Brotsis
20,100
 
2,010
18,090
*
William Nelson Brotton
25,250
 
2,525
22,725
*
Therese Brown 10,000   1,000 9,000 *
William F. Brown
100,250
 
10,025
90,225
*
William F. Brown, as Trustee of the Brown Family Trust
50,250
 
5,025
45,225
*
Daivd M. & Nina Brubaker
45,000
 
4,500
40,500
*
Craig & Jodi Buda
101,000
 
10,100
90,900
*
Frank Buda
101,000
 
10,100
90,900
*
Edward F. Bukaty III
10,000
 
1,000
9,000
*
Ricky M. Bullard
62,950
 
6,295
56,655
*
Bulldog International Pty Ltd. 60,000   6,000 54,000 *
Patrick & Olivia Burke Francis
40,000
 
4,000
36,000
*
John Burrough
10,000
 
1,000
9,000
*
Wendell R. Burton
12,500
 
1,250
11,250
*
Avram Buso
250,000
 
25,000
225,000
*
Laverda Y. Butler
6,313
 
631
5,682
*
Roger A. Caccamo
36,438
 
3,643
32,795
*
Tommer Carmel
10,000
 
1,000
9,000
*
R.A. Carrington
50,000
 
5,000
45,000
*
Josh, Carsman
150,550
 
15,055
135,495
*
Annette & James Cassidy
12,500
 
1,250
11,250
*
John Casey or Doreen Cassidy
34,974
 
3,497
31,477
*
Arpad A. Chabafy
27,765
 
2,776
24,989
*
Christopher Cherry
16,834
 
1,683
15,151
*
Cesar Haim & Monica Chomski
50,500
 
5,050
45,450
*
Joe & Juli Clark
5,050
 
505
4,545
*
Tim & Toni Cloonan
20,000
 
2,000
18,000
*
Jennifer D. Coco
3,000
 
300
2,700
*
Irving Cohen
10,100
 
1,010
9,090
*
Jeff Cole
60,000
 
6,000
54,000
*
James Coleman
1,000,000
 
100,000
900,000
*
Deborah J. Collins
1,507,500
 
150,750
1,356,750
1.4%
Cindy L. Colombo
17,500
 
1,750
15,750
*
Michael A. Colombo
17,500
 
1,750
15,750
*
Traci Coltrane
3,000
 
300
2,700
*
Reginald Coopwood
50,000
 
5,000
45,000
*
Dave Cordone
5,050
 
505
4,545
*
Manuel Cornejo
12,500
 
1,250
11,250
*
David L. Cornella
101,000
 
10,100
90,900
*
Debbie Dubravka Cosic
12,500
 
1,250
11,250
*
David Couzin
12,575
 
1,257
11,318
*
Michael R. Crill
187,500
 
18,750
168,750
*
Cronus Enterprise, LLC
100,000
 
10,000
90,000
*
Anthony C. Cruz
10,000
 
1,000
9,000
*
Maria Luisa Cruz
100,000
 
10,000
90,000
*
Marlon H. Cryer
16,667
 
1,666
15,001
*
Gregory M. Curnutte
42,925
 
4,292
38,633
*
William B. Curnutte
5,050
 
505
4,545
*
Gaetano Cutarella
13,130
 
1,313
11,817
*
Melissa Dalton
10,000
 
1,000
9,000
*
Marc T. Dasen
18,485
 
1,848
16,637
*
Kym David
2,000
 
200
1,800
*
Mike Davidov
55,555
 
5,555
50,000
*
Joel D. Davidowski
63,968
 
6,396
57,572
*
John R. Davison
12,500
 
1,250
11,250
*
Ken Deifik 9,750   975 8,775 *
Bernard Demers
50,000
 
5,000
45,000
*
Antoinette Demonbreun
50,500
 
5,050
45,450
*
Zigi & Lauren Dromy
15,000
 
1,500
13,500
*
Errol Derman
20,100
 
2,010
18,090
*
Mattew H. Deters
2,000
 
200
1,800
*
Eduardo Diaz
4,000
 
400
3,600
*
Shah Dilip
50,500
 
5,050
45,450
*
Phong Dinh Ngo
25,000
 
2,500
22,500
*
Alan J. & Melody M. Ditter
3,000
 
300
2,700
*
Thomas J. Dobbins
16,666
 
1,666
15,000
*
Bitton & Shelomo Tobol Dror
18,750
 
1,875
16,875
*
Michael B. & Jennifer Duffy
10,000
 
1,000
9,000
*
Elizabeth Mary Dunn
50,500
 
5,050
45,450
*
Scott Eaker
10,050
 
1,005
9,045
*
Diane M. Earle 50,500   5,050 45,450 *
EB Inc., DBA Trust Plumbing 12,500   1,250 11,250 *
Barbara Shirley Eckert
10,000
 
1,000
9,000
*
Fred J. Eckert
150,000
 
15,000
135,000
*
Gerald Eckert MD
10,000
 
1,000
9,000
*
Thomas F. Eckert
10,100
 
1,010
9,090
*
Michael G. Eckman
12,625
 
1,262
11,363
*
Nissim Edri
266,000
 
26,600
239,400
*
Edward D. Jones & CO. Custodian FBO Eric R Von Borstel SEP
38,750
 
3,875
34,875
*
Peter Eggmann
50,500
 
5,050
45,450
*
Aharon Elchanan
60,000
 
6,000
54,000
*
Eleni & Demetrias Pantazis Family Trust
40,400
 
4,040
36,360
*
Dosit Eli
5,000
 
500
4,500
*
John J. Ellegate
450,000
 
45,000
405,000
*
James Ellison
80,400
 
8,040
72,360
*
Michael Engbrecht
17,170
 
1,717
15,453
*
Shawn Engbrecht
11,195
 
1,119
10,076
*
Kenneth G. Enochs Jr.
10,000
 
1,000
9,000
*
Brenda L. & Karl F. Esengard
3,333
 
333
3,000
*
Dennis D. Estrada
6,250
 
625
5,625
*
Frank J. Estrada
130,000
 
13,000
117,000
*
Becky Etcheverry
12,500
 
1,250
11,250
*
Jerry Lee Evans Jr.
10,200
 
1,020
9,180
*
Jerry Lee Sr. & Ruth Ann Evans
71,710
 
7,171
64,539
*
Amnon Even
62,500
 
6,250
56,250
*
Ray Fadich 50,000   5,000 45,000 *
Steven A. Farah
17,170
 
1,717
15,453
*
Benjamin Farkash
15,625
 
1,562
14,063
*
Sharon Fashempour
9,333
 
933
8,400
*
Charles Schwab Co. Inc. FBO Ronald J. Hauer IRA
10,000
 
1,000
9,000
*
Stephen Marco Fea
111,166
 
11,116
100,050
*
Eran Feig
12,751
 
1,275
11,476
*
Frank Feldman
26,934
 
2,693
24,241
*
Robin Ferris
10,000
 
1,000
9,000
*
Nancy & Vernon JR. Field
20,000
 
2,000
18,000
*
Thomas M. or Julie J. Field
10,000
 
1,000
9,000
*
Darrell Forgey
8,333
 
833
7,500
*
Ronald Forgey
28,333
 
2,833
25,500
*
Frajnd Family Trust 3-14-05
12,625
 
1,262
11,363
*
Benjamin Freeman
40,400
 
4,040
36,360
*
Eliana Freeman
20,000
 
2,000
18,000
*
Gary Freeman
303,000
 
30,300
272,700
*
Jonathan Freeman
12,000
 
1,200
10,800
*
Leela Freeman
20,000
 
2,000
18,000
*
Marc Freeman
120,000
 
12,000
108,000
*
Ian & Julia Freitor
10,000
 
1,000
9,000
*
Ronald & Barbara Freshour
16,413
 
1,641
14,772
*
Gerald J. Fresonke
16,667
 
1,666
15,001
*
Alexander Fritz
60,300
 
6,030
54,270
*
Anne E. Fritz
14,070
 
1,407
12,663
*
Thomas M. Fritz
179,845
 
17,984
161,861
*
John S. & Jeanne A. Frost
48,480
 
4,848
43,632
*
Brad Fryman
10,000
 
1,000
9,000
*
Isabel Omayka Fuentes
10,050
 
1,005
9,045
*
Paul E. Fuller
50,000
 
5,000
45,000
*
Patricia A. Fusano
12,500
 
1,250
11,250
*
Meir & Laurie Gabbai
165,650
 
16,565
149,085
*
Rebekah Gamble
14,140
 
1,414
12,726
*
Cynthia Michelle Garvin 15,000   1,500 13,500 *
Richard J. & Lori L. Gascoyne
100,500
 
10,050
90,450
*
Navot Gasul
16,667
 
1,666
15,001
*
Felix Genkin
50,332
 
5,033
45,299
*
Antonio J. Gentile
20,000
 
2,000
18,000
*
Gregory A. Gereaux
101,000
 
10,100
90,900
*
Aylene Geringer
1,579
 
157
1,422
*
Michael Geringer
14,079
 
1,407
12,672
*
Richard Geringer
1,579
 
157
1,422
*
Johnny O. Gibbons
10,100
 
1,010
9,090
*
Terry L Jr. Giese
22,000
 
2,200
19,800
*
Melinda & Matthew Gins
20,200
 
2,020
18,180
*
David Gitis
7,500
 
750
6,750
*
Marilny & Brad Good
5,000
 
500
4,500
*
Bryan Good
20,100
 
2,010
18,090
*
Diane or William Good
10,100
 
1,010
9,090
*
Renee & John Good
20,200
 
2,020
18,180
*
Robert Le Roy or Susan Lynn Good
34,270
 
3,427
30,843
*
Tom G. or Kathleen M. Good
15,150
 
1,515
13,635
*
Sandra L. Goodwin
12,500
 
1,250
11,250
*
Donald J. Gormley
1,267,500
 
126,750
1,140,750
*
Donald J. & Lynn E. Gormley
20,200
 
2,020
18,180
*
Ofer Gover
10,500
 
1,050
9,450
*
Hymie Green
65,325
 
6,532
58,793
*
Joyce Green
14,442
 
1,444
12,998
*
Daniel Morris Greenberg
4,040
 
404
3,636
*
Evan Jonah Greenberg
4,040
 
404
3,636
*
Lee & Rachel Greenberg
272,510
 
27,251
245,259
*
Marvin & Claire Greenberg
30,300
 
3,030
27,270
*
Yossi Grimberg 10,000   1,000 9,000 *
Richard G. & Jodie R Grimshaw
1,010
 
101
909
*
Stacey Grodski
16,667
 
1,666
15,001
*
Ron Grossman
10,500
 
1,050
9,450
*
Samuel A. Grossman
25,000
 
2,500
22,500
*
Valdis O. or Hinde Gubins
30,000
 
3,000
27,000
*
Maher Guirguis Guindi
1,050,000
 
105,000
945,000
*
Dmitry y. Gurovich
500,000
 
50,000
450,000
*
Ian Peter & Carol Anne Gunn
20,200
 
2,020
18,180
*
Shahar Habani
197,960
 
19,796
178,164
*
Dennis D. or Patricia Ann Hagele
10,000
 
1,000
9,000
*
Yosef Haim
25,000
 
2,500
22,500
*
Gary Jr. &Christy Hale
50,000
 
5,000
45,000
*
Uri & Ora Oli Halfon Trustees
56,111
 
5,611
50,500
*
Mark H. Hall 3,125   312 2,813 *
Jason Harden
12,500
 
1,250
11,250
*
Susan Harmon
17,500
 
1,750
15,750
*
Duncan Harrison
128,842
 
12,884
115,958
*
Fred M. & Sara-Linn Harwin
10,000
 
1,000
9,000
*
Carolyn A. Hauer
19,850
 
1,985
17,865
*
Karen S. Hayes
12,120
 
1,212
10,908
*
Eric and Melissa Heffler
12,625
 
1,262
11,363
*
Clifford Hein
70,350
 
7,035
63,315
*
Sean Hendifar
65,417
 
6,541
58,876
*
Karen Hermesh
6,313
 
631
5,682
*
Talia Hermesh
6,313
 
631
5,682
*
Bruce A. Hesselbach
20,000
 
2,000
18,000
*
Robert N. & Deborah R. Hesselbach
20,000
 
2,000
18,000
*
Troy Hilfiker
3,000
 
300
2,700
*
Mei Hui Ho
100,000
 
10,000
90,000
*
William Lee & Barbara M. Hodges
11,363
 
1,136
10,227
*
Danile C. & Melanie C. Hogan
25,000
 
2,500
22,500
*
Carol Wardlaw Holden
16,667
 
1,666
15,001
*
Sandra I. Hollander
12,500
 
1,250
11,250
*
Dennis Michael & Stephanie Ann Hom
200,000
 
20,000
180,000
*
Charlotte Horowitz
75,750
 
7,575
68,175
*
Crawford Hoss
45,450
 
4,545
40,905
*
Carol G. Hovsepian
12,625
 
1,262
11,363
*
Zakary and/or Heather Hubbard
20,100
 
2,010
18,090
*
Phil Huber
13,750
 
1,375
12,375
*
Nicholas Basil Hudson
13,837
 
1,383
12,454
*
Hummingbird Trust
222,680
 
22,268
200,412
*
Douglas W. Hunter
130,000
 
13,000
117,000
*
Eric L. Hutchings
45,000
 
4,500
40,500
*
Ivan G. Hyden
40,200
 
4,020
36,180
*
Eric Iannamico
8,333
 
833
7,500
*
C. Young Im
71,000
 
7,100
63,900
*
William C. Irish Jr.
25,125
 
2,512
22,613
*
Irwin Meyers C/O Meyers, Saxon & Cole
12,500
 
1,250
11,250
*
John F. Irwin
25,250
 
2,525
22,725
*
Russell J. & Sozanne E. Isham
50,753
 
5,075
45,678
*
Thomas S. Ishkanian
116,993
 
11,699
105,294
*
Scott H. & Maggie Shea Jacobs
26,950
 
2,695
24,255
*
Stephanie Jaehn
2,500
 
250
2,250
*
Jeffrey & Sandra Janes
20,500
 
2,050
18,450
*
Alan J. Jaskoski
1,250
 
125
1,125
*
Robert S. Jefferson
17,625
 
1,762
15,863
*
Patti Lyn Jerzy
10,000
 
1,000
9,000
*
Reuven Jerzy
16,667
 
1,666
15,001
*
Sharone Jerzy
10,100
 
1,010
9,090
*
James D. & Jeris C. Johnson
50,000
 
5,000
45,000
*
Robert Joseph
32,825
 
3,282
29,543
*
William D. Joseph
249,240
 
24,924
224,316
*
Henry & Maxine E. Kalin
20,200
 
2,020
18,180
*
Yossi Kandero
6,250
 
625
5,625
*
Edo Kanterowitsch
12,272
 
1,227
11,045
*
Kathy S. Kaprinyak
4,000
 
400
3,600
*
William S. & Dina M. Kase
21,834
 
2,183
19,651
*
Allan Katz
141,905
 
14,190
127,715
*
Yair and Debra Katzir
20,100
 
2,010
18,090
*
Eyal S. Kaufmann
12,500
 
1,250
11,250
*
Todd Kausrud
45,250
 
4,525
40,725
*
Dayana Kedem
5,000
 
500
4,500
*
Keller Trust Dated: 8/21/99
12,625
 
1,262
11,363
*
Alexander Kerman
30,300
 
3,030
27,270
*
Ken Kessler
40,200
 
4,020
36,180
*
Bernard Kiesel
205,367
 
20,537
184,830
*
Coral Kline
20,000
 
2,000
18,000
*
Heath L. Kline
30,500
 
3,050
27,450
*
Jeremy B. Kline 25,000   2,500 22,500 *
David J. Kludjian
168,670
 
16,867
151,803
*
Roger Klurfeld 50,000   5,000 45,000 *
Robert J. & Bette J. Knepp
10,100
 
1,010
9,090
*
Chris & Post, Eileen Kobus
12,625
 
1,262
11,363
*
Kristen E. Koch
20,200
 
2,020
18,180
*
Tom Kotarac
77,000
 
7,700
69,300
*
Koudanis Family Trust
42,925
 
4,292
38,633
*
John & Eugenia Koudanis
25,250
 
2,525
22,725
*
George Kravitz
50,000
 
5,000
45,000
*
Louis Krokover
12,625
 
1,262
11,363
*
Donald A. Kunda
26,934
 
2,693
24,241
*
Kevin & Julie Kunda
6,667
 
666
6,001
*
Tiffany Kunda
8,080
 
808
7,272
*
Adam Kunst
10,000
 
1,000
9,000
*
Natalia Kustovinov
25,000
 
2,500
22,500
*
Martin H. & Judith C. Katchai
73,670
 
7,367
66,303
*
Kathryn & Andreu Labrador
2,000
 
200
1,800
*
Damon J and Erin L LaCasella
5,000
 
500
4,500
*
Donald La Forest
50,180
 
5,018
45,162
*
Lana Lipkowitz Inc.
10,100
 
1,010
9,090
*
Lana Lipkowitz Inc. & Paul Goldberg
10,100
 
1,010
9,090
*
Robert Langbart
30,150
 
3,015
27,135
*
Moshe & Isac Lazarovits
177,013
 
17,701
159,312
*
Jason Leal
9,000
 
900
8,100
*
Carol Lee
56,100
 
5,610
50,490
*
Wayne Lee
9,000
 
900
8,100
*
Daniel M. Lent-Koop
11,883
 
1,188
10,695
*
Scott and Larra Leonardson
22,000
 
2,200
19,800
*
Roni Leuck
1,579
 
157
1,422
*
Melech Levi
12,500
 
1,250
11,250
*
Greg Levy
151,500
 
15,150
136,350
*
Harry S. & Rose E. Levy TTEE
101,000
 
10,100
90,900
*
Shay Levy
8,838
 
883
7,955
*
Perry B. & Bonnie R. Lewin
20,200
 
2,020
18,180
*
Myra F. Lewis
12,500
 
1,250
11,250
*
Jeff & Robin Lichtenstein
1,000,000
 
100,000
900,000
*
Robert Lichtenstein
45,000
 
4,500
40,500
*
Terry Lichtenstein
55,550
 
5,555
49,995
*
Jeff Lievense
20,100
 
2,010
18,090
*
Barbara A. Lilenfeld
22,330
 
2,233
20,097
*
Barbara M. Lilenfeld
27,100
 
2,710
24,390
*
Carol G. Lilenfeld
12,625
 
1,262
11,363
*
Linda Comfort, Trustee of the Bramy 1989 Living Trust 5,000   500 4,500 *
Sid Lipkowirz
20,000
 
2,000
18,000
*
Dennis Lipscomb
12,625
 
1,262
11,363
*
Steven E. & Sharon P. Littman
1,344
 
134
1,210
*
Aaron C. Loboda
1,200
 
120
1,080
*
Brandon T. Loboda
3,030
 
303
2,727
*
Christopher W. & Renee A. Loboda
35,071
 
3,507
31,564
*
Justin L. Loboda
2,100
 
210
1,890
*
Walter E & Monica S. Loboda
2,677
 
267
2,410
*
Augustin Lomeli
40,000
 
4,000
36,000
*
Michael J. & Stephanie J. Loomis
12,500
 
1,250
11,250
*
Loving Family Trust
16,834
 
1,683
15,151
*
Gabriel Luban
8,000
 
800
7,200
*
Alex Lvovsky
25,000
 
2,500
22,500
*
M. Scott Zillioux SEP IRA FCC As Custodian
40,000
 
4,000
36,000
*
James H. Jr & Kelly Mabry
75,955
 
7,595
68,360
*
Carl Macalalad
149,333
 
14,933
134,400
*
Oren Madar
30,000
 
3,000
27,000
*
ShaI Magdish
36,666
 
3,666
33,000
*
Dotty Malinsky
10,000
 
1,000
9,000
*
Nick L. & Dee Mallas
50,500
 
5,050
45,450
*
Joseph V. Maltese
70,700
 
7,070
63,630
*
Kosta & Lichtenstein, Terry Maltezos
45,450
 
4,545
40,905
*
Dino Daniel Mancinelli
90,900
 
9,090
81,810
*
Julie Mancinelli
26,260
 
2,626
23,634
*
Ricci Mancinelli
221,950
 
22,195
199,755
*
Carl J. Manfredi
4,040
 
404
3,636
*
Manios Family Trust
10,000
 
1,000
9,000
*
Gregory A. or Rae Ann Manship
20,200
 
2,020
18,180
*
Richard L. or Kathryn R. Manship
100,400
 
10,040
90,360
*
Donald Mantie
18,750
 
1,875
16,875
*
Kurt Aaron Mantie
12,500
 
1,250
11,250
*
Ovadya Mantsur
22,000
 
2,200
19,800
*
Brad March
20,000
 
2,000
18,000
*
Michel Margaritis
12,500
 
1,250
11,250
*
Zev Marmurstein
33,667
 
3,366
30,301
*
Patrick Marona
10,100
 
1,010
9,090
*
Ricardo Marquez
6,667
 
666
6,001
*
Harold M. & Marilyn Marshall
22,220
 
2,222
19,998
*
Sherry D. Martin
50,500
 
5,050
45,450
*
Mary E. Good Trustee
10,100
 
1,010
9,090
*
Michael Mascaro
20,000
 
2,000
18,000
*
Ana C. Mathis
8,693
 
869
7,824
*
James Mathis
2,000
 
200
1,800
*
Eliahu Matsliah
300,000
 
30,000
270,000
*
Erez Maya
10,000
 
1,000
9,000
*
Margaret E. Mayberry
5,000
 
500
4,500
*
Steven B. Mayberry
21,000
 
2,100
18,900
*
Timothy Sean Mayne
18,750
 
1,875
16,875
*
Loy A. Mayo
20,100
 
2,010
18,090
*
Mark McCullough
20,100
 
2,010
18,090
*
Patrick J. McInnis
100,000
 
10,000
90,000
*
David F. McKenzie
50,000
 
5,000
45,000
*
Mike Mecka
10,050
 
1,005
9,045
*
Ralph or Barbara Mecka
33,750
 
3,375
30,375
*
Darcey A. Meddings
12,626
 
1,262
11,364
*
Amish & Rajul Mehta
101,000
 
10,100
90,900
*
Howard D. & Rosemary E. Meinicove
12,625
 
1,262
11,363
*
Patricia Melton
12,625
 
1,262
11,363
*
Isidro Cid Mendez Jr. 12,500   1,250 11,250 *
Shauna & Tom Menner
2,020
 
202
1,818
*
Mitchell F. Mense
20,000
 
2,000
18,000
*
Christopher H. Mesbah
12,500
 
1,250
11,250
*
Eyal Messika
33,250
 
3,325
29,925
*
David J. & Cynthia C. Messing
51,284
 
5,128
46,156
*
Yaacov Jake Metzler
176,750
 
17,675
159,075
*
Shirley A. Meyer
80,400
 
8,040
72,360
*
John and Emi Hirose Meyers
12,000
 
1,200
10,800
*
Michael H. Decker & Michele Carkner-Decker
808
 
80
728
*
Jason Miller
5,000
 
500
4,500
*
Jaime Milstein
403,750
 
40,375
363,375
*
Mike or Michael I. Mintz
13,750
 
1,375
12,375
*
Frank Miraglia
18,938
 
1,893
17,045
*
Walter Miraglia
4,040
 
404
3,636
*
Mirimichi Investments PTY Ltd
10,100
 
1,010
9,090
*
L. P. Misuma
33,333
 
3,333
30,000
*
Iouri Mitchenko
10,000
 
1,000
9,000
*
David Mitshnik
100,000
 
10,000
90,000
*
Brian L. Mitteldorf
222,200
 
22,220
199,980
*
Robert & Peggy Mitteldorf
444,400
 
44,440
399,960
*
Avigdor Mizrahi
16,667
 
1,666
15,001
*
Orna Mizrahi (1)
1,000,000
 
100,000
900,000
*
Meir Mizrahi
33,668
 
3,366
30,302
*
Ali Motamedi-Rad
20,000
 
2,000
18,000
*
Bonnie Jean Moore
5,050
 
505
4,545
*
Sia Mormanis
8,333
 
833
7,500
*
Thomas J. III & Joanne O. Munger
17,675
 
1,767
15,908
*
Jim M. & Brenda K. Nabulsi
20,200
 
2,020
18,180
*
Zak & Elizabeth Nahmoulis
21,208
 
2,120
19,088
*
Alan Nanas
20,000
 
2,000
18,000
*
Herb Nanas
20,000
 
2,000
18,000
*
Rick Nanas
10,000
 
1,000
9,000
*
Shmuel Naparstek
10,000
 
1,000
9,000
*
Rami Navarro
60,000
 
6,000
54,000
*
Vaughn Nelson
6,000
 
600
5,400
*
Walter Netzke
32,685
 
3,268
29,417
*
Jerrold Newman
50,000
 
5,000
45,000
*
Hong N. Nguyen
633,040
 
63,304
569,736
*
William & Lupita Niccum
10,100
 
1,010
9,090
*
Howard P. Nichols
20,000
 
2,000
18,000
*
Norman Janes & Patricia M. Janes Living Trust
12,500
 
1,250
11,250
*
Erin Nowak
4,020
 
402
3,618
*
Michael F. & Elizabeth A. O’Brien
14,358
 
1,435
12,923
*
David P. O’Connor
50,000
 
5,000
45,000
*
Zareh Ohanian
20,000
 
2,000
18,000
*
Peter & Wendy Oillataguerre
5,000
 
500
4,500
*
Daniel E. Olander
7,215
 
721
6,494
*
Mathew J. O’Leary
31,984
 
3,198
28,786
*
Kerri Lee Oneill
10,000
 
1,000
9,000
*
Pacific West Management
1,900,000
 
190,000
1,710,000
1.7%
William J. & Margo J. Pagnini, Trustees
12,625
 
1,262
11,363
*
John and Cindy Pappas
4,242
 
424
3,818
*
Lance K. Paris
4,020
 
402
3,618
*
Charles Mack & Hattie E. Pate
20,200
 
2,020
18,180
*
Jeffrey Pedersen
12,625
 
1,262
11,363
*
Michael G. Pelaic
21,250
 
2,125
19,125
*
James J. Peot
10,000
 
1,000
9,000
*
Ronald B. Perelman, MD
25,000
 
2,500
22,500
*
Gal Peretz
10,000
 
1,000
9,000
*
Juan F. Perez
10,050
 
1,005
9,045
*
Robert B. Perkins
6,677
 
667
6,010
*
Dirk D. & Jeannine J. Perriseau
50,000
 
5,000
45,000
*
James M. Perrizo
12,500
 
1,250
11,250
*
John K. Perry
12,500
 
1,250
11,250
*
John M. Petote
631,250
 
63,125
568,125
*
Bertold W. Pfeifer
241,200
 
24,120
217,080
*
Karin Pfeifer
55,166
 
5,516
49,650
*
Dwyne B. Philippin
39,050
 
3,905
35,145
*
Myrna Picard
2,000
 
200
1,800
*
Robin Picard
8,000
 
800
7,200
*
Harve Pierre
12,625
 
1,262
11,363
*
James Reid Pint
50,500
 
5,050
45,450
*
David L. Pitts
20,000
 
2,000
18,000
*
Kellye Tarelka Pitts
20,000
 
2,000
18,000
*
Thomas Plummer 10,000   1,000 9,000 *
Posey Family Trust
30,300
 
3,030
27,270
*
Douglas F. & Windi L. Posey
13,000
 
1,300
11,700
*
Russ & Lauri Posey
10,100
 
1,010
9,090
*
Eleni Potouridou
13,750
 
1,375
12,375
*
Jeanne M. Powell
20,000
 
2,000
18,000
*
Allan H. & Judith M. Price
18,750
 
1,875
16,875
*
Myra Priskie
20,000
 
2,000
18,000
*
Linda Provencio
10,000
 
1,000
9,000
*
David L. Puckett
148,134
 
14,813
133,321
*
Paul D’arey Purtill
60,000
 
6,000
54,000
*
Amalia Michelle Quezada
4,000
 
400
3,600
*
Kobi & Golan Rabin
12,625
 
1,262
11,363
*
Josef & Mirit Rabinovitz
303,000
 
30,300
272,700
*
David J. Radis
12,500
 
1,250
11,250
*
Alen Rasidkadic
15,000
 
1,500
13,500
*
George & Dorothy Relyea
5,050
 
505
4,545
*
William T. Rhodes
97,750
 
9,775
87,975
*
Yolanda Ridoutt
16,667
 
1,666
15,001
*
Itzik & Sandra Rief
20,200
 
2,020
18,180
*
Bryan & Tamara Riley
5,000
 
500
4,500
*
Annakali Rimada 12,500   1,250 11,250 *
Robert Saxon C/O Meyers, Saxon & Cole
12,500
 
1,250
11,250
*
James E. Rock, Jr.
12,500
 
1,250
11,250
*
John Thomas Rogers Jr.
103,525
 
10,352
93,173
*
Reynoldo J. Roman
10,000
 
1,000
9,000
*
Roscious Pty Ltd.
20,000
 
2,000
18,000
*
Jason Rosenberg
4,500
 
450
4,050
*
Larry & Carla Rosenberg
26,333
 
2,633
23,700
*
Bert Rosenbluth
12,625
 
1,262
11,363
*
Bernice Ross
25,000
 
2,500
22,500
*
Joseph S. Rossi
50,500
 
5,050
45,450
*
Chad W. Roth
2,525
 
252
2,273
*
Shane V. Roth
7,070
 
707
6,363
*
Ron Rotschild
16,833
 
1,683
15,150
*
Ruck & Maul Pty Ltd ATF Johneales Family Trust
20,000
 
2,000
18,000
*
Jeff Ruiz
30,582
 
3,058
27,524