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REVOLUTIONARY CONCEPTS INC - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")
(Edgar Glimpses Via Acquire Media NewsEdge) The following is management's discussion and analysis (|MD&A") of certain
significant factors that have affected our financial position and operating
results during the periods included in the accompanying consolidated financial
statements, as well as information relating to the plans of our current
management. This report includes forward-looking statements. Generally, the
words "believes," "anticipates," "may," "will," "should," "expect," "intend,"
"estimate," "continue," and similar expressions or the negative thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this report or other reports or documents we file with the
Securities and Exchange Commission from time to time, which could cause actual
results or outcomes to differ materially from those projected. Undue reliance
should not be placed on these forward-looking statements which speak only as of
the date hereof. We undertake no obligation to update these forward-looking
statements.
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this Form 10-K
The Company's MD&A is comprised of significant accounting estimates made in
the normal course of its operations, overview of the Company's business
conditions, results of operations, liquidity and capital resources and
contractual obligations. The Company did not have any off balance sheet
arrangements as of December 31, 2010 or 2011.
The discussion and analysis of the Company's financial condition and results of
operations is based upon its financial statements, which have been prepared in
accordance with generally accepted accounting principles generally accepted in
the United States (or "GAAP"). The preparation of those financial statements
requires us to make estimates and judgments that affect the reported amount of
assets and liabilities at the date of its financial statements. Actual results
may differ from these estimates under different assumptions or conditions.
Critical accounting policies are those that reflect significant judgments or
uncertainties, and potentially result in materially different results under
different assumptions and conditions. The Company has described below what it
believes are its most critical accounting policies. SEE ALSO NOTES 1 and 2 TO
FINANCIAL STATEMENTS, "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES."
SUMMARY OF CRITICAL ACCOUNTING POLICIES
Revenue recognition
The Company will recognize sales revenue at the time of delivery when ownership
has transferred to the customer, when evidence of a payment arrangement exists
and the sales proceeds are determinable and collectable. Provisions will be
recorded for product returns based on historical experience. To date, the
Company's revenue is primarily comprised of interest income.
Options and warrants issued
The Company allocates the proceeds received from equity financing and the
attached options and warrants issued, based on their relative fair values, at
the time of issuance. The amount allocated to the options and warrants is
recorded as additional paid in capital.
Stock-based compensation
(Included in Accounting Standards Codification ("ASC") 718 "Share Based
Payment", previously SFAS No. 123(R) "Accounting for stock based compensation")
The Company will account for its employee stock based compensation arrangements
in accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25. "Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense for stock options, common stock and other equity
instruments issued to non-employees for services received will be based upon the
fair value of the equity instruments issued, as the services are provided and
the securities earned. SFAS No. 123, "Accounting for Stock-Based Compensation",
requires entities that continue to apply the provisions of APB Opinion No. 25
for transactions with employees to provide pro forma net earnings (loss) and pro
forma earnings (loss) per share disclosures for employee stock option grants as
if the fair-value-based method defined in SFAS No. 123 had been applied to these
transactions. For the period from inception (March 12, 2004) to December 31,
2011, no stock options were committed to be issued to employees.
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Income taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss carry forwards that are available to be carried forward to future years for
tax purposes. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. When it is not considered to be more
likely than not that a deferred tax asset will be realized, a valuation
allowance is provided for the excess. Although the Company has significant loss
carry forwards available to reduce future income for tax purposes, no amount has
been reflected on the balance sheet for deferred income taxes as any deferred
tax asset has been fully offset by a valuation allowance.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions, where applicable, that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. While actual results could differ from
those estimates, management does not expect such variances, if any, to have a
material effect on the financial statements.
Research and Development Costs
Research and development costs are expensed as incurred in accordance with
generally accepted accounting principles in the United States of America.
Research is planned search or critical investigation aimed at discovery of new
knowledge with the hope that such knowledge will be useful in developing a new
product or service or a new process or technique or in bringing about a
significant improvement to an existing product or process. Development is the
translation of research findings or other knowledge into a plan or design for a
new product or process or for a significant improvement to an existing product
or process whether intended for sale or use. It includes the conceptual
formulation, design, and testing of product alternatives, construction of
prototypes, and operation of pilot plants. It does not include routine or
periodic alterations to existing products, production lines, manufacturing
processes, and other on-going operations even though those alterations may
represent improvements and it does not include market research or market testing
activities. Elements of costs shall be identified with research and development
activities as follows: The costs of materials and equipment or facilities that
are acquired or constructed for research and development activities and that
have alternative future uses shall be capitalized as tangible assets when
acquired or constructed. The cost of such materials consumed in research and
development activities and the depreciation of such equipment or facilities used
in those activities are research and development costs. However, the costs of
materials, equipment, or facilities that are acquired or constructed for a
particular research and development project and that have no alternative future
uses and therefore no separate economic values are research and development
costs at the time the costs are incurred. Salaries, wages, and other related
costs of personnel engaged in research and development activities shall be
included in research and development costs. The costs of contract services
performed by others in connection with the research and development activities
of an enterprise, including research and development conducted by others in
behalf of the enterprise, shall be included in research and development costs.
Depreciation
Depreciation is computed using the straight-line method over the assets'
expected useful lives.
Amortization
Deferred charges are amortized using the straight-line method over five and six
years.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits in banks with
maturities of three months or less, and all highly liquid investments which are
unrestricted as to withdrawal or use, and which have original maturities of
three months or less.
Concentrations of Credit Risk
Financial instruments that subject the Company to concentrations of credit risk
consist primarily of cash and cash equivalents. The Company maintains its cash
and cash equivalents with high-quality institutions. Deposits held with banks
may exceed the amount of insurance provided on such deposits. Generally these
deposits may be redeemed upon demand and therefore bear minimal risk.
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Fair Value of Financial Instruments
The carrying value of financial instruments including cash and cash equivalents,
receivables, accounts payable and accrued expenses, approximates their fair
value at December 31, 2011 due to the relatively short-term nature of these
instruments.
Supplies
Supplies are experimental materials used for research and development purpose.
Actual cost is used to value these materials and supplies.
Valuation of Long-Lived Assets
The Company periodically analyzes its long-lived assets for potential
impairment, assessing the appropriateness of lives and recoverability of
unamortized balances through measurement of undiscounted operating cash flows on
a basis consistent with accounting principles generally accepted in the United
States of America.
Intangible and Other Long-Lived Assets, Net
(Included in Accounting Standards Codification ("ASC") 350 "Goodwill and Other
Intangible Assets" previously SFAS No. 142 and ASC 985 "Accounting for Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed" previously SFAS No.
86)
Intangible assets are comprised of software development costs and legal fees
incurred in order to obtain the patent. The software development costs are
capitalized in accordance with SFAS 86. Costs of producing product masters
incurred subsequent to establishing technological feasibility shall be
capitalized. Those costs include coding and testing performed subsequent to
establishing technological feasibility. Software production costs for computer
software that is to be used as an integral part of a product or process shall
not be capitalized until both (a) technological feasibility has been established
for the software and (b) all research and development activities for the other
components of the product or process have been completed. The fees incurred in
order to obtain the patent are capitalized in accordance with SFAS 142 "Goodwill
and Other Intangible Assets. This Statement applies to costs of internally
developing identifiable intangible assets that an entity recognizes as assets
APB Opinion 17, paragraphs 5 and 6. The Company periodically analyzes its
long-lived assets for potential impairment, assessing the appropriateness of
lives and recoverability of unamortized balances through measurement of
undiscounted operating cash flows on a basis consistent with accounting
principles generally accepted in the United States of America.
Comprehensive Income
(Included in ASC 220 "Reporting Comprehensive Income" previously SFAS No. 130)
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income as defined includes all changes in equity during a period from non-owner
sources. Accumulated comprehensive income, as presented in the accompanying
statement of changes in shareholders' equity consists of changes in unrealized
gains and losses on foreign currency translation. This comprehensive income is
not included in the computation of income tax expense or benefit.
Related Parties
For the purposes of these financial statements, parties are considered to be
related if one party has the ability, directly or indirectly, to control the
party or exercise significant influence over the party in making financial and
operating decisions, or vice versa, or where the Company and the party are
subject to common control or common significant influence. Related parties may
be individuals or other entities.
Unpaid Capital Contributions
"Unpaid Capital Contributions" are short-term loans to our officers and
directors in lieu of salary or other compensation. These loans are unsecured,
bear a 5% interest and have five year repayment term. The total balance of loans
to officers and directors was $121,952 and $80,345 in 2010 and 2011,
respectively.
Management expects these loans on a rolling basis throughout the term of the
five year loans. After deducting re-payments made by the officers and adding
accumulated interest, balances were due as of year ended 2010 and 2011 as
follows:
12/31/10 12/31/11
Ron Carter $ 44,824 $ -0-
Garry Stevenson 33,042 34,428
Bethiel Tesfasillasie 44,086 45,917
$ 121,952 $ 80,345
In the event that the loans are not fully repaid, any shortfall will be written
off as compensation expense in its income statement.
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Earnings (Loss) Per Common Share
Basic earnings (loss) per common share are computed on the basis of the weighted
average number of common shares outstanding during the period.
Diluted earnings (loss) per share are computed on the basis of the weighted
average number of common shares and dilutive securities (such as convertible
preferred stock) outstanding. Dilutive securities having an anti-dilutive effect
on diluted earnings (loss) per share are excluded from the calculation.
Overview - Business Conditions
The Company is a development stage company positioned to begin launch and
license of its patented technologies in 2012. The Company was incorporated as a
Nevada corporation on February 28, 2005 to reincorporate and re-domesticate two
existing North Carolina entities; Revolutionary Concepts, Inc. and DVMS, LLC.
The Company in engaged in the development of smart camera technologies that
interface with smart handheld devices enabling remote monitoring.
The Company's efforts to date have been devoted to securing the intellectual
framework around several key technologies and applications related to remote
video monitoring. Advances in wireless technologies combined with increased data
speed rates permits a very sophisticated and new means of monitoring, security
and entry management.
The company has branded is new smart technology "EyeTalk®". EyeTalk® is a first
generation smart camera technology that allows interactive two-way communication
between a smart phone or other handheld device.
Unlike many IP cameras that simply produce and transmit an image, the EyeTalk®
smart camera technology has embedded capabilities that distinguish it as a
significant technological advancement over traditional camera systems.
In July of 2011, Revolutionary Concepts engaged SIS Development Inc. to direct
the development of this state of the art system. SIS Development, Inc. offers
highly specialized, wing-to-wing commercial OEM product development services.
SIS Development has an extensive track record of high volume product and
software successes in Fortune 100 and startup environments alike. The initial
product launch will be in the entry management space for both residential and
commercial uses, with a medical application as an immediate spin-off.
The company currently holds two (2) patents, and expects to have a total of
seven (7) by midyear 2012. The 5 pending patents will fortify the claims of the
initial patent award and position Revolutionary Concepts as a key player in the
wireless camera space. The company plans to implement a variety of
commercialization strategies ranging from development to licensing to generate
revenue and to capitalize on the opportunities made possible by the wave of new
wireless products in the market place.
The Company has funded development through three private offerings in 2005, 2007
and 2009. The Company also borrowed $307,500 from four non-related parties at 4%
interest to fund ongoing operations, and new patent applications. These
promissory notes began to become due in October 2008 and were repaid in November
2008 by issuing 630,811 shares of restricted common stock from authorized
shares.
In July and August 2009, the Company issued two notes payable in the total
amount of $20,000. The two notes were later combined at the note holder's
request into one note. The note bears interest at a rate of 10%. Principal and
interest were due in May 2010. In 2009, the board of directors agreed to
guarantee a personal loan to the President of the Company, Mr. Ron Carter of
$75,000 with interest of 10%, by a shareholder. The note became due in November
2010. On October 5, 2010, the Company received notice that a claim for judgment
had been filed in Mecklenburg County by a shareholder for the note that was in
default as of May 2010. On January 7, 2011, the note holder amended the filing
to include the personal loan. The amount of the claim is $100,996, plus interest
at 18% and legal costs. On the 10 th day of May 2011, a summary judgment was
entered on behalf of the plaintiff against Mr. Carter and the Company. On the
4th day of August 2011, the Company reached an agreement with a third party to
negotiate and acquire the judgment award and to agree to a convertible note from
the Company for its services. The total value of the convertible note is
$144,066.76 with no interest, of which the Company has received a promissory
note from Mr. Carter for $112,663.02 for the part of the judgment, interest and
fees that was from the personal promissory note that the Company guaranteed
In July 2010, the Company partnered with US Financial and Rainco Industries to
consult in Investor Relations, introduction to institutional investors, assist
with mergers and acquisitions, and to help develop a strategy to fund its
growth. As a result of this partnership, the Company has resolved additional
debt obligations, is now trading on both the US and Frankfurt stock exchanges
and is also now listed with Standards and Poors. In November 2011, the Company
terminated its association with US Financial but retained the relationship with
Rainco Industries.
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Introduction to EyeTalk®
Revolutionary Concepts is the patent holder of a wireless smart camera
technology, branded EyeTalk®. EyeTalk® represents a very disruptive technology
that integrates into an industry of new smart devices…. an industry on pace to
establish a new era in everyday life across all lines.
From Wire Industry News - February 2012;
By most standards, the iPhone is considered by a lot of people to be one of the
most successful products in business history, and there are many reasons why the
majority of people and especially iPhone users think so.
So far, about 200 million iPhones have been sold since it was introduced in the
spring of 2007, and 37 million of them in the last three months of 2011 alone.
And make no mistake-- the iPhone is a huge revenue generator! Just last quarter,
it contributed to over $24.39 billion in revenue for the fruity company from
Cupertino, greater than the $20.9 billion Microsoft made in all of its many
businesses.
Apple also produces the iPad. iPad is a line of tablet computers designed,
developed and marketed by Apple Inc., primarily as a platform for audio-visual
media
Tech Crunch - March 2012
Following Apple's announcement yesterday of the new iPad's record weekend, which
saw 3 million devices sold in three days, analysts are upping their predictions
for the tablet's market share growth over the course of the year. In a note to
investors, Gene Munster of Piper Jaffray says the firm is now forecastingas many
as 66 million sales of the new device in 2012, up from the earlier prediction of
60 million. Meanwhile, Shaw Wu of Sterne Agee is now predicting 60 million, up
from 55 million. Regardless of the final outcome, the bottom line impact the
device will have on the market was summed up in Munster's bullish note: "we
believe the unprecedented ramp of the iPad over the past year is evidence that
the tablet market will be measurably larger than the PC market," he said.
Revolutionary Concepts EyeTalk® technology represents a camera system with
embedded intelligence. Moving beyond the typical take a picture, take a video
and send it technology, the
EyeTalk® technology will activate and engage. The capabilities of the EyeTalk®
system go beyond the ability to offer two way communication by incorporating an
embedded processor that will ultimately be able to communicate and interpret
while providing video surveillance and remote monitoring capabilities.
Wireless cameras, wireless communication devices such as smart phones and hand
held devices represent the ultimate marriage of wireless technologies. Until we
discover how to actually teleport people, wireless cameras and mobile monitors
will allow people to literally be in two places at once.
Revolutionary Concepts believes its patent represents a very significant asset
and advancement in camera technology.
The EyeTalk® technology is primarily a software platform with a hardware
component of an external smart camera deployed at a chosen location. The system
offers two-way communication and it streams video to designated PC or handheld
devices such as PDA's, smart phones or other smart devices. . The software
interface allows the system to offer preprogrammed messages, greetings,
commands, etc. The software maintains information captured by the EyeTalk®
system. Access to the information may be achieved via a Personal Data Assistant
(PDA), Handheld Computer (HC), Smart phone, or other compatible device. The
EyeTalk® software platform will be able to communicate with many of the
smartphone and other devices that are currently available in the market place.
As a residential application, the EyeTalk® system provides a very effective and
efficient means of entry management allowing seamless communication to and from
a location to the owner to interact remotely with anyone who approaches with the
benefit of audio, video and data communication. The system utilizes new
technology to synergistically improve communication, security, convenience,
messaging, and manage deliveries and guest.
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According to USBX (US Business Exchange), "iSuppli, a respected technology
market research firm, announced this quarter that they project IP video
surveillance camera revenue to grow to more than $9.0 billion by 2011, a
compound annual growth rate of 13.2%". Declining cost of new surveillance
technology have improved the viability of enhanced security systems while
boosting the affordability and demand for basic security systems among families
in the middle to lower-middle income strata of society."
The point of greatest significance is not the fact that Revolutionary Concepts
plans to participate in this space, but the fact that our company owns IP rights
to the much anticipated wireless activity in the space.
The company has a careful eye on the transition many traditional security
companies are attempting to make to a more practical video solution. Fortunately
for Revolutionary Concepts, the company owns the rights to the use of wireless
cameras and their interface with wireless handheld devices.
The EyeTalk® system also records and archives data, video and audio records. The
system provides a centralized control system using a user-friendly application
with a means for storing digital images and provides enhanced security features.
The company also recognizes that we have entered an era where cellphone
applications are just a matter of every day activity. An "AP" that offers
individuals the ability to manage and monitor locations of interest is both very
marketable and necessary.
Our management expects the EyeTalk® technology to provide three primary
benefits:
Protection - EyeTalk® as a standalone system will provide a much safer platform
because of its preemptive capabilities, or the EyeTalk® system may augment
current residential and commercial security systems.
Monitoring - EyeTalk® may allow the user to better facilitate the task of entry
management in non-threatening circumstances, such as latch key school children,
and deliveries allowing the user to maintain better control and understanding of
what is going on at any given location or property at any given time.
Convenience - EyeTalk® will add convenience to home and business owners, by
providing a more responsive and efficient means of responding to, screening, and
monitoring activity at a given location. Deliveries and service appointments can
be better managed with a system such as EyeTalk®..
For all intents and purposes, traditional security and alarm services are
ineffective, inefficient and costly. Across the country, municipalities report
false alarms at a rate exceeding 90%. The response time between an event and
police arrival can be much too long. EyeTalk® represents a proactive response
rather than a reactive one.
To insure the highest quality and product reliability, Revolutionary Concepts
entered into a development agreement with SIS Development to produce the initial
EyeTalk system. Revolutionary Concepts is committed to producing a very high
quality, reliable and sophisticated system however the first generation of the
EyeTalk®technology will not have all of the feature sets intended for future
models, and will simply serve as the company's initial launch and introduction.
SIS Development, Inc. offers highly specialized, wing-to-wing commercial OEM
product development services. SIS has managed formidable, leading-edge design
teams shipping millions of products a year and has an extensive track record of
high volume product and software successes in Fortune 100 and startup
environments alike.
The President of SIS Development is Richard Kramer. Prior to founding SIS
Development, Inc. and Security Industry Services, Inc., Richard Kramer served as
General Manager-Technology and Vice President, Engineering at General Electric's
GE Security division, where he led a progressive 250+ person organization with
more than $500M per year in revenue. He was responsible for managing 16 groups
in 11 geographically dispersed locations, providing advanced Network, Software,
Wireless, Enterprise/Commercial/Residential/Real Estate Solutions for the video
surveillance (system software, IP solutions, communications, cameras, recorders,
PTZs, video recognition technology), life safety (central station software,
intrusion systems, software and sensors), and key control/real estate system
software/product markets.
The EyeTalk® product development is in very capable and competent hands.
Needless to say, we are thrilled to have SIS Development as a part of our team.
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INDUSTRY
Security industry stats from IMS Research
by Geoff Kohl
First up is 2009.
In the Americas, here's how differing industries compared in a rough financial
year. The semiconductor market was down 30%; industrial automation was down 15%;
vehicle production was down 33% and consumer technology was down 6%. Despite
those significant downturns in many major industries, the electronic security
industry was down only 0.2%. Basically, that means our industry stayed flat
during 2009.
Also in 2009, IMS saw network video up 25% and analog video down 7%. They saw a
terrible year for analytics companies. While analytics was having trouble,
megapixel video surveillance had a good year, even as HD emerged as a potential
format of choice. Megapixel could even outpace "standard resolution" IP video
usage by 2012 or 2013 based on what IMS saw in 2009.
Now to the future...
In 2013, in the Americas, video surveillance is going to be 43% of the total
physical security systems market; that means a huge increase in terms of video's
role in the overall market. Fire will be 20% (that's down from current market
share per IMS); intrusion will be 11.2% (also down in overall market share); and
access control will be 7.8% (again, that's down in overall market share -- a
loss chiefly attributed video's strong growth rather than any failing in the
access control market).
In 2010 (since that's the year we're dealing with now), IMS is forecasting a
large number of mergers and acquisitions, which they think will happen because
the capital funding for such purchase is finally coming back. They're expecting
2% growth in North America for security products as a whole, a growth number
that pales in comparison to a 15.2% growth forecast for security products in
China/India. While North America isn't going to see the banner year that China
and India will see, it certainly is better than what IMS is forecasting for
Europe -- which is a -4.8% decline in overall revenues attributed to the sale of
security products.*
*Article not incorporated by reference.
The tipping point for when IP video takes over analog video in sales is going to
be pushed back a year thanks to the bad economy of 2009; now it is forecasted to
be 2013 or 2014 when that transition happens.
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How to Capitalize on the Fastest Growing Trend in Residential Security
By Jay Kenny - Feb 03, 2012
Security dealers and integrators are recognizing that consumers increasingly
rely on smartphones, tablets and other mobile devices to control home security,
automation and energy management services. Alarm.com, a provider of interactive
security solutions, has evidence to support this trend.
This shift in consumer behavior is driven both by the explosive adoption of
mobile devices and the availability of dynamic apps and services for end users
to unlock additional value from their security system. Usage trends are not
limited to monitoring security events that occur in the home, but also extend to
a range of relevant day-to-day interactive services such as receiving
motion-triggered video clips when kids arrive home from school, alerts when
cabinets are accessed, or the ability to remotely adjust thermostats, lights and
door lock settings. It is a behavioral change that presents a new opportunity
and should not be lost on security dealers and integrators. Mobile connection to
the security system has proven to be a successful way to improve retention of
existing customers, drive new customer acquisition, deliver additional
revenue-generating services, and differentiate a product offering as new
entrants hit the market.*
*Article not incorporated by reference.
EyeTalk® as stated previously represents a technology with embedded
intelligence. This one key feature that we term smart camera technology,
combined with smart phone technology is a very powerful and compelling
combination of technologies. A key reason we define EyeTalk® a "disruptive
technology".
Mobile apps help close sales - Increasingly, feedback from Alarm.com partners is
that one of the most powerful sales tactics is to show interactive system
capabilities and features on a mobile device such as an iPhone, iPad or Android
smartphone. This "mobile-first" approach in the sales cycle is more effective
than showing mobile apps as a "nice-to-have" among a list of broader system
features. Once prospective customers see how easy and convenient it is to use a
free app to arm the system, adjust the lights or watch live video of their
property, their perceived value increases dramatically and distances the product
offering from that of competitors.
Mobile services keep customers "sticky" - In addition to helping dealers close
more sales, the mobile app significantly drives day-to-day use of the system, in
turn increasing customer stickiness and reducing customer attrition. In fact,
analysis conducted by Alarm.com in 2011 confirmed a direct correlation between a
consumer's consistent interaction with their interactive security system and
reduced attrition. Through an independent third party analysis, it was proven
that customers with interactive accounts stay on longer than traditional
security customers and those who are actively logging into their accounts via
the Alarm.com website or mobile app attrite even less.
Mobile apps help meet rising consumer expectations - Current mobile trending
shows people are not just becoming more comfortable with technology, but that
they prefer the convenience of the mobile app to monitor and control home
security system settings. Mobile apps enhance the value of the security platform
and deliver access to key services consumers expect on-demand wherever they are,
and from any device.
Mobility isn't just about remote access - It would be reasonable to assume that
customers are solely utilizing mobile devices remotely to monitor and interact
with security, video, energy and automation functions. But dealers and
integrators report that for many customers the mobile app offers much more.
Customers appreciate the ability to change system settings, lock doors or turn
off lights from the living room couch or bedroom rather than having to do so
from a physical keypad. Mobile apps also offer a new level of awareness and
comfort by enabling the user to stay connected and essentially extend the value
of the security system.
Mobile apps can drive sales for other services - Mobile apps can expose
customers to additional services anchored to the security platform, especially
when used as a sales tactic for a whole home solution. The ease of controlling
home energy and seeing video through the same platform can create higher system
value as well as increase the opportunity to attach add-on services and generate
more RMR. Mobile apps help drive sales for system-integrated services such as
video, energy management and home automation.
Below is an illustration of the security market segments. (2011)
[[Image Removed]]
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Future Plans and Potential Markets
Our management believes it has the capability to enter into a growing security
marketplace with an explosive product at the perfect time.. Research and current
trends suggest that the security industry will continue to experience increased
spending and growth on detection devices such as EyeTalk®. The companies
Intellectual Property makes it more than just a provider but the outright owner
of a very relevant and significant IP… a tremendous asset. The future of the
company is bright and the options of development and/or licensing provide
incredible latitude.
The company systematically filed patents over the past decade in the areas of
medical, institutional, child monitoring, home healthcare and real estate
markers. As these assets are now manifesting themselves one by one, the
company's plans are unfolding perfectly. Each of the aforementioned markets are
monumental and perfectly suited for the IP in our portfolio.
The company also believes that EyeTalk® has advantages over existing and
competing technologies by virtue of its embedded intelligence and processing
capabilities. . Many of these capabilities may not relate to the security field
at all, but may nonetheless be commercially useful. The additional commercial
benefits of the EyeTalk® include:
º Virtual reception capabilities for offices and businesses
º Advanced operations management and remote supervision
º Remote on-line education and real-time teacher/student interface
(homeschooling)
º Home healthcare monitoring and independent living capabilities
º Sports applications and entertainment
Sales Strategy
The company plans to utilize multiple sales and distribution channels.
· Multi-level Marketing
Multi-level Marketing (MLM) is one of the sales strategies the company plans to
employ. This idea was suggested by a vast number of shareholders who have MLM
experience and can create an immediate sales force. As the company explored the
MLM sales option, it became very evident that a MLM distribution channel could
be very effective and lucrative. A number of key factors support this
distribution approach.
1) Economic conditions make a MLM opportunity for people either out of work or
needing to supplement their income very attractive. This fact combined with
product appeal make the sale of EyeTalk® through a MM model very attractive.
2) Rapid growth and rapid revenue potential for the company are very possible
given the network of supporters and shareholders with interest in marketing
and selling the EyeTalk® systems
MLM sales worldwide sales are in excess of $100 billion dollars and growing
annually. Every product category imaginable is now sold through MLM. Ease of
entry, speed to market and relatively low startup marketing cost are two key
factors to many companies selecting the MLM model. Products that are best sold
through personal demonstration are highly successful in the MLM business model.
A number of companies have entered the MLM industry and achieved over $100
million in annual revenue in less than five (5) years and several have reached
$500 million or more in the same period. It is not uncommon for companies to
achieve triple digit growth for a number of years in the startup phase.
Members of our management team, who are seasoned in the MLM industry, as well a
number of our shareholders are considering establishing a contract with a new
MLM company that would be formed and would have the exclusive marketing and
distribution rights to the EyeTalk® home entry management system in the United
States, with an option for other countries. Members of management may be
involved in the organization and operation of the newly formed company. No
assurances can be provided that such MLM company will be formed. All of these
actions would require Board approval and the Company would endeavor to ensure
all Nevada corporate requirements and SEC statutory disclosure requirements
would be met, prior to any action being taken.
(24)
Table of Contents
- Licensing
Revolutionary Concepts currently holds the IP that provides the use of a
wireless camera and it's interface with other devices enabling monitoring. The
IP is very relevant to a multi-billion dollar industry. The company plans to
offer licensing opportunities to companies who wish to utilize this technology
and aggressively defend its patent rights.
· Internet Sales
The Company expects to sale a significant percentage of the EyeTalk® technology
via direct internet sales. The company is currently developing 3 commercials
that will be airing of television networks, YouTube and the company's website.
It is anticipated that these commercials will generate interest and sales.
- Existing Security Companies
The use of wireless camera technology is so effective and efficient today that
every security company will have to include the technology in their product
offerings in order to remain competitive. Revolutionary Concepts will not only
offer a wireless camera technology, but one the company believes will be vastly
superior because of its smart capabilities. The company is in the process of
developing key relationships with industry leaders to identify the fortune 500
companies we will target.
· Commercials and Advertising
The company has engaged the services of two individuals to assist in the
development of its first 3 commercials to be aired on television networks,
internet sites and the company's website.
Patent and Intellectual Property
On March 20, 2007, the United States Patent and Trademark Office issued to the
Company a patent, number 7,193,644 B2. The patent abstract states:
"The invention is audio-video communication and answering system that
synergistically improves communication between an exterior and an interior of a
business or residence and a remote location, enables messages to be stored and
accessed from both locally and remotely, and enables viewing, listening, and
recording from a remote location. The system's properties make it particularly
suitable as a sophisticated door answering-messaging system. The system has a
DVMS module on the exterior. The DVMS module has a proximity sensor, a video
camera, a microphone, a speaker, an RF transmitter, and an RF receiver. The
system also has a computerized controller with a graphic user interface DVMS
database application. The computerized controller is in communication with a
public switching telephone network, and an RF switching device. The RF switching
device enables communication between the DVMS module and the computerized
controller. The RF switching device can be in communication with the other RF
devices, such as a cell phone, PDA, or computer."
Legal
For several years, RCI has been engaged in litigation against its former patent
attorneys for malpractice arising from a missed filing deadline relating to
obtaining patents for RCI's core technologies outside the United States. After
a two-year fight over jurisdiction in the case, including wins for RCI at the
trial court and at the North Carolina Court of Appeals, the case was remanded to
the trial court for further proceedings. Unfortunately, the trial court
dismissed the case on a technicality, potentially ending the case. RCI's trial
counsel have assured the Company that the judge's ruling is contrary to law and
that good grounds exist for appeal. A decision about whether to appeal is
forthcoming.
COMPETITION
We expect to compete with much larger and better financed companies in the
remote monitoring industry, all of which have superior name recognition, such as
ADT, Alarm Force, ATT, Pinkerton's and others. RCI owns the patent by which many
of the aforementioned companies will be dependent upon and "MAY" already be
infringing in some manner
Remote monitoring is available through a variety of media and processes,
including systems integrators, closed circuit television systems, intrusion
detection systems, and others. These systems typically incorporate ultrasonic,
infrared, vibration, microwave and other sensors to detect door and window
openings, glass breakage, vibration, motion, temperature, and noise and transmit
through alarms and other peripheral equipment.
For example, the ATT remote monitor integrates with Cingular and Yahoo through
cell phones and wireless internet. The user can remotely select the device and
determine whether notification will be triggered by door sensors, motion
sensors, temperature sensors or a combination. The user can remotely control
cameras with pan, tilt and zoom features. The user can download and record or
view live camera. The EyeTalk® system provides similar capabilities; however
with two-way communication and a programmable software interface enabling the
system to effectively manage itself if the user desires.
Industry analysts report that both Cysco and IBM are developing new hardware and
software applications for remote monitoring that, if successful, could have
profound implications for the industry.
Regulation
We are subject to the same federal, state and local laws as other companies
conducting business in the software field. Our products are subject to copyright
laws. We may become the subject of infringement claims or legal proceedings by
third parties with respect to its current or future products. In addition, we
may initiate claims or litigation against third parties for infringement of its
proprietary rights, or to establish the validity of our proprietary rights. Any
such claims could be time-consuming, divert management from our daily
operations, result in litigation, cause product delays or lead us to enter into
royalty or licensing agreements rather than disputing the merits of such claims.
Moreover, an adverse outcome in litigation or a similar adversarial proceedings
could subject us to significant liabilities to third parties, require the
expenditure of significant resources to develop non-infringing products, require
disputed rights to be licensed from others or require us to cease the marketing
or use of certain products, any of which could have a material adverse effect on
our business and operating results.
(25)
Table of Contents
Results of Operations
Comparison of Twelve months Periods Ended December 31, 2010 and December 31,
2011
Assets. Assets increased by $112,779 to $128,921 as of December 31, 2011, or
approximately 699%, from $16,142 as of December 31, 2010. This increase was
primarily due to additional computers offset by the accumulated depreciation and
amortization and a note receivable for $112,663 from a related party.
Liabilities. Total liabilities increased by $1,068,666 to $1,734,297 as of
December 31, 2011, or approximately 161%, from $665,631 as of December 31, 2010.
The increase was primarily due to increases notes payable, accrued payroll
expenses for payroll and the related expected payroll liability and a contingent
payroll liability that we have booked on unpaid capital contributions. As the
Company continued to develop its technology, it has incurred additional
development and legal cost associated with protecting its IP rights and
furthering the abilities of the technology. Additionally, we were able to
convert some of the accrued compensation and expenses of certain officers and
vendors into long term notes payable, to reduce our current liabilities, improve
our cash flow, and improve the Balance Sheet.
Stockholders' Equity. Stockholders' equity decreased by $955,887 to $(1,605,376)
as of December 31, 2011 or approximately 147% from $(649,489) as of December 31,
2010 The decrease was due primarily to increases in paid in capital from the
issuance of stock for services and debt retirement valued at $769,843 and a
total net loss of $1,767,337 for the year.
We are still a development-stage company and have not had revenues from our
operations or reached the level of our planned operations. Our general and
administrative expenses were $825,353 and $1,692,432 for the years ended
December 31, 2010 and 2011 respectively. General and administrative expenses
principally consist of those costs required to maintain our corporate existence,
and to meet our statutory requirements as a small public reporting company. Such
costs include legal fees, accounting fees, auditing fees, transfer agent costs,
and other fees for filing our reports with the Securities and Exchange
Commission. Other significant costs include continued research and development
and professional fees both related to our further development of our principal
product EyeTalk® and the related patent. Compensation to officers is being
accrued, even though most of the accrued compensation will not likely be paid in
cash.
Liquidity and Capital Resources
General. Our primary sources of cash have been sales of common stock through
private placements and loans from affiliates. We are a developmental stage
company moving from Research and Development ("R & D")to the initial stages of
development. The transition from R & D to development and production requires a
greater focus on operations, product infrastructure, distribution and channel
partners and industry alliances. Over the next 6 - 12 months, we will be looking
for the ideal acquisitions that will enable our company to take advantage of an
existing customer base. Our management will also pursue appropriate Letter of
Intents and Joint Ventures that will position our company to move its products
into these ventures when successful production is completed.
Prior relationships with companies discussed in previous filings have been
terminated. We are not involved with any of those companies that were very
instrumental during the Research and Development stages, but are no longer
engaged. We have engaged SIS Development as consulting technical officials for
product development. SIS Development will assist RCI in identifying the
necessary contracts and relationships moving forward. Additionally, industry
expertise and consultation is being provided by advisors in the industry.
Overall, we had a net decrease in cash of $184 for the year ended December 31,
2011 compared to an increase of $184 over the same prior year.
Cash Flows from Operating Activities. Net cash used in operations of $749,868
for the twelve-months period ended December 31, 2011 was attributable to a net
loss of $1,767,337 and an increase in accounts payable and accrued expenses of
$460,826 which was offset by a non-cash expense for depreciation and
amortization of $11,833 and the issuance of 13,149,436 shares for services
received recorded at an average of $0.05 per share and a new note receivable for
$112,663 from a related party.
Cash Flows from Investing Activities. Net cash used by investing activities was
12,133 for the year ended December 31, 2011. The Company purchased computer
equipment for $900 and invested in patent for $11,233.
Cash Flows from Financing Activities. Net cash provided by financing activities
of $761,817 for the twelve-month period ended December 31, 2011 was attributable
to the issuance of notes payable $643,175, less retirement of notes payable of
$35,336, retirement of debt and notes debt of $112,371, plus the repayment of
unpaid capital contributions in the amount of $41,607.
Our Company's Capital Structure. In its efforts to grow and expand the Company,
management must obtain the necessary capital to achieve those objectives, decide
on the best methods to obtain that capital, and the capital structure of the
Company. The primary ways a company will raise capital is either through debt
financing (borrowing money), or equity financing (selling a portion of the
company via shares of stock) or a combination of both. The type of capital
chosen (debt or equity), and methods of raising the capital depend on a number
of factors including; the company's life cycle stage, e.g., start-up,
development, high-growth or maturity, future growth prospects, strength of the
national economy and the credit markets.
Potential investors in any company, including ours will consider those factors
and the relative risks to their investment capital. To limit their risks, these
investors may limit the size of their investment, or provide it to the company
in stages, that is contingent upon the company reaching stated goals e.g.,
production, marketing, distribution and revenues. The ultimate question for
management is; how do you get the investors to commit to making what could be a
high risk investment for them, although one that would correspondingly benefit
the Company, however one that the investor could lose if the Company were to
fail. Management considered both the equity and the debt financing options based
on the Company's life cycle stage, economy, credit markets and other
circumstances at the time, and reached the following conclusions;
(26)
Table of Contents
Equity Financing - Management decided not to raise additional capital through an
equity offering in its initial start-up and development stage for a variety of
reasons;
(1) The Company would have had to go through the process of filing a
registration statement e.g. S-1 with the SEC, which would have been very
difficult to have received approved and would have been very time consuming,
given our situation at that time.
(2) The direct and indirect flotation costs of the issuance of an equity capital
raise could have run $250,000 or more, and the Company did not have those funds
available.
(3) It would have been very difficult to get an investment banker to underwrite
a new issuance for a development stage company with a limited operating history
and revenues.
(4) Many investors did not want to take an equity position in the Company at
that time and the corresponding risks of ownership.
(5) The issuance of equity to these investors, after resolving the potential
regulatory hurdles, legal issues, time constraints, and costs would have
resulted in immediate dilution for the other shareholders, giving them only
limited hopes that value would be created.
Therefore, due to the above stated reasons, the economic climate and the
Company's circumstances at that time, management elected not to pursue raising
capital through an equity offering at that time.
Debt Financing - Management elected to raise capital for the Company through
debt financing for the following reasons;
(1) Due to the Companies need for further development of our patents, it had
immediate and continuous need for capital.
(2) The investors were more willing to invest funds more expeditiously, and take
a creditor's position instead of that as an owner by taking an equity position.
(3) With those immediately available funds, management could continue to develop
our technology and create short-term economic value to the Company by
contracting with various vendors for work, prior to any equity dilution taking
place.
(4) The investors were issued Promissory Notes that were unsecured without any
collateral (taking a high risk), except as called for in the agreements.
(5) The Notes required no monthly payments which allowed us to use that free
cash flow for operating expenses, reduced our cash outlays, interest payments
and improve our budget, plans and forecast our cash flow.
(6) The investors received the potential upside of conversion of the Notes into
equity while protecting our downside with the use of the cash flow.
(7) Should the investors decide to convert the Notes into common stock, then the
Company's debt would be eliminated from its balance sheet.
(8) The tax benefits of debt financing is that it's less expensive, while the
Company is taxed on earnings, it is not generally taxed on borrowed money and
the interest on the Notes is tax deductible.
(9) Since the investors does not have any equity interests, it has no voting
rights or other control over the management of the Company, its operations and
no claim to its future earnings.
(10) If the Company ever suffers a negative financial situation, it is much
easier to re-negotiate the terms of the Notes with the individual investors than
with a bank, or a group of investors through an equity or bond offering.
Based on the reasons above, and since the Company required immediate capital to
rapidly expand, grow, restructure its operations, continue development. finance
potential acquisitions and execute its marketing plans; raising capital through
debt financing was our best alternative. This strategy resulted in our expanding
on our technology patents; thereby, increasing our potential assets, market
capitalization value and our shareholders owning a portion of a much larger and
more valuable company. As the Company continues to advance and develop through
the different stages of its business life cycle, management will evaluate
options, alternatives, and make strategic decisions for the best investment
opportunities, financing and capital structure at that time.
(27)
Table of Contents
Debt
Debt
In its efforts to expand and grow, we issued debt instruments to borrow funds
from various creditors to raise capital. These are long-term Notes with various
rates and maturities, that grants the Note Holder the right, (but not the
obligation), to convert them into shares of our common stock in lieu of
receiving payment in cash. The issued Notes are secured obligations. The
principal amount of the Notes may be prepaid upon agreement of both parties and
a prepayment penalty, in whole or part at any time, together with all accrued
interest upon written notice.
Our management believes that there are a number of benefits when issuing debt
versus issuing equity capital. The interest paid on debt capital is tax exempt;
hence, our loan costs are lowered. Outside of their contractual debt documents,
creditors have no control in the conduct of the business, so by issuing debt
capital, we do not dilute the ownership rights of our shareholders (unless and
until any debt is converted into equity). Also, as the interest rates are
predetermined, the management is able to budget for the payments. Generally,
debt is less costly and the time involved to be able to raise the capital is
shortened. In many cases, raising capital through equity requires regulatory
approval, which can take months and is dilutive to all shareholders.
2010
On December 30, 2010, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $19,705 at 10% interest. The holder has the
right to convert the note to common stock. On August 4, 2011 this Note was
converted to 3,941,000 restricted common shares,
On December 31, 2010, we entered into a two (2) year convertible Promissory Note
with three non-related creditors for $289,787, which included $84,950 in prior
accrued interest payable at 0% interest. The holders have the right to convert
the note to common stock at $0.005 per share. On October 1, 2011, these Notes
were modified to include interest and two of the notes were assigned by the
original note holders to an unrelated third party.
2011
On January 15, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $42,500 at 10% interest. The holder has the
right to convert the note to common stock. On August 4, 2011 this Note was
converted to 8,500,068 restricted common shares of which 2,200,000 shares had
previously been issued,
On April 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $76,194 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share.
On April 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $12,000 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share.
On May 30, 2011, we entered into a two (2) year convertible Promissory Note with
a non-related creditor for $12,000 at 10% interest. The holder has the right to
convert the note to common stock at $0.005 per share.
On May 30, 2011, we entered into a two (2) year convertible Promissory Note with
a non-related creditor for $10,000 at 10% interest. The holder has the right to
convert the note to common stock at $0.005 per share.
On June 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $140,663 and $3,404 in interest. The holder has
the right to convert the note to common stock at $0.005 per share.On November
30, 2011, the holder converted $50,166 of the note leaving a principal balance
due of $90,497.
On August 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $44,600 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share.
On September 30, 2011, we entered into a two (2) year convertible Promissory
Note with a non-related creditor for $177,522 at 10% interest. The holder has
the right to convert the note to common at stock at $0.005 per share.
On October 1, 2011, we entered into a two (2) year convertible Promissory Note
with Ronald Carter, our President and CEO for $92,308 at 10% interest for the
accrued compensation owed to him for the fiscal year 2010 in accordance with his
Employment Agreement. The holder has the right to convert the note to common
stock at $0.005 per share.
On October 1, 2011, we entered into a two (2) year convertible Promissory Note
with our Senior Vice President, Solomon Ali for $46,154 at 10% interest for the
accrued compensation owed to him for the fiscal year 2010 in accordance with his
Employment Agreement. The holder has the right to convert the note to common
stock at $0.005 per share.
On October 1, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $63,818 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share. This note was
originally dated 12/31/10
On October 1, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $27,018 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share. This note was
assigned to an unrelated third party and was originally issued 12/31/10.
On October 1, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $198,950 at 10% interest. The holder has the
right to convert the note to common stock at $0.005 per share. This note was
assigned to an unrelated third party and was originally issued 12/31/10.
On October 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $8,700 at 10% interest. The holder has the right
to convert the note to common stock at $0.005 per share.
On November 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $8,500 at 10% interest. The holder has the right
to convert the note to common stock at $0.005 per share.
On December 30, 2011, we entered into a two (2) year convertible Promissory Note
with a non-related creditor for $4,700 at 12% interest. The holder has the right
to convert the note to common stock at $0.005 per share.
The investors and private equity firms are very astute and have many years of
experience and expertise in making successful investments in many companies.
They have been investing with the Company for several years, and have provided
us with critical short and long-term funds that we have used for operations,
working capital, and investment capital for our business acquisitions to expand
and grow the Company. They have the option to convert their Notes into stock
after a six month holding period per SEC guidelines. However, most have elected
to hold their Notes for 1 to 3 years and therefore have taken a long-term
investment strategy in the Company. Without their continuous long-term
commitment to investment in the Company, it is unlikely that the growth and
expansion that we have achieved would have been possible.
(28)
Table of Contents
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the
results of its operations.
In January 2011, the FASB released Accounting Standards Update No. 2011-01 ("ASU
2011-01"), Receivables (Topic 310): Deferral of the Effective Date of
Disclosures about Troubled Debt Restructurings in Update No. 2010-20, which
deferred the disclosure requirements surrounding troubled debt restructurings.
These disclosures are effective for reporting periods ending on or after
June 15, 2011. We do not expect the disclosure requirements to have a material
impact on our current disclosures.
In April 2011, the FASB released Accounting Standards Update No. 2011-02 ("ASU
2011-02"), Receivables (Topic 310): A Creditor's Determination of Whether a
Restructuring is a Troubled Debt Restructuring. ASU 2011-02 clarifies the
guidance for determining whether a restructuring constitutes a troubled debt
restructuring. In evaluating whether a restructuring constitutes a troubled debt
restructuring, a creditor must conclude that 1) the restructuring constitutes a
concession and 2) the debtor is experiencing financial difficulties. ASU 2011-02
also requires companies to disclose the troubled debt restructuring disclosures
that were deferred by ASU 2011-01. The guidance in ASU 2011-02 is effective for
public companies in the first reporting period ending on or after June 15, 2011,
but the amendment must be applied retrospectively to the beginning of the annual
period of adoption. ASU 2011-02 is not expected to materially impact our
consolidated financial statements.
No other accounting standards or interpretations issued recently are expected to
a have a material impact on the Company's consolidated financial position,
operations or cash flows.
(29)
Table of Contents
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
This Annual Report on Form 10-K and certain information incorporated herein
by reference contain forward-looking statements within the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. All
statements included or incorporated by reference in this Annual Report on
Form 10-K, other than statements that are purely historical, are forward-looking
statements.
Words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "estimates," and similar expressions also identify forward-looking
statements. Forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the forward-looking
statements. These forward-looking statements are based on management's
expectations as of the date hereof, that necessarily contain certain assumptions
and are subject to certain risks and uncertainties. The Company does not
undertake any responsibility to update these statements in the future. The
Company's actual future performance and results could differ from that contained
in or suggested by these forward-looking statements as a result of the factors
set forth in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, the Business Risks described in Item 1 of this Report
on Form 10-K and elsewhere in the Company's filings with the Securities and
Exchange Commission.
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