Hank'links

[10 bagger]

The Asia Tigers Fund, Inc. Announces Performance Data And Portfolio Composition

PR Newswire - Nov 06 14:54 EDT

Alert hits:OTC
Company Symbols: NYSE:GRR, OTC-PINK:JMHLY, ACORN:A.3941167182, ACORN:A.0204877217, LSE:JAR


PHILADELPHIA, Nov. 6, 2012 /PRNewswire/ -- The Asia Tigers Fund, Inc. (the "Fund") (NYSE: GRR), a closed-end equity fund, announced today its performance data and portfolio composition as of September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20121106/NE07292LOGO )

The Fund's total returns for various periods through September 30, 2012 are provided below. (All figures are based on distributions reinvested at the dividend reinvestment price and are stated net-of-fees):

Period
NAV Total Return %
Market Price Total Return %


Cumulative
Annualized
Cumulative
Annualized

Since inception

(November 1993)
112.1
4.1
79.1
3.1

10-years
273.9
14.1
283.2
14.4

5-years
-14.2
-3.0
-14.0
-3.0

3-years
17.6
5.6
10.1
3.3

1-year
17.8
16.7


On September 30, 2012, the Fund's net assets amounted to US$54.6 million and the Fund's NAV per share was $15.28.

As of September 30, 2012, the portfolio was invested as follows:

Portfolio Composition


Percent of

Net Assets

Financials
43.5

Technology
15.2

Industrials
12.0

Communications
9.2

Consumer, Non-Cyclical
5.8

Energy
5.7

Basic Materials
4.9

Consumer, Cyclical
2.8

Health Care
0.9


The Fund's ten largest equity holdings as of September 30, 2012, representing 42.8% of net assets, were:

Stock


Percent of

Net Assets

Oversea-Chinese Banking Corporation, Ltd.
5.9

Taiwan Semiconductor Manufacturing Company, Ltd.
5.0

Jardine Strategic Holdings, Ltd.
4.9

Housing Development Finance Corporation, Ltd.
4.4

Swire Pacific, Ltd.
4.4

China Mobile, Ltd.
3.9

Singapore Technologies Engineering, Ltd.
3.7

Standard Chartered PLC
3.6

City Developments, Ltd.
3.5

Infosys, Ltd.
3.5


Important Information

Aberdeen Asset Management Inc. has prepared this report based on information sources believed to be accurate and reliable. However, the figures are unaudited and neither the Fund, Aberdeen Asset Management Asia Limited (the Investment Manager), nor any other person guarantees their accuracy. Investors should seek their own professional advice and should consider the investment objectives, risks, charges and expenses before acting on this information. Aberdeen is a U.S. registered service mark of Aberdeen Asset Management PLC.

Closed-end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock exchanges. The investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund's portfolio. There is no assurance that a fund will achieve its investment objective. Past performance does not guarantee future results.

Total return figures with distributions reinvested at the dividend reinvestment price are stated net-of-fees and represents past performance. Past performance is not indicative of future results, current performance may be higher or lower. Holdings are subject to change and are provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities shown. Inception date November 29, 1993.

If you wish to receive this information electronically, please contact: [e-mail]

SOURCE The Asia Tigers Fund, Inc.

[10 bagger]

Trans World Corporation Schedules 2012 Third Quarter Financial Results and Conference Call for Thursday, November 8, 2012

Business Wire - Nov 06 08:30 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:TWOC


NEW YORK--(BUSINESS WIRE)-- Trans World Corporation (OTC:TWOC) announced today that it will issue its financial results for its 2012 third quarter ended September 30, 2012 on Thursday, November 8, 2012, prior to the opening of the stock market.

The Company will discuss these results in a conference call later that day at 2:00 PM ET.

The dial-in numbers are:

Live Participant Dial In (Toll Free): 877-407-8035
Live Participant Dial In (International): 201-689-8035

The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Trans World’s website at www.transwc.com, or click on the following link: : http://www.investorcalendar.com/IC/CEPage.asp?ID=169969

About Trans World Corporation

Trans World Corporation, founded in 1993, is a publicly traded, US corporation with all of its gaming and hotel operations in Europe. Additional information about TWC and its Czech subsidiaries, American Chance Casinos and Hotel Savannah, can be found at www.transwc.com, www.american-chance-casinos.com and www.hotel-savannah.com.

The press release herein contains certain forward-looking statements and data. For this purpose, any statements and data contained herein that are not historical fact may be deemed to be forward-looking data. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipates,” “estimates,” or “continue” or comparable terminology or the negative thereof are intended to identify certain forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, both known and unknown, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements or data whether as a result of new information, future events or otherwise.




Trans World Corporation
Jill Yarussi, 212-983-3355
Manager of Communications
[e-mail]
www.transwc.com
or
Investor Relations Counsel:
The Equity Group Inc.
Adam Prior, 212-836-9606
Vice President
[e-mail]
or
Terry Downs, 212-836-9615
Account Executive
[e-mail]
www.theequitygroup.com


Source: Trans World Corporation


Copyright Business Wire 2012

[10 bagger]

MDHI.. Possible earnings..

MDHI Projects Break Even With Quickly Accelerating Monthly Recurring Revenues - Expects Continued Growth

PR Newswire - Nov 05 10:17 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:MDHI


KING OF PRUSSIA, Pa., Nov. 5, 2012 /PRNewswire/ -- Medical Alarm Concepts Holding, Inc. (OTCQB: MDHI.PK) today announced a major milestone in its corporate history. Due to significantly accelerating sales and very strong contract extension close ratios, the company has now added enough MRR (Monthly Recurring Revenues) to surpass the monthly breakeven point in early 2013.

In addition to contracts for the monitoring of medical alarms, which produces the MRR, the company expects to also produce ongoing incremental, high-margin sales of the MediPendant™ medical alarm to domestic distributors and international customers.

"As we announced recently, our retail promotions have been highly successful with over 70% of customers selecting to extend their monitoring contract periods beyond the initial six months. The strength of our sales is continuing and we are shipping at 100% of capacity," commented CEO, Ronnie Adams. "It is important for our investors to remember that our success will be based on very high quality, high margin recurring monthly revenues. It is a significant milestone for us to project surpassing our breakeven point based on these recurring revenues, but we think that this is just the beginning, as we see no end in sight to our continued growth. We are clearly increasing our market share in the rapidly expanding medical alarm/alert segment."

The company has elected a very conservative accounting treatment of upgrade revenue by not charging customers credit cards upon initial sale, but as the contract extension period begins. Considering the company began selling these contract extensions for its retail partnership almost six months ago, the company is expecting acceleration in cash flow as it begins charging customers credit cards for the periods after the initial six months.

Mr. Adams continued, "We are well on our way now that we are reaching this important break even MRR event. While our domestic sales have continued to reach record levels, we are also continuing to expand our international business. This week we are delivering another major proposal to establish distribution and services in one of the most populous countries in the world. We expect our international business to be very strong moving forward, which will well augment our extremely fast growing MRR and domestic distribution."

The MediPendant™ is a second-generation personal medical alarm and the first product in its category that allows for monitored, two-way communications directly through the pendant. Older generations of technology require the user to be in close proximity to the base station in order to speak and listen to the operator. With the MediPendant™, the customer can be anywhere up to 600+ feet from their home, and in the event of an emergency, they can speak and listen to the EMT trained operator directly through the pendant.

Additional information on the MediPendant™ can be viewed at www.medipendant.com.

About MDHI

Medical Alarm Concepts Holding, Inc. (MAC) develops and manufactures innovative products and practical solutions within the framework of a vast growing marketplace. MediPendant's™ patented two-way voice technology enables the user to speak and listen directly through the pendant no matter where the user may be in and around their home. MediPendant™ service also includes advanced features such as three-way calling that enables the operator to link loved ones directly into the emergency call in real time. Text message alerts are also standard, and are used to inform loved ones that the user has contacted an operator or has requested assistance. A standard PERS system does not enable the user to speak and listen through the pendant, thus limiting them to a small area in their home. There is always the risk that the user will not be heard by the call center operator if they are not within a short range of the base station.

Safe Harbor Statement
Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the Company's actual operating results to be materially different from any historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements that explicitly describe these risks and uncertainties, readers are urged to consider statements that contain terms such as "believes," "belief," "expects," "expect," "intends," "intend," "anticipate," "anticipates," "plans," "plan," to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with Securities and Exchange Commission.

Contact:
Medical Alarm Concepts Holding, Inc.
877-639-2929 Ext. 113

SOURCE Medical Alarm Concepts Holding, Inc.

[10 bagger]

IDTA.. Drug Kits..

Breakthrough Drug Detection Kit Now Available At The Largest Internet Consumer Site

PR Newswire - Nov 05 09:45 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:IDTA, LSE:RED, ACORN:A.3783515782

IDenta's technology tests for 22 types of illicit drugs -- easily, safely

JERUSALEM, Nov. 5, 2012 /PRNewswire/ -- IDenta Corp. (OTC Pink: IDTA) CEO Yaacov Shoham announced the company's revolutionary drug detection kits are now being sold exclusively at the largest American internet drugstore consumer site, since the end of the last week.

http://www.drugstore.com/touch-and-know-discreet-drug-test/qxp456905?catid=185976

The internet site has a very large number of visitors every day. IDenta's product has been well received, having been viewed by several thousand people in the first 48 hours since its introduction on the web. In the first 48 hours our product has received almost 2000 likes.

Marketed under the brand name Touch&Know™, the unit combines safety, accuracy, affordability and ease of use for the consumer. The kit, based on proven field tests used extensively by law enforcement worldwide, is based on technology which is now available to the general public for the first time ever.

"Touch&Know™ is the first non-biological drug testing kit offered by a US retailer," explained Shoham. "Touch&Know™ safely tests the substance, as opposed to the person, and provides immediate results. It is a fully non-invasive method. We are proud to have partnered with the largest online drugstore, drugstore.com. The web site is one of the largest in terms of activity on the Internet. This will make IDenta's detector kits available to all consumers."

Touch&Know™ contains two detectors: one for general screening and one for marijuana/hashish. The patented retail package is able to detect 22 different kinds of illegal drugs.

The testing kit provides immediate display of results without lab involvement, ensuring a 99% accuracy rate in results -- environmentally friendly and in a non-confrontational approach requiring no bodily fluids.

IDenta Corp. is committed to the belief that any effective anti-drug policy begins with the ability to quickly gather credible evidence. Touch&Know™ offers the means to do so. The detector can assist with the resolution of drug-related issues in the home, schools and businesses.

For interviews and additional information, please contact:

Ephraim Ruttner
President

Oximeter Plus, Inc.

[e-mail]

www.oximeterplus.com
516 626-6226 Ext 300

Operating since 2003, IDenta Corporation (www.touchandknow.net, www.identa-corp.com) has been recognized as a worldwide leader in the development of proprietary on-site drug, drug precursor and explosive detection kits. IDenta develops, manufactures and distributes products for both the professional and consumer markets which consistently pass the highest qualifications and testing procedures of law enforcement and security agencies worldwide. Additional information may be accessed at www.drugsdetector.com, and www.identa.biz.

Disclaimer:

Certain statements contained herein may be, within the meaning of the Federal securities laws, "forward-looking statements" that are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on management's expectations as of the date hereof, and the company does not undertake any responsibility to update any of these statements in the future.

For Investor Relations, lobbying interests or information concerning IDenta's products internationally or the development of new chemical detectors,

Contact:

Yaacov Shoham - CEO

IDenta Corp.

Mobile: [phone]

[e-mail]

Site: www.drugsdetector.com,

www.identa.biz, www.identa-corp.com

[10 bagger]

PMOIY.. Oil services..

Tarmin Drills for Success in Oil and Gas Industry

PR Newswire - Nov 05 08:30 EDT

Alert hits:OTC
Company Symbols: LSE:PMO, OTC-PINK:PMOIY

GridBank helps Premier Oil chart a new course in geo-distributed data management to maximize efficiency and gain new advantage

CAMBRIDGE, Mass., Nov. 5, 2012 /PRNewswire/ -- Tarmin, Inc., provider of innovative, cloud-optimized data management and storage technologies and their partner, Eurotech Computer Services Ltd, a UK-based IT technology integrator and services provider, announces that Premier Oil, a leading FTSE 250 exploration and production company, has chosen to evaluate Tarmin GridBank to help optimize their fast-growing globally distributed data.

(Logo: http://photos.prnewswire.com/prnh/20120619/SF26581LOGO)

London-based Premier [LSE: PMO] is enjoying strong growth, primarily from successful operations in the North Sea, Southeast Asia and the Middle East-Africa-Pakistan region. As new technologies revolutionize the fields of mapping and data analysis, Premier has experienced marked increase in data volumes. Premier has chosen to evaluate the Tarmin GridBank platform in a bid to maximize the value of fast-growing data and contain costs.

With data growth a top concern for upstream oil and gas companies, the GridBank solution delivers a compelling message: Harness the power of the cloud to improve storage cost efficiencies, reduce risk and drive more insightful decisions from geographically dispersed unstructured data.

"The rapid growth of our company, through value enhancing acquisitions and successful exploration, is generating more and more data, much of it in isolated pools," says David Edwards, Group Head of IS at Premier. "The aim is that GridBank will allow us to organise, store and protect our G&G data and create a platform for improving business efficiency while reducing TCO."

Speaking on behalf of Tarmin, President and CEO, Shahbaz Ali added, "GridBank is uniquely positioned to deliver value to oil and gas companies. With native support for O&G file formats, a superior security framework, unmatched scalability and geographic availability, GridBank is poised to become the solution of choice for upstream O&G companies to intelligently manage their rapidly expanding data. We are excited to be working with Premier and look forward to a successful relationship."

GridBank addresses the key challenges faced by organizations seeking to better manage existing heterogeneous infrastructures or build multi-site, distributed data repositories. It provides highly available, application aware access to information for users in pursuit of improved operational efficiencies, strategic undertakings, responses to compliance mandates and analytic requirements. GridBank empowers clients to lower costs in storing enterprise scale workloads while benefiting from its information governance framework for controlling risk and its big data analytic functionality for understanding information.

"As technology specialists, we are excited to represent Tarmin with the innovative GridBank platform," said Tony Klapcia of Eurotech Computer Services. "The oil and gas industry works under the most demanding conditions imaginable and it's no surprise they demand robust, secure solutions that get the job done no matter what. GridBank is one of the most exciting offerings available; we recommend it highly."

About Tarmin
Tarmin is a leading provider of unstructured data management solutions designed for enterprise infrastructures. Tarmin GridBank enables clients to meet the unprecedented challenges presented by big data as the costs associated with regulatory, legal and commercial risks of storing and maintaining this data escalate. Tarmin removes the pain points of managing vast data flows and empowers organizations across industries to better store, control and understand their fast-growing, geographically dispersed unstructured data repositories. Tarmin's GridBank Data Management Platform is an integrated solution that blurs the line between infrastructure and applications to deliver the comprehensive scope, power and elasticity required to successfully address the challenges of unprecedented data growth, while achieving lower costs and improving the total management of vital business data.

About Eurotech
Eurotech Computer Services Ltd has been providing high quality IT Products and Services to its customers since its creation in 1993, having initially been established to address the specialized computer technology requirements of the oil and gas industry. Although this remains a key focus for the company, Eurotech has since expanded and diversified its business portfolio to include supply of IT Products and Services to other market sectors - including NHS Healthcare, Ministry of Defense and the Broadcasting Industry. Eurotech's range of products and services address many requirements that are critical to leading IT & IM focused businesses today.

Contact Agency:
Dan Miller
JPR Communications
818-884-8282, ext. 13
[e-mail]

SOURCE Tarmin, Inc.

[10 bagger]

TMEN.. Many shares on conversion makes a lid but..

ThermoEnergy Receives $900,000 Contract from Unity Power Alliance to Build Bench-Scale "Flameless" Combustion Reactor

PR Newswire - Nov 05 08:17 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:TMEN, ACORN:A.1037322296

Unit will be used to optimize UPA's pressurized oxy-combustion Technology under U.S. DOE program to advance carbon capture technology at power plants

WORCESTER, Mass., Nov. 5, 2012 /PRNewswire/ -- ThermoEnergy Corp. (OTCBB: TMEN), a diversified technologies company engaged in the development and sales of wastewater recovery and power generation technologies, has announced that it has signed an $900,000 contract with Unity Power Alliance (UPA) to build a bench-scale "flameless" combustion system that will be used to test and optimize UPA's pressurized oxy-combustion technology for clean coal power generation.

(Logo: http://photos.prnewswire.com/prnh/20100816/CL50460LOGO )

The Unity Power Alliance, a joint venture between ThermoEnergy Corporation and ITEA, S.p.A., recently announced that it received a $1 Million Phase 1 award from the U.S. Department of Energy to help fund the project under a special DOE program to advance technologies for efficient, clean coal power and carbon capture. After successful completion of the first phase of the program, it is anticipated that a much larger Phase 2 will occur, with DOE awards in the $10-20 million range applied toward the construction of a pilot scale plant.

Construction of the bench scale unit will begin in late in Q4, 2012 at ThermoEnergy's 48,000 sq ft, manufacturing facility in Worcester, Massachusetts. Fabrication and assembly is expected to be completed in Q1 2013. Testing will take place at the new Carbon Neutral Energy Solutions (CNES) laboratory at Georgia Tech, and will be based on techno-economic models provided by MIT.

"We are very proud to participate in a project that could have significant benefits for the world's energy future and carbon footprint," said ThermoEnergy Chairman and CEO, Cary Bullock. "ThermoEnergy continues to find new applications for the company's technology and expertise in the energy sector, including oil & gas hydrofracking, biogas production, and power generation."

About ThermoEnergy
Founded in 1988, ThermoEnergy is a diversified technologies company engaged in the worldwide development, sales and commercialization of patented and/or proprietary technology for the recovery and recycling of wastewater from oil & gas hydrofracking operations, municipal and industrial wastewater treatment, and power generation technologies. Additional information on the Company and its technologies can be found on its website at www.thermoenergy.com.

About Unity Power Alliance
Unity Power Alliance is a joint venture between ThermoEnergy Corporation (OTCBB: TMEN) and ITEA, S.p.A. The Mission of the Unity Power Alliance is to the develop and commercialize POXC™ "pressurized oxy-combustion" as a new, preferred clean combustion platform for repowering existing coal-fired power plants in the USA and building new power plants around the world with near zero air emissions. Unity Power Alliance's strategy is to form alliances with engineering companies, utilities, independent power producers, air separators, service companies, CO2 pipeline companies, transportation companies, and other key industry stakeholders who believe near zero emissions fossil fuel power production is a desirable and achievable near-term goal that will provide maximum benefit to the global environment and economy. Visit www.unitypoweralliance.com

THIS PRESS RELEASE INCLUDES STATEMENTS THAT MAY CONSTITUTE "FORWARD LOOKING" STATEMENTS, USUALLY CONTAINING THE WORDS "ESTIMATE", "PROJECT", "EXPECT" OR SIMILAR EXPRESSIONS. FORWARD LOOKING STATEMENTS INHERENTLY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM CURRENT EXPECTATIONS. BY MAKING THESE FORWARD LOOKING STATEMENTS, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE STATEMENTS FOR REVISIONS OR CHANGES.

SOURCE ThermoEnergy Corp.

[10 bagger]

GLGI earnings..

Record First Quarter for Greystone Logistics

PR Newswire - Nov 05 07:00 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:GLGI






TULSA, Okla., Nov. 5, 2012 /PRNewswire/ -- Greystone Logistics, Inc. (OTCBB: GLGI). Greystone Logistics announced record revenue and earnings for the first quarter ending August 31, 2012.

Sales for the quarter ended August 31, 2012 were $7,128,866 compared to $5,783,624 for the quarter August 31, 2011 for an increase of $1,345,252 or 23%. Net income available to common shareholders was $832,005, or $0.03 per share, compared to $479,735, or $.02 per share, for the quarters ended August 31, 2012 and 2011, respectively. Bill Rahhal, CFO, commented, "Management is emboldened by the strong quarter but temper our enthusiasm for the next two quarters based on historically slower sales of beer case goods pallets. However, demand for our keg pallet and Intermediate Bulk Container (IBC) pallet continue to look good over the next six months. Additionally, one of the pelletizing lines which has been down for necessary maintenance will be placed back in service during next quarter and we may see resurgence in resin sales back to historical levels. All other product lines continue to hold steady and work also continues on promising new pallet opportunities with existing and new customers."

Greystone Logistics is a "Green" manufacturing and leasing company that reprocesses and sells recycled plastic and designs, manufactures, sells and leases high-quality 100% recycled plastic pallets that provide logistical solutions needed by a wide range of industries such as food and beverage, agricultural, automotive, chemical, pharmaceutical and consumer products. The Company's technology, including that used in its injection molding equipment, proprietary blend of recycled plastic resins and patented pallet designs, allows production of high-quality pallets quickly and at lower costs than many processes. The recycled plastic for its pallets helps control material costs while reducing environmental waste and provides cost advantages over users of virgin resin. Excess plastic not used in production of pallets is reprocessed for resale.

This press release includes certain statements that may be deemed "forward-looking statements" within the meaning of the federal securities laws. All statements, other than statements of historical facts that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including the potential sales of pallets or other possible business developments are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, including the ability of the Company to continue as a going concern. Actual results may vary materially from the forward-looking statements. For a list of certain material risks relating to the Company and its products, see Greystone Logistics' Form 10-K for the fiscal year ended May 31, 2012.

Contact:
Warren F. Kruger
President/CEO
Corporate Office
1613 East 15th Street
Tulsa, Oklahoma 74120
[phone]
[phone] (FAX)
http://www.greystonelogistics.com









SOURCE Greystone Logistics, Inc.

[10 bagger]

NPDV.. Asset Play..

NATIONAL PATENT DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)



September
30, December 31,
2012 2011
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 24,832 $ 27,247
Refundable and prepaid income tax 55 51
Prepaid expenses and other current assets 61 77
Total current assets 24,948 27,375
Investment in undeveloped land 355 355
Other assets 275 275
Total assets $ 25,578 $ 28,005

Liabilities and stockholders’ equity
Current liabilities
Income taxes payable $ 331 $ 331
Accounts payable and accrued expenses 381 409
Total current liabilities 712 740

Contingencies (Note 8)

Stockholders’ equity
Common stock 181 181
Additional paid-in capital 30,004 29,928
Accumulated deficit (3,960 ) (1,485 )
Treasury stock, at cost (1,359 ) (1,359 )
Total stockholders’ equity 24,866 27,265
Total liabilities and stockholders’ equity $ 25,578 $ 28,005

[10 bagger]

ECIA.. Possible..

Encision Inc.

Condensed Statements of Operations

(Unaudited)



Six Months Ended

September 30,
2012

September 30,
2011


NET REVENUE:






Product

$
5,611,158

$
5,663,574


Service

364,004

787,578


Total Revenue

5,975,162

6,451,152


COST OF REVENUE:






Product

2,406,234

2,785,920


Service

208,295

319,909


Total Cost of Revenue

2,614,529

3,105,829


GROSS PROFIT

3,360,633

3,345,323


OPERATING EXPENSES:






Sales and marketing

1,812,272

2,250,318


General and administrative

979,878

881,696


Research and development

820,122

672,765


Total operating expenses

3,612,272

3,804,779


OPERATING LOSS

(251,639
)
(459,456
)

Interest expense, net

(1,801
)
(30,920
)

Other income (expense), net

(945
)
625


Interest and other income, net

(2,746
)
(30,295
)

LOSS BEFORE PROVISION FOR INCOME TAXES

(254,385
)
(489,751
)

Provision for income taxes

—

—


NET LOSS

$
(254,385
)
$
(489,751
)

Net loss per share—basic and diluted

$
(0.03
)
$
(0.08
)

Weighted average shares—basic and diluted

8,189,198

6,455,100





The accompanying notes to financial statements are an integral part of these condensed statements.






Outlook



Installed Base of AEM Monitoring Equipment: We believe that sales of our installed base of AEM products will increase sales as the inherent risks associated with monopolar laparoscopic electrosurgery become more widely acknowledged, as we focus on increasing our sales efficiency and with recent quality enhancement to our product line, including an improved disposable foot-activated fixed-tip electrode and an enhanced disposable scissor insert, the e-Edge™ Scissor, which we began shipping in mid-September. We expect that the replacement sales of electrosurgical instruments and accessories will also increase as additional facilities adopt AEM technology. We anticipate that the efforts to improve the productivity of sales representatives carrying the AEM product line, along with the introduction of next generation products, may provide the basis for increased sales and profitable operations. However, these measures, or any others that we may adopt, may not result in either increased sales or profitable operations.



We believe that the unique performance of the AEM technology and our breadth of independent endorsements provide an opportunity for continued market share growth. In our view, market awareness and awareness of the clinical credibility of the AEM technology, as well as awareness of our endorsements, are continually improving, and we expect this awareness to benefit our sales efforts for the remainder of fiscal year 2013. Our objectives in the remainder of fiscal year 2013 are to optimize sales execution, to expand market awareness of the AEM technology and to maximize the number of additional hospital and surgery center accounts switching to AEM instruments while retaining existing customers. In addition, acceptance of AEM products depends on surgeons’ preference for our instruments, which depends on factors such as ergonomics quality and ease of use in addition to the technological and safety advantages of AEM products. If surgeons prefer other instruments to our instruments, our business results will suffer.



Possibility of Operating Losses: We have an accumulated deficit of $16,814,405 at September 30, 2012. Operating funds have been provided primarily by issuances of our common stock and warrants, and the exercise of stock options to purchase our common stock. Should our liquidity be diminished in the future because of operating losses, we may be required to seek additional capital. We have made strides toward improving our operating results but due to the ongoing need to support the development of refinements to our product line, and the need to increase sustained sales to a level adequate to cover fixed and variable operating costs, we may operate at a net loss. Sustained losses, or our inability to generate sufficient cash flow from operations to fund our obligations, may result in a need to raise additional capital.



Revenue Growth: We expect to generate increased product revenue in the U.S. from sales to new customers and from expanded sales to existing customers as the medical device industry stabilizes and our network of direct and independent sales representatives becomes more efficient. We believe that the visibility and credibility of the independent clinical endorsements for AEM technology will contribute to new accounts and increased product revenue in fiscal year 2013. We also expect to increase market share through promotional programs of placing our AEM monitors at no charge into hospitals that commit to standardize with AEM instruments. However, all of these efforts to increase market share and grow product revenue will depend in part on our ability to expand the efficiency and effective coverage range of our direct and independent sales representatives, as well as maintain and in some cases, improve the quality of our product offerings. Service revenue represents design and development service revenue from our agreements with strategic partners. As a result of a project that has been phased out by a strategic partner, and unless we obtain another strategic partner or further commitments from existing partners, we anticipate that future service revenue will be significantly reduced as compared to last fiscal year’s service revenue. Service revenue represents design and development service revenue.



We also have longer term initiatives in place to improve our prospects. We expect that development of next generation versions of our AEM products will better position our products in the marketplace and improve our retention rate at hospitals and surgery centers that have changed to AEM technology, enabling us to grow our sales. We are exploring overseas markets to assess opportunities for sales growth internationally. Finally, we intend to explore opportunities to capitalize on our proven AEM technology via licensing arrangements and strategic alliances. These efforts to generate additional sales and further the market penetration of our products are longer term in nature and may not materialize. Even if we are able to successfully develop next generation products or identify potential international markets or strategic partners, we may not be able to capitalize on these opportunities

[10 bagger]

FCBI.. bank

Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)





Three Months Ended

Nine Months Ended


(dollars in thousands, except per share amounts)

September 30,
2012

September 30,
2011

September 30,
2012

September 30,
2011


Interest income:










Interest and fees on loans

$
3,008

$
3,095

$
8,931

$
9,274


Interest and dividends on investment securities:










Interest – taxable

148

191

477

540


Interest – tax exempt

116

149

307

393


Dividends

13

14

38

39


Interest on federal funds sold

—

—

—

1


Other interest income

11

14

41

52


Total interest income

3,296

3,463

9,794

10,299


Interest expense:










Interest on deposits

366

538

1,150

1,780


Interest on short-term borrowings

18

34

59

45


Interest on long-term borrowings

81

81

241

240


Interest on junior subordinated debentures

33

101

100

303


Total interest expense

498

754

1,550

2,368


Net interest income

2,798

2,709

8,244

7,931


Provision for loan losses

360

900

425

1,515


Net interest income after provision for loan losses

2,438

1,809

7,819

6,416


Noninterest income:










Gain on sale of securities

236

383

456

386


Loss on sale of foreclosed properties

—

(18
)
(82
)
(18
)

Bank owned life insurance income

39

41

118

61


Service fees

96

72

263

225


Other operating income

63

49

234

152


Total noninterest income

434

527

989

806


Noninterest expense:










Salaries and employee benefits

1,294

1,241

3,907

3,690


Occupancy and equipment expenses

354

312

1,064

976


Other operating expenses

841

630

2,270

1,692


Total noninterest expense

2,489

2,183

7,241

6,358


Income before provision for income taxes

383

153

1,567

864


Provision for income taxes (benefits)

82

(3
)
448

184


Net income

$
301

$
156

$
1,119

$
680


Basic earnings per share

$
0.20

$
0.11

$
0.74

$
0.46


Diluted earnings per share

$
0.20

$
0.10

$
0.74

$
0.45


Basic weighted average number of shares outstanding

1,512,309

1,482,044

1,515,283

1,477,708


Diluted weighted average number of shares outstanding

1,519,781

1,519,305

1,516,369

1,513,849


Dividends declared per share

$
0.05

$
—

$
0.15

$
0.10





The accompanying notes are an integral part of these unaudited consolidated financial statements.

[10 bagger]

BIMI asset play

Bimini Capital Management Announces Third Quarter 2012 Results

Business Wire - Nov 01 16:30 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:BMNM


VERO BEACH, Fla.--(BUSINESS WIRE)--

Bimini Capital Management, Inc. (OTCBB:BMNM)

Third Quarter net loss of $0.8 Million
Book Value per Share of $0.52
MBS Portfolio Remains 100% Invested in Agency MBS
Company to Discuss Results on Tuesday, November 6, 2012, at 9:00 AM ET
Bimini Capital Management, Inc. (OTCBB:BMNM) (“Bimini Capital” or the “Company”), a real estate investment trust (“REIT”), today announced results of operations for the three month period ended September 30, 2012. The Company reported a net loss of $0.8 million for the three month period ended September 30, 2012, compared with a net loss of $1.9 million for three month period ended September 30, 2011.

Details of Third Quarter 2012 Results of Operations

The Company's third quarter net loss of $0.8 million included net interest income of $0.8 million. Net gains on mortgage backed securities (“MBS”), which includes non-cash portfolio mark-to-market gains, realized gains on securities sold and losses on funding hedges, netted to approximately zero. The Company incurred $2.3 million of expenses consisting of audit, legal and other professional fees of $1.4 million, compensation and related benefits of $0.4 million, and other operating, general and administrative expenses of $0.5 million. During the third quarter, the Company sold MBS with a market value at the time of sale of $3.3 million, resulting in a de minimis realized gain (based on security prices from June 30, 2012). The Company recorded $0.8 million of other income, including $0.7 million of mark-to-market gains on the Company’s retained interests.

Details of the MBS Portfolio Performance

The Company allocates capital to two MBS sub-portfolios, the pass-through MBS portfolio (“PT MBS”), and the structured MBS portfolio, consisting of interest only (“IO”) and inverse interest-only (“IIO”) securities. The PT MBS sub-portfolio is encumbered under repurchase agreement funding, while the structured MBS sub-portfolio is not. As a result of being encumbered, the PT MBS sub-portfolio requires the Company to maintain cash balances to meet price and/or prepayment related margin calls from lenders. As of June 30, 2012, approximately 42% of the Company’s investable capital (which consists of equity in pledged PT MBS, available cash and unencumbered assets) was deployed in the PT MBS portfolio. At September 30, 2012, the allocation of capital to the PT MBS increased to approximately 53%. The relative allocation of capital between the structured MBS sub-portfolio and the PT MBS sub-portfolio changed materially in response to realized and anticipated levels of refinancing activity. The market value of the combined portfolio increased by approximately $13.8 million as the reallocation of capital to the PT MBS sub-portfolio, which is explicitly levered, resulted in $18.3 million of net-purchases of PT MBS. The decline in the structured MBS sub-portfolio of $2.5 million was the result of return on investment – which was not reinvested in structured MBS – and negative mark-to-market adjustments of $0.9 million.

The tables below detail the changes to the respective sub-portfolios during the quarter, as well as the returns generated by each. During the third quarter, purchases of $21.6 million, net of sales of $3.3 million and pay-downs of $3.1 million, increased the PT MBS portfolio by approximately $16.4 million. There was a $1.2 million positive mark-to-market gain for the PT MBS sub-portfolio as well. The capital allocated to the PT MBS portfolio increased approximately $2.9 million during the three months ended September 30, 2012. Capital allocated to the structured MBS portfolio decreased by $2.5 million.

The market was impacted materially on September 13, 2012, when the Federal Reserve announced a third round of quantitative easing, or “QE3”, which is to be focused exclusively in Agency MBS. The program is expected to result in purchases of $40 billion per month, plus reinvestment of pay-downs on the existing Agency MBS portfolio back into Agency MBS, indefinitely. Any changes to the levels of purchases will be driven by economic activity. The market reacted quickly as Agency MBS prices rallied, the Mortgage Bankers Association refinancing index surged and the Freddie Mac survey rate decreased. After peaking in mid-July just short of 5,500, the refinance index surged from approximately 4,700 on September 7th to almost 5,900 on September 28th. The index has since receded to the pre-announcement level of approximately 4,700. The Freddie Mac survey rate likewise responded, falling from 3.75% on September 7th to 3.53% on September 28th. The survey rate has receded as well, although not all the way back to the pre-announcement level. The impact on HARP eligible mortgages continues to be less than feared, as mortgage brokers instead focus on newer loans to pristine credit borrowers. The most significant increases in refinancing activity continue to be 2010 and 2011 production mortgages with coupons in the 3.5% to 4.5% range, not the HARP eligible cohorts.


Portfolio Activity for the Quarter
Structured Security Portfolio

Pass-Through Interest Only Inverse Interest
Portfolio Securities Only Securities Sub-total Total
Market Value - June 30, 2012 $ 96,993,122 $ 4,469,667 $ 10,438,184 $ 14,907,851 $ 111,900,973
Securities Purchased 21,557,358 - - - 21,557,358
Securities Sold (3,280,476 ) - - - (3,280,476 )
Gain on Sale 3,948 - - - 3,948
Return on Investment n/a (501,229 ) (1,188,690 ) (1,689,919 ) (1,689,919 )
Pay-downs (3,067,777 ) n/a n/a n/a (3,067,777 )
Premium Lost Due to Pay-downs (128,565 ) n/a n/a n/a (128,565 )
Mark-to-Market 1,309,976 (124,147 ) (742,395 ) (866,542 ) 443,434
Market Value - September 30, 2012 $ 113,387,586 $ 3,844,291 $ 8,507,099 $ 12,351,390 $ 125,738,976


The table below presents the return on invested capital for each sub-portfolio for the three month period ended September 30, 2012. The return on invested capital in the PT MBS portfolio was approximately 15.5% for the quarter. The return on invested capital for the structured MBS portfolio was approximately (2.7%). The return was impacted by negative mark-to-market adjustments and lower realized yields, particularly in the IO sub-portfolio. The combined portfolio generated a return on invested capital of approximately 5.0%.


Return on Invested Capital
Structured Security Portfolio

Pass-Through Interest Only Inverse Interest
Portfolio Securities Only Securities Sub-total Total
Capital Allocation - June 30, 2012* $ 10,792,035 $ 4,469,667 $ 10,438,184 $ 14,907,851 $ 25,699,886
Market Value - June 30, 2012 $ 96,993,122 $ 4,469,667 $ 10,438,184 $ 14,907,851 $ 111,900,973
Repurchase Agreement Obligations $ 91,824,989 $ - $ - $ - $ 91,824,989
Income / (loss) (net of repo cost) $ 591,952 $ 109,882 $ 358,579 $ 468,461 $ 1,060,413
Realized and unrealized gains / (losses) 1,185,359 (124,147 ) (742,395 ) (866,542 ) 318,817
Hedge gains/(losses)** (99,750 ) n/a n/a n/a (99,750 )
$ 1,677,561 $ (14,265 ) $ (383,816 ) $ (398,081 ) $ 1,279,480

Return on Invested Capital for the Quarter
(Not Annualized) 15.5 % (0.3 )% (3.7 )% (2.7 )% 5.0 %


* Capital Allocation is defined as the sum of the market value of securities held, less associated repurchase agreement borrowings, plus cash and cash equivalents, restricted cash (associated with repurchase agreements only) and unencumbered securities. (Capital allocated to non-portfolio assets not included. Restricted cash at June 30, 2012 included $133,337 related to trust preferred debt funding hedges).

** Excludes losses of ($237,950) associated with trust preferred debt funding hedges.

Three-month constant prepayment rates (CPR) on the two MBS sub-portfolios are presented in the table below. Note only securities held for the entire quarter are included. During the quarter ended June 30, 2012 this included just four PT MBS securities.


Derivative
PT MBS Sub- MBS Sub- Total
Portfolio (%) Portfolio (%) Portfolio (%)
Three Months Ended,
September 30, 2012 8.8 34.9 26.7
June 30, 2012 1.1 36.4 34.7
March 31, 2012 6.5 28.9 23.0
December 31, 2011 14.1 33.7 31.1
September 30, 2011 13.4 22.8 20.9
June 30, 2011 11.8 13.0 12.7
March 31, 2011 12.0 19.1 17.2


Highlights of the MBS Portfolio

As of September 30, 2012, Bimini Capital’s MBS portfolio consisted of $125.7 million of agency or government MBS at fair value. This portfolio had a weighted average coupon of 3.19% and a net weighted average repurchase agreement borrowing cost of 0.43%. The following tables summarize Bimini Capital’s agency and government mortgage related securities as of September 30, 2012 and December 31, 2011:

(in thousands)

Weighted Weighted
Percentage Average Average Weighted Weighted
of Weighted Maturity Coupon Average Average
Fair Entire Average in Longest Reset in Lifetime Periodic
Asset Category Value Portfolio Coupon Months Maturity Months Cap Cap
September 30, 2012

Adjustable Rate MBS $ 21,603 17.2 % 3.26 % 270 1-Sep-35 8.52 9.72 % 2.00 %
Fixed Rate MBS 42,759 34.0 % 3.01 % 179 1-Dec-40 NA NA NA
Hybrid Adjustable Rate MBS 49,026 39.0 % 2.77 % 355 1-Jun-42 77.90 7.77 % 1.96 %
Total Mortgage-backed Pass-through 113,388 90.2 % 2.95 % 272 1-Jun-42 56.68 8.37 % 1.97 %
Structured MBS 12,351 9.8 % 5.36 % 301 25-Nov-40 NA NA NA
Total Mortgage Assets $ 125,739 100.0 % 3.19 % 275 1-Jun-42 NA NA NA
December 31, 2011
Adjustable Rate MBS $ 12,181 13.4 % 2.89 % 233 1-Jan-41 4.36 11.07 % 2.00 %
Fixed Rate MBS 35,417 38.9 % 4.84 % 178 1-Nov-40 NA NA NA
Hybrid Adjustable Rate MBS 25,466 27.9 % 3.57 % 354 1-Dec-41 95.21 8.83 % 2.00 %
Total Mortgage-backed Pass-through 73,064 80.2 % 4.07 % 249 1-Dec-41 65.82 9.55 % 2.00 %
Structured MBS 18,078 19.8 % 5.61 % 300 25-Nov-40 NA NA NA
Total Mortgage Assets $ 91,142 100.0 % 4.37 % 259 1-Dec-41 NA NA NA

(in thousands)

September 30, 2012 December 31, 2011
Percentage of Percentage of
Agency Fair Value Entire Portfolio Fair Value Entire Portfolio
Fannie Mae $ 117,385 93.36 % $ 58,628 64.32 %
Freddie Mac 6,631 5.27 % 27,267 29.92 %
Ginnie Mae 1,723 1.37 % 5,247 5.76 %
Total Portfolio $ 125,739 100.00 % $ 91,142 100.0 %


Entire Portfolio September 30, 2012 December 31, 2011
Weighted Average Pass Through Purchase Price $ 104.90 $ 104.43
Weighted Average Structured Purchase Price $ 6.21 $ 6.13
Weighted Average Pass Through Current Price $ 106.59 $ 106.13
Weighted Average Structured Current Price $ 6.55 $ 6.50
Effective Duration (1) 2.654 (3.492 )


(1) Effective duration of 2.654 indicates that an interest rate increase of 1.0% would be expected to cause a 2.654% decrease in the value of the MBS in the Company’s investment portfolio at September 30, 2012. An effective duration of (3.492) indicates that an interest rate increase of 1.0% would be expected to cause a 3.492% increase in the value of the MBS in the Company’s investment portfolio at December 31, 2011. These figures include the structured securities in the portfolio.

Recent Developments – HARP (Home Affordable Refinancing Program)

In 2011 the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac announced changes to the Home Affordable Refinancing Program (HARP), which became effective on December 1, 2011. The changes to the program were designed to increase the number of loans currently eligible to be refinanced under existing guidelines and extend the term of the program through the end of 2013. The changes to the original HARP program are expected to increase refinancing activity of eligible loans – predominantly fixed rate mortgages with higher coupons (ranging from 5.5% to 6.5%) originated between 2006 and 2008. Only loans originated before May 31, 2009 are eligible for refinancing under HARP. To date the impact of the new HARP program terms has been an increase in prepayment speeds with respect to loans eligible for the program; however, the increase has been within expectations and has not had a material impact on the Company’s portfolio and results of operations.

The table below provides details of the securities in our two portfolios that are eligible to be refinanced under the new HARP guidelines:

($ in thousands)
Market Value of Securities where Underlying Pools were Issued Prior to May 31, 2009
Underlying Current Gross WAC (Borrower Mortgage Rate) Total
Securities
in Sub-
Portfolio

Less
Than
4.00%
4.0% - 4.99% 5.0% - 5.99%
6.0% - 6.99% Greater
Than
7.0%
Total
Pass-through portfolio $ 18,241 $ - $ - $ - $ - $ 18,241 $ 113,388
Structured security portfolio $ 330 $ - $ 2,291 $ 4,992 $ 591 $ 8,204 $ 12,351
Total $ 18,571 $ - $ 2,291 $ 4,992 $ 591 $ 26,445 $ 125,739

Percent of Securities where Underlying Pools were Issued Prior to May 31, 2009
Less
Than
4.00%
4.0% - 4.99% 5.0% - 5.99%
6.0% - 6.99% Greater
Than
7.0%
Total
Pass-through portfolio 16.1 % - - - - 16.1 %
Structured security portfolio 2.7 % - 18.5 % 40.4 % 4.8 % 66.4 %
Total 14.8 % - 1.8 % 4.0 % 0.5 % 21.0 %


Dividends

During the three months ended September 30, 2012, the Company made no dividend distributions. All distributions are made at the discretion of the Company’s Board of Directors and will depend on the Company’s results of operations, financial conditions, maintenance of REIT status, availability of net operating losses and other factors that may be deemed relevant. The Company declared a special dividend in December 2009 and a regular dividend in each of the six quarters thereafter. In August 2011, the Company announced that it would suspend its quarterly dividend until at least early 2012. The Company continues to evaluate its dividend payment policy. However, as more fully described below, due to net operating losses incurred in prior periods, the Company is unlikely to declare and pay dividends to stockholders until such net operating losses have been consumed.

REIT Taxable Income and Net Operating Losses

REIT taxable income/(loss) is a term that describes the Company's operating results calculated in accordance with rules and regulations promulgated pursuant to the Internal Revenue Code. The Company's REIT taxable income/(loss) is computed differently from net income or loss as computed in accordance with generally accepted accounting principles (GAAP) as reported in the Company's consolidated financial statements. Depending on the number and size of the various items or transactions being accounted for differently, the differences between REIT taxable income or loss and GAAP net income or loss can be substantial and each item can affect several reporting periods. Generally, these items are timing or temporary differences between years; for example, an item that may be a deduction for GAAP net income/loss in the current year may not be a deduction for REIT taxable income/loss until a later year.

In order to maintain its qualification as a REIT, the Company is generally required (among other things) to annually distribute dividends to its stockholders in an amount at least equal to 90% of the Company's REIT taxable income. Additionally, as a REIT, the Company may be subject to a federal excise tax if it distributes less than 85% of its REIT taxable income by the end of the calendar year. Accordingly, the Company's dividends are generally based on REIT taxable income, as determined for federal income tax purposes, as opposed to its net income computed in accordance with GAAP. Dividends are paid if, when, and as declared by the Company's Board of Directors.

As described above, a REIT may be subject to a federal excise tax if it distributes less than 85% of its REIT taxable income by the end of a calendar year. In calculating the amount of excise tax payable in a given year, if any, Bimini Capital reduces REIT taxable income by distributions made to stockholders in the form of dividends and/or net operating losses (“NOL’s”) carried-over from prior years, to the extent any are available. Since income subject to excise tax is REIT taxable income after deducting qualifying dividends and the application of NOL’s (in that order), a REIT may avoid excise taxes solely by application of available NOL’s without paying qualifying dividends to stockholders. Because Bimini Capital had a $10.7 million REIT tax NOL as of December 31, 2011, in the future it could avoid excise taxes by applying such NOL’s against REIT taxable income without making any distributions to stockholders. Further, the REIT could avoid the obligation to pay excise taxes through a combination of qualifying dividends and the application of NOL’s. In any case, future distributions to stockholders may be less than REIT taxable income until the existing NOL’s are consumed.

Book Value Per Share

The Company's Book Value Per Share at September 30, 2012 was $0.52. Book Value Per Share is regularly used as a valuation metric by various equity analysts that follow the Company and may be deemed a non-GAAP financial measure pursuant to Regulation G. The Company computes Book Value Per Share by dividing total stockholders' equity by the total number of shares outstanding of the Company's Class A Common Stock. At September 30, 2012, the Company's consolidated stockholders' equity was $5.4 million with 10,329,421 Class A Common shares outstanding. At September 30, 2012, the Company had $7.3 million in cash and cash equivalents.

Management Commentary

Commenting on the Company's third quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, “As we approach the end of 2012, four years past the trough of the recent financial crisis in September of 2008 when Lehman Brothers collapsed, the economy is far from reaching pre-crisis levels. Poor economic data this past summer was followed by the announcement on September 13, 2012 by the Federal Reserve of another round of quantitative easing. This round, dubbed “QE3”, will be focused exclusively in Agency MBS. The Fed has committed to substantial purchases, $40 billion per month, indefinitely until economic activity, and the unemployment rate in particular, improve. This has impacted our market and Bimini as well. Within weeks of the announcement, the Mortgage Bankers Association refinance index approached 6,000 and the Freddie Mac survey rate was close to 3.5%, a new all-time low. Prices of Agency MBS are at even higher levels than we saw during the second quarter when the 10-year Treasury broke below 1.40% for the first time. The Federal Reserve appears intent on keeping longer-term rates low in an effort to spur economic activity, particularly mortgage rates. While we have not had any additional announcements of government sponsored refinance programs, rumors of enhancements to HARP 2.0 and other programs are commonplace. These developments are expected to result in elevated levels of prepayments as mortgage brokers ramp up capacity in anticipation of borrowers taking advantage of such low rates and, potentially, relaxed credit if there is any more accommodation from the government. Bimini has responded to these developments by re-allocating our capital more towards PT MBS. While we seek prepay-protected securities, we also avoid those that come with substantial premiums over generic securities. Prepayment rates on the PT MBS sub-portfolio continue to be modest, although we will continue to diligently monitor the portfolio and react as conditions warrant. We have decreased our allocation to the structured MBS sub-portfolio in response to these developments, although yields available in structured MBS are still attractive given current and anticipated prepayment levels. Since quarter end we have increased our capital allocation to structured MBS”.

The Company has scheduled an online Web simulcast and conference call to discuss these announcements that will begin at 9:00 AM ET, Tuesday, November 6, 2012. An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue for 48 hours. A link to these events will be available at the Company's website www.biminicapital.com. Those persons without Internet access may listen to the live call by dialing [phone] or [phone], confirmation code: 8574985.

The following is a summarized presentation of the unaudited balance sheets as of September 30, 2012, and December 31, 2011, and the unaudited quarterly results of operations for the calendar quarters ended September 30, 2012, June 30, 2012, and September 30, 2011.


BIMINI CAPITAL MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
($ in thousands, except per share amounts)

9/30/2012 12/31/2011 % Change
ASSETS
Mortgage-backed securities $ 125,739 $ 91,142 38.0 %
Cash equivalents and restricted cash 7,576 4,718 60.6 %
Accrued interest receivable 664 901 (26.3 )%
Retained interests 4,315 3,495 23.5 %
Other assets 7,924 8,998 (11.9 )%
Total Assets $ 146,218 $ 109,254 33.8 %

LIABILITIES AND STOCKHOLDERS' EQUITY
Repurchase agreements $ 107,121 $ 69,528 54.1 %
Junior subordinated notes 26,804 26,804 -
Other liabilities 6,913 7,555 (8.5 )%
Total Liabilities 140,838 103,887 35.6 %
Stockholders' Equity 5,380 5,367 0.2 %
Total Liabilities and Stockholders' Equity $ 146,218 $ 109,254 33.8 %
Class A Common Shares outstanding 10,329,421 10,086,854
Book value per share $ 0.52 $ 0.53


BIMINI CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the calendar quarter ended
9/30/2012 6/30/2012 % Change 9/30/2011 % Change
Interest income $ 1,165 $ 1,084 7.4 %
$
1,134 2.7 %
Interest expense (104 ) (108 ) 3.7 % (53 ) (96.2 )%
Net interest income, before interest on junior subordinated notes 1,061 976 8.7 % 1,081 (1.9 )%
Interest expense on junior subordinated notes (266 ) (261 ) (1.9 )% (250 ) (6.4 )%
Net interest income 795 715 11.2 % 831 (4.5 )%
Losses (19 ) (1,516 ) 98.7 % (2,801 ) 99.3 %
Net portfolio income (deficiency) 776 (801 ) 196.9 % (1,970 ) 139.3 %
Other (expense) income 796 1,751 (54.5 )% 2,436 (67.3 )%
Expenses (2,334 ) (1,141 ) (104.6 )% (2,379 ) 1.9 %
Net loss $ (762 ) $ (191 ) (299.0 )%
$
(1,913 ) 60.2 %
Basic and Diluted Net loss Per Share of:
CLASS A COMMON STOCK $ (0.07 ) $ (0.02 )
$
(0.19 )
CLASS B COMMON STOCK $ (0.07 ) $ (0.02 )
$
(0.19 )


About Bimini Capital Management, Inc.

Bimini Capital Management, Inc. is a REIT that invests primarily in, but is not limited to, residential mortgage-related securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae). Its objective is to earn returns on the spread between the yield on its assets and its costs, including the interest expense on the funds it borrows.

Statements herein relating to matters that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The reader is cautioned that such forward-looking statements are based on information available at the time and on management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in such forward-looking statements. Important factors that could cause such differences are described in Bimini Capital Management, Inc.'s filings with the Securities and Exchange Commission, including Bimini Capital Management, Inc.'s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Bimini Capital Management, Inc. assumes no obligation to update forward-looking statements to reflect subsequent results, changes in assumptions or changes in other factors affecting forward-looking statements.



Bimini Capital Management, Inc.
Robert E. Cauley, 772-231-1400
Chairman and Chief Executive Officer
www.biminicapital.com

Source: Bimini Capital Management, Inc.


Copyright Business Wire 2012

[10 bagger]

SANT.. hype ????

SANTEON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011

Revenues $ 1,196,711 $ 586,762 $ 2,897,904 $ 1,523,206
Costs of revenue 588,741 348,191 1,608,833 1,024,793
Gross Profit 607,970 238,571 1,289,071 498,413

Operating expenses:
General, selling and administration 456,478 376,463 1,276,315 979,146
Depreciation and amortization 1,460 1,209 4,273 3,626
Total operating expenses 457,938 377,672 1,280,588 982,772

Income (loss) from operations 150,032 (139,101 ) 8,483 (484,359 )

Other Income/(Expense):
Interest expense (1,556 ) (8,622 ) (9,908 ) (24,746 )
Gain on settlement of debt - 56,498 56,540 56,498
Gain (loss) from foreign currency transactions 1,840 76 2,386 (971 )
Other income (expense) 407 (3,431 ) 19,157 (3,431 )
Total Other Income 691 44,521 68,175 27,350

Income (loss) before provision for income taxes 150,723 (94,580 ) 76,658 (457,009 )

Income tax (benefit) expense - - - -

Net income (loss) $ 150,723 $ (94,580 ) $ 76,658 $ (457,009 )

Net income (loss) per common share, basic and diluted $ 0.00 $ (0.00 ) $ 0.00 $ (0.00 )

Weighted average number of common shares
outstanding, basic and diluted 477,125,745 468,722,194 479,561,944 454,157,588

[10 bagger]

GHSE



GateHouse Media Announces Third Quarter 2012 Results

PR Newswire - Nov 01 16:05 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:GHSE


FAIRPORT, N.Y., Nov. 1, 2012 /PRNewswire/ --

Third Quarter Highlights


Total digital revenue increased 27.9% versus the prior year.
Total revenues for the third quarter were $120.8 million, down 3.4% from the prior year.
As Adjusted EBITDA decreased 7.8% versus the prior year to $20.3 million. Excluding investments in new strategic growth initiatives, As Adjusted EBITDA decreased 1.7% versus the prior year.
Operating costs and SG&A expense declined $2.1 million from the prior year, or 2.1%, to $102.3 million. Adjusting for one-time and non-cash items, operating costs and SG&A expense declined 2.5% from the prior year.
Levered Free Cash Flow per share was $0.08 versus $0.11 for the prior year.
GateHouse Media, Inc. (the "Company" or "GateHouse Media") (OTC Pink Sheets: GHSE), a leading multi-media company providing news and information to local communities, today reported financial results for the third quarter ended September 30, 2012. Total revenues were $120.8 million for the quarter, a decline of 3.4% from the prior year on a GAAP and same store basis. As Adjusted EBITDA was $20.3 million, a decline of 7.8% compared to the prior year.

Commenting on GateHouse Media's results, Michael E. Reed, Chief Executive Officer of GateHouse Media, said, "We continue to make inroads on our transformational strategy. While the anemic economic recovery creates a challenging operating environment, we continue to invest in our digital and other strategic growth initiatives, grow consumer revenues, reduce overall expenses and implement new initiatives to stabilize print advertising.

"Digital revenues grew by 27.9% in the quarter versus prior year. Our digital products extend across web, mobile and tablet products and led to 28% growth in average monthly page views during the quarter. We invested $1.5 million in the quarter on new strategic growth initiatives, particularly on our local digital solutions service to small and medium sized businesses. Our continued focus on consumer revenue growth resulted in a 3.1% increase in circulation revenue during the quarter. Pricing initiatives more than offset volume declines and we saw improving volume trends throughout the quarter, particularly on Sunday circulation. We currently have pay meters in place in all of our daily newspapers and early indications suggest they are not having a significant impact on traffic.

"After adjusting for one-time and non-cash items, our operating expenses declined 2.5% in the quarter, or 3.9% when the investment in new strategic growth initiatives is factored out. As Adjusted EBITDA declined 7.8% in the quarter but remained positive year to date at 0.4%. Additionally, when excluding our investments in strategic growth initiatives, As Adjusted EBITDA decreased only 1.7% for the quarter and is up 5.7% year to date.

"I believe we are developing the right strategies and making the right investments in people and resources to execute on our transformational strategy, making GateHouse a truly local multi-media company. These investments along with a more efficient operating structure should position us to take full advantage of the growth opportunities we see as well as improvement we should start to see coinciding with a sustainable improvement in the economy."

Third Quarter 2012

Total revenues were $120.8 million for the quarter, a decline of 3.4% compared to the prior year on a GAAP and same store basis. The same store results were driven by strong digital revenue growth of 27.9% offset by declines in print advertising. The improvement in digital revenue resulted primarily from increased banner and display advertising revenue from higher page views and strong growth in our SEO/SEM services. Total advertising revenue declined 6.4% on a same store basis as growth in digital advertising was more than offset by a 9.2% decline in total print advertising. Classified print revenue declined 6.6% compared to the prior year, however, trends improved slightly from the second quarter across all major categories, with auto showing the greatest improvement. Circulation revenue increased 3.1% driven by price increases, partially offset by volume declines.

Total operating and SG&A expenses in the quarter were $102.3 million, down 2.1% compared to the prior year. The expense declines were primarily from lower compensation.

Operating income for the quarter was $6.7 million, a decrease of $2.1 million as compared to the prior year. As Adjusted EBITDA for the quarter was $20.3 million, a decrease of $1.7 million or 7.8% from the prior year.

Levered Free Cash Flow for the quarter declined $2.0 million, or 31.3%, to $4.4 million as compared to $6.4 million for the prior year.

One-time costs incurred and other non-cash expenses in the quarter were $3.2 million, related primarily to reorganization efforts and initiatives introduced to realize permanent expense reductions.

About GateHouse Media, Inc.

GateHouse Media, Inc., headquartered in Fairport, New York, is one of the largest publishers of locally based print and online media in the United States as measured by its 78 daily publications. GateHouse Media currently serves local audiences of approximately 10 million per week across 21 states through hundreds of community publications and local websites. GateHouse Media is traded in the over-the-counter market under the symbol "GHSE."

For more information regarding GateHouse Media and to be added to our email distribution list, please visit www.gatehousemedia.com.

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. GateHouse Media defines and uses Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues, and Levered Free Cash Flow, non-GAAP financial measures, as set forth below. The Company strongly urges stockholders and other interested persons not to rely on any single financial measure to evaluate its business. In addition, because Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are not measures of financial performance under GAAP and are susceptible to varying calculations, these non-GAAP measures, as presented in this press release, may differ from and may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow

The Company defines Adjusted EBITDA as income (loss) from continuing operations before interest, income tax expense (benefit), depreciation and amortization and other non-recurring or non-cash items. The Company defines As Adjusted EBITDA as Adjusted EBITDA before other non-cash items such as non-cash compensation, non-recurring integration and reorganization costs and Adjusted EBITDA from non-wholly owned subsidiaries. The Company defines As Adjusted Revenues as total revenues plus revenues of discontinued operations less revenues from non-wholly owned subsidiaries. The Company defines Levered Free Cash Flow as As Adjusted EBITDA less capital expenditures, cash taxes and interest expense, excluding non-wholly owned subsidiaries.

Management's Use of Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow

Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are not measurements of financial performance under GAAP and should not be considered in isolation or as alternatives to income from operations, net income (loss), cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. GateHouse Media's management believes these non-GAAP measures, as defined above, are useful to investors for the following reasons:

Evaluating performance and identifying trends in day-to-day performance because the items excluded have little or no significance on its day-to-day operations;
Providing assessments of controllable expenses that afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance; and
Indicators for management to determine if adjustments to current spending decisions are needed.
Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow provide GateHouse Media with measures of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with its capital structure. These metrics measure GateHouse Media's financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are some of the metrics used by senior management and the Board of Directors to review the financial performance of the business on a monthly basis. In addition, GateHouse Media's management utilizes these metrics to evaluate the Company's performance, along with other criteria, to determine the funds available for paying the quarterly dividend.

Forward-Looking Statements

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to various risks and uncertainties, including without limitation, statements relating to progress made by the Company in its integration efforts, growth in revenues and cash flow, on-line revenues, expense reduction efforts and potential acquisition and sale opportunities. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "would," "project," "predict," "continue" or other similar words or expressions. Forward looking statements are based on certain assumptions or estimates, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that the expectations reflected in such forward looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the condition of the economy and the credit markets generally, the Company's ability to maintain adequate liquidity and financing sources and an appropriate level of debt, the Company's ability to maintain debt covenants, the Company's ability to successfully grow digital revenues and audience and consumer revenues, the Company's ability to successfully stabilize print revenues, the ability of the Company to successfully identify and develop new business ventures, the Company's ability to close on a timely basis upon announced or contemplated transactions, unexpected liabilities arising from any transaction or that the Company will not receive the expected benefits from the transaction, the Company's ability to generate sufficient cash flow to cover required interest and long-term obligations, the effect of the Company's indebtedness and long-term obligations on its liquidity, the Company's ability to integrate acquired assets and businesses, any increases in the price or reduction in the availability of newsprint, seasonal and other fluctuations affecting the Company's revenues and operating results, any declines in circulation, the Company's ability to obtain additional capital on terms acceptable to it, the Company's ability to compete effectively in the local media industry, the Company's success or failure in pursuing its digital business and related initiatives and strategic realignments and undertakings, increases in health costs, the Company's vulnerability to economic downturns, regulatory changes or acts of nature in certain geographic areas, increases in competition for skilled personnel, a portion of the Company's workforce being unionized, departure of key officers, increases in market interest rates, the cost and difficulty of complying with increasing and evolving regulation, and other risks detailed from time to time in the Company's SEC reports, including but not limited to its most recent Annual Report on Form 10-K filed with the SEC under Commission File Number 001-33091. When considering forward- looking statements, readers should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are also cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release. The factors discussed above and the other factors noted in the Company's SEC filings could cause actual results to differ significantly from those contained in any forward-looking statement. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements and expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.



GATEHOUSE MEDIA, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

and Comprehensive Income (Loss)

(In thousands, except share and per share data)
































Three months
ended

Three months
ended

Nine months
ended

Nine months
ended






September 30,
2012

September 25,
2011

September 30,
2012

September 25,
2011














Revenues:










Advertising

$ 80,262

$ 85,901

$ 246,365

$ 258,808


Circulation

33,837

32,750

100,076

97,390


Commercial printing and other

6,698

6,373

18,955

18,761



Total revenues

120,797

125,024

365,396

374,959

Operating costs and expenses:










Operating costs

67,098

69,045

204,968

211,314


Selling, general, and administrative

35,223

35,421

107,812

110,977


Depreciation and amortization

9,836

10,285

30,116

31,694


Integration and reorganization costs

1,597

1,274

3,467

3,317


Impairment of long-lived assets

-

37

-

1,733


Loss on sale of assets

379

157

534

556



Operating income

6,664

8,805

18,499

15,368

Interest expense

14,500

14,441

43,497

42,690

Amortization of deferred financing costs

314

340

994

1,020

(Gain) loss on derivative instruments

5

(694)

(1,639)

(274)

Other expense

7

94

4

94



Loss from continuing operations












before income taxes

(8,162)

(5,376)

(24,357)

(28,162)

Income tax expense (benefit)

(250)

22

(207)

90



Loss from continuing operations

(7,912)

(5,398)

(24,150)

(28,252)

Income (loss) from discontinued operations, net










of income taxes

(1,506)

236

(1,504)

(169)



Net loss

(9,418)

(5,162)

(25,654)

(28,421)



Net loss attributable to noncontrolling interest

105

185

410

600




Net loss attributable to GateHouse Media

$ (9,313)

$ (4,977)

$ (25,244)

$ (27,821)














Loss per share:










Basic and diluted:










Loss from continuing operations











attributable to GateHouse Media

$ (0.13)

$ (0.09)

$ (0.41)

$ (0.48)


Loss from discontinued operations











attributable to GateHouse Media, net of











income taxes

(0.03)

-

(0.03)

-


Net loss attributable to GateHouse Media

$ (0.16)

$ (0.09)

$ (0.44)

$ (0.48)














Basic weighted average shares outstanding

58,051,607

57,976,184

58,038,673

57,935,943

Diluted weighted average shares outstanding

58,051,607

57,976,184

58,038,673

57,935,943














Comprehensive income (loss)

$ (6,036)

$ 1,416

$ (23,545)

$ (19,590)


Comprehensive loss attributable to noncontrolling











interest

(105)

(185)

(410)

(600)


Comprehensive income (loss) attributable to GateHouse Media
$ (5,931)

$ 1,601

$ (23,135)

$ (18,990)



















GATEHOUSE MEDIA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data)

















September 30,
2012

January 1, 2012







(unaudited)



Assets





Current assets:






Cash and cash equivalents

$ 36,820

$ 19,212


Restricted cash

6,167

6,167


Accounts receivable, net of allowance for doubtful accounts of $2,789







and $2,976 at September 30, 2012 and January 1, 2012, respectively

51,023

59,236


Inventory

6,104

6,017


Prepaid expenses

5,798

15,483


Other current assets

8,280

7,347


Current assets held for sale

1,433

-



Total current assets


115,625

113,462


Property, plant, and equipment, net of accumulated depreciation of $124,625







and $116,780 at September 30, 2012 and January 1, 2012, respectively

119,785

130,937


Goodwill

13,742

13,958


Intangible assets, net of accumulated amortization of $190,981 and $179,327







at September 30, 2012 and January 1, 2012, respectively

224,873

246,661


Deferred financing costs, net

1,980

2,974


Other assets

2,118

1,876


Long-term assets held for sale

2,315

934



Total assets


$ 480,438

$ 510,802











Liabilities and Stockholders' Deficit





Current liabilities:






Current portion of long-term liabilities

$ 889

$ 1,039


Current portion of long-term debt

-

4,600


Accounts payable

9,933

8,216


Accrued expenses

29,531

27,625


Accrued interest

2,479

2,876


Deferred revenue

25,865

27,171


Current liabilities held for sale

597

-



Total current liabilities


69,294

71,527

Long-term liabilities:






Long-term debt

1,176,638

1,176,638


Long-term liabilities, less current portion

2,422

2,935


Derivative instruments

48,317

51,576


Pension and other postretirement benefit obligations

12,873

13,758



Total liabilities


1,309,544

1,316,434

Stockholders' deficit:






Common stock, $0.01 par value, 150,000,000 shares authorized at







September 30, 2012 and January 1, 2012; 58,313,868 issued, and







58,077,031 outstanding at September 30, 2012 and January 1, 2012

568

568


Additional paid-in capital

831,320

831,249


Accumulated other comprehensive loss

(52,250)

(54,359)


Accumulated deficit

(1,606,358)

(1,581,114)


Treasury stock, at cost, 236,837 shares at September 30, 2012 and







January 1, 2012

(310)

(310)



Total GateHouse Media stockholders' deficit


(827,030)

(803,966)



Noncontrolling Interest


(2,076)

(1,666)



Total stockholders' deficit



(829,106)

(805,632)



Total liabilities and stockholders' deficit



480,438

510,802
















GATEHOUSE MEDIA, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)




































Nine months ended

Nine months ended










September 30, 2012

September 25, 2011














Cash flows from operating activities:






Net loss




$ (25,654)

$ (28,421)


Adjustments to reconcile net loss to net cash







provided by operating activities:








Depreciation and amortization

30,710

32,315




Amortization of deferred financing costs

994

1,020




Gain on derivative instrument

(1,639)

(274)




Non-cash compensation expense

71

422




Loss on sale of assets

566

905




Pension and other postretirement benefit obligations

(432)

(680)




Impairment of long-lived assets

2,344

2,051




Changes in assets and liabilities:










Accounts receivable, net

6,889

6,801






Inventory

(87)

1,133






Prepaid expenses

9,622

6,156






Other assets

(1,181)

(557)






Accounts payable

1,859

3,272






Accrued expenses

2,019

2,457






Accrued interest

(397)

1,328






Deferred revenue

(949)

(659)






Other long-term liabilities

(513)

(577)






Net cash provided by operating activities


24,222

26,692

Cash flows from investing activities:






Purchases of property, plant, and equipment

(2,854)

(2,431)


Proceeds from sale of assets and insurance

840

2,389






Net cash used in investing activities


(2,014)

(42)

Cash flows from financing activities:






Repayments under current portion of long-term debt

(4,600)

(11,249)






Net cash used in financing activities


(4,600)

(11,249)






Net increase in cash and cash equivalents


17,608

15,401

Cash and cash equivalents at beginning of period

19,212

8,753

Cash and cash equivalents at end of period

$ 36,820

$ 24,154



















GATEHOUSE MEDIA, INC. AND SUBSIDIARIES

As Adjusted EBITDA

(In thousands)





























Three months
ended

Three months
ended

Nine months
ended

Nine months
ended





September 30,
2012

September 25,
2011

September 30,
2012

September 25,
2011













Loss from continuing operations

$ (7,912)

$ (5,398)

$ (24,150)

$ (28,252)

Income tax expense (benefit)

(250)

22

(207)

90

(Gain) loss on derivative









instruments (1)


5

(694)

(1,639)

(274)

Amortization of deferred









financing costs


314

340

994

1,020

Interest expense

14,500

14,441

43,497

42,690

Impairment of long-lived assets

-

37

-

1,733

Depreciation and amortization

9,836

10,285

30,116

31,694

Adjusted EBITDA from










continuing operations



16,493

19,033

48,611

48,701

Non-cash compensation and









other expense


1,417

1,215

4,125

4,018

Non-cash portion of









postretirement benefits










expense


(188)

(107)

(432)

(229)

Integration and reorganization









costs


1,597

1,274

3,467

3,317

Loss on sale of assets

379

157

534

556

As adjusted EBITDA from discontinued operations



612

467

1,472

1,184

As Adjusted EBITDA


20,310

22,039

57,777

57,547

Net capital expenditures

(1,117)

(757)

(2,853)

(2,366)

Cash taxes

-

-

-

-

Interest paid

(14,772)

(14,847)

(43,778)

(41,384)

Levered Free Cash Flow


$ 4,421

$ 6,435

$ 11,146

$ 13,797
















(1)
Non-cash loss on derivative instruments is related to interest rate swap agreements which are financing related and are excluded from Adjusted EBITDA.






GATEHOUSE MEDIA, INC. AND SUBSIDIARIES

As Adjusted Revenues

(In thousands)





























Three months ended

Three months ended

Nine months ended

Nine months ended





September 30,
2012

September 25,
2011

September 30,
2012

September 25,
2011

























Total revenues from continuing

$ 120,797

$ 125,024

$ 365,396

$ 374,959

operations









Revenues from discontinued









operations

2,145

2,119

6,326

6,396

Revenues from non-wholly owned









subsidiary

(818)

(729)

(2,235)

(1,741)

Same reporting period basis adjustment

-

-

(2,256)

-

As Adjusted Revenues

$ 122,124

$ 126,414

$ 367,231

$ 379,614


















SOURCE GateHouse Media, Inc.

[10 bagger]

ULUR..

Management To Invest On The Same Terms As Melmed Holdings AG

PR Newswire - Nov 01 08:00 EDT

Alert hits:OTC
Company Symbols: OTC-PINK:ULUR


ADDISON, Texas, Nov. 1, 2012 /PRNewswire/ -- ULURU Inc. ("ULURU")(OTCQB: ULUR), announced today that company management will invest approximately $400,000 on similar terms to Melmed Holdings AG ("Melmed"), as outlined in the binding term sheet announced on September 25, 2012.

Melmed intends to invest $2 million for 5 million shares of the Company's common stock ($0.40 cents per share) and warrants to purchase up to 3 million shares of common stock with an exercise price of $0.60 cents per share.

Commenting on the investment by management, Helmut Kerschbaumer, Chairman of Melmed Holdings AG, stated, "We are delighted that the management of ULURU has shown such financial commitment and shares our confidence and vision for the company. Given the investment in ULURU by both parties, we believe the company is funded to execute on their business plan and to enhance shareholder value."

The shares of common stock to be issued and any shares issued resulting form the exercise of warrants have not been registered under the Securities Act of 1933 and may not be sold absent registration or an applicable exemption from the registration requirements.

About ULURU Inc.:
ULURU Inc. is a specialty pharmaceutical company focused on the development of a portfolio of wound management and oral care products to provide patients and consumers improved clinical outcomes through its innovative Nanoflex® Aggregate technology and OraDisc™ transmucosal delivery system. For further information about ULURU Inc., please visit our website at www.uluruinc.com.

This press release contains certain statements that are forward-looking within the meaning of Section 27a of the Securities Act of 1933, as amended. These statements are subject to numerous risks and uncertainties, including but not limited to enhancing ULURU's long term value, and to the risk factors detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and other reports filed by us with the Securities and Exchange Commission.

Contact: Company
Kerry P. Gray
President & CEO
Terry K. Wallberg
Vice President & CFO
[phone]

SOURCE ULURU Inc.

[10 bagger]

AMTX..

AEMETIS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)


For the six months ended For the three months ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
Revenues $ 88,475,642 $ 27,991,659 $ 44,279,866 $ 27,253,190

Cost of goods sold 92,755,094 28,355,126 46,300,806 27,567,654

Gross loss (4,279,452 ) (363,467 ) (2,020,940 ) (314,464 )

Research and development expense 341,321 103,969 148,704 71,400
Selling, general and administrative expenses 4,375,336 4,092,691 2,412,495 1,989,282

Operating loss (8,996,109 ) (4,560,127 ) (4,582,139 ) (2,375,146 )

Other income/(expense)
Interest income, net 2,188 6,817 1,840 2,796
Interest expenses (9,269,964 ) (5,752,522 ) (5,304,917 ) (3,649,359 )
Other income/(expenses) (81,358 ) 78,238 (99,569 ) 54,207
Gain/(loss) on sale of land 236,830 (401,407 ) 236,830 (401,407 )

Loss before income taxes (18,108,413 ) (10,629,001 ) (9,747,955 ) (6,368,909 )

Income taxes (4,000 ) (3,200 ) - -

Net loss $ (18,112,413 ) $ (10,632,201 ) $ (9,747,955 ) $ (6,368,909 )


Other comprehensive loss
Foreign currency translation adjustment 84,006 4,255 (226,977 ) (16,031 )
Comprehensive loss $ (18,028,407 ) $ (10,627,946 ) $ (9,974,932 ) $ (6,384,940 )

Loss per common share
Basic and diluted $ (0.14 ) $ (0.12 ) $ (0.07 ) $ (0.07 )

Weighted average shares outstanding
Basic and diluted 132,183,868 91,591,203 133,239,456 92,384,340


The accompanying notes are an integral part of the financial statements.

[10 bagger]

TNLX..

TRANS-LUX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)





Three Months Ended



Six Months Ended



June 30

June 30

In thousands, except per share data


2012


2011


2012


2011

Revenues:













Digital display sales

$
5,014

$
3,119

$
8,851

$
5,967

Digital display lease and maintenance


1,822


1,949


3,590


3,995

Real estate rentals


13


22


31


45

Total revenues


6,849


5,090


12,472


10,007















Cost of revenues:













Cost of digital display sales


3,820


2,628


7,010


4,963

Cost of digital display lease and maintenance


1,496


1,617


2,957


3,249

Cost of real estate rentals


15


16


31


33

Total cost of revenues


5,331


4,261


9,998


8,245















Gross profit from operations


1,518


829


2,474


1,762

General and administrative expenses


(2,380)


(2,090)


(4,981)


(4,255)

Restructuring costs


(163)


-


(173)


(70)

Operating loss


(1,025)


(1,261)


(2,680)


(2,563)

Interest expense, net


(74)


(363)


(187)


(724)

Gain on debt extinguishment


56


-


60


-

Change in warrant liabilities


1,789


-


1,897


-

Income (loss) before income taxes


746


(1,624)


(910)


(3,287)

Income tax expense


(7)


(7)


(14)


(14)

Income (loss) from continuing operations


739


(1,631)


(924)


(3,301)

Loss from discontinued operations


-


-


(7)


-

Net income (loss)

$
739

$
(1,631)

$
(931)

$
(3,301)















Income (loss) per share continuing operations – basic and diluted

$
0.13

$
(0.67)

$
(0.18)

$
(1.35)

Loss per share discontinued operations – basic and diluted


-


-


-


-

Total income (loss) per share – basic and diluted

$
0.13

$
(0.67)

$
(0.18)

$
(1.35)















Weighted average common shares outstanding - basic and diluted


5,831


2,443


5,259


2,443

The accompanying notes are an integral part of these condensed consolidated financial statements.

[10 bagger]

JUST incase it gets deleted..

Bottom is in.

I don't know why with all the shares comming out of loose hands anyone would want to believe that or buy on an uptic.. If they were really wanting to own,, why not let the stock trade natural and find it's own level.. That would at present prob. IMO be in the low $0.30's.. ON SPIN there is no guidance,, the past guidance wasn't any good and if any projections made in the past had teeth the only buyers "Stupids" in SPIN was/were/are the whales..

Since they never will sell why pay up and why do all the bids and offers move all day on no VOLUME.. It's almost like rearrangeing the chairs on the Titantic..

The "PAINTER" doesn't even paint any longer because he's even afraid to add to his/her position.. ..?? This is a stock where every post for months not only over promised ,, but seemed have followers that were in attack mode on any one that disagreed with them.. They were wrong and now they will suffer even if they are correct today because SPIN no longer has any creditibility.. Personally I think SPIN is dead money because it will be several Qtrs. before any real earnings are attainable.. The AR's are no even suspect according to the latest news from management and as SPIN was built on AR's whats left other than a shell with a good Dr. looking for another way to find sizzle..

Once the sizzle is found SPIN will IMO have to earn the much promised number of $0.05 per Qtr. promised many,, many times in the past two years.. W/O it.. it's crying Wolf over again.. hank

[10 bagger]

[10 bagger]

MSEH.. Finally the screw job has been disclosed..

I postd before I exited with the board membrs of MSEH tat moved on.. Held over 900,000 shares and sold almost 3/4 of the position into the first day's markup after the news of a merger.. Sold the rest as It became clear to anyone that MSEH shareholders had been screwed.. I didn't like the deal when first announced and liked it less as the deal further progressed.. I think that this was one of the dumbest deals to be constructed in the Oil patch in years.. After the first day's rape I sold the rest of the position down into the high teens.. Have no position at present.. Good Luck to those that remain.. hank

:

10 bagger Thursday, November 15, 2012 12:45:22 PM
Re: biztech post# 727 Post # of 747
MSEH I see no reason to change my opinion after further reading and DD.. hank
Quote:
--------------------------------------------------------------------------------
A proper evaluation IMO is $0. 19 on MSEH and $0.48 on AOIL.. I would be a entry level buyer of either at a 25% discount from those numbers .. Oct. 4
Quote:
--------------------------------------------------------------------------------
The ARB's are absent so any bid wacking on AOIL will decrease the premiumn rapidly and unmask any premiumn for MSEH.. I would consider re-buying but at levels below yesterday's close ,, but only if the complete assets of both companies could be put on a spread sheet.. Because at present cash flow per share is non accretive with this combination of assets and necessay drilling funds will still have to be found/begged /borrowed to drill out future combined prospects.. hank

===========================================================

10 bagger Saturday, October 06, 2012 1:20:19 AM
Re: cleverrox post# 679 Post # of 747

MSEH.. $0.205.. Yes I made sales and never tried to hide them....They were infact posted as they were done except for the last 135K..

My reason for owning MSEH was to piggy back the insiders in thier purchases and did so from the origional move of $0.09. Paid for hype had propelled the stock to almost $0.40 in size and I made sales as high as $0.36.. But I also bought the hype and started AVE. down starting @ $0.31.. Each time I got near 150K in position I re-offered that position at the last uptic sale and tried to/maintained a position of about 125K thruout the move to $0.19.. At that time I built my position to almost 500,000 shares and maintained a position adding and selling to just below $0.13 making spreads and tics..

My Bids ending in $0.0028 should of been obvious to all as were my offers of $0.0088.. .. At the mid $0.13 I had developed a position of almost 1.4 Million shares as the Conv. seemed to be converted and continued the down pressure on MSEH.. ..

Insiders were/became obvious in thier additions at the $0.14 to $0.158 level and I used some of the position to accomidate them.. My concerns started with the delayed news of cashflow and the spotty drilling results but as I had whittled my position down to just a tad under a million my cost basis had also decreased to just below $0.15..

Then we had the false run to $0.23 which I believed was a leak on a well and $0.30 was around the corner.. I made no sales except for about 75K that were in place on open orders all below $0.18..

Next it seemed that insiders made decisions to leave but there was not any indications of them selling thier stock,, why because it appears that they were pledging thier stock but why..

That why came and IMO it transformed MSEH from a possible cash flow play to a banking play on new properties.. The first re-dills didn't send the cash flow up to any degree that we all had anticipated and now with the reason why I owned MSEH started fading away..

The change in tone and direction and the lack of real news seemed to stall any upwards movement and MSEH drifted back to the $0.16 level and except for one block of 100K the stock seemed to become in a trading channel again with a downward bias.. The reason That I purchased and repurchased it again left with the insider departures IMO..

I felt my reason for ownership was no longer baised upon the Insiders as much as the Insiders need to monitise thier position but not with the drill bit but the promise of new hype and new riches from the results of others in the same area of new drilling prospects..

The news of the merger which has no defined terms is suspect in my view.. The combined resulting company IMO is not bankable,, has properties in a prolific area but so what,, What do the logs look like and why is MSEH involved.. I think MSEH needed an out,, either thru the drill bit or a Hail Mary.. This IMO was the Hail Mary and it was thru the painted stock of a stock that rarely traded and/that marked up the bids on MSEH to the point where I was a seller..

The reason I sold primarily was because there were no ARB's in the deal and at these discounts to market value why not.. I tried to find one and none would commit funds due to the way the deal was written and displayed.. If they Arb'ed and went long MSEH against the deal and it was broken off what price could AOIL rise to permit cover of any large short.. More was needed to make this a firmer deal or the possibility of another buyer was in the wings was necessary to buy thefailed position of the Arb's.. ..

The lack of an Arb is still the question and I still cant find the answer.. During the past week in addition to the sales I made below I also sold another 135,000 shares and as before I never hit a bid.. I now own 250K which are in a place hard to recover for sale and it will remain my passive stake in this new venture..

I wish all good luck and I will today resign as a mod on this board.. IMO as there is nothing that I feel that I can add to this post.. .. hank

See More

[10 bagger]

/YHGG

[10 bagger]

ACGX.. Quarterly Report GO to the ACGX board and click on to where you can get news releases from I-Hub and most of the info that you need will be there.. I hope you can get some tomprrow as this is all we need now to make this thing real.. They didn't want to do anything but I believe we forced them into it.. hank
============================================================

Wed, Nov 14, 2012 07:35 - Alliance Creative Group, Inc. (ACGX: OTC Link) released their Quarterly Report concerning ACGX Consolidated 3rd Quarter 2012 Disclosure & Financial Statements - Balance Sheet, Income Statement, Cash-Flows and Stockholder Equity ending September 30, 2012. To read the complete report, please visit: https://www.otciq.com/otciq/ajax/showFinancialReportById.pdf?id=94577.


==================================================

ACGX is out with earnings. They did 2.8 million in sales and 160k in net profits. They now stand at 660k in net profits for 9 months. The good news is that they now come clean with all the preferred stuff in the filing. They also clearly speak about a certain number of shares if fully diluted. There are now 11 million shares outstanding. So I will clearly do the math with this number for now on the boards. Let's get this thing up to 3 cents now!!


The preferred stock had 1000 votes per share and 1000 to 1 conversion rights into common but is not entitled to receive any cash dividends. The company is currently in the process of amending the rights for the preferred stock to be reduced to 25 to 1 voting and 25 to 1 conversion right into common stock. If all the preferred stock was converted into common stock it would be equal to 125 million shares. However, there are no plans to convert the preferred into common shares at this time.
===============================================
Alliance Creative Group (ACGX) Announces the Removal of their DTCC Deposit Chill

Company Symbols: OTC-PINK:ACGX, ACORN:A.2818830036, ACORN:A.3706905638

Company Amending Preferred Stock Terms to Benefit Current Shareholders

CHICAGO, Nov. 1, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (Stock Symbol: ACGX.pk) is pleased to announce the removal of the DTCC Deposit Chill on its stock and the amending of the terms of the company's preferred stock to benefit current shareholders.

Attorney Simon Kogan represented the company and was able to help clear up any confusion by sharing all requested documentation with The Depository Trust & Clearing Corporation (DTCC) and getting the chill lifted so the company can resume accepting deposits and book-entry transfer services.

CEO of the Alliance Creative Group, Steven St. Louis, said, "Our attorney Simon Kogan deserves a lot of credit for helping us resolve this very frustrating and unfortunate situation. Now that we have resolved this issue we are going to continue working on growing the business and increasing shareholder value. In a significant step to improve shareholder value we are amending our Preferred Stock rights from 1000 to 1 voting and conversion rights to 25 to 1. There are 5 million outstanding preferred shares, however we have not converted any preferred stock into common shares and have no plans to do so at this time." St. Louis went on to say, "Our Q3 #s will be released around the middle of November and we will be adding more detailed updates and disclosures in our 3rd Quarter reports that will be posted on the OTC Markets."

About Alliance Creative Group, Inc.

ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and brand management marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product fulfillment & logistics and strategic marketing. www.AllianceCreativeGroup.com

About Simon Kogan, ESQ

Mr. Kogan is a senior litigator with over 20 years of experience in complex cases from inception to trial and beyond. He has personally managed dozens of arbitration and related matters for both brokers and public customers and generated over $400,000 per year in annual billings. Mr. Kogan has a long history as a partner in boutique securities firm where he developed and maintained the firm's intranet and use of technology for litigation support. Through his private practice and in cooperation with other lawyers, Mr. Kogan handles civil litigation and private securities matters, including private placements and reverse mergers. From 1993-95, Mr. Kogan taught legal writing as an Adjunct Professor of Law at New York Law School.

For Mr. Kogan's website please go to http://mysite.verizon.net/vzexoxyk/simonskoganesqattorneyatlaw/.

To contact via email [e-mail] or via phone [phone].

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]

SOURCE Alliance Creative Group, Inc.




===========================================================

STL Marketing Group, Inc. (STLK) and Versant Corporation Execute Definitive Merger and Share Purchase Agreement

Marketwire - Oct 18 07:50 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:STLK, OTC-PINK:ACGX, ACORN:A.1301529744

Significant First Step in Increasing the Company's Future Value

CHICAGO, IL -- (Marketwire) -- 10/18/12 -- STL Marketing Group, Inc. (PINKSHEETS: STLK) and Versant Corporation have completed their merger and share purchase agreement. Versant I, Inc. has purchased the controlling block of preferred shares in STLK from Alliance Creative Group, Inc. (PINKSHEETS: ACGX). The Board of Directors of both companies have approved the merger of the companies and management will begin implementation immediately. As part of the merger, Mr. Paul Sorkin has resigned as Chief Executive Officer of STL Marketing Group, Inc. and Mr. Jose P. Quiros has been named STL Marketing Group's new Chief Executive Officer.

"We apologize for any delays or confusion related to the past status of STLK. Today is a great day for all current shareholders and I look forward to watching Mr. Quiros lead his team through this very exciting project. I am committed to working with the new management during this transition to assure that the public receives full and complete disclosures related to all past, current and future transactions," says former CEO Mr. Paul Sorkin.

The company has changed transfer agents from First American Stock Transfer to V Stock Transfer Agent and would like to correct a previous statement. Although the company has not issued a single share, free trading or restricted, since the 4th Quarter of 2009, the previous press release listed an incorrect total number of outstanding shares. The total number of current outstanding common shares is 21,623,524 with 20,843,686 of those shares free trading.

Current CEO Jose P. Quiros said, "We are very pleased with this transaction as it provides us a better platform to operate and provide continued transparency to our existing and future investors in addition to positioning us to better access the capital markets. We will implement a parallel strategy that continues to pursue the completion of our Power Purchase Agreement, as well as updating and completing our studies on the site. All while we initiate the necessary work to complete our audits and file all required information and disclosures to complete the requirements for STLK to become a fully reporting company. We look forward to implementing our business plan and filing the necessary filings with the Securities Exchange Commission as soon as possible."

About STL Marketing Group, Inc./ Versant Corporation
Versant Corporation is a subsidiary of STL Marketing Group, Inc. and a Colorado based renewable energy company whose primary focus is to develop and operate renewable energy projects. Its first stage of development is focused on wind energy facilities in Costa Rica. For more information on Versant, please visit our web site at www.v3rsant.com.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Add to Digg Bookmark with del.icio.us Add to Newsvine

Media and Investor Relations Contact
STL Marketing Group, Inc. and Versant Corporation
Phone [phone]
Email Contact


Source: St. Louis Marketing Group; Versant



===================================================
Alliance Creative Group (ACGX) Reports Over $2,800,000 in Q2 Revenue for 2012 and a 30% increase in Gross Profits for Q2 2012 compared to Q2 2011

PR Newswire - Aug 16 09:00 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:ACGX

Annual Estimated EPS equal to about 12 cents per share

CHICAGO, Aug. 16, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (Stock Symbol: ACGX) is pleased to announce the results of Operations for the Three Months Ended June 30, 2012 compared to the Three Months Ended June 30, 2011.

Revenues for the three months ended June 30, 2012 ("Second Quarter 2012") were $2,828,474 compared with $2,537,895 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is an increase of $290,579 or 12% for the quarter.

Gross Profits for the three months ended June 30, 2012 ("Second Quarter 2012") were $774,727 compared with $596,553 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is an increase of $178,174 or 30% for the quarter.

Net Income for the three months ended June 30, 2012 ("Second Quarter 2012") were $209,282 compared with $213,530 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is a decrease of $4,248 or 2% decrease for the quarter due to some 1 time expenses and bad debt write off.

The total assets of the Alliance Creative Group as of 6/30/12 were $5,140,966. The total equity was $1,864,933. The total outstanding shares as of June 30, 2012 were 8,554,746 with 8,415,221 of those shares in the float. The stock is currently trading around the 2.5 cents per share range and the overall company market cap is around only $200,000.

The full financial statement, balance sheet, cash flow statement, stockholder equity and information and disclosure statements are on the Company website at http://alliancecreativegroup.com/investor-relations under the section for financials and on www.OTCmarkets.com under stock symbol ACGX.

CEO of the Alliance Creative Group, Steven St. Louis, said "I am very proud of our team and the progress we are making. This is our 11th consecutive quarter with over a million dollars in revenue and our earnings per share for 2012 are estimated to be around 12 cents a share. We moved into a larger office/warehouse location and have added some quality members to our growing team. We also purchased some additional equipment and are still evaluating other new technologies to help keep our competitive edge. Our Revenue and Gross Profits were both up but our Net Income was a little lower because of a few 1 time expenses and a bad debt write off. Now that we have moved into our new location we will be stepping up our efforts to find good strategic partners and potential acquisitions to help continue growing both organically and by acquisition. We will also continue to look for bigger and more long-term financial partners to help us get to the next level quicker. We feel our foundation is very solid and there are a lot of opportunities we want to evaluate. Our overall goals continue to be increased revenues, profits, stock price, stock liquidity and increased shareholder value and we will continue to look for and evaluate the best ways to accomplish these goals."

About Alliance Creative Group, Inc.
ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product development, event marketing, business consulting and strategic marketing. www.AllianceCreativeGroup.com

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]


====================================================
Alliance Creative Group (ACGX) Moves to New Office to Prepare for Future Growth and Opportunities

PR Newswire - Aug 01 08:30 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:ACGX

Company has also been adding key employees to help manage future expansion

CHICAGO, Aug. 1, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (PINKSHEETS: ACGX) is pleased to announce the addition of some key employees and the completion of the move to a bigger office location. The new office is located at 1066 National Parkway in Schaumburg, IL.

The new office is approximately 13,000 square feet and allows for the addition of some workspace, equipment and employees to help prepare for and handle the future growth and potential expansion opportunities.

CEO of the Alliance Creative Group, Steven St. Louis, said "We are very excited about this move and the addition of some quality employees because our overall numbers and business fundamentals have been very solid and this new location and the additional experienced employees will help us better execute our business plans. We have been and continue to aggressively look for all opportunities with good synergy to our printing, packaging and marketing core businesses. We feel these industries are perfect for roll ups to share space and resources to better service clients while maintaining good margins and being very competitive". Mr. St. Louis went on to say, "we will be posting some pictures online of the new facility in the near future and should have the 2nd quarter numbers released around the middle of August. We are aware of the major disconnect between our revenues, profits and financial numbers and our stock price and market cap and are working diligently with legal and financial professionals in an attempt to change this. As we find out more we will inform the public via press releases and uploads to the OTC Markets website and our main website www.AllianceCreativeGroup.com

About Alliance Creative Group, Inc.

ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product development, event marketing, business consulting and strategic marketing. www.AllianceCreativeGroup.com

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]

SOURCE Alliance Creative Group, Inc.

[10 bagger]

Wed, Nov 14, 2012 07:35 - Alliance Creative Group, Inc. (ACGX: OTC Link) released their Quarterly Report concerning ACGX Consolidated 3rd Quarter 2012 Disclosure & Financial Statements - Balance Sheet, Income Statement, Cash-Flows and Stockholder Equity ending September 30, 2012. To read the complete report, please visit: https://www.otciq.com/otciq/ajax/showFinancialReportById.pdf?id=94577.


==================================================

ACGX is out with earnings. They did 2.8 million in sales and 160k in net profits. They now stand at 660k in net profits for 9 months. The good news is that they now come clean with all the preferred stuff in the filing. They also clearly speak about a certain number of shares if fully diluted. There are now 11 million shares outstanding. So I will clearly do the math with this number for now on the boards. Let's get this thing up to 3 cents now!!


The preferred stock had 1000 votes per share and 1000 to 1 conversion rights into common but is not entitled to receive any cash dividends. The company is currently in the process of amending the rights for the preferred stock to be reduced to 25 to 1 voting and 25 to 1 conversion right into common stock. If all the preferred stock was converted into common stock it would be equal to 125 million shares. However, there are no plans to convert the preferred into common shares at this time.
===============================================
Alliance Creative Group (ACGX) Announces the Removal of their DTCC Deposit Chill

Company Symbols: OTC-PINK:ACGX, ACORN:A.2818830036, ACORN:A.3706905638

Company Amending Preferred Stock Terms to Benefit Current Shareholders

CHICAGO, Nov. 1, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (Stock Symbol: ACGX.pk) is pleased to announce the removal of the DTCC Deposit Chill on its stock and the amending of the terms of the company's preferred stock to benefit current shareholders.

Attorney Simon Kogan represented the company and was able to help clear up any confusion by sharing all requested documentation with The Depository Trust & Clearing Corporation (DTCC) and getting the chill lifted so the company can resume accepting deposits and book-entry transfer services.

CEO of the Alliance Creative Group, Steven St. Louis, said, "Our attorney Simon Kogan deserves a lot of credit for helping us resolve this very frustrating and unfortunate situation. Now that we have resolved this issue we are going to continue working on growing the business and increasing shareholder value. In a significant step to improve shareholder value we are amending our Preferred Stock rights from 1000 to 1 voting and conversion rights to 25 to 1. There are 5 million outstanding preferred shares, however we have not converted any preferred stock into common shares and have no plans to do so at this time." St. Louis went on to say, "Our Q3 #s will be released around the middle of November and we will be adding more detailed updates and disclosures in our 3rd Quarter reports that will be posted on the OTC Markets."

About Alliance Creative Group, Inc.

ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and brand management marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product fulfillment & logistics and strategic marketing. www.AllianceCreativeGroup.com

About Simon Kogan, ESQ

Mr. Kogan is a senior litigator with over 20 years of experience in complex cases from inception to trial and beyond. He has personally managed dozens of arbitration and related matters for both brokers and public customers and generated over $400,000 per year in annual billings. Mr. Kogan has a long history as a partner in boutique securities firm where he developed and maintained the firm's intranet and use of technology for litigation support. Through his private practice and in cooperation with other lawyers, Mr. Kogan handles civil litigation and private securities matters, including private placements and reverse mergers. From 1993-95, Mr. Kogan taught legal writing as an Adjunct Professor of Law at New York Law School.

For Mr. Kogan's website please go to http://mysite.verizon.net/vzexoxyk/simonskoganesqattorneyatlaw/.

To contact via email [e-mail] or via phone [phone].

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]

SOURCE Alliance Creative Group, Inc.




===========================================================

STL Marketing Group, Inc. (STLK) and Versant Corporation Execute Definitive Merger and Share Purchase Agreement

Marketwire - Oct 18 07:50 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:STLK, OTC-PINK:ACGX, ACORN:A.1301529744

Significant First Step in Increasing the Company's Future Value

CHICAGO, IL -- (Marketwire) -- 10/18/12 -- STL Marketing Group, Inc. (PINKSHEETS: STLK) and Versant Corporation have completed their merger and share purchase agreement. Versant I, Inc. has purchased the controlling block of preferred shares in STLK from Alliance Creative Group, Inc. (PINKSHEETS: ACGX). The Board of Directors of both companies have approved the merger of the companies and management will begin implementation immediately. As part of the merger, Mr. Paul Sorkin has resigned as Chief Executive Officer of STL Marketing Group, Inc. and Mr. Jose P. Quiros has been named STL Marketing Group's new Chief Executive Officer.

"We apologize for any delays or confusion related to the past status of STLK. Today is a great day for all current shareholders and I look forward to watching Mr. Quiros lead his team through this very exciting project. I am committed to working with the new management during this transition to assure that the public receives full and complete disclosures related to all past, current and future transactions," says former CEO Mr. Paul Sorkin.

The company has changed transfer agents from First American Stock Transfer to V Stock Transfer Agent and would like to correct a previous statement. Although the company has not issued a single share, free trading or restricted, since the 4th Quarter of 2009, the previous press release listed an incorrect total number of outstanding shares. The total number of current outstanding common shares is 21,623,524 with 20,843,686 of those shares free trading.

Current CEO Jose P. Quiros said, "We are very pleased with this transaction as it provides us a better platform to operate and provide continued transparency to our existing and future investors in addition to positioning us to better access the capital markets. We will implement a parallel strategy that continues to pursue the completion of our Power Purchase Agreement, as well as updating and completing our studies on the site. All while we initiate the necessary work to complete our audits and file all required information and disclosures to complete the requirements for STLK to become a fully reporting company. We look forward to implementing our business plan and filing the necessary filings with the Securities Exchange Commission as soon as possible."

About STL Marketing Group, Inc./ Versant Corporation
Versant Corporation is a subsidiary of STL Marketing Group, Inc. and a Colorado based renewable energy company whose primary focus is to develop and operate renewable energy projects. Its first stage of development is focused on wind energy facilities in Costa Rica. For more information on Versant, please visit our web site at www.v3rsant.com.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

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Media and Investor Relations Contact
STL Marketing Group, Inc. and Versant Corporation
Phone [phone]
Email Contact


Source: St. Louis Marketing Group; Versant



===================================================
Alliance Creative Group (ACGX) Reports Over $2,800,000 in Q2 Revenue for 2012 and a 30% increase in Gross Profits for Q2 2012 compared to Q2 2011

PR Newswire - Aug 16 09:00 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:ACGX

Annual Estimated EPS equal to about 12 cents per share

CHICAGO, Aug. 16, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (Stock Symbol: ACGX) is pleased to announce the results of Operations for the Three Months Ended June 30, 2012 compared to the Three Months Ended June 30, 2011.

Revenues for the three months ended June 30, 2012 ("Second Quarter 2012") were $2,828,474 compared with $2,537,895 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is an increase of $290,579 or 12% for the quarter.

Gross Profits for the three months ended June 30, 2012 ("Second Quarter 2012") were $774,727 compared with $596,553 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is an increase of $178,174 or 30% for the quarter.

Net Income for the three months ended June 30, 2012 ("Second Quarter 2012") were $209,282 compared with $213,530 for the three months ended June 30, 2011 ("Second Quarter 2011"). That is a decrease of $4,248 or 2% decrease for the quarter due to some 1 time expenses and bad debt write off.

The total assets of the Alliance Creative Group as of 6/30/12 were $5,140,966. The total equity was $1,864,933. The total outstanding shares as of June 30, 2012 were 8,554,746 with 8,415,221 of those shares in the float. The stock is currently trading around the 2.5 cents per share range and the overall company market cap is around only $200,000.

The full financial statement, balance sheet, cash flow statement, stockholder equity and information and disclosure statements are on the Company website at http://alliancecreativegroup.com/investor-relations under the section for financials and on www.OTCmarkets.com under stock symbol ACGX.

CEO of the Alliance Creative Group, Steven St. Louis, said "I am very proud of our team and the progress we are making. This is our 11th consecutive quarter with over a million dollars in revenue and our earnings per share for 2012 are estimated to be around 12 cents a share. We moved into a larger office/warehouse location and have added some quality members to our growing team. We also purchased some additional equipment and are still evaluating other new technologies to help keep our competitive edge. Our Revenue and Gross Profits were both up but our Net Income was a little lower because of a few 1 time expenses and a bad debt write off. Now that we have moved into our new location we will be stepping up our efforts to find good strategic partners and potential acquisitions to help continue growing both organically and by acquisition. We will also continue to look for bigger and more long-term financial partners to help us get to the next level quicker. We feel our foundation is very solid and there are a lot of opportunities we want to evaluate. Our overall goals continue to be increased revenues, profits, stock price, stock liquidity and increased shareholder value and we will continue to look for and evaluate the best ways to accomplish these goals."

About Alliance Creative Group, Inc.
ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product development, event marketing, business consulting and strategic marketing. www.AllianceCreativeGroup.com

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]


====================================================
Alliance Creative Group (ACGX) Moves to New Office to Prepare for Future Growth and Opportunities

PR Newswire - Aug 01 08:30 EDT

Alert hits:(/A (/a
Company Symbols: OTC-PINK:ACGX

Company has also been adding key employees to help manage future expansion

CHICAGO, Aug. 1, 2012 /PRNewswire/ -- Alliance Creative Group, Inc., (http://www.AllianceCreativeGroup.com) (PINKSHEETS: ACGX) is pleased to announce the addition of some key employees and the completion of the move to a bigger office location. The new office is located at 1066 National Parkway in Schaumburg, IL.

The new office is approximately 13,000 square feet and allows for the addition of some workspace, equipment and employees to help prepare for and handle the future growth and potential expansion opportunities.

CEO of the Alliance Creative Group, Steven St. Louis, said "We are very excited about this move and the addition of some quality employees because our overall numbers and business fundamentals have been very solid and this new location and the additional experienced employees will help us better execute our business plans. We have been and continue to aggressively look for all opportunities with good synergy to our printing, packaging and marketing core businesses. We feel these industries are perfect for roll ups to share space and resources to better service clients while maintaining good margins and being very competitive". Mr. St. Louis went on to say, "we will be posting some pictures online of the new facility in the near future and should have the 2nd quarter numbers released around the middle of August. We are aware of the major disconnect between our revenues, profits and financial numbers and our stock price and market cap and are working diligently with legal and financial professionals in an attempt to change this. As we find out more we will inform the public via press releases and uploads to the OTC Markets website and our main website www.AllianceCreativeGroup.com

About Alliance Creative Group, Inc.

ALLIANCE CREATIVE GROUP, Inc. (Stock Symbol: ACGX) is a printing, packaging and marketing company. The Alliance Creative Group utilizes shared resources to create efficiencies between their projects and internal divisions to create quality results and long-term partnerships. The core business areas include creative and design services, printing and packaging, product development, event marketing, business consulting and strategic marketing. www.AllianceCreativeGroup.com

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plan, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Investor Relations and Media Contact
1-847-885-1800 ext 6
[e-mail]

SOURCE Alliance Creative Group, Inc.

[10 bagger]

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

This section reviews the financial condition and results of operations of MISCOR Group, Ltd. and subsidiaries for the quarterly and year to date periods ended September 30, 2012, and September 30, 2011. When you read this discussion, you should also refer to the consolidated financial statements and related notes in this report. The page locations of specific sections and notes that we refer to are presented in the table of contents.

References to our “2011 Annual Report on Form 10-K” refer to our Annual Report on Form 10-K for the year ended December 31, 2011, which has been filed with the Securities and Exchange Commission (the “SEC”) and is available on its website (www.sec.gov) or on our website (www.miscor.com) by clicking on the heading “Investor Relations.”

Terminology

Throughout this discussion, references to the “Company,” “we,” “our,” “us” and similar terms refer to the consolidated entity consisting of MISCOR and its subsidiaries.

We also want to provide some background so that you better understand the discussion that follows:



• In December 2009 we announced an overall restructuring plan to reorient our growth strategy and to intensify our focus on industrial and utility services. This plan has been completed. The plan resulted in the divestiture of: (i) AMP Rail Services Canada ULC (“AMP Canada”), in December 2009; and (ii) the divestiture of our CES subsidiaries, Martell Electric and Ideal, in February 2010, and American Motive Power, Inc (“AMP”), in March 2010. In December of 2011, we announced our intention to no longer have HKEC, the subsidiary comprising our Rail Services segment, listed as held for sale. While we see HKEC as outside of our business strategy focusing on industrial and utility services, we do see significant value in HKEC and believe we would not obtain the appropriate value for this business if it were to be sold in today’s economic environment.


Following completion of the restructuring plan, and through September 30, 2012, we have operated primarily in two business segments:



• Industrial Services – Providing maintenance and repair services to several industries including electric motor repair and rebuilding; maintenance and repair of electro-mechanical components for the wind power industry; and the repairing, manufacturing, and remanufacturing of industrial lifting magnets for the steel and scrap industries. To supplement our service offerings, the Company also provides on-site maintenance services and custom and standardized industrial maintenance training programs.




• Rail Services – Manufacturing and rebuilding power assemblies, engine parts, and other components related to large diesel engines, and providing locomotive maintenance, remanufacturing, and repair services for the rail industry.


Recent Developments

Not applicable

Significant Accounting Policies

The significant accounting polices used in preparation of the Company’s consolidated financial statements are disclosed in Note B of the Notes to the Consolidated Financial Statements within the Form 10-K. No additional significant accounting policies have been adopted during Fiscal 2012.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.



12



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Table of Contents
Discussion of Forward-Looking Statements

From time to time, we have made or will make forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as “goal,” “objective,” “plan,” “expect,” “anticipate,” “intend,” “project,” “believe,” “may,” “could,” “believe,” “estimate,” or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results, or aspirations. Our disclosures in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in our other documents filed or furnished with the SEC.

A “safe harbor” for forward-looking statements is provided by the Private Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of 1995 was adopted to encourage such forward-looking statements without the threat of litigation, provided those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement.

Management based the forward-looking statements in this report largely on its current expectations and perspectives about future events and financial trends that management believes may affect our financial condition, results of operations, business strategies, short-term and long-term business objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, that may cause actual results to differ materially from those indicated in the forward-looking statements, due to, among other things, factors identified in this report, and those identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Results of Operations

Three Months Ended September 30, 2012 Compared to Three Months Ended October 2, 2011

Revenues. Total revenues increased by $511, or 4.5%, to $11,822 for the three months ended September 30, 2012 from $11,311 for the three months ended October 2, 2011. This increase is comprised of a $763 or 10.5%, decrease in service revenues and a $1,274, or 31.6%, increase in product sales. The Industrial Services segment revenues decreased by $946, or 11.1%, while revenues for the Rail Services segment increased $1,457, or 51.8%. The decrease in the service revenues represents the timing of the completion of various field service projects. The increase in product sales is primarily related to demand for engine components produced by our HKEC unit.

Gross Profit. Total gross profit for the three months ended September 30, 2012 was $3,178, or 26.9% of total revenues, compared to $2,472, or 21.9% of total revenues for the three months ended October 2, 2011. This represents an increase of $706, or 28.6%. This increase is comprised of a decline of $570, or 36.0%, in service gross profit and an increase of $1,276, or 143.5%, in product gross profit. The Industrial Services segment gross profit decreased by $239, or 12.6%, while gross profit for the Rail Services segment increased $945, or 164.6%. The decline in gross profits associated with service revenues is due to a number of quoted jobs not achieving optimal efficiencies, as well as the whole dollar impact of reduced sales. Many customers have reduced demand for our services due to the economic uncertainty presented by the impending elections in the United States of America. Product sales gross profit increased due to price increases, volume increases and our ability to eliminate costs and improve operational efficiencies. For the three months ended October 2, 2011, HKEC was held-for-sale and accordingly no depreciation was recorded (depreciation for HKEC in 2011 was subsequently recorded during the fourth quarter when HKEC was reclassified from held-for-sale to held-and-used). Had depreciation been recorded for the three months ended October 2, 2011, both product and rail services gross profit would have declined by $46 as a result of the associated depreciation expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $2,238 for the three months ended September 30, 2012, compared to $2,042 for the three months ended October 2, 2011. This represents an increase of $196, or 9.6%, for the quarter. Selling expenses were 6.4% of total revenues for the three months ended September 30, 2012 and 5.7% of total revenues for the three months ended October 2, 2011. This increase is attributed to an increase in the number of salesmen employed on the Industrial Services segment of the business. Selling expenses for the Industrial Services segment were 7.9% of the Industrial Services segment revenue for the three months ended September 30, 2012, compared to 6.0% of Industrial Services segment revenues for the three months ended October 2, 2011. Selling expenses for the Rail Services segment were 3.5% of Rail Services segment revenues for the three months ended September 30, 2012 and 4.8% of the Rail Services segment



13



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Table of Contents
revenues for the three months ended October 2, 2011. General and administrative expenses increased 1.4% to $1,419 for the three months ended September 30, 2012 from $1,399 for the three months ended October 2, 2011. The increase in in general and administrative expenses is attributed to increased consulting fees. General and administrative expenses were 12.0% and 12.4% of total revenues for the three months ended September 30, 2012 and October 2, 2011, respectively. General and administrative expenses for the Industrial Services segment were 14.2% of Industrial Service segment revenues for the three months ended September 30, 2012 and 14.0% of the Industrial Services segment revenues for the three months ended October 2, 2011. General and administrative expenses for the Rail Services segment were 8.9% of the Rail Services segment revenues for the three months ended September 30, 2012, and 7.4% for the three months ended October 2, 2011.

Income from Operations. Income from operations improved $510, or 119%, from $430 for the three months ended October 2, 2011 to $940 for the three months ended September 30, 2012. This improvement is directly attributable to increased gross profit for the three months ended September 30, 2012. The Industrial Services segment generated a loss from operations of $5 for the three months ended September 30, 2012. This is a decline of $204 from income from operations of $199 for the three months ended October 2, 2011. The Rail Services segment generated income from operations of $989 for the three months ended September 30, 2012 or an improvement of $760 from income from operations of $229 for the three months ended October 2, 2011.

Interest Expense and Other Expense (Income). Interest expense was reduced for the three months ended September 30, 2012 to $189, or by 17%, from $228 for the three months ended October 2, 2011. This reduction is the result of the Company’s reduced level of debt and the fact that the Company renegotiated its credit facility with Wells Fargo during 2011, which effectively reduced the interest rate paid to Wells Fargo by approximately 39%, and reduced interest expense related to certain of the Company’s subordinated debt, as a result of the Company renegotiation with its subordinated debt holders. Other expense increased $150 to $1 of expense for the three months ended September 30, 2012 from $149 of income for the three months ended October 2, 2011. The income achieved in other expense for the third quarter of 2011 was due to the successful recovery on a lawsuit against a prior property and casualty insurance broker.

Provision for Income Taxes. Through 2010, we experienced tax net operating losses in each year since we commenced operations. We are uncertain as to whether we will be able to utilize these tax losses before they expire. Accordingly, we have provided a valuation allowance for the income tax benefits associated with these net future tax benefits which primarily relates to cumulative net operating losses, until such time that profitability is reasonably assured and it becomes more likely than not that we will be able to utilize such tax benefits. No provision for income taxes was recorded during the periods ended September 30, 2012, and October 2, 2011, due to the utilization of cumulative net operating losses.

Net Income. Net income was $750 for the three months ended September 30, 2012, as compared to $351 for the three months ended October 2, 2011. This represents an increase of $399 or 113.7%. As indicated above, the improvement is due to improved gross margins and reduced interest expense.

Nine Months Ended September 30, 2012 Compared to Nine Months Ended October 2, 2011

Revenues. Total revenues increased by $3,096, or 9.0%, to $37,562 for the nine months ended September 30, 2012, as compared to $34,466 for the nine months ended October 2, 2011. This increase is comprised of a $1,581 or 7.0%, decrease in service revenues and a $4,677, or 39.8%, increase in product sales. The Industrial Services segment revenues decreased by $1,309, or 5.0%, while revenues for the Rail Services segment increased by $4,405, or 52.2%. The decrease in the service revenues represents the timing of the completion of various field service projects. The increase in product sales is primarily related to demand for engine components produced by our HKEC unit.

Gross Profit. Total gross profit for the nine months ended September 30, 2012 was $9,516, or 25.3% of total revenues, as compared to $7,472, or 21.7% of total revenues, for the nine months ended October 2, 2011. This represents an increase of $2,044, or 27.4%. The increase is comprised of a decline of $1,472, or 33.5%, in service gross profit and an increase of $3,516, or 114.2%, in product gross profit. The Industrial Services segment gross profit decreased by $56, or 1.0%, while gross profit for the Rail Services segment increased by $2,100, or 102.6%. The decline in gross profits associated with service revenues is due to a number of quoted jobs not achieving optimal efficiencies and lower sales volume. Product sales gross profit increased due to price increases and our ability to eliminate costs and improve operational efficiencies. For the nine months ended October 2, 2011, HKEC was held-for-sale and accordingly no depreciation was recorded (depreciation for HKEC in 2011 was subsequently recorded during the fourth quarter when HKEC was reclassified from held-for-sale to held-and-used). Had depreciation been recorded for the nine months ended October 2, 2011, both product and Rail Services segment gross profit would have declined by $138 as a result of the associated depreciation expense.



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Table of Contents
Selling, General and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $6,629 for the nine months ended September 30, 2012 from $5,913 for the nine months ended October 2, 2011. This represents an increase of $716, or 12.1%. Selling expenses were 5.9% of total revenues for the nine months ended September 30, 2012 and 5.3% of total revenues for the nine months ended October 2, 2011. This increase is attributed to an increase in the number of salesmen employed on the Industrial Services segment of the business Selling expenses for the Industrial Services segment were 6.9% of the Industrial Services segment revenue for the nine months ended September 30, 2012 and 5.4% of the Industrial Services segment revenues for the nine months ended October 2, 2011. Selling expenses for the Rail Services segment were 3.4% of Rail Services segment revenues for the nine months ended September 30, 2012, as compared to 4.5% of the Rail Services segment revenues for the nine months ended October 2, 2011. General and administrative expenses decreased 3.1% to $3,296 for the nine months ended September 30, 2012 from $3,400 for the nine months ended October 2, 2011. General and administrative expenses were 11.7% and 12.0% of total revenues for nine months ended September 30, 2012 and October 2, 2011, respectively. General and administrative expenses for the Industrial Services segment were 13.4% of the Industrial Service segment revenues for the nine months ended September 30, 2012 and 13.1% of the Industrial Services segment revenues for the nine months ended October 2, 2011. General and administrative expenses for the Rail Services segment were 8.2% of the Rail Services segment revenues for the nine months ended September 30, 2012, as compared to 8.0% of the Rail Service segment revenues for the nine months ended October 2, 2011.

Income from Operations. Income from operations improved $1,328, or 85%, from $1,559 for the nine months ended October 2, 2011 to $2,887 for the nine months ended September 30, 2012. This improvement is directly attributable to increased sales volume and overall gross profit improvement for the nine months ended September 30, 2012. The Industrial Services segment generated income from operations of $351 for the nine months ended September 30, 2012. This is a decline of $269, or 43%, from income from operations of $620 for the nine months ended October 2, 2011. The Rail Services segment generated income from operations of $2,658 for the nine months ended September 30, 2012 or an improvement of $1,667 from income from operations of $992 for the nine months ended October 2, 2011.

Interest Expense and Other Expense (Income). Interest expense decreased by $182, or 25%, for the nine months ended September 30, 2012 to $556 from $738 for the nine months ended October 2, 2011. This reduction is the result of the Company having reduced its level of debt and renegotiated its credit facility with Wells Fargo, during 2011, effectively reducing the interest rate of the credit facility by approximately 39%, and reduced interest expense related to certain of the Company’s subordinated debt, as a result of its renegotiation with the Company’s subordinated debt holders in November 2011. Other loss increased $264 to $12 for the nine months ended September 30, 2012 from $252 of income for the nine months ended October 2, 2011, as the nine months ended October 2, 2011 included the expiration of an exclusivity agreement, which expired, with a potential buyer for HKEC business unit, the subsidiary comprising our Rail Services segment.

Provision for Income Taxes. Through 2010 we have experienced tax net operating losses in each year since we commenced operations. We are uncertain as to whether we will be able to utilize these tax losses before they expire. Accordingly, we have provided a valuation allowance for the income tax benefits associated with these net future tax benefits which primarily relates to cumulative net operating losses, until such time as our profitability is reasonably assured and it becomes more likely than not that we will be able to utilize such tax benefits. No provision for income taxes was recorded during the periods ended September 30, 2012, and October 2, 2011, due to the utilization of cumulative net operating losses.

Net Income. Net income was $2,319 for the nine months ended September 30, 2012 compared to $1,073 for the nine months ended October 2, 2011. This is an increase of $1,246, or 116.1%. As indicated above, the improvement is due to improved gross margins, and reduced interest expense.

Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”)

For the three months ended September 30, 2012, EBITDA increased by $356, or 35%, from $1,010 for the three months ended October 2, 2011 to $1,366. The primary increase in EBITDA is a result of increased profitability during the three months ended September 30, 2012, as compared to the three months ended October 2, 2011.



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Table of Contents
For the nine months ended September 30, 2012, EBITDA increased by $1,185, or 40%, from $2,974 for the nine months ended October 2, 2011 to $4,159. The primary increase in EBITDA is a result of increased profitability during the nine months ended September 30, 2012, as compared to the nine months ended October 2, 2011.




Three months ended
September 30, 2012 October 2, 2011
Restated
EBITDA - Consolidated

Net income (loss)
$ 750 $ 351
Add back:

Interest Expense
189 228
Depreciation and amortization
415 435
Income taxes
12 (4 )





EBITDA (1)
$ 1,366 $ 1,010






Nine months ended
September 30, 2012 October 2, 2011
Restated
EBITDA - Consolidated

Net income (loss)
$ 2,319 $ 1,073
Add back:

Interest Expense
556 738
Depreciation and amortization
1,228 1,231
Income taxes
56 (68 )





EBITDA (1)
$ 4,159 $ 2,974








(1) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions. We believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

However, EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

Liquidity and Capital Resources

At September 30, 2012, the Company had $3,129 of working capital, an improvement of $379 as compared to December 31, 2011. The increase is primarily due to increased accounts receivable, offset by an increase in the revolver at September 30, 2012. The increase in accounts receivable is due to the timing of invoicing of customers and the corresponding payment being made by the customers.

Net cash provided by operating activities was $1,205 for the nine months ended September 30, 2012, as compared to $659 for the nine months ended October 2, 2011. This increase is primarily due to the Company generating increased income.

For the nine months ended September 30, 2012, net cash flows utilized by investing activities increased by $332 to $523, as compared to $191 for the nine months ended October 2, 2011. This is the result of the purchase of various property and equipment.

Net cash utilized by financing activities increased by $214 to $682, as of September 30, 2012, as compared to $468 as of October 2, 2011. This increase is directly attributed to the Company’s ability to repay long-term debt owed to our subordinated debt holders.

During the remainder of 2012, the Company will continue to focus its efforts to maintain the generation of positive operating cash flows and to reduce the levels of subordinated debt. We continue our efforts to enhance our future cash flows. These improvements include efforts to collect accounts receivable at a faster rate, decrease inventory levels, improve operating margins, review alternative financing sources, and negotiate extended terms with our vendors.



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Results of Operations

Three Months Ended July 1, 2012 Compared to Three Months Ended July 3, 2011

Revenues. Total revenues increased by $1,143, or 9.4%, to $13,262 for the three months ended July 1, 2012 from $12,119 for the three months ended July 3, 2011. This increase is comprised of a $512, or 6.2%, decrease in service revenues and a $1,655, or 42.4%, increase in product sales. Industrial Services revenues decreased by $331, or 3.6%, while revenues for the Rail Services segment increased $1,474, or 51.9%. The decrease in the service revenues represents the timing of the completion of various field service projects and a low seasonal demand in the market place. The increase in product sales is primarily related to demand for engine components produced by our HKEC unit.

Gross Profit. Total gross profit for the three months ended July 1, 2012 was $3,310, or 25.0% of total revenues, compared to $2,573, or 21.2% of total revenues for the three months ended July 3, 2011. This represents an increase of $737, or 28.6%. This increase is comprised of a decline of a $546, or 37.8%, in service gross profit and an increase of $1,283, or 113.3%, in product gross profit. Industrial Services gross profit increased by $35, or 1.9%, while gross profit for the Rail Services increased $702, or 97.8%. The decline in gross profits associated with service revenues is due to a number of quoted jobs not achieving optimal efficiencies, as well as the whole dollar impact of reduced sales. Product sales gross profit increased due to price increases and our ability to eliminate costs and improve operational efficiencies. For the three months ended July 3, 2011, HKEC was held-for-sale and accordingly no depreciation was recorded (depreciation for HKEC in 2011 was subsequently recorded during the fourth quarter when HKEC was reclassified from held-for-sale to held-and-used). Had depreciation been recorded for the three months ended July 3, 2011, both product and rail services gross profit would have declined by $46 as a result of the associated depreciation expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $2,362 for the three months ended July 1, 2012 from $1,916 for the three months ended July 3, 2011.This is an increase of $446, or 23.3%. Selling expenses were 5.5% of total revenues for the three months ended July 1, 2012 and 4.6% of total revenues for the three months ended July 3, 2011. This increase is attributed to increased salesmen on the Industrial Services side of the business. Selling expenses for Industrial Services were 5.8% of Industrial Services revenue for the three months ended July 1, 2012 and 4.6% of Industrial Services revenues for the three months ended July 3, 2011. Selling expenses for Rail Services were 3.3% of Rail Services revenues for the three months ended July 1, 2012 and 4.5% of Rail Services revenues for the three months ended July 3, 2011. General and administrative expenses increased 14.9% to $1,606 for the three months ended July 1, 2012 from $1,398 for the three months ended July 3, 2011. The increase in in general and administrative expenses is attributed to increased consulting fees. General and administrative expenses were 12.1% and 11.5% of total revenues for three months ended July 1, 2012 and July 3, 2011, respectively. General and administrative expenses for Industrial Services were 14.0% of Industrial Service revenues for the three months ended July 1, 2012 and 12.3% of Industrial Services revenues for the three months ended July 3, 2011. General and administrative expenses for Rail Services were 8.1% of Rail Services revenues for the three months ended July 1, 2012, and for the three months ended July 3, 2011.

Income from Operations. Income from operations improved $291 from $657 for the three months ended July 3, 2011 to $948 for the three months ended July 1, 2012. This improvement is directly attributable to increased gross profit for the three months ended July 1, 2012. Industrial Services generated income from operations of $75 for the three months ended July 1, 2012. This is a decline of $189 from income from operations of $264 for the three months ended July 3, 2011. Rail Services generated income from operations of $915 for the three months ended July 1, 2012 or an improvement of $552 from income from operations of $363 for the three months ended July 3, 2011.

Interest Expense and Other Expense (Income). Interest expense was reduced for the three months ended July 1, 2012 to $174 from $257 for the three months ended July 3, 2011. This reduction is the result of the Company having a reduced level of debt on its books, and its ability to renegotiate its credit facility with Wells Fargo, during 2011, effectively reducing the interest rate by approximately 39%, and reduced interest expense related to certain of the Company’s subordinated debt, as a result of its renegotiation with the Company’s subordinated debt holders. Other expense (income) decreased $121 to $20 of expense for the three months ended July 1, 2012 from $101 of income for the three months ended July 3, 2011, as the three months ended July 3, 2011 included the expiration of an exclusivity agreement, which expired, with a potential buyer for HKEC business unit.

Provision for Income Taxes. Through 2010, we experienced tax net operating losses in each year since we commenced operations. We are uncertain as to whether we will be able to utilize these tax losses before they expire. Accordingly, we have provided a valuation allowance for the income tax benefits associated with these net future tax benefits which primarily relates to cumulative net operating losses, until such time profitability is reasonably assured and it becomes more likely than not that we will be able to utilize such tax benefits. No provision for income taxes was recorded during the periods ended July 1, 2012, and July 3, 2011, due to the utilization of cumulative net operating losses.



13



--------------------------------------------------------------------------------

Net Income. Net income was $754 for the three months ended July 1, 2012 compared to $501 for the three months ended July 3, 2011. This is an increase of $253 or 50.5%. As indicated above, the improvement is due to improved gross margins, and reduced interest expense.

Six Months Ended July 1, 2012 Compared to Six Months Ended July 3, 2011

Revenues. Total revenues increased by $2,584, or 11.2%, to $25,740 for the six months ended July 1, 2012 from $23,156 for the six months ended July 3, 2011. This increase is comprised of a $818, or 5.3%, decrease in service revenues and a $3,402, or 44.1%, increase in product sales. Industrial Services revenues decreased by $361, or 2.1%, while revenues for the Rail Services segment increased $2,946, or 52.4%. The decrease in the service revenues represents the timing of the completion of various field service projects and a low seasonal demand in the market place. The increase in product sales is primarily related to demand for engine components produced by our HKEC unit.

Gross Profit. Total gross profit for the six months ended July 1, 2012 was $6,338, or 24.6% of total revenues, compared to $5,001, or 21.6% of total revenues, for the six months ended July 3, 2011. This represents an increase of $1,337, or 26.7%. The increase is comprised of a decline of $902, or 32.10%, in service gross profit and an increase of $2,239, or 102.2%, in product gross profit. Industrial Services gross profit decreased by $163, or 4.6%, while gross profit for the Rail Services increased $1,174, or 80.7%. The decline in gross profits associated with service revenues is due to a number of quoted jobs not achieving optimal efficiencies and lower sales volume. Product sales gross profit increased due to price increases and our ability to eliminate costs and improve operational efficiencies. For the six months ended July 3, 2011, HKEC was held-for-sale and accordingly no depreciation was recorded (depreciation for HKEC in 2011 was subsequently recorded during the fourth quarter when HKEC was reclassified from held-for-sale to held-and-used). Had depreciation been recorded for the six months ended July 3, 2011, both product and rail services gross profit would have declined by $92 as a result of the associated depreciation expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $4,391 for the six months ended July 1, 2012 from $3,871 for the six months ended July 3, 2011.This is an increase of $520, or 13.4%. Selling expenses were 5.7% of total revenues for the six months ended July 1, 2012 and 5.0% of total revenues for the six months ended July 3, 2011. This increase is attributed to increased commissions attributed to the increased sales associated with product sales. Selling expenses for Industrial Services were 6.6% of Industrial Services revenue for the six months ended July 1, 2012 and 5.1% of Industrial Services revenues for the six months ended July 3, 2011. Selling expenses for Rail Services were 3.4% of Rail Services revenues for the six months ended July 1, 2012 and 4.3% of Rail Services revenues for the six months ended July 3, 2011. General and administrative expenses increased 4.4% to $2,895 for the six months ended July 1, 2012 from $2,772 for the six months ended July 3, 2011. General and administrative expenses were 11.2% and 12.0% of total revenues for six months ended July 1, 2012 and July 3, 2011, respectively. General and administrative expenses for Industrial Services were 12.9% of Industrial Service revenues for the six months ended July 1, 2012 and 12.9% of Industrial Services revenues for the six months ended July 3, 2011. General and administrative expenses for Rail Services were 7.8% of Rail Services revenues for the six months ended July 1, 2012 and 8.3% of Rail Service revenues for the six months ended July 3, 2011.

Income from Operations. Income from operations improved $817 from $1,130 for the six months ended July 3, 2011 to $1,947 for the six months ended July 1, 2012. This improvement is directly attributable to increased gross profit for the six months ended July 1, 2012. Industrial Services generated income from operations of $368 for the six months ended July 1, 2012. This is an improvement of $5 from income from operations of $363 for the six months ended July 3, 2011. Rail Services generated income from operations of $1,658 for the six months ended July 1, 2012 or an improvement of $916 from income from operations of $742 for the six months ended July 3, 2011.

Interest Expense and Other Expense (Income). Interest expense reduced by $144 for the six months ended July 1, 2012 to $367 from $511 for the six months July 3, 2011. This reduction is the result of the Company having a reduced level of debt on its books, and its ability to renegotiate its credit facility with Wells Fargo, during 2011, effectively reducing the interest rate by approximately 39%, and reduced interest expense related to certain of the Company’s subordinated debt, as a result of its renegotiation with the Company’s subordinated debt holders in November 2011. Other Income decreased $113 to $11 for the six months ended July 1, 2012 from $102 of income for the six months ended July 3, 2011, as the six months ended July 3, 2011 included the expiration of an exclusivity agreement, which expired, with a potential buyer for HKEC business unit.



14



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Provision for Income Taxes. Through 2010 we have experienced tax net operating losses in each year since we commenced operations. We are uncertain as to whether we will be able to utilize these tax losses before they expire. Accordingly, we have provided a valuation allowance for the income tax benefits associated with these net future tax benefits which primarily relates to cumulative net operating losses, until such time profitability is reasonably assured and it becomes more likely than not that we will be able to utilize such tax benefits. No provision for income taxes was recorded during the periods ended July 1, 2012, and July 3, 2011, due to the utilization of cumulative net operating losses.

Net Income. Net income was $1,569 for the six months ended July 1, 2012 compared to $721 for the six months ended July 3, 2011. This is an increase of $848 or 117.6%. As indicated above, the improvement is due to improved gross margins, and reduced interest expense.

Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”)

EBITDA increased by $267 from $1,102 for the three months ended July 3, 2011 to $1,369 for the three months ended July 1, 2012. The primary increase in EBITDA is a result of increased profitability during the three months ended July 1, 2012 versus the three months ended July 3, 2011.

EBITDA increased by $805 from $1,988 for the six months ended July 3, 2011 to $2,793 for the six months ended July 1, 2012. The primary increase in EBITDA is a result of increased profitability during the six months ended July 1, 2012 versus the six months ended July 3, 2011.




Three months ended
July 1, 2012 July 3, 2011
Restated
EBITDA – Consolidated

Net income
$ 754 $ 501
Add back:

Interest Expense
174 257
Depreciation and amortization
411 411
Income taxes
30 (43 )





EBITDA (1)
$ 1,369 $ 1,126






Six months ended
July 1, 2012 July 3, 2011
Restated
EBITDA — Consolidated

Net income
$ 1,569 $ 721
Add back:

Interest Expense
367 511
Depreciation and amortization
813 820
Income taxes
44 (64 )





EBITDA (1)
$ 2,793 $ 1,988








(1) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions. We believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

However, EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.



15



--------------------------------------------------------------------------------

Liquidity and Capital Resources

At July 1, 2012, the Company had $3,693 of working capital, an improvement of $943 as compared to December 31, 2011. The increase is primarily due to increased accounts receivable, offset by a decrease in accounts payable owed at December 31, 2011.

Net cash provided by operating activities was $1,635 for the six months ended July 1, 2012 compared to $686 for the six months ended July 3, 2011. This increase is primarily due to the Company generating increased income.

For the six months ended July 1, 2012, net cash flows utilized by investing activities increased by $149 to $257 compared to $108 for the six months ended July 3, 2011. This is the result of the purchase of various property and equipment.

Net cash utilized by financing activities increased by $800 to 1,378 as of July 1, 2012 as compared to $578 as of July 3, 2011. This increase is directly attributed to the Company’s ability to repay long-term debt owed to our subordinated debt holders.

During 2012, the Company will continue to focus its efforts to maintain the generation of positive operating cash flows and to reduce the levels of subordinated debt. We continue our efforts to enhance our future cash flows. These improvements include efforts to collect accounts receivable at a faster rate, decrease inventory levels, improve operating margins, review alternative financing sources, and negotiate extended terms with our vendors.

The Company has subordinated promissory notes outstanding to BDeWees, Inc., XGenIII, Ltd., and John A. Martell, in the principal amounts of $1,063, $1,063 and $941, respectively (together the “Subordinated Indebtedness”) (See Note F, Related Party Transactions, of our Financial Statements). Subordination agreements have been executed which subordinate the obligations of the Company under the Subordinated Indebtedness to the Wells Fargo credit facility.

As of July 1, 2012, we did not have any material commitments for capital expenditures.

[10 bagger]

MONK'S Den..

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=77874061

[PhoenixRises]

Convertible debt at .01+ can create float to increase..debt holders can convert shares to common at x price. Perhaps 3mil float is almost accurate, but otc markets shows float way higher. I would recommend calling cfo ceo to find out if ss is current. I need to review last q.

I am interested for sure! There are very few team players here....i can get anything on 1st page of google. Keyword "wafr.pk" pages 1 +2 already and just made sites last thursday...if u have any left over powder i highly recommend you scooping up some wafr tomorrow. Confirmed 14mil float...one of my buddies owns 1.5 mil f float and can afford to hold and let run....lets talk tomorrow am.

Question is? Who said float is 3mil? Blga ceo confirmed ss is current to me. However their debt holders can convert at .01 ...so how i wonder how many shares do debt holders have??

[10 bagger]

LFLS..$0.11 complete DD package..
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Please request a chart from stockcharts.com

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Business Description

Loans4Less.com, Inc. (LFLS) is an online mortgage broker which matches qualified individuals seeking mortgage loans with suitable lenders who offer the company a competitive wholesale lending program. Maintaining an A+ TrustLink rating with the Better Business Bureau, the company provides competitive rates, terms, costs, daily updates, extensive market information, and trusted first-class service to the public.

Leveraging its portfolio of 62 different web domains, Loans4Less.com is focused on developing a national consumer platform for conforming residential mortgage programs and implementation of other consumer loan programs via operating providers. The company's expansion strategy includes rapidly growing revenues through strategic and cost-effective advertising, licensing, and/or third party agreements that build national recognition of the Loans4Less® brand.

The management team has accumulated many years of experience in the real estate and financial services sectors. This combination of expertise provides the knowledge and foresight necessary to get the best results for the company and their thousands of loyal clients. The team skillfully navigated through the credit crisis that destroyed much of their competition, putting the company in a stronger position to increase market share.

Loans4Less.com is not exposed to the risks and/or problems that are associated with sub-prime lending. Having never defaulting on an obligation or been involved in any litigation, the company is poised for rapid growth in today's low interest rate environment with its industry leading reputation and well established relationships with respected lenders.
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Contact Info.

Mail:

Loans4Less
210 Avenue I, Suite F
Redondo Beach, CA 90277-5622

Phone: Toll Free (877) 981-LOAN
Local [phone]

Fax: [phone]

Email: [e-mail]

Website: http://www.loans4less.com/index.html
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Share Structure

Market Value1 $3,360,500 a/o Oct 23, 2012
Shares Outstanding 30,550,000 a/o Aug 31, 2012
Float 3,157,981 a/o Aug 31, 2012
Authorized Shares 250,000,000 a/o Aug 31, 2012
Par Value 0.00001
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Transfer Agent

Broadridge Financial Solutions, Inc.
1717 Arch Street
Suite 1300
Philadelphia, PA, 19103
610-649-7300
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Quarterly and annual filings

http://www.otcmarkets.com/stock/LFLS/filings
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Insider Ownership

Page 9

http://www.otcmarkets.com/financialReportViewer?symbol=LFLS&id=87222
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Management

Steven M. Hershman Chairman of the Board, President, Treasurer, Director June 30, 1999
Julia Leah Greenfield Secretary, Director, General Counsel January 1, 2005
Martin W. Genis Director, Executive Vice President February 28, 2005
Daniela Haynie Director, Executive Vice President February 28, 2005
Marc C. Phelps Director, CPA October 1, 2005
Hannah R. Robertson Director, Senior Vice President July 10, 2012



The Company's directors have been elected to serve until the next annual meeting of the stockholders and until their respective successors have been elected and qualified or until death, resignation, removal or disqualification. The Company's certificate of incorporation provides for the number of directors to serve on the Board of Directors which may be established, from time to time, by action of the Board of Directors or a majority of the shareholders. Vacancies on the Board are filled by a majority vote of the remaining directors on the Board. The Company's executive officers are appointed by and serve at the discretion of the Board.

Steven M. Hershman serves as President, Treasurer, CFO and Chairman of the Board of the Company and has devoted substantially all his efforts to the development of Loans4Less.com which serves as a mortgage broker primarily in the California residential mortgage place. A citizen of the United States and the UK , Mr. Hershman holds a California Real Estate Broker License and he started his career on the London Stock Exchange in 1977 becoming a Member of The London Stock Exchange in 1981. Between 1982 and 1990 Mr. Hershman worked for Thomson McKinnon Securities, Inc. and Ladenburg, Thalmann Members of The New York Stock Exchange. In 1990 Mr. Hershman became a mortgage broker prior to forming Union Discount Mortgage, Inc. in April 1993.

Julia Leah Greenfield, Attorney-At-Law serves as secretary and a director of the Company. Ms. Greenfield has been a practicing attorney since 1976 representing several major savings banks and mortgage lenders, specializing in mortgage banking laws with an emphasis on origination, servicing, secondary market whole-loan sales, securitization of prime and subprime residential mortgage loans, Truth-In-Lending and regulatory compliance under federal and state law. Ms. Greenfield is a member of the State Bar of Pennsylvania, State Bar of California and American Bar Association. Ms. Greenfield received her Juris Doctorate in May 1976 from Villanova University School of Law, Villanova, Pennsylvania and her Bachelor of Arts (Phi Beta Kappa) in May, 1973 from the State University of New York at Binghamton, Binghamton, New York.

Martin W. Genis serves as a director and an executive vice president of the Company. Since December, 1997, Mr. Genis has been involved in the development of the Company's real estate division, Platinum Properties. Since November, 1990, Mr. Genis has been licensed with the California Department of Real Estate and has been employed as a realty agent specializing in residential listings and purchases with the Jon Douglas Company, Los Angeles, California, a real estate company.

Daniela Haynie serves as a director of the Company and an executive vice president underwriting manager and mortgage loan processor, assisting in the processing and closing of mortgage loan transactions. Ms. Haynie has worked with the Company since October, 2001. From August, 1997 to October, 2001, Ms. Haynie served as a mortgage loan underwriter assisting brokers and various loan officers in processing and closing mortgage loan transactions for Crestwood Mortgage Company, Torrance, California, a company specializing in residential mortgage lending and brokerage. Ms. Haynie graduated from the University of Sao Judas Tadeu (Sao Paulo, Brazil) in 1995 and moved to the United States in March, 1996.

Marc C. Phelps, CPA serves as a director of the Company. Mr. Phelps has been working in public accounting since 1982 assisting small businesses in the areas of taxation, setup and maintenance of accounting systems and business management. Since 1999, Mr. Phelps has also helped small businesses with the audit process both as the auditor and as a consultant assisting small companies to get ready for audits. Mr. Phelps is a Certified Public Accountant licensed to practice in the State of California. In 1999, he received a Bachelor of Science degree in Business Administration (Magna Cum Laude) from California State University Dominquez Hills.
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Recent pr's

LFLS Preliminary Financial Results for Q3 2012
Oct 15, 2012
http://www.otcmarkets.com/stock/LFLS/news/LFLS-Preliminary-Financial-Results-for-Q3-2012?id=53780&b=y

LFLS Audio Interview - SmallCapVoice
Sep 12, 2012
http://www.otcmarkets.com/stock/LFLS/news/LFLS-Audio-Interview---SmallCapVoice?id=52486&b=y
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Investor relations

Investor Relations Firm

QualityStocks LLC
3370 N. Hayden Rd.
Scottsdale, 85251
United States
480-374-1336
http://www.qualitystocks.net
[e-mail]

[10 bagger]

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



Forward-Looking Statements



This annual report on Form 10-K of M Line Holdings, Inc. for the year ended June 30, 2012 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements which apply only as of the date of this annual report. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.



We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in this filing, as well as any cautionary language in this annual report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated, include, but are not limited to: our ability to successfully maintain a credit facility to purchase new and used machines, manufacture new products; the ability to obtain financing for product acquisition; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.



Critical Accounting Policies



Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. We believe that of our significant accounting policies (more fully described in Notes to the Consolidated Financial Statements), the following are particularly important to the portrayal of our results of operations and financial position and may require the application of a higher level of judgment by our management, and as a result are subject to an inherent degree of uncertainty.



Estimates



Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We review our estimates on an on-going basis, including those related to sales allowances, the allowance for doubtful accounts, inventory reserves, long-lived assets, income taxes and litigation. We base our estimates on our historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates, and material effects on our operating results and financial position may result. We believe the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.



27





Revenue Recognition



We recognize revenues when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) our price to the customer is fixed or determinable; and (iv) collection of the sales price is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. Revenue recognition is deferred in all instances where the earnings process is incomplete. We record reserves for estimated sales returns and allowances for both CNC machine sales and manufactured parts in the same period as the related revenues are recognized. We base these estimates on our historical experience for returns or the specific identification of an event necessitating a reserve. Our estimates may change from time to time in the event we ship manufactured parts which in the customers’ opinion, do not conform to the specifications provided. To the extent actual sales returns differ from our estimates, our future results of operations may be affected.



Accounts Receivable



We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer's current credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. While our credit losses have historically been within our expectations and the allowance established, we may not continue to experience the same credit loss rates as we have in the past. Accounts receivable are written off or reserves established when considered to be uncollectible or at risk of being uncollectible. While management believes that adequate allowances have been provided in the Consolidated Financial Statements, it is possible that we could experience unexpected credit losses. Our accounts receivable are concentrated in a relatively few number of customers. One customer, Panasonic Avionics Corporation (“Panasonic”), a leading provider of in-flight entertainment systems for commercial aircraft, accounts for 44% and 67% of our consolidated accounts receivable balance at June 30, 2012 and 2011, respectively. Therefore, a significant change in the liquidity or financial position of any one customer could make it more difficult for us to collect our accounts receivable and require us to increase our allowance for doubtful accounts, which could have a material adverse impact on our consolidated financial position, results of operations and cash flows.



Inventories



Within our Precision Manufacturing segment, we seek to purchase and maintain raw materials at sufficient levels to meet lead times based on forecasted demand. Within our Machine Tools segment, we purchase machines held for resale based upon management’s judgment of current market conditions and demand for both new and used machines. If forecasted demand exceeds actual demand, we may need to provide an allowance for excess or obsolete quantities on hand. We also review our inventories for changes in the market prices of machines held in inventory and provide reserves as deemed necessary. If actual market conditions are less favorable than those projected by management, additional inventory reserves may be required. We state our inventories at the lower of cost, using the first-in, first-out method on an average costs basis, or market.



Abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) are recognized as current-period charges. Fixed production overhead is allocated to the costs of conversion into inventories based on the normal capacity of the production facilities. We utilize an expected normal level of production within the Precision Manufacturing segment, based on our plant capacity. To the extent we do not achieve a normal expected production levels, we charge such under-absorption of fixed overhead to operations.



ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



Forward-Looking Statements



This annual report on Form 10-K of M Line Holdings, Inc. for the year ended June 30, 2012 contains forward-looking statements, principally in this Section and “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans,” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements which apply only as of the date of this annual report. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation of belief will be accomplished.



We believe it is important to communicate our expectations to our investors. There may be events in the future; however, that we are unable to predict accurately or over which we have no control. The risk factors listed in this filing, as well as any cautionary language in this annual report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated, include, but are not limited to: our ability to successfully maintain a credit facility to purchase new and used machines, manufacture new products; the ability to obtain financing for product acquisition; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.



Critical Accounting Policies



Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. We believe that of our significant accounting policies (more fully described in Notes to the Consolidated Financial Statements), the following are particularly important to the portrayal of our results of operations and financial position and may require the application of a higher level of judgment by our management, and as a result are subject to an inherent degree of uncertainty.



Estimates



Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We review our estimates on an on-going basis, including those related to sales allowances, the allowance for doubtful accounts, inventory reserves, long-lived assets, income taxes and litigation. We base our estimates on our historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates, and material effects on our operating results and financial position may result. We believe the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.



27





Revenue Recognition



We recognize revenues when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) our price to the customer is fixed or determinable; and (iv) collection of the sales price is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. Revenue recognition is deferred in all instances where the earnings process is incomplete. We record reserves for estimated sales returns and allowances for both CNC machine sales and manufactured parts in the same period as the related revenues are recognized. We base these estimates on our historical experience for returns or the specific identification of an event necessitating a reserve. Our estimates may change from time to time in the event we ship manufactured parts which in the customers’ opinion, do not conform to the specifications provided. To the extent actual sales returns differ from our estimates, our future results of operations may be affected.



Accounts Receivable



We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer's current credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. While our credit losses have historically been within our expectations and the allowance established, we may not continue to experience the same credit loss rates as we have in the past. Accounts receivable are written off or reserves established when considered to be uncollectible or at risk of being uncollectible. While management believes that adequate allowances have been provided in the Consolidated Financial Statements, it is possible that we could experience unexpected credit losses. Our accounts receivable are concentrated in a relatively few number of customers. One customer, Panasonic Avionics Corporation (“Panasonic”), a leading provider of in-flight entertainment systems for commercial aircraft, accounts for 44% and 67% of our consolidated accounts receivable balance at June 30, 2012 and 2011, respectively. Therefore, a significant change in the liquidity or financial position of any one customer could make it more difficult for us to collect our accounts receivable and require us to increase our allowance for doubtful accounts, which could have a material adverse impact on our consolidated financial position, results of operations and cash flows.



Inventories



Within our Precision Manufacturing segment, we seek to purchase and maintain raw materials at sufficient levels to meet lead times based on forecasted demand. Within our Machine Tools segment, we purchase machines held for resale based upon management’s judgment of current market conditions and demand for both new and used machines. If forecasted demand exceeds actual demand, we may need to provide an allowance for excess or obsolete quantities on hand. We also review our inventories for changes in the market prices of machines held in inventory and provide reserves as deemed necessary. If actual market conditions are less favorable than those projected by management, additional inventory reserves may be required. We state our inventories at the lower of cost, using the first-in, first-out method on an average costs basis, or market.



Abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) are recognized as current-period charges. Fixed production overhead is allocated to the costs of conversion into inventories based on the normal capacity of the production facilities. We utilize an expected normal level of production within the Precision Manufacturing segment, based on our plant capacity. To the extent we do not achieve a normal expected production levels, we charge such under-absorption of fixed overhead to operations.

[10 bagger]

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Thats the reason I think it's name should be changed from a VMC board sponsered board to the Swing Traders Board contest and then we only need to have results published when the stocks are up..

Less work for SKILLZ1.. As for him agreeing with you,, (SSKLLZ1 agrees with me, hence the new rules.) I thought you thought everyone agreed with you,, so whats new,, I'm out of here so you can as always get in the last post since now you believe you run this board also.... hank

Nah, I think SSKLLZ1 agrees with me, hence the new rules.

[10 bagger]

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10 bagger Wednesday, October 10, 2012 11:18:14 PM
Re: Rawnoc post# 253 Post # of 270

Since there are some that have a constant problem with others.. Lets try to make make everyone happy.. Why then why don't we just rename the contest from the VMC PSL 22,, a VMC sponsered contest to the Swing Board dictated contest.. As the post below servers no other purpose than misguided humor to the poster may I also suggest we have no rules,, forget our contests all together and just post the results of the SWING TRADE Portfolio on day's when it's stocks are up.. hank



Quote:
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Rawnoc Wednesday, October 10, 2012 6:40:11 PM
Re: ghmm post# 246 Post # of 269

I suspect that will change with the new rules that doesn't allow doubling down and making 42% profit on $34.10 in volume... ;)


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Since KIK wins all the contests anyway
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Raw

Research & analysis on some of my favorite stocks is located on the sticky note on the SwingTrade board.

[10 bagger]

Frontier Oilfield Services, Inc. Completes Exchange Offering

PR Newswire - Oct 08 12:07 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI


DALLAS, Oct. 8, 2012 /PRNewswire/ -- Frontier Oilfield Services, Inc. (OTCQB : FOSI) announces that it has successfully completed an exchange offering to acquire the remaining 49% of the outstanding membership interests of Frontier Income and Growth, LLC that it did not previously own. The successful exchange completes the acquisition of 100% of the ownership of Frontier Income and Growth, LLC and its operating subsidiary Trinity Disposal and Trucking, LLC.

All of the 101 interest holders of Frontier Income and Growth, LLC agreed to exchange their 1122 units for 1,870,000 shares of restricted common stock in Frontier Oilfield Services.

Tim P Burroughs, President of Frontier Oilfield Services, Inc. stated, "We welcome the former unit holders of Frontier Income and Growth as our shareholders, and the completion of this acquisition consolidates our holdings in East Texas. Frontier will continue to identify, evaluate and acquire compatible saltwater disposal operations in the Haynesville, Barnett, Eagle Ford and Permian Basin formations as we grow our company and implement our business strategy."

ABOUT TRINITY DISPOSAL and TRUCKING, LLC

TDT's gross revenues for 2012 are expected to be approximately $10,000,000. TDT currently operates 8 permitted commercial disposal wells and 25 disposal tank trucks and trailers in a service area primarily located in East Texas and Northwestern Louisiana. There are approximately 4,000 producing oil and gas wells within a 15 mile radius of TDT's disposal sites in Marion, Harrison and Panola Counties. The Trinity operational headquarters is located in Marshall, Texas and its administrative headquarters are located at Frontier's corporate offices in Dallas, Texas.

ABOUT FRONTIER OILFIELD SERVICES, INC.

Frontier Oilfield Services, Inc.'s primary business focus on wastewater recovery and disposal has been selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in recent technology (the process by which shale oil and gas is extracted), exploration & production companies are faced with increasing volumes of, and thus challenges with regard to the disposal of, produced fluids and saltwater. Frontier's acquisition strategy is focused on an essential but highly fragmented energy services sector. Frontier plans to continue rapid expansion and substantial growth in the near future. At this time, Frontier and its subsidiaries operate approximately 100 disposal tank trucks and trailers, 30 frac rental tanks, and 13 disposal wells with estimated annualized revenue of $50 million.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risk factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

(FOR MORE INFORMATION CONTACT DICK O'DONNELL, EVP AT FRONTIER OILFIELD SERVICES, INC. [phone])

SOURCE Frontier Oilfield Services, Inc.







=========================================

FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2011 AND 2010

Liabilities and Members’ Capital




2011 2010
Current liabilities:

Current portion of equipment notes payable
$ 302,781 $ 302,781
Accounts payable and accrued expenses
692,815 282,163





Total current liabilities
995,596 584,944





Commitments and contingencies (Note 4)


Long-term debt

Equipment notes payable, net of current portion
992,779 1,282,856
Notes payable
1,344,000





Total long-term debt
2,336,779 1,282,856





Members’ capital
5,074,533 3,127,250





$ 8,406,908 $ 4,995,050






The accompanying notes are an integral part of these consolidated financial statements.



3



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010




2011 2010
Revenues
$ 6,132,477 $ 2,581,020





Cost of revenues:

Labor
2,583,631 912,106
Other costs
2,790,451 1,366,722
Depreciation
845,116 407,489





Total cost of revenues
6,219,198 2,686,317





Gross loss
(86,721 ) (105,297 )





Operating expenses:

Salaries and wages
78,010 68,979
General and administrative
348,763 101,728
Professional fees
208,836 263,810
Insurance
391,530 201,492
Depreciation and amortization
13,277





Total operating expenses
1,040,416 636,009





Loss from operations
(1,127,137 ) (741,306 )





Other expenses:

Interest
109,570 35,454
Loss on disposal of property and equipment
54,909 62,324





Total other expenses
164,479 97,778





Loss before state franchise tax provision
(1,291,616 ) (839,084 )
State franchise tax provision
38,101 10,000





Net loss
$ (1,329,717 ) $ (849,084 )






The accompanying notes are an integral part of these consolidated financial statements.



4



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF MEMBERS’ CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010




Members’ capital at December 31, 2009
$ 1,151,000
Contributions
3,686,000
Commissions and offering costs (Note 1 and 5)
(796,866 )
Distributions
(63,800 )
Net loss
(849,084 )



Members’ capital at December 31, 2010
3,127,250
Contributions
3,375,000
Commissions and offering costs (Note 1 and 5)
(98,000 )
Net loss
(1,329,717 )



Members’ capital at December 31, 2011
$ 5,074,533




The accompanying notes are an integral part of these consolidated financial statements.



5



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010




2011 2010
Cash flows from operating activities:

Net loss
$ (1,329,717 ) $ (849,084 )
Adjustments to reconcile net loss to
net cash used in operating activities:

Depreciation and amortization
858,393 407,489
Loss on disposal of property and equipment
54,909 62,324
Amortization of deferred interest
64,414 10,498
Allocated expenses from affiliates
49,764
Changes in operating assets and liabilities:

Accounts receivable
(729,159 ) (549,618 )
Prepaid expenses, primarily insurance and fuel
(54,535 ) (31,681 )
Utility deposit
— (16,100 )
Accounts payable and accrued expenses
410,652 282,163





Net cash used in operating activities
(675,279 ) (684,009 )





Cash flows from investing activities:

Repayment of advances to affiliate
180,094
Proceeds from sale of property and equipment
46,000 87,407
Purchase of property and equipment
(1,035,291 ) (264,356 )
Acquisition of subsidiary
(2,000,000 )
Advances to affiliate
(144,605 ) (183,822 )





Net cash used in investing activities
(1,133,896 ) (2,180,677 )





Cash flows from financing activities:

Members’ contributions
3,375,000 3,686,000
Proceeds from notes payable
170,625
Distributions to members
(63,800 )
Payment of promissory note
(1,000,000 )
Payments on notes payable
(156,000 )
Payments on equipment notes payable
(290,077 ) (12,516 )
Commissions and offering costs
(98,000 ) (796,866 )





Net cash provided by financing activities
3,001,548 1,812,818





Net change in cash
1,192,373 (1,051,868 )
Cash at beginning of year
99,132 1,151,000





Cash at end of year
$ 1,291,505 $ 99,132






The accompanying notes are an integral part of these consolidated financial statements.



6



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010




Supplemental Cash Flow Disclosures
Interest paid
$ 38,408 $ 17,301





Supplemental Disclosures of Non-Cash Investing and Financing Activities
Notes payable issued for purchase of property and equipment
$ 1,300,000 —





Equipment notes payable issued for purchase of property and equipment
$ 1,330,000





Promissory note issued for acquisition of subsidiary
$ 1,000,000





Deferred interest included in principal balance of equipment notes payable
$ 257,655





Deferred loan fees included in principal balance of notes payable
$ 29,375 $ —





Repayment of advances to affiliates through expenses charged by affiliates to the Company
$ 49,764 $ —





Membership interests issued to TBX in exchange for an unsecured receivable (Note 5)
$ 390,000 $





Assets acquired from acquisition of subsidiary:

Prepaid expenses
$ 17,539





Property and equipment
$ 2,982,461






The accompanying notes are an integral part of these consolidated financial statements.



7



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and business

Frontier Income and Growth, LLC, a Texas limited liability company (the Company), was organized to engage in the oil field services industry, including the transportation and disposal of salt water and other oil field fluids primarily in the Haynesville Shale in East Texas. The Company’s customer base includes national, integrated, and independent oil and gas exploration companies. The Company was organized in January 2009 and is headquartered in Dallas, Texas. The Company is managed by Frontier Asset Management, LLC (Note 5).

The Company purchased the outstanding membership interests of Trinity Disposal & Trucking, LLC (Trinity) effective March 1, 2010 (the Effective Date) for total consideration of $3,000,000 (the Purchase Price). The Purchase Price was paid through the issuance of a $1,000,000 promissory note and a $2,000,000 cash payment. The promissory note was paid during the year ended December 31, 2010. Trinity is in the business of transporting and disposing of salt water and other oil field fluids for operators of oil and gas leases. At the date of acquisition, Trinity owned five disposal wells in Harrison County, Texas, two permitted disposal wells in Panola County, Texas and nineteen trucks and fifteen trailers.

The Company’s purchase of Trinity has been accounted for as a business combination in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations. The Company was deemed to be the acquirer and Trinity was deemed to be the acquiree. In accordance with ASC Topic 805, the assets of Trinity were recorded at cost, which the Company believes approximates fair value, and the results of operations and cash flows are reflected in the accompanying consolidated financial statements subsequent to the Effective Date.

During the year ended December 31, 2011, the Company accepted a subscription agreement from TBX Resources, Inc. (TBX) to purchase a 51% interest in the Company. Through February 24, 2012, TBX has contributed $2,610,000 in cash and $390,000 in the form of an unsecured receivable in exchange for a 35% interest in the Company (Note 5).

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Trinity. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.

Management estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.



8



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Reclassifications

Certain reclassifications have been made to the 2010 financial statements to conform to the 2011 consolidated financial statement presentation. The effect of the reclassifications was to include advances from affiliates as a non-current asset, depreciation expense as a component of ‘cost of revenues’, to include fuel surcharges as a reduction of ‘other costs’ on the accompanying statements of operations and to include payroll processing fees as a component of ‘salaries and wages’ on the accompanying consolidated statements of operations.

Cash

For purposes of the consolidated statements of cash flows, cash includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. The Company maintains deposits in two financial institutions. The Federal Deposit Insurance Corporation provides coverage for interest bearing accounts of up to $250,000 and unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At December 31, 2011 and 2010, none of the Company’s cash was in excess of federally insured limits.

Accounts receivable

The Company performs periodic credit evaluations of its customers’ financial condition and extends credit to virtually all of its customers on an uncollateralized basis. Credit losses to date have been insignificant and within management’s expectations. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal accounts receivable are due 30 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are evaluated for collectability based on individual credit evaluation and specific circumstances of the customer. At December 31, 2011 and 2010, the Company had not identified any significant customer balances which it believes are uncollectible.

Property and equipment

The Company’s property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets for financial reporting purposes. Expenditures for normal maintenance and repairs are expensed as incurred. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are charged or credited to income in the respective period. The estimated useful lives are as follows:




Asset Description
Estimated Useful Life
Trucks and equipment
3-5 years
Disposal wells
3-5 years
Buildings
7-10 years

During the years ended December 31, 2011 and 2010, the Company disposed of property and equipment with a cost of $136,270 and $177,496, respectively, and accumulated depreciation of $35,361 and $27,765, respectively. The Company received total cash proceeds of $46,000 and $87,407, respectively, and recognized a loss of $54,909 and $62,324, respectively, in the accompanying consolidated statements of operations.





9



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Commissions and offering costs

In connection with the Company’s capital raising activities during the years ended December 31, 2011 and 2010, the Company incurred $98,000 and $796,866, respectively, in commissions paid to brokers and other offering costs. These costs have been accounted for as a reduction of members’ capital in the accompanying consolidated financial statements. A portion of these costs were paid to related parties (Note 5).

Revenue recognition

The Company recognizes revenues when services are rendered, field tickets are signed and received, and when payment is determinable and reasonably assured. The Company extends unsecured credit to its customers for amounts invoiced.

Income taxes

The Company is organized as a limited liability company under the provisions of the Internal Revenue Code of 1986 as amended. Accordingly, the consolidated financial statements do not include a provision for income taxes because the Company does not incur income tax liabilities. Instead, its earnings and losses are included in the Members’ income tax returns and are taxed based on the respective Member’s income tax rate.

The Company is subject to the Texas Franchise Tax. At December 31, 2011 and 2010, the Company has recorded a liability of $33,000 and $10,000, respectively, which is included in ‘accounts payable and accrued expenses’ on the accompanying consolidated balance sheets.

Fair value measurements

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

Fair value of financial instruments

In accordance with the reporting requirements of ASC Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments The estimated fair value of cash, accounts receivable and accounts payable and accrued expenses approximate their carrying amounts due to the short maturity of these instruments. The carrying value of the Company’s long-term debt also approximates fair value since these instruments bear a market rate of interest. None of these instruments are held for trading purposes.





10



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Long-lived assets

The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At December 31, 2011 and 2010, the Company had not identified any such impairment.

Asset retirement obligations

ASC Topic 410, Asset Retirement and Environmental Obligations, requires companies to recognize a liability for an asset retirement obligation (ARO) at fair value in the period in which the obligation is incurred, if a reasonable estimate of fair value can be made. This obligation relates to the future costs of plugging and abandoning the Company’s salt water disposal wells, the removal of equipment and facilities, and returning such land to its original condition.

The Company has not recorded an ARO for the future estimated reclamation costs associated with the operation of the Company’s six salt water disposal wells. The Company is not able to determine the estimated life of its wells and is unable to determine a reasonable estimate of the fair value associated with this liability. The Company believes that any such liability would not be material to the consolidated financial statements taken as a whole.

Recent accounting pronouncements

During the year ended December 31, 2011 and through February 24, 2012, there were several new accounting pronouncements issued by the Financial Accounting Standards Board, the most recent of which was Accounting Standards Update 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

Subsequent events

In preparing the consolidated financial statements, the Company has reviewed, as determined necessary by the Company’s management, events that have occurred after December 31, 2011, up until the issuance of the consolidated financial statements, which occurred on February 24, 2012.





11



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



2. SIGNIFICANT CONCENTRATIONS

Significant customers

At December 31, 2011 and 2010 and for each of the years then ended, the Company had the following customer concentrations.




Percentage of
Revenues Percentage of
Accounts Receivable
2011 2010 2011 2010
Customer A
17 % 23 % 12 % 34 %
Customer B
* 23 % * 10 %
Customer C
10 % 13 % * 14 %
Customer D
29 % * 36 % *
Customer E
* * 12 % *

* = less than 10%

3. LONG-TERM DEBT

Equipment notes payable

The Company’s equipment notes payable consist of ten installment notes for ten trucks used in the Company’s operations. At December 31, 2011, the notes have annual interest rates of 7.87% and 7.25%, require monthly minimum principal payments of $2,503 and $2,544, and mature during December 2014 and January 2015. The Company’s notes payable are collateralized by the truck purchased with the respective note payable.

The equipment notes payable included a deferred interest component of $257,655 which was added to the principal balance of the notes by the lender. The deferred interest is being amortized on a straight-line basis over the term of the notes.

Notes payable

The Company’s notes payable consists of two revolving term notes with variable interest rates equal to the prime rate plus 1% with a minimum interest rate of 5%. At December 31, 2011 the annual interest rate was 6%. The notes require monthly interest only payments. The notes are secured by all of the Company’s assets. The term notes mature on January 13, 2013, at which time the outstanding principal balance of the notes will be due. The Company is required, among other things, to maintain a current ratio of not less than 1.0, maintain a debt to adjusted tangible net worth ratio of 2.0 to 1.0 and maintain an interest coverage ratio of 3.50 to 1.0 or 1.25 to 1.0 based the Company’s quarterly borrowing base reduction calculation. The Company is currently in compliance with all covenants.





12



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Future maturities of the Company’s long-term debt as of December 31, 2011, are as follows:




Years Ending

December 31,
Amount
2012
$ 302,781
2013
1,646,899
2014
485,482
2015
204,398



$ 2,639,560




4. COMMITMENTS AND CONTINGENCIES

At the date the Company purchased Trinity (Note 1) the previous owner informed the Company’s management that two of the disposal wells were not functioning and the permitted disposal well locations had certain landowner disputes. Under the terms of the Amended Purchase Agreement, at the option of the Company, the previous owner is to provide either a proportionate reduction of the promissory note issued in connection with the acquisition or provide similar assets to replace the assets in dispute. The Company believes that it may be possible to repair these wells, but does not have an estimate of the time within which the repairs will be completed but anticipates beginning this process during the first quarter of 2012. If the efforts to repair the wells are not successful, the Company may seek compensation from the prior owner of Trinity pursuant to the Amended Purchase Agreement. The Company may also accept other assets of equal value from the former owner. The Company issued a demand letter to the former owner during February 2011 and is currently attempting to resolve the issues with the former owner.

5. RELATED PARTY TRANSACTIONS

Frontier Asset Management

During the years ended December 31, 2011 and 2010, the Company paid $185,246 and $36,105, respectively, to Frontier Asset Management (Frontier) for reimbursed expenses related to the Company’s capital raising activities. These payments are included within ‘commissions and offering costs’ on the accompanying consolidated statements of members’ capital and ‘general and administrative’ on the accompanying consolidated statements of operations. Additionally, during the years ended December 31, 2011 and 2010 the Company paid Frontier $3,545 and $175,094, respectively, for accounting and operations management services. These costs are included within ‘professional fees’ on the accompanying consolidated statements of operations.

During the year ended December 31, 2010, the Company advanced $183,822 to Frontier and received repayments totaling $180,094. At December 31, 2010, $3,728 remained outstanding. These advances are unsecured and due on demand as funds are available. During the year ended December 31, 2011, the Company received non-cash repayments of $3,728 for expenses charged by Frontier related to the Company’s capital raising activities. These costs are included within ‘general and administrative on the accompanying consolidated statements of operations.





13



--------------------------------------------------------------------------------

FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Gulftex Operating

The Company paid Gulftex Operating (Gulftex) $298,618 during the year ended December 31, 2010. These payments related to reimbursed expenses for commissions and offering costs in connection with the Company’s capital raising activities. These costs are included within ‘commissions and offering costs’ on the accompanying consolidated statements of members’ capital.

Additionally, the Company paid Gulftex a total of $189,971 and $93,638 for administrative and office services during the years ended December 31, 2011 and 2010. These costs are included within ‘general and administrative’, ‘professional fees’ and ‘cost of goods sold’ on the accompanying consolidated statements of operations. During the year ended December 31, 2011, the Company advanced $9,605 to Gulftex and is included in ‘advances from affiliates’ on the accompanying consolidated balance sheets.

Gulftex charges the Company a monthly fee of $10,000 for office and administrative services. There is no formal agreement between the Company and Gulftex for this arrangement. Gulftex is owned by one of the managing directors of Frontier (Note 1).

Euro American Capital

During the year ended December 31, 2010, the Company paid commissions totaling $428,371 to Euro American Capital (EAC) in connection with the Company’s capital raising activities. These costs are included within ‘commissions and offering costs’ on the accompanying consolidated statements of members’ capital. EAC is owned by one of the managing directors of Frontier (Note 1). During the year ended December 31, 2011 the Company did not pay any commissions to EAC.

TBX Resources, Inc.

During the year ended December 31, 2011, the Company made cash advances of $135,000 and non-cash advances of $5,475 for expenses incurred by the Company on behalf of TBX Resources, Inc. (TBX). The Company received non-cash repayments of $46,036 for expenses charged by TBX for administrative and office services. These costs are included within ‘general and administrative’ and ‘professional fees’ on the accompanying statements of operations. At December 31, 2011, $88,964 was due from TBX and is included in ‘advances from affiliates’ on the accompanying consolidated balance sheets. TBX is the Company’s largest single member (Note 1) and is controlled by a managing member of the Company.

Additionally, the Company has recorded a receivable of $390,000 for membership interests in the Company which were sold to TBX which have not yet been collected through February 24, 2012. In accordance with ASC 505, Equity, this receivable has been included as a reduction of contributions in the accompanying consolidated statements of members’ capital at December 31, 2011.





14



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Frontier Income and Growth, LLC and Subsidiary

Unaudited Consolidated Financial Statements as of

June 30, 2012 and December 31, 2011 and

For the Six Months Ended June 30, 2012 and 2011



--------------------------------------------------------------------------------

CONTENTS




CONSOLIDATED BALANCE SHEETS
1

CONSOLIDATED STATEMENTS OF OPERATIONS
2

CONSOLIDATED STATEMENTS OF CASH FLOWS
3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4-10



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS




June 30, 2012 Dec. 31, 2011
(Unaudited) (Audited)
Assets


Current assets:

Cash
$ 579,447 $ 1,291,505
Accounts receivable
1,974,932 1,278,777
Prepaid expenses, primarily insurance and fuel
41,127 103,755
Deferred interest on equipment notes payable, current portion
64,414 64,414
Deferred loan fees, net of amortization of $24,480
4,895 —





Total current assets
2,664,815 2,738,451





Property and equipment, at cost:

Land
582,953 574,053
Buildings
33,160 33,160
Trucks and equipment
2,828,430 2,380,428
Disposal wells
3,908,524 3,610,701





7,353,067 6,598,342
Less: accumulated depreciation
(1,710,972 ) (1,190,516 )





Net property and equipment
5,642,095 5,407,826





Other assets:

Advances to affiliates
653,672 98,569
Deferred interest on equipment notes payable, net of current portion
96,621 128,827
Deferred loan fees, net of amortization of $12,240
— 17,135
Utility deposit
25,960 16,100





Total other assets
776,253 260,631





Total Assets
$ 9,083,163 $ 8,406,908





Liabilities and Members’ Capital


Current liabilities:

Notes payable
$ 1,344,000 $ —
Current portion of equipment notes payable
302,781 302,781
Accounts payable and accrued expenses
792,509 692,815





Total current liabilities
2,439,290 995,596





Commitments and contingencies (Note 4)

Long-term debt:

Notes payable
— 1,344,000
Equipment notes payable, net of current portion
841,357 992,779





Total long-term debt
841,357 2,336,779





Members’ capital
5,802,516 5,074,533





Total Liabilities and Members’ Capital
$ 9,083,163 $ 8,406,908






The accompanying notes are an integral part of these consolidated financial statements.



1



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Unaudited)




2012 2011
Revenues
$ 4,736,908 $ 2,733,175





Cost of revenues:

Labor
1,877,622 1,035,318
Other costs
2,164,429 1,141,238
Depreciation
596,852 345,142





Total cost of revenues
4,638,903 2,521,698





Gross profit
98,005 211,477





Operating expenses:

Salaries and wages
— 38,383
General and administrative
120,129 206,284
Professional fees
68,450 115,233
Insurance
344,097 107,590
Depreciation
778 —





Total operating expenses
533,454 467,490





Loss from operations
(435,449 ) (256,013 )





Other expenses:

Interest
73,231 29,597
Loss on disposal of property and equipment
18,306 54,909





Total other expenses
91,537 84,506





Loss before state franchise tax
(526,986 ) (340,519 )

State franchise tax
12,004 5,101





Net loss
$ (538,990 ) $ (345,620 )






The accompanying notes are an integral part of these consolidated financial statements.



2



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Unaudited)




2012 2011
Cash flows from operating activities:

Net loss
$ (538,990 ) $ (345,620 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation
597,630 345,142
Allocated and direct expenses from affiliate
115,079 —
Loss on disposal of property and equipment
18,306 54,909
Other
(27 ) —
Changes in operating assets and liabilities:

Accounts receivable
(696,155 ) (609,187 )
Prepaid expenses, primarily insurance and fuel
74,868 (25,936 )
Utility deposit
(9,860 ) —
Accounts payable and accrued expenses
99,694 358,744





Net cash used in operating activities
(339,455 ) (221,948 )





Cash flows from investing activities:

Proceeds from sale of property and equipment
88,722 46,000
Purchase of property and equipment
(938,927 ) (279,084 )





Net cash used in investing activities
(850,205 ) (233,084 )





Cash flows from financing activities:

Members’ contributions
1,267,000 725,000
Advances to affiliates
(670,182 ) (105,953 )
Payments on equipment notes payable
(119,216 ) (109,058 )
Commissions and offering costs
— (98,000 )





Net cash provided by financing activities
477,602 411,989





Net decrease in cash
(712,058 ) (43,043 )
Cash at beginning of period
1,291,505 99,132





Cash at end of period
$ 579,447 $ 56,089





Supplemental Cash Flow Disclosures
Interest paid
$ 73,231 $ 29,597





Supplemental Disclosures of Non-Cash Investing and Financing Activities
Membership interests issued in exchange for an unsecured receivable
$ 813,800 $ —





Trade in value of property and equipment disposals
$ 35,000 $ —






The accompanying notes are an integral part of these consolidated financial statements.



3



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and business

Frontier Income and Growth, LLC, a Texas limited liability company (the Company), was organized to engage in the oil field services industry, including the transportation and disposal of salt water and other oil field fluids primarily in the Haynesville Shale in East Texas. The Company’s customer base includes national, integrated, and independent oil and gas exploration companies. The Company was organized in January 2009 and is headquartered in Dallas, Texas. The Company is managed by Frontier Asset Management, LLC (Note 5).

The Company purchased the outstanding membership interests of Trinity Disposal & Trucking, LLC (Trinity) effective March 1, 2010 (the Effective Date) for total consideration of $3,000,000 (the Purchase Price). The Purchase Price was paid through the issuance of a $1,000,000 promissory note and a $2,000,000 cash payment. The promissory note was paid during the period ended December 31, 2010. Trinity is in the business of transporting and disposing of salt water and other oil field fluids for operators of oil and gas leases. At June 30, 2012 Trinity has five disposal wells in Harrison County, Texas, two disposal wells in Panola County, Texas and one disposal well in Marion County, Texas and twenty trucks and trailers.

The Company’s purchase of Trinity has been accounted for as a business combination in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations. The Company was deemed to be the acquirer and Trinity was deemed to be the acquiree. In accordance with ASC Topic 805, the assets of Trinity were recorded at cost, which the Company believes approximates fair value, and the results of operations and cash flows are reflected in the accompanying consolidated financial statements subsequent to the Effective Date.

During the third quarter of the previous year, the Company accepted a subscription agreement from Frontier Oilfield Services, Inc. (Frontier; formerly TBX Resources, Inc.) to purchase a 51% interest in the Company. As of June 30, 2012, Frontier has contributed $3,877,000 in cash and $1,203,800 in the form of an unsecured receivable in exchange for a 51% interest in the Company (Note 5 and 6).

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Trinity. All significant intercompany transactions, accounts and balances have been eliminated in consolidation.

Basis Of Presentation

The consolidated financial statements included herein have been prepared by the Company, without audit. Information and footnote disclosures included in financial statements are prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, all adjustments (which include normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year.



4



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



Management estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash

For purposes of the consolidated statements of cash flows, cash includes demand deposits, time deposits, certificates of deposit and short-term liquid investments with original maturities of three months or less when purchased. The Company maintains deposits in two financial institutions. The Federal Deposit Insurance Corporation provides coverage for interest bearing accounts of up to $250,000 and unlimited coverage for non-interest bearing transaction accounts through December 31, 2012. At June 30, 2012 none of the Company’s cash was in excess of federally insured limits.

Accounts receivable

The Company performs periodic credit evaluations of its customers’ financial condition and extends credit to virtually all of its customers on an uncollateralized basis. Credit losses to date have been insignificant and within management’s expectations. The Company provides an allowance for doubtful accounts that is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. Normal accounts receivable are due 30 days after the issuance of the invoice. Receivables past due more than 60 days are considered delinquent. Delinquent receivables are evaluated for collectability based on individual credit evaluation and specific circumstances of the customer. At June 30, 2012, the Company had not identified any significant customer balances which it believes are uncollectible.

Property and equipment

The Company’s property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets for financial reporting purposes. Expenditures for normal maintenance and repairs are expensed as incurred. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are charged or credited to income in the respective period. The estimated useful lives are as follows:




Asset Description
Estimated Useful Life
Trucks and equipment
3-5 years
Disposal wells
3-5 years
Buildings
7-10 years

During the periods ended June 30, 2012 and 2011, the Company disposed of property and equipment with a cost of $209,624 and $136,270, respectively, and accumulated depreciation of $77,171 and $35,361, respectively. The Company received total proceeds of $123,722 and $46,000, respectively, and recognized a loss of $18,306 and $54,909, respectively, in the accompanying consolidated statements of operations.



5



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



Commissions and offering costs

In connection with the Company’s capital raising activities during the periods ended June 30, 2012 and 2011, the Company incurred $0 and $98,000, respectively, in commissions paid to brokers. These costs have been accounted for as a reduction of members’ capital in the accompanying consolidated financial statements.

Revenue recognition

The Company recognizes revenues when services are rendered, field tickets are signed and received, and when payment is determinable and reasonably assured. The Company extends unsecured credit to its customers for amounts invoiced.

Income taxes

The Company is organized as a limited liability company under the provisions of the Internal Revenue Code of 1986 as amended. Accordingly, the consolidated financial statements do not include a provision for income taxes because the Company does not incur income tax liabilities. Instead, its earnings and losses are included in the Members’ income tax returns and are taxed based on the respective Member’s income tax rate.

The Company is subject to the Texas Franchise Tax. There was no outstanding liability for franchise taxes as of June 30, 2012.

Fair value measurements

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with U.S. generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time.

Fair value of financial instruments

In accordance with the reporting requirements of ASC Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments The estimated fair value of cash, accounts receivable and accounts payable and accrued expenses approximate their carrying amounts due to the short maturity of these instruments. The carrying value of the Company’s long-term debt also approximates fair value since these instruments bear a market rate of interest. None of these instruments are held for trading purposes.



6



--------------------------------------------------------------------------------

FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



Long-lived assets

The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At June 30, 2012, the Company had not identified any such impairment.

Asset retirement obligations

ASC Topic 410, Asset Retirement and Environmental Obligations, requires companies to recognize a liability for an asset retirement obligation (ARO) at fair value in the period in which the obligation is incurred, if a reasonable estimate of fair value can be made. This obligation relates to the future costs of plugging and abandoning the Company’s salt water disposal wells, the removal of equipment and facilities, and returning such land to its original condition.

The Company has not recorded an ARO for the future estimated reclamation costs associated with the operation of the Company’s eight salt water disposal wells. The Company is not able to determine the estimated life of its wells and is unable to determine a reasonable estimate of the fair value associated with this liability. The Company believes that any such liability would not be material to the consolidated financial statements taken as a whole.

Recent accounting pronouncements

During the six months ended June 30, 2012 and the year ended December 31, 2011, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results. The Company will monitor these emerging issues to assess any potential future impact on its financial statements.

2. SIGNIFICANT CONCENTRATIONS

Significant customers

At June 30, 2012 and 2011 and for each of the periods then ended, the Company had the following customer concentrations.




Percentage of Percentage of
Revenues Accounts Receivable
2012 2011 2012 2011
Customer A
33 % 23 % 23 % 23 %
Customer B
23 % 23 % 22 % 20 %
Customer C
* 13 % * 10 %
Customer D
* * * 10 %

* = less than 10%



7



--------------------------------------------------------------------------------

FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



3. LONG-TERM DEBT

Equipment notes payable

The Company’s equipment notes payable consist of ten installment notes for ten trucks used in the Company’s operations. At June 30, 2012, the notes have annual interest rates of 7.87% and 7.25%, require monthly minimum principal payments of $12,721 and $12,516, and mature during December 2014 and January 2015. The Company’s notes payable are collateralized by the truck purchased with the respective note payable (Note 6).

The equipment notes payable included a deferred interest component of $257,655 which was added to the principal balance of the notes by the lender. The deferred interest is being amortized on a straight-line basis over the term of the notes.

Notes payable

The Company’s notes payable consists of two revolving term notes with variable interest rates equal to the prime rate plus 1% with a minimum interest rate of 5%. At June 30, 2012 the annual interest rate was 6%. The notes require monthly interest only payments. The notes are secured by all of the Company’s assets. The term notes mature on January 13, 2013, at which time the outstanding principal balance of the notes will be due (Note 6). The Company is required, among other things, to maintain a current ratio of not less than 1.0 to 1.0, maintain a debt to adjusted tangible net worth ratio of 2.0 to 1.0 and maintain an interest coverage ratio of 3.50 to 1.0 or 1.25 to 1.0 based the Company’s quarterly borrowing base reduction calculation. At June 30, 2012 the Company was not in compliance with the interest coverage ratio covenant.

Future maturities of the Company’s long-term debt as of June 30, 2012, are as follows:




Periods Ending

June 30,
Amount
2013
$ 1,646,781
2014
302,781
2015
538,576



$ 2,488,138




4. COMMITMENTS AND CONTINGENCIES

At the date the Company purchased Trinity (Note 1) the previous owner informed the Company’s management that two of the disposal wells were not functioning and the permitted disposal well locations had certain landowner disputes. Under the terms of the Amended Purchase Agreement, at the option of the Company, the previous owner is to provide either a proportionate reduction of the promissory note issued in connection with the acquisition or provide similar assets to replace the assets in dispute. The Company believes that it may be possible to repair these wells, but does not have an estimate of the time within which the repairs will be completed but anticipates beginning this process during the fourth



8



--------------------------------------------------------------------------------

FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



Quarter of 2012. If the efforts to repair the wells are not successful, the Company may seek compensation from the prior owner of Trinity pursuant to the Amended Purchase Agreement. The Company may also accept other assets of equal value from the former owner. The Company issued a demand letter to the former owner during February 2011 and is currently attempting to resolve the issues with the former owner.

5. RELATED PARTY TRANSACTIONS

Frontier Oilfield Services, Inc.

The Company conducts substantial transactions with Frontier Oilfield Services, Inc. These related party transactions have a significant impact on the financial condition and operations of the Company. If these transactions were conducted with third parties, the financial condition and operations of the Company could be materially different from reported results.

During the period ended June 30, 2012, the Company made cash advances of $670,182 and non-cash advances of $813,800. The Company received non-cash repayments of $115,079 for expenses charged by Frontier for professional, administrative and office services. These costs are included within general and administrative and professional fees on the accompanying statements of operations. At June 30, 2012, $653,672 was due from Frontier and is included in advances to affiliates on the accompanying consolidated balance sheets. Frontier is the Company’s largest single member (Note 1 and 6) and is controlled by a managing member of the Company.

Additionally, the Company has recorded a receivable of $813,800 for membership interests in the Company which were sold to Frontier which has not yet been collected through June 30, 2012. In accordance with ASC 505, Equity, this receivable has been included as a reduction of members’ capital in the accompanying consolidated balance sheet at June 30, 2012.

Frontier Asset Management

During the period ended June 30, 2012, the Company advanced $260 to Frontier Asset Management (FAM). At June 30, 2012 the balance due is $260 and is included in accounts receivable on the accompanying balance sheets

Gulftex Operating

The Company paid Gulftex a total of $0 and $60,000 for administrative and office services during the periods ended June 30, 2012 and 2011. These costs are included within professional fees on the accompanying consolidated statements of operations. During the period ended June 30, 2011, Gulftex charged the Company a monthly fee of $10,000 for office and administrative services. There was no formal agreement between the Company and Gulftex for this arrangement that was terminated on August 31, 2011. Gulftex is owned by one of the managing directors of Frontier (Note 1).



9



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FRONTIER INCOME AND GROWTH, LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



6. SUBSEQUENT EVENTS:

On July 23, 2012, Frontier and its subsidiaries (including the Company) executed a new credit agreement with Capital ONE Leverage Finance Corp. and paid-off the Company’s existing notes payable and equipment financing loans. The credit agreement with Capital ONE Leverage Finance Corp. provides for funding through a revolving loan and a term loan subject to the Credit Agreement. The loans have a maturity date of July 23, 2017 and provide for variable interest payments calculated by applying a base rate plus a margin of 1.5% to 3.25% depending on the loan and interest rate elected by the borrower. In addition, Frontier and its subsidiaries (including the Company) entered into a term loan with ICON Investments, Inc. which provided immediate funding in the amount of $5,000,000 that was used by Frontier to fund a portion of the cash consideration paid for the acquisition of an oilfield service company. The note has a fixed interest rate of 14% per annum with a stated maturity date of February 1, 2018.




==============================================


Frontier Oilfield Services Inc To Acquire Remaining 49% Interests In Frontier Income And Growth LLC

Reuters America - Sep 11 08:12 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI


Frontier Oilfield Services Inc announced that it is engaged in an exchange offering to acquire the remaining 49% of the membership interests of Frontier Income and Growth LLC that it does not currently own. If the exchange will complete the acquisition of 100% of the ownership of Frontier Income and Growth, LLC and operating subsidiary Trinity Disposal and Trucking, LLC. If all the current membership interest holders of Frontier Income and Growth, LLC agree to exchange their 1,122 interests a total of 1,870,374 shares of Frontier's restricted common stock will be issued. All of the current membership interest holders agreeing to the exchange would then become shareholders in Frontier. Terms of the transaction were not disclosed.






=======================================

Frontier Oilfield Services, Inc. Tenders for Subsidiary

PR Newswire - Sep 11 08:00 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI


DALLAS, Sept. 11, 2012 /PRNewswire/ -- Frontier Oilfield Services, Inc. (OTCQB: FOSI) announces that it is engaged in an exchange offering to acquire the remaining 49% of the membership interests of Frontier Income and Growth LLC that it does not currently own. If successful the exchange will complete the acquisition of 100% of the ownership of Frontier Income and Growth, LLC and its operating subsidiary Trinity Disposal and Trucking, LLC. If all the current membership interest holders of Frontier Income and Growth, LLC agree to exchange their 1,122 interests a total of 1,870,374 shares of Frontier's restricted common stock will be issued. All of the current membership interest holders agreeing to the exchange would then become shareholders in Frontier.

Tim P Burroughs, President of Frontier Oilfield Services, Inc. stated "We see this exchange offering to the remaining membership interest holders of Frontier Income and Growth, LLC as a 'win-win' situation. The benefits to the remaining members include a path to liquidity and appreciation while Frontier Oilfield Services, Inc is able to consolidate its ownership in Trinity Disposal and Trucking, LLC."

ABOUT TRINITY DISPOSAL and TRUCKING, LLC

TDT's gross revenues for 2012 are expected to be approximately $10,000,000. TDT currently operates 8 permitted commercial disposal wells and 25 disposal tank trucks and trailers in a service area primarily located in East Texas and Northwestern Louisiana. There are approximately 4,000 producing oil and gas wells within a 15 mile radius of TDT's disposal sites in Marion, Harrison and Panola Counties. The Trinity operational headquarters is located in Marshall, Texas and its administrative headquarters are located at Frontier's corporate offices in Dallas, Texas.

ABOUT FRONTIER OILFIELD SERVICES, INC.

Frontier Oilfield Services, Inc.'s primary business focus on wastewater recovery and disposal has been selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in recent extraction technology, exploration & production companies are faced with the increasing burden of the disposal of higher volumes of produced fluids and saltwater. Frontier's acquisition strategy in this highly fragmented, decentralized and essential sector of the energy services market positions Frontier for potentially rapid expansion and substantial growth in the future.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risk factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

(For more information contact Dick O'Donnell, EVP at Frontier Oilfield Services, Inc [phone])

SOURCE Frontier Oilfield Services, Inc.




=================================================

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

The Registrant has entered into two material loan agreements, the initial proceeds of which were used to fund the cash portion of the consideration paid for the acquisition by Registrant of Chico Coffman Tank Trucks, Inc.;

Credit Agreement entered into on July 23, 2012 by and between Registrant and its subsidiaries and Capital ONE Leverage Finance Corp. which provides funding through a revolving commitment of $9,000,000 and a term loan commitment of $6,000,000 for a total loan commitment of $15,000,000 subject to the terms of the Credit Agreement. The loans have a maturity date of July 23, 2017 and provide for variable interest payments calculated by applying a base rate plus a margin of 1.5% to 3.25% depending on the loan and the interest rate elected by the borrower.

Term Loan, Guaranty and Security Agreement entered into on July 23, 2012 by and between Registrant and its subsidiaries and ICON Investments which provides immediate funding in the amount of $5,000,000 at a fixed interest rate of 14% per annum with a stated maturity date of February 1, 2018.

Section 2 — Financial Information

Item 2.01 Completion of Acquisition or Disposition of Assets

Registrant by and through a wholly owned subsidiary, Frontier Acquisition I, Inc. closed and completed the acquisition of Chico Coffman Tank Trucks, Inc. on July 24, 2012 by acquiring all of the issued and outstanding stock of Chico Coffman Tank Trucks, Inc. (“Coffman”) inclusive of its wholly owned subsidiary, Coffman Disposal, LLC for the sum of $17,408,348. Of the purchase price $12,700,000 was paid in cash and the remainder was paid in the issuance of 1,177,087 shares of Registrants restricted common stock.

Coffman is a salt water disposal company with its primary base of operations located in Chico, Texas with its trade and service area being in the Barnett Shale oil field located in north central Texas. Coffman had audited 2011 revenues of $40.5 million with an EBITDA of $3,263,929. Coffman’s assets are currently valued on its audited financials at $24 million and consist of accounts receivable, rolling stock (85 trucks and trailers), six permitted disposal wells and the headquarters real property. Coffman has short and long term liabilities of approximately $2.35 million.

Mr. JD Coffman, who was the seller of the Coffman stock, will remain as President of Coffman Tank Trucks, Inc. and will report directly to Tim Burroughs, President and CEO of Frontier.

A press release announcing the completion of the acquisition was issued by the Registrant and is a part of this Form 8-K as Exhibit 99.1

Section 3—Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

On September 2, 2011 Frontier Oilfield Services, Inc. (“FOSI”), under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000 shares of TBX’s 2011 Series A 8% Preferred Stock (the “Stock”) for the sum of $5,500,000 contingent upon TBX using the proceeds of the Stock to acquire a majority 51% membership interest in Frontier Income and Growth, LLC (“Frontier”), a salt water transportation and disposal company. The attributes of the Stock allow the holder to convert the preferred share into two shares of Frontier common stock and a warrant for an additional share at an exercise price of $3.50 per share. LoneStar completed the purchase of $5,500,000 of the Stock and FOSI has completed the acquisition of 51% of Frontier. Effective July 12, 2012 LoneStar elected to convert the Stock into 5,500,000 shares of the common stock and 2,750,000 warrants.



3



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Table of Contents
Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits



99.1 Press Release Announcing Completion of the Coffman Acquisition.



4



--------------------------------------------------------------------------------

Table of Contents
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




FRONTIER OILFEILD SERVICES, INC.

(Registrant)


July 26, 2012 /s/ Tim Burroughs

(Date) Tim Burroughs

Chief Executive Officer




5

Exhibit 99.1




FRONTIER OILFIELD SERVICES, INC. COMPLETES TRANSACTIONS


Dallas, Texas
25 July 2012

Tim P Burroughs, President and CEO of Frontier Oilfield Services, Inc (OTCQB: FOSI) announced today that the Company has completed the acquisition of Chico Coffman Tank Trucks, Inc (“Coffman”), including its wholly owned subsidiary, Coffman Disposal, LLC, which had audited gross revenue in 2011 of $40,500,000 and net income before interest, taxes, depreciation and amortization of $3,263,000.

The acquisition was facilitated by credit facilities loaned to the Company in the aggregate amount of $14,000,000 provided by Capital ONE Leverage Finance Corp. and ICON Investments.

Coffman is a commercial salt water disposal company with its primary area of operations located within the Northern Barnett Shale oil and gas field located in North Central Texas.

Coffman’s assets are currently valued on its financial statements at $24 million and consist of accounts receivables, rolling stock (85 trucks and trailers) six permitted commercial salt water disposal wells and its headquarters real property located in Chico, Texas.

Coffman’s primary services wells owned and operated by Devon Energy (DVN), XTO Energy (XTO), Pioneer Natural Resources (PXD) and EnCana Corporation (ECA).

Tim P Burroughs, President of Frontier Oilfield Services, Inc, stated, “The acquisition of Coffman allows Frontier to expand its operations across North Central and East Texas and was a next step to our business strategy of geographic expansion over the US mid-continent region.”

ABOUT FRONTIER OILFIELD SERVICES, INC

Frontier Oilfield Services, Inc.’s primary business focus on wastewater recovery and disposal has been selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in recent technology (the process by which shale oil and gas is extracted), exploration & production companies are faced with increasing volumes of, and thus challenges with regard to the disposal of, produced fluids and saltwater. Frontier’s acquisition strategy in this highly fragmented, decentralized and essential sector of the energy services market positions Frontier for potentially rapid expansion and substantial growth in the future.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in “Risk Factors” in the Company’s Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risk factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company’s management team; the ability to successfully implement the Company’s business plan; the ability to continue as a going concern; the ability to fund the Company’s business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company’s common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

(For more information contact Dick O’Donnell , EVP at Frontier Oilfield Services, Inc [phone])

================================

PART 1 — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FRONTIER OILFIELD SERVICES, INC.

(Formerly TBX Resources, Inc.)

CONDENSED BALANCE SHEETS




May 31, 2012
(Unaudited) November 30,
2011

ASSETS
Current Assets:

Cash
$ 4,370 $ 13,871
Oil and gas revenue receivable
1,674 4,057
Advances receivable from affiliates
9,233 —
Prepaid finance fees (Note 9)
140,000 —





Total current assets
155,277 17,928
Property and equipment, net
48,547 996
Investments in unconsolidated affiliated company (Note 5)
4,539,104 3,136,553
Other
6,211 6,211





Total Assets
$ 4,749,139 $ 3,161,688





LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:

Trade accounts payable and accrued expenses
$ 158,723 $ 66,746
Advances payable from affiliate (Note 6)
1,391,698 338,490





Total current liabilities
1,550,421 405,236





Commitments and Contingencies (Note 9)


Stockholders’ Equity:

Preferred stock- $.01 par value; authorized 10,000,000; no shares issued or outstanding
— —
Preferred stock subscriptions
4,625,000 3,000,000
Common stock- $.01 par value; authorized 100,000,000 shares;
9,428,288 shares issued and outstanding at May 31, 2012,
8,853,288 shares issued and outstanding at November 30, 2011
94,282 88,532
Additional paid-in capital
12,048,332 11,558,639
Prepaid stock compensation
(148,750 ) —
Accumulated deficit
(13,420,146 ) (11,890,719 )





Total stockholders’ equity
3,198,718 2,756,452





Total Liabilities and Stockholders’ Equity
$ 4,749,139 $ 3,161,688






The accompanying notes are an integral part of these condensed financial statements.



F-1



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Table of Contents
FRONTIER OILFIELD SERVICES, INC.

(Formerly TBX Resources, Inc.)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)




For the Three Months Ended For the Six Months Ended
May 31, 2012 May 31, 2011 May 31, 2012 May 31, 2011
Revenues:

Oil and gas sales
$ 701 $ 931 $ 2,309 $ 2,421









Total revenues
701 931 2,309 2,421









Expenses:

Lease operating and taxes
177 3,808 1,701 4,180
General and administrative
809,173 19,352 1,305,834 56,126
Depreciation
1,665 — 1,752 —
Loss on forfeiture of oil and gas properties
— — — 16,089
Gain on sale of office equipment
— (2,220 ) — (2,220 )









Total expenses
811,015 20,940 1,309,287 74,175









Operating Loss
(810,314 ) (20,009 ) (1,306,978 ) (71,754 )

Other Expense:

Equity in loss of unconsolidated affiliated company
(71,491 ) — (222,449 ) —









Loss Before Provision for Income Taxes
(881,805 ) (20,009 ) (1,529,427 ) (71,754 )
Provision for income taxes
— — — —









Net Loss
$ (881,805 ) $ (20,009 ) $ (1,529,427 ) $ (71,754 )









Net Loss per Common Share:

Basic and Diluted
$ (0.09 ) $ (0.01 ) $ (0.17 ) $ (0.02 )









Weighted Average Common Shares Outstanding:

Basic and Diluted
9,339,701 4,027,442 9,217,222 4,027,442










The accompanying notes are an integral part of these condensed financial statements.



F-2



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Table of Contents
FRONTIER OILFIELD SERVICES, INC.

(Formerly TBX Resources, Inc.)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)




For the Six Months Ended
May 31, 2012 May 31, 2011
Cash Flows From Operating Activities:

Net loss
$ (1,529,427 ) $ (71,754 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation
1,752 —
Issuance of common stock for services
462,263 —
Equity in loss of unconsolidated affiliated company
222,449 —
Advance to officer
6,500 —
Allocated and direct expenses to affiliates
(115,079 ) 14,076
Loss on forfeiture of oil and gas properties
— 16,089
Gain on sale of office equipment
— (2,220 )
Changes in operating assets and liabilities other than advances from affiliates:

Decrease (increase) in operating assets:

Oil and gas revenue receivable
2,383 1,760
Advances receivable from affiliate
(9,233 ) —
Prepaid finance fees
(140,000 ) —
Inventory
— 8,300
Increase (decrease) in operating liabilities:

Trade accounts payable and accrued expenses
91,977 346
Deferred revenue
— (8,300 )





Net cash used in operating activities
(1,006,415 ) (41,703 )





Cash Flows From Investing Activities:

Purchase of membership units in affiliate
(1,267,000 ) —
Purchase of property and equipment
(49,303 ) —





Net cash used in investing activities
(1,316,303 ) —





Cash Flows From Financing Activities:

Proceeds from preferred stock subscriptions
1,625,000 —
Payments to affiliate (Note 6)
(115,570 ) —
Advances from affiliate
803,787 41,481





Net cash provided by financing activities
2,313,217 41,481





Net decrease in cash
(9,501 ) (222 )
Cash at beginning of period
13,871 665





Cash at end of period
$ 4,370 $ 443





Supplemental Schedule of Non-Cash Investing and Financing Activities:

Purchase of additional interest in unconsolidated affiliated company exchanged for advances payable
$ 358,000 $ —





Direct deposit of receipts from preferred stock subscriptions used to purchase additional interest in unconsolidated affiliated company
$ 147,000 $ —






The accompanying notes are an integral part of these condensed financial statements.



F-3



--------------------------------------------------------------------------------

Table of Contents
FRONTIER OILFIELD SERVICES, INC.

(Formerly TBX Resources, Inc.)

NOTES TO CONDENSED FINANCIAL STATEMENTS

May 31, 2012

(Unaudited)

1. BASIS OF PRESENTATION:



===============================================

Frontier Oilfield Services announces another acquisition

PR Newswire - Jul 10 08:00 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI, ACORN:A.695405566


DALLAS, July 10, 2012 /PRNewswire/ -- Frontier Oilfield Services, Inc (OTCQB: FOSI) announces its intention to acquire Chico Coffman Tank Trucks, Inc ("Coffman"), including its wholly owned subsidiary, Coffman Disposal, LLC for the sum of $17,408,348.00 subject to certain negative and positive adjustments based upon the amount, at the time of closing, of Coffman's indebtedness, seller's expenses and EBITA adjustments.

Coffman is a salt water disposal company with its primary base of operations located in North Texas with its trade and service area being in the Barnett Shale oil and gas field located in North Central Texas.

Coffman had audited 2011 revenues on $40.5 million with an EBITA of $3,263,929. Coffman's assets are currently valued on its financials at $24 million and consist of accounts receivables, rolling stock (trucks and trailers), six permitted disposal wells and the headquarters real property.

Tim P Burroughs, President of Frontier Oilfield Services, stated, "We are pleased that Mr. JD Coffman will remain as President of Coffman Tank Trucks, Inc. under a five year employment agreement and assist us in the implementation of our future acquisition strategy."

ABOUT FRONTIER OILFIELD SERVICES, INC

Frontier Oilfield Services, Inc.'s primary business focus on wastewater recovery and disposal has been selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in recent technology (the process by which shale oil and gas is extracted), exploration & production companies are faced with increasing volumes of, and thus challenges with regard to the disposal of produced fluids and saltwater. Frontier's acquisition strategy in this highly fragmented, decentralized and essential sector of the energy services market, positions Frontier for potentially rapid expansion and substantial growth in the future.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risks factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

(For more information contact Dick O'Donnell, EVP at Frontier Oilfield Services, Inc [phone])

SOURCE Frontier Oilfield Services, Inc.




==============================================

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

The Registrant has entered into two material agreements;

Acquisition of Chico Coffman Tank Trucks, Inc.

On June 29, 2012 Registrant by and through a wholly owned subsidiary, Frontier Acquisition I, Inc., executed a Stock Purchase Agreement whereby, upon closing, it will acquire all of the issued and outstanding stock of Chico Coffman Tank Trucks, Inc. (“Coffman”) inclusive of its wholly owned subsidiary, Coffman Disposal, LLC for the sum of $17,408,348 subject to certain negative and positive adjustments based upon the amount, at the time of closing, of Coffman’s indebtedness, seller’s expenses and EBITDA adjustments.

. Coffman is a salt water disposal company with its primary base of operations located in Chico, Texas with its trade and service area being in the Barnett Shale oil field located in north central Texas.

Coffman had audited 2011 revenues of $40.5 million with an EBITDA of $3,263,929. Coffman’s assets are currently valued on its financials at $24 million and consist of accounts receivable, rolling stock (trucks and trailers), six permitted disposal wells and the headquarters real property. Coffman has short and long term liabilities of approximately $17.6 million.

Upon closing Mr. JD Coffman will remain as President of Coffman Tank Trucks, Inc. and will report directly to Tim Burroughs, President and CEO of Frontier.

The Registrant’s payment of the purchase price and closing is schedule for July 13, 2012.

Dimirak Securities Corporation

We entered into a non-exclusive Finder’s Fee Agreement with Dimirak Securities Corporation, a FINRA licensed broker dealer on June 28, 2012. The Agreement provides that Dimirak, on a best efforts basis, will attempt to obtain for us up to $2,000,000 in debt or equity financing, upon terms approved by us. If Dimirak is successful the agreement provides they will receive a 10% fee on the funding upon closing of the transaction. In addition, if Dimirak is successful, the two principals of Dimirak will each receive 25,000 of our restricted common stock shares.

Copies of the Coffman and Dimirak Agreements are attached to this Form 8-K as Exhibits 10.1 and 10.2 respectively.

Section 5-Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On June 28, 2012 our Board of Director’s approved the employment contract of Charles David York who will serve as President of Trinity Disposal and Trucking, LLC and Director of Field Operations for Frontier Oilfield Services, Inc. Mr. York will receive a base salary of $150,000 and will receive an initial stock grant of 25,000 common shares per quarter for a total of 100,000 common shares. Mr. York will also receive an annual stock grant of 5,000 shares times his years of service to a maximum of 100,000 shares annually. In addition to his salary and stock grants Mr. York will receive annual leave and medical insurance consistent with other employees of the company. Trinity is a wholly owned subsidiary of Frontier Income and Growth LLC a majority owned subsidiary of Frontier. Mr. York’s employment agreement is attached as Exhibit 10.3 and a press release regarding Trinity is attached as Exhibit 99.1 to this Form 8-K

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Stock Purchase Agreement dated June 29, 2012

10.2 Finder’s Fee Agreement dated June 28, 2012 between Registrant and Dimirak Securities Corporation.

10.3 Employment Agreement with Charles David York

99.1 Press Release Trinity Disposal and Trucking, LLC.



================================================

Frontier Oilfield Services, Inc. Completes Key Milestone for
Frontier Oilfield Services, Inc.'s Subsidiary Announces Record Results

PR Newswire - Jul 05 08:00 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI, ACORN:A.695405566


DALLAS, July 5, 2012 /PRNewswire/ -- Frontier Oilfield Services, Inc. (OTCQB: FOSI) announces the record results of Trinity Disposal and Trucking, LLC (TDT), its majority owned subsidiary. Income from operations during the production month of May 2012 reached $1,058,956.00 generating a corresponding EBITDA of $229,391.00.

Frontier acquired majority interest of TDT on June 6, 2012 as a result of a successful $5.5 million financing with Lonestar Income and Growth, LLC of Dallas, Texas. TDT's monthly gross operating revenue for 2012 is currently on a projected annual run rate of $9 million and has an estimated $15 million unaudited value in assets consisting primarily of the value of commercial disposal wells, trucks, customer contracts and its operational office and real property.

Kenneth Conte, Vice President and CFO of Frontier stated, "We are pleased with the results of TDT to date and are currently having updated appraisals completed for inclusion in the consolidated 3rd quarter 10Q. We are anticipating a smooth integration with our anticipated future acquisitions."

ABOUT TRINITY DISPOSAL and TRUCKING, LLC

TDT currently operates 8 permitted commercial disposal wells and 25 disposal tank trucks and trailers in a service area primarily located in East Texas and Northwestern Louisiana. There are approximately 4,000 producing wells within a 15 mile radius of TDT's disposal sites in Marion, Harrison and Panola Counties. Operational headquarters is located in Marshall, Texas and its administrative headquarters are located at FOSI's corporate offices in Dallas, Texas.

ABOUT FRONTIER OILFIELD SERVICES, INC.

Frontier Oilfield Services, Inc.'s primary business focus on wastewater recovery and disposal was selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in fracking technology (the process by which shale oil and gas is extracted) exploration & production companies are faced with increasing volumes of, and thus challenges with regard to the disposal of, fracking fluids and saltwater. Frontier's acquisition strategy in this highly fragmented, decentralized and essential sector of the energy services market, positions Frontier for potentially rapid expansion and substantial growth in the future.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risks factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

For more information contact:
Dick O'Donnell
EVP at Frontier Oilfield Services, Inc.
[phone]

SOURCE Frontier Oilfield Services, Inc.




=================================

Rollup in Saltwater Disposal Business

Marketwire - Jun 07 06:35 EDT

Frontier Engages Investment Banking Firm

Marketwire - Jun 28 15:46 EDT

Alert hits:(/f
Company Symbols: OTC-PINK:FOSI, ACORN:A.695405566


DALLAS, TX -- (Marketwire) -- 06/28/12 -- Frontier Oilfield Services, Inc. (OTCQB: FOSI) (PINKSHEETS: FOSI) announces that we have retained Burnham Securities Incorporated to assist in sourcing capital and to advise us in fulfilling our acquisition strategy and enhancing shareholder value and liquidity.

Frontier president Tim P. Burroughs stated, "We are pleased to engage the corporate finance professionals at Burnham Securities because they provide Frontier with exceptional advice and access to the capital markets in order to fund our growth in the oilfield services sector through our acquisition strategy."

ABOUT FRONTIER OILFIELD SERVICES, INC.

Frontier Oilfield Services, Inc.'s primary business focus on wastewater recovery and disposal was selected due to the recurring nature of the revenues, the relatively high margins and the strong barriers to entry by potential competitors because of the limited supply of state permitted commercial disposal wells. In addition, as a result of breakthroughs in fracking technology (the process by which shale oil and gas is extracted) exploration & production companies are faced with increasing volumes of, and thus challenges with regard to the disposal of, fracking fluids and saltwater. Frontier's acquisition strategy in this highly fragmented, decentralized and essential sector of the energy services market, positions Frontier for potentially rapid expansion and substantial growth in the future.

ABOUT BURNHAM SECURITIES INCORPORATED

Burnham Securities Incorporated is an independent broker-dealer which specializes in retail services, principal distribution of its mutual fund family, and corporate finance. Tracing its roots back to 1935 when legendary financier I.W. Burnham ll, founded Burnham and Company, the firm today continues an 80 year heritage that embraces the values of honesty and commitment and combines them with enterprise and innovation. With decades of experience behind them, Burnham's investment bankers enable clients to focus on running their businesses, providing senior level attention to every assignment while implementing creative and time-tested solutions for today's M&A and capital markets and strategies for enhancing liquidity and/or shareholder value.

FORWARD-LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risks factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

For more information contact
Dick O'Donnell
EVP at Frontier Oilfield Services, Inc.
[phone]




=====================================================
Frontier Oilfield Services, Inc. Completes Key Milestone for Rollup in Saltwater Disposal Business



DALLAS, TX -- (Marketwire) -- 06/07/12 -- Frontier Oilfield Services, Inc. (OTCQB: FOSI) (PINKSHEETS: FOSI) announced today that Lonestar Income and Growth, LLC -- an unrelated third party investor -- has completed the acquisition of Frontier Oilfield Services, Inc 2011 Series "A" 8% Preferred Stock. This completion will supply sufficient capital for Frontier Oilfield Services, Inc. to purchase a majority interest in Frontier Income and Growth, LLC and its wholly owned subsidiary, Trinity Disposal and Trucking, LLC, a saltwater transportation and disposal company in East Texas.

The move is considered pivotal in Frontier Oilfield Services' growth strategy. Trinity Disposal and Trucking, LLC currently operates eight permitted commercial disposal wells and 25 disposal tank trucks in a service area primarily located in East Texas and Northwestern Louisiana. There are approximately 4,000 producing wells within a 15 mile radius of Trinity's disposal sites situated in Marion, Harrison, and Panola Counties. Well proximity is crucial to maintaining efficient margins in the saltwater disposal business. Operational headquarters are located in Marshall, Texas and administrative headquarters will be located at Frontier Oilfield Services' corporate office in Dallas, Texas.

"This transaction completes the initial step of our new business plan, and sets the stage for Frontier Oilfield Services to continue expansion of our acquisition strategy into oilfield services, a key component of the energy sector," stated Tim P. Burroughs, President of Frontier Oilfield Services. "Monthly revenue from Trinity Disposal and Trucking, LLC has Frontier Income and Growth, LLC on a projected annual run rate of approximately $9,000,000 for 2012, with an estimated $15,000,000 unaudited value in assets. This is fantastic progress for our management team and shareholders."

Assets for Frontier Income and Growth, LLC consist primarily of Trinity Disposal and Trucking's commercial disposal wells, trucks, customer contracts, operations offices, and real property. Frontier Oilfield Services, Inc. will now purchase a majority interest of Frontier Income and Growth, LLC, which immediately enhances shareholder value for Frontier Oilfield Services, Inc. (OTCQB: FOSI).

FORWARD LOOKING STATEMENTS
Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" in the Company's Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risks factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company's management team; the ability to successfully implement the Company's business plan; the ability to continue as a going concern; the ability to fund the Company's business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company's common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

For more information contact
Dick O'Donnell
EVP at Frontier Oilfield Services, Inc
[phone])


Source: Frontier Oilfield Services, Inc.




==========================================

(For more information contact Dick O’Donnell, EVP at Frontier Oilfield Services, Inc [phone])


Section 3 — Securities and Trading Markets

Item 3.02 Unregistered Sales of Equity Securities.

On September 2, 2011 Frontier Oilfield Services, Inc. (“FOSI”), under its former name, TBX Resources, Inc. entered into an Investment Agreement with LoneStar Income and Growth, LLC, a Texas limited liability company, an unrelated third party. The Investment Agreement provided that LoneStar would acquire up to 2,750,000 shares of TBX’s 2011 Series A 8% Preferred Stock (the “Stock”) for the sum of $5,500,000 contingent upon TBX using the proceeds of the Stock to acquire a majority 51% membership interest in Frontier Income and Growth, LLC (“Frontier”), a salt water transportation and disposal company. Effective June 4, 2012, LoneStar has completed the purchase of $5,000,000 of the Stock and FOSI has completed the acquisition of 51% of Frontier. We intend to file pro forma financials showing the financial effect of the acquisition in an amended 8-K filing within 60days from the date hereof.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits




99.1 Press Release Issued By FOSI Disclosing Acquisition of 51% Interest in Frontier Income and Growth, LLC.



--------------------------------------------------------------------------------

Table of Contents
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




FRONTIER OILFIELD SERVICES, INC.

(Registrant)


June 6, 2012 /s/ Tim Burroughs
(Date) Tim Burroughs
Chief Executive Officer

Exhibit 99.1

6 June 2012 Dallas, Texas

Tim P. Burroughs, President of Frontier Oilfield Services, Inc. (FOSI) announced, effective today, that LoneStar Income and Growth, LLC, a Texas Limited Liability company (LoneStar), an unrelated third party investor, has completed its acquisition of FOSI’s 2011 Series “A” 8% Preferred Stock which will supply sufficient capital for FOSI to purchase a majority (51%) interest in Frontier Income and Growth, LLC, (Frontier), and its wholly owned subsidiary, Trinity Disposal and Trucking, LLC , a saltwater transportation and disposal company in East Texas.

Frontier currently operates 8 permitted commercial disposal wells and 25 disposal tank trucks in a service area primarily located in East Texas and Northwestern Louisiana. There are approximately 4,000 producing wells within a 15 mile radius of Frontier’s disposal sites situated in Marion, Harrison and Panola Counties. Operational headquarters is located in Marshall, Texas and its administrative headquarters will be located at FOSI’s corporate offices in Dallas, Texas.

Frontier’s monthly gross operating revenue for 2012 is currently on a projected annual run rate of $ 9 million and has an estimated $15,000,000 unaudited value in assets consisting primarily of the value of commercial disposal wells, trucks, customer contracts and its operations office and real property.

Mr. Burroughs stated that “this transaction completes the initial step of our new business plan and sets the stage for Frontier Oilfield Services to continue to expand our acquisition strategy into oilfield services for the energy sector”.

FORWARD LOOKING STATEMENTS

Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those discussed in “Risk Factors” in the Company’s Forms 10-K, Forms 10-Q, and other filings with the Securities and Exchange Commission. Such risks factors include, but are not limited to, a limited operating history with no earnings; reliance on the Company’s management team; the ability to successfully implement the Company’s business plan; the ability to continue as a going concern; the ability to fund the Company’s business and acquisition strategy; difficulty in managing operations of acquired businesses; and limited trading in the public market for the Company’s common stock. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

(For more information contact Dick O’Donnell, EVP at Frontier Oilfield Services, Inc [phone])

[10 bagger]

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[Traderfan]

I only see 400k in volume, where do you see 2.9 million?


great day volume interest for ACGX, but strange to see ,despite 2,9M vol[/b9

[10 bagger]

Amazing reply to my e-mail:
Original message: "great day volume interest for ACGX, but strange to see ,despite 2,9M vol., we risked to close unch.
Lot of posters (old stockholders from previous R/S) continuate to insinuate no trusting , diluition only matter of time, beware and bla...bla...


Hello
During the last 5 years everyone has had a different experience with our company depending on when they bought or sold and what their trading style is or was. We have to remember the stock has only been reversed 1 time in the last 5 years and we survived the recession and a very difficult time for the market and for small businesses - 2008 to 2011 was especially a challenging time for all of us.

People seem to forget I took over as CEO in June of 2008 when the company was doing horrible. They had very low revenues, big losses and a lot of debt. I cut just about everything and everyone, closed offices and starting building a foundation to build off of. I built it up from around $100,000 in revenue and a loss to about $10,000,000 in revenue with solid profits of about $800,000 in net income in only a few years and Now is our CEO as of Dec 21, 2011 and I am the General Counsel.

Now in order to build the company I had to make a lot of very hard decisions and be very aggressive. I entered into some joint ventures that started off strong and eventually had to be dissolved because of a change in their management. We also had some friends and family invest using the 1 year hold convertible note method to avoid any direct funding from issuing shares and cause big dilution quickly by using the 504 or Reg A to sell shares directly for cash causing an instant dilution. Although it helped to delay dilution for over a year eventually some of the investors wanted to get some of their money back. Unfortunately the stock was trading so low that when they started to convert their notes, the dilution went up, and the price went down and the MM’s crushed us and shorted us and naked shorted us into we were cellar boxed in at .0001. This hurt me, the company, the investors and the shareholders - no one wanted this to happen and we tried to fight it the entire time but eventually had no other options.

After being stuck at .0001 for a long time with no real options left we reluctantly did a reverse split to help get us to a better trading area away from the naked short sellers. This was done in November of 2010 (About 18 months ago). So we have done 1 reverse total in the last 5 years. since then DTC has been difficult and will not allow electronic deposits so some brokers will not let people buy and sell via certificate form so it has probably scared away some traders. However, we haven’t issued a single share in about 8 months and now have a very stable and profitable company with a very low float.

I hope people will look beyond the stereotypes of what they think happened and look at the facts and the documented transactions and realize the company and myself personally lost as much or more money than anyone by being public vs. private and we have still tried to do everything we could and can to put us in a better situation despite the naked shorters, the DTC and the paid bashers.

I think we have done a great job controlling the dilution, increasing the revenues and profits and by sharing more information with the public to help people make better informed decisions. The reverse was 18 months ago and the company currently has only 8.4 mil shares in the float with over $9 mil in revenue and almost $800k in net income. There is zero reason for anyone to even think about a reverse since it is not something a company wants to do and wouldn't make any sense to do at this point. We all have the same common goal and the better the company does and the stock does the better the chance we can all make more money in the future.

The crazy thing is if everyone who lost money and is bashing me or the company ALL got together and bought a ton of stock tomorrow to average down their investment the stock would probably go to 10 or 20 cents and they could probably make a lot of their money back. I am not in any way saying that will happen or recommending anyone do that but I'm just saying when people and companies go through difficult times we are all stronger when working together to accomplish the same common goal of helping people make some of their money back.

Everyone needs to do their own research, their own DD, form their own opinions and make their own decisions but I hope things continue in the right direction.

Also keep in mind I have offered to listen to every basher by asking them to email me directly and go over any suggestions or ideas to make things better and only 1 or 2 bashers have ever emailed me directly in the past few years so that tells me they are not real bashers with real concerns that are looking for real solutions but rather just paid bashers trying to help the shorters and whoever is paying them.

Thank You,

[10 bagger]

TOOT..

Item 1.01 Entry into a Material Definitive Agreement.
Item 3.02 Unregistered Sales of Equity Securities.


Securities Purchase Agreement between the Company and TCA Global Credit Master Fund, LP, executed April 6, 2012

Tootie Pie Company, Inc. (the "Company") executed a securities purchase agreement with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), on April 6, 2012, whereby TCA committed to purchase up to $1,000,000 of senior secured redeemable debentures of the Company (the “Agreement”). The Agreement provides for the purchase and sale of debentures and extension of the total loan amount in separate closings. TCA funded an amount of $350,000 for the first closing, and TCA will fund up to an additional $650,000 at a later date or dates, subject to certain terms and conditions. The loan is secured by all of the assets and properties of the Company pursuant to a security agreement executed April 6, 2012 (the “Security Agreement”). The net proceeds available to the Company, after deducting the transaction advisory fee payable by the Company to TCA and other associated closing costs and expenses, will be approximately $323,650.


On April 6, 2012, the Company issued a $350,000 senior secured redeemable debenture to TCA (the “Debenture”). The Debenture is due and payable on April 9, 2013 (the “Maturity Date”), together with interest on the outstanding principal balance of the Debenture at a rate of 11% per annum. The Debenture may be prepaid by the Company at any time prior to the Maturity Date with three business days advance written notice to TCA. On or before the Maturity Date, when the Company redeems the Debenture, the Company will be required to pay a redemption premium equal to the then outstanding principal amount due under the Debenture multiplied by four percent (4%), in addition to the principal amount being redeemed, all accrued interest as of the redemption date, and all costs, fees, and charges due and payable. Upon the occurrence of an event of default under the Debenture, the interest rate on the Debenture shall increase and immediately accrue at the maximum interest rate permitted by applicable law, and TCA would be entitled, in its sole direction, to acceleration of full repayment of the debt plus all accrued interest and redemption premiums due under the Debenture.


The Company has agreed to make monthly payments of principal ($29,166.67), interest, and the corresponding amount of redemption premium ($1,750.00) to TCA, beginning on May 1, 2012. The Debenture is secured by all of the assets and properties of the Company pursuant to the Security Agreement.


The Company agreed to pay a transaction advisory fee to TCA equal to three percent (3%) of the amount of the Debenture purchased by TCA at the first closing, or approximately $10,500. The Company also agreed to reimburse TCA for due diligence fees and legal fees, for an aggregate of $20,000.


The Company intends to use the funds from the Debenture for general working capital purposes.


The Company may request that TCA purchase additional debentures under the Agreement at any time prior to the Maturity Date of the Debenture. In the event of any additional closings, the Company shall pay to TCA a transaction advisory fee equal to two percent (2%) of the amount of the debentures purchased by TCA at any such additional closings, which fee shall be due and payable upon such additional closing and withheld from the gross purchase price paid by TCA for the debentures at such additional closing.


Common Stock Issuance pursuant to the Securities Purchase Agreement between the Company and TCA Global Credit Master Fund, LP, executed April 6, 2012


In connection with the sale of the Debenture and as both inducement for their purchase by TCA and compensation for corporate advisory and investment banking services provided by TCA to the Company prior to April 6, 2012, the Company shall issue to TCA shares of its common stock valued at $60,000 (the “Shares”).


It is the intention of the Company and TCA that the value of the Shares shall equal $60,000. In the event the value of the Shares issued to TCA does not equal $60,000 after a nine month evaluation date, the Agreement provides for an adjustment provision allowing for necessary action (either the issuance of additional shares to TCA or the return of shares previously issued to TCA to the Company) to adjust the number of Shares issued.




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With respect to the sale of its common stock described above, the Company is relying on the Section 4(2) exemption from securities registration under the federal securities laws for transactions not involving any public offering. No advertising or general solicitation was employed in offering the Shares. The Shares were sold to an accredited investor. The Shares were offered for investment purposes only and not for the purpose of resale or distribution, and the transfer thereof was appropriately restricted by the Company.


Subordination Agreement between the Company, TCA Global Credit Master Fund, LP, and the Company’s Chief Executive Officer, Don L. Merrill, Jr., executed April 6, 2012

The Company, TCA, and the Company’s Chief Executive Officer, Don L. Merrill, Jr. executed a subordination agreement on April 6, 2012 (the “Subordination Agreement”) in favor of the holder of the Debenture. As of the date of the Subordination Agreement, there was currently no outstanding debt due by the Company to Mr. Merrill. The parties agreed that no indebtedness shall be incurred between the Company and Mr. Merrill while the Debenture, or any of the additional debentures which may be issued, are outstanding.


The foregoing description of each of the Agreement, the Security Agreement, the Debenture, and the Subordination Agreement does not purport to be a complete statement of the parties’ rights and obligations under, or a complete explanation of the material terms of, the agreements related to the Agreement, the Security Agreement, the Debenture, and the Subordination Agreement and is qualified in its entirety by reference to the provisions contained in the full text of the documents, respectively, which are filed as Exhibits 10.1, 10.2, 4.1, and 4.2 to this Current Report of Form 8-K and incorporated herein by reference.


This report contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. The Company’s actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in the Company’s annual report on Form 10-K and other reports the Company files with the Securities and Exchange Commission. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. The Company does not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in its expectations, except as required by law. The Company undertakes no obligation to release publicly the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.


Item 9.01 Financial Statements and Exhibits.



Exhibit No. Description

4.1 Senior Secured Redeemable Debenture issued by the Company to TCA Global Credit Master Fund, LP, executed April 6, 2012

4.2 Subordination of Loans Agreement by and among the Company, Don L. Merrill, Jr., and TCA Global Credit Master Fund, LP, executed April 6, 2012

10.1 Securities Purchase Agreement by and between the Company and TCA Global Credit Master Fund, LP, executed April 6, 2012

10.2 Security Agreement by and between the Company and TCA Global Credit Master Fund, LP, executed April 6, 2012





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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


TOOTIE PIE COMPANY, INC.



Date: April 12, 2012 By: /s/ Don L. Merrill, Jr.
Don L. Merrill, Jr.
Chief Executive Officer



Exhibit 4.1


Senior Secured Redeemable Debenture

Original Issue Date as of: March 30, 2012

Maturity Date: April 9, 2013

Amount: $350,000.00


This Senior Secured Redeemable Debenture (the “Debenture”) is issued as of March 30, 2012 (the “Closing Date”) by Tootie Pie Company, Inc., a Nevada corporation (the “Company”), to TCA Global Credit Master Fund LP, a Cayman Islands limited partnership (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.

ARTICLE I.

Section 1.01 Principal and Interest. For value received, the Company hereby promises to pay to the order of the Holder, by no later than April 9, 2013 (the “Maturity Date”), in immediately available and lawful money of the United States of America, Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00), together with interest on the outstanding principal amount under this Debenture, at the rate of eleven percent (11%) per annum simple interest (the “Interest Rate”) from the date the proceeds hereof are initially funded until paid, as more specifically provided below.

Section 1.02 Optional Redemption. The Company, at its option, shall have the right to redeem this Debenture in full and for cash, at any time prior to the Maturity Date, with three (3) business days advance written notice (the “Redemption Notice”) to the Holder. The amount required to redeem this Debenture in full pursuant to this Section 1.02 shall be equal to: (i) the aggregate principal amount then outstanding under this Debenture; plus (ii) all accrued and unpaid interest due under this Debenture as of the redemption date; plus (iii) all other costs, fees and charges due and payable hereunder or under any other “Transaction Documents” (as hereinafter defined); plus (iv) a redemption premium equal to the then outstanding principal amount due under this Debenture multiplied by four percent (4%) (collectively, the “Redemption Amount”). The Company shall deliver the Redemption Amount to the Holder on the third (3rd) business day after the date of the Redemption Notice.

Section 1.03 Mandatory Redemption. On or before the Maturity Date, the Company shall redeem this Debenture for the Redemption Amount, which Redemption Amount shall be due and payable to the Holder by no later than 2:00 P.M., EST, on the Maturity Date.


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Section 1.04 Payments.

(1) Monthly Payments. The Company shall make monthly payments of principal, interest and the corresponding amount of redemption premium to the Holder, commencing on the first (1st) day of May, 2012, and on the first (1st) day of each consecutive calendar month thereafter while this Debenture is outstanding, until the Maturity Date, based on the payment, amortization and redemption premium schedule attached hereto as Exhibit “A”.

(2) Interest Calculations. Interest shall be calculated on the basis of a 360-day year, and shall accrue daily on the outstanding principal amount outstanding from time to time for the actual number of days elapsed, commencing on the Closing Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.

(3) Late Fee. If all or any portion of the payments of principal, interest or other charges due hereunder are not received by the Holder within five (5) days of the date such payment is due, then the Company shall pay to the Holder a late charge (in addition to any other remedies that Holder may have) equal to five percent (5%) of each such unpaid payment or sum. Any payments returned to Holder for any reason must be covered by wire transfer of immediately available funds to an account designated by Holder, plus a $100.00 administrative fee charge. Holder shall have no responsibility or liability for payments purportedly made hereunder but not actually received by Holder; and the Company shall not be discharged from the obligation to make such payments due to loss of same in the mails or due to any other excuse or justification ultimately involving facts where such payments were not actually received by Holder.

Section 1.05 Manner of Payments. All sums payable to the order of Holder hereunder shall be payable by wire transfer of lawful dollars of the United States of America to the wire instructions set forth below, or at such place as Holder, from time to time, may designate in writing. Wire Instructions for all sums due and payable hereunder are as follows:

ARTICLE II.

Section 2.01 Secured Nature of Debenture. This Debenture is being issued in connection with a Securities Purchase Agreement dated of even date herewith by and between the Company and the Holder (the “SPA”). The indebtedness evidenced by this Debenture is also secured by all of the assets and property of the Company pursuant to that certain Security Agreement by and between the Company and Holder made of even date herewith (the “Security Agreement”). The SPA, this Debenture, the Security Agreement, and all other documents and instruments heretofore or hereafter executed or filed in connection with the SPA or the indebtedness evidenced by this Debenture, and all modifications, extensions, future advances, and renewals thereof, and any substitutions therefor, being herein collectively referred as the “Transaction Documents.” All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in any of the Transaction Documents which are to be kept and performed by the Company are hereby made a part of this Debenture to the same extent and with the same force and effect as if they were fully set forth herein, and the Company covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.


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ARTICLE III.

Section 3.01 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” hereunder: (i) the Company shall fail to pay any installment of interest, principal or other charges due under this Debenture when any such payment shall be due and payable; (ii) the Company makes an assignment for the benefit of creditors; (iii) any order or decree is rendered by a court which appoints or requires the appointment of a receiver, liquidator or trustee for the Company, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iv) any order or decree is rendered by a court adjudicating the Company insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (v) the Company files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency act; (vi) the Company admits, in writing, its inability to pay its debts as they become due; (vii) a proceeding or petition in bankruptcy is filed against the Company and such proceeding or petition is not dismissed within thirty (30) days from the date it is filed; (viii) the Company files a petition or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any other foreign country or state; or (ix) the Company shall fail to perform, comply with or abide by any of the stipulations, agreements, conditions and/or covenants contained in this Debenture or any of the other Transaction Documents on the part of the Company to be performed complied with or abided by, and such failure continues or remains uncured for ten (10) days following written notice from the Holder to the Company.

Section 3.02 Remedies. Upon the occurrence of an Event of Default that is not timely cured within an applicable cure period hereunder, the interest on this Debenture shall immediately accrue at an Interest Rate equal to the maximum rate permitted by applicable law, and, in addition to all other rights or remedies the Holder may have, at law or in equity, the Holder may, in its sole discretion, accelerate full repayment of all principal amounts outstanding hereunder, together with accrued interest thereon, together with all redemption premiums due hereunder, together with all attorneys’ fees, paralegals’ fees and costs and expenses incurred by the Holder in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due by the Company hereunder and under the Transaction Documents, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity, or under this Debenture or any of the other Transaction Documents. In connection with the Holder’s rights hereunder upon an Event of Default, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it in equity or under applicable law.

ARTICLE IV.

Section 4.01 Usury Savings Clause. Notwithstanding any provision in this Debenture or the other Transaction Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Debenture or any other applicable law. In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Debenture, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance due hereunder immediately upon receipt of such sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect, by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest, rather than accept such sums as a prepayment of the principal balance then outstanding. It is the intention of the parties that the Company does not intend or expect to pay, nor does the Holder intend or expect to charge or collect any interest under this Debenture greater than the highest non-usurious rate of interest which may be charged under applicable law.

ARTICLE V.

Section 5.01 No Exemption. The Company hereby waives and releases all benefit that might accrue to the Company by virtue of any present or future laws exempting any property that may serve as security for this Debenture, or any other property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy, or sale under execution, exemption from civil process, or extension of time for payment; and the Company agrees that any property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued thereon, may be sold upon any such writ in whole or in part in any order or manner desired by Holder.

Section 5.02 Exercise of Remedies. The remedies of the Holder as provided herein and in any of the other Transaction Documents shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

Section 5.03 Waivers. The Company and all others who are, or may become liable for the payment hereof: (i) severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest of this Debenture or any other Transaction Documents, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Debenture and the other Transaction Documents, except as specifically provided in this Debenture or any other Transaction Document; (ii) expressly consent to all extensions of time, renewals or postponements of time of payment of this Debenture and any other Transaction Documents from time to time prior to or after the maturity of this Debenture without notice, consent or further consideration to any of the foregoing; (iii) expressly agree that the Holder shall not be required first to institute any suit, or to exhaust its remedies against the Company or any other person or party to become liable hereunder or against any collateral that may secure this Debenture in order to enforce the payment of this Debenture; and (iv) expressly agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by the Holder of any such person), the undersigned shall be and remain, directly and primarily liable for all sums due under this Debenture.


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Section 5.04 No Waiver. Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by Holder, and then only to the extent specifically set forth in the writing. A waiver on one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

ARTICLE VI.

Section 6.01 Notice. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Debenture must be in writing and in each case properly addressed to the party to receive the same in accordance with the information below, and will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Debenture may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party. The addresses and facsimile numbers for such communications shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof.

If to the Company: Tootie Pie Company, Inc.
129 Industrial Drive
Boerne, TX 78006
Attn: Mr. Don Merrill, Jr., CEO

With a copy to: David P. Strolle, Jr., Esq.
Law Offices of David P. Strolle, Jr.
8000 I.H. 10 West, Suite 600
San Antonio, Texas 78230

If to the Holder: TCA Global Credit Master Fund, LP
1404 Rodman Street
Hollywood, FL 33020
Attn: Mr. Robert Press

With a copy to: David Kahan, P.A.
6420 Congress Ave., Suite 1800
Boca Raton, FL 33487
Attn: David Kahan, Esq.


Section 6.02 Governing Law. This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of Nevada without giving effect to the principals of conflict of laws thereof. Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of Nevada or the state courts of the State of Nevada sitting in Clark County, Nevada in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions, provided, however, nothing contained herein shall limit the Holder’s ability to bring suit or enforce this Debenture or any other Transaction Documents in any other jurisdiction.


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Section 6.03 Severability. In the event any one or more of the provisions of this Debenture shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Debenture operates or would prospectively operate to invalidate this Debenture, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Debenture. The remaining provisions of this Debenture shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.

Section 6.04 Entire Agreement and Amendments. This Debenture, together with the other Transaction Documents, represents the entire agreement between the parties hereto with respect to the subject matter hereof and thereof, and there are no representations, warranties or commitments, except as set forth herein and therein. This Debenture may be amended only by an instrument in writing executed by the parties hereto.

Section 6.05 Binding Effect. This Debenture shall be binding upon the Company and the successors and assigns of the Company and shall inure to the benefit of the Holder and the successors and assigns of the Holder.

Section 6.06 Assignment. The Holder may from time to time sell or assign, in whole or in part, or grant participations in, this Debenture and/or the obligations evidenced hereby without the consent of the Company, provided that the Holder shall give written notice of the assignment to the Company. The holder of any such sale, assignment or participation, if the applicable agreement between Holder and such holder so provides, shall be: (i) entitled to all of the rights, obligations and benefits of Holder (to the extent of such holder’s interest or participation); and (ii) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to the Company (to the extent of such holder’s interest or participation), in each case as fully as though the Company was directly indebted to such holder. Holder may in its discretion give notice to the Company of such sale, assignment or participation; however, the failure to give such notice shall not affect any of Holder’s or such holder’s rights hereunder.

Section 6.07 Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.

Section 6.08 Waiver of Jury Trail. THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS DEBENTURE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY HERETO, AND THE COMPANY AGREES AND CONSENTS TO THE GRANTING TO HOLDER OF RELIEF FROM ANY STAY ORDER WHICH MIGHT BE ENTERED BY ANY COURT AGAINST HOLDER AND TO ASSIST HOLDER IN OBTAINING SUCH RELIEF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER ACCEPTING THIS DEBENTURE FROM THE COMPANY. THE COMPANY’S REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.

Section 6.09 Non-U.S. Status. THE HOLDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAW.







[Signatures on the following page]


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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company as executed this Debenture as of the date first written above.

TOOTIE PIE COMPANY, INC.

By: /s/ Don L. Merrill, Jr.
Name: Don L. Merrill, Jr.
Title: President and Chief Executive Officer









Signature page – Debenture


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Exhibit “A”


Schedule of Payments


Payment No. Interest Payment Prin. Payment Redemption prem. % Prem. Payable Total Payable Balance Outstanding Principal & Interest
(350,000.00 ) 350,000.00
5/1/2012 1 3,208.33 29,166.67 6 % 1,750.00 34,125.00 320,833.33 32,375.00
6/1/2012 2 2,940.97 29,166.67 6 % 1,750.00 33,857.64 291,666.67 32,107.64
7/1/2012 3 2,673.61 29,166.67 6 % 1,750.00 33,590.28 262,500.00 31,840.28
8/1/2012 4 2,406.25 29,166.67 6 % 1,750.00 33,322.92 233,333.33 31,572.92
9/1/2012 5 2,138.89 29,166.67 6 % 1,750.00 33,055.56 204,166.67 31,305.56
10/1/2012 6 1,871.53 29,166.67 6 % 1,750.00 32,788.19 175,000.00 31,038.19
11/1/2012 7 1,604.17 29,166.67 6 % 1,750.00 32,520.83 145,833.33 30,770.83
12/1/2012 8 1,336.81 29,166.67 6 % 1,750.00 32,253.47 116,666.67 30,503.47
1/1/2013 9 1,069.44 29,166.67 6 % 1,750.00 31,986.11 87,500.00 30,236.11
2/1/2013 10 802.08 29,166.67 6 % 1,750.00 31,718.75 58,333.33 29,968.75
3/1/2013 11 534.72 29,166.67 6 % 1,750.00 31,451.39 29,166.67 29,701.39
4/1/2013 12 267.36 29,166.67 6 % 1,750.00 31,184.03 (0.00 ) 29,434.03





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Exhibit 4.2



SUBORDINATION OF LOANS AGREEMENT


THIS SUBORDINATION AGREEMENT (the “Agreement”) is executed effective as of the 30th day of March, 2012, by, between and among DON L. MERRILL, JR. (the “Loan Holder”), TCA GLOBAL CREDIT MASTER FUND, LP (“TCA”) and TOOTIE PIE COMPANY, INC., a Nevada corporation (“TOOT”).


W I T N E S S E T H:


WHEREAS, TOOT has borrowed, or may in the future borrow, funds from Loan Holder, for which TOOT is or may become indebted to and in favor of Loan Holder (all present or future indebtedness of TOOT to Loan Holder, of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended and whether now in existence or hereafter arising, hereinafter collectively referred to as the “Subordinated Debt”); and


WHEREAS, the TCA has or will be purchasing debentures from TOOT of up to One Million and No/100 Dollars ($1,000,000.00) (the “Debentures”), pursuant to that certain Securities Purchase Agreement dated of even date herewith by and between TCA and TOOT (the “SPA”), which SPA and related Transaction Documents provide to TCA a first priority security interest (“TCA’s Security Interest”) in the Collateral of TOOT (throughout this Agreement, the term “Collateral” shall mean and be defined as such term is defined in the Security Agreement entered into between TCA and TOOT, as part of the SPA). Capitalized terms used in this Agreement and not otherwise defined herein, shall have the same meanings ascribed to such terms in the SPA; and


WHEREAS, Loan Holder is a shareholder, director, officer or otherwise associated with TOOT, and will materially benefit as a result of the TCA purchasing the Debentures from TOOT; and


WHEREAS, Loan Holder acknowledges that the TCA is willing to purchase the Debentures only on the condition that the Subordinated Debt be subordinate and inferior to the obligations under the SPA, the Debentures and the other Transaction Documents, and to all other indebtedness of TOOT to TCA, whether now in existence or hereafter created; and


WHEREAS, Loan Holder has agreed to subordinate the Subordinated Debt to the lien and effect of the SPA, the Debentures and the other Transaction Documents, and TCA’s Security Interest and all security instruments securing the Debentures, and all other indebtedness of TOOT to TCA of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended, whether now in existence or hereafter arising; and

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WHEREAS, Loan Holder acknowledges that TCA would not effectuate the purchase of the Debentures without the execution of this Agreement by Loan Holder.


NOW, THEREFORE, in consideration of, and as an inducement to TCA to purchase the Debentures, Loan Holder, TCA and TOOT do hereby agree as follows:


1. Recitals. The recitals set forth above are true and correct and are incorporated herein by reference.


2. No Further Indebtedness. Loan Holder and TOOT do hereby warrant and represent that as of the date hereof, the only Subordinated Debt currently outstanding which is due and owing from TOOT to Loan Holder is $0.00, and that no further indebtedness shall be incurred between TOOT and Loan Holder while any of the Debentures remain outstanding.


3. Subordination. Loan Holder does hereby unconditionally subordinate the Subordinated Debt to the debts and obligations evidenced by the SPA, the Debentures and all other Transaction Documents, and all other present and future debts and obligations of TOOT to TCA, said indebtedness including all obligations of TOOT to TCA of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended, whether now in existence or hereafter arising and to the lien and effect of TCA’s Security Interest in and to the Collateral and to all Transaction Documents and all other debts and obligations of TOOT to TCA.


4. No Payments on Subordinated Debt; Event of Default. Loan Holder and TOOT do hereby warrant, represent and agree that no payment (principal, interest or any other payment) shall be made, permitted or accepted under or with respect to any of the Subordinated Debt (or under any other document or agreement) while any Debentures remain outstanding. If any payment is made by TOOT in payment of the Subordinated Debt, or if any security or proceeds thereof is received by Loan Holder on account of the Subordinated Debt contrary to the terms of this Agreement, the same shall be and constitute an Event of Default under the SPA and the other Transaction Documents. Upon the occurrence of an Event of Default under the SPA or any other Transaction Documents, TCA shall be entitled to immediately exercise all remedies provided to TCA in connection with the Collateral and under the Transaction Documents, and each and every amount paid by or on behalf of TOOT to Loan Holder, or any payments, security, proceeds or other items received by Loan Holder (from TOOT, its subsidiaries, or from an individual or an entity on behalf of TOOT or its subsidiaries) will be forthwith paid by Loan Holder to TCA, in precisely the form received (except for Loan Holder’s endorsement, where necessary), to be credited and applied, in TCA’s sole discretion, upon any indebtedness (principal and/or interest and/or otherwise as TCA may elect, in its sole discretion) then owing to TCA by TOOT and, whether matured or unmatured, and, until so delivered, the same shall be held in trust by Loan Holder as the property of TCA. In the event of a failure of Loan Holder to endorse any instrument for the payment of monies so received by Loan Holder payable to Loan Holder’s order, TCA, or any officer or employee of TCA, is hereby irrevocably constituted and appointed attorney-in-fact (coupled with an interest) for Loan Holder, with full power to make any such endorsement and with full power of substitution.


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5. No Enforcement By Loan Holder. Loan Holder will not exercise any collection rights with respect to the Subordinated Debt, will not take possession of, sell or dispose of, or otherwise deal with any Collateral, and will not exercise or enforce any right or remedy which may be available to them with respect to the Subordinated Debt, unless and until such time as the obligations evidenced by the SPA and the debentures and other Transaction Documents, as the same may be modified from time to time, including all principal, interest and other charges associated therewith, has been paid in full and no other debts or obligations are due and owing from TOOT to TCA. Loan Holder shall immediately notify TCA, in writing, of any default by TOOT under any Subordinated Debt, and any default under or with respect to any Subordinated Debt shall be and constitute a default under the SPA and other Transaction Documents, entitling TCA to exercise all of its rights in connection with the Collateral and under the Transaction Documents.


6. No Impairment of TCA Remedies. TCA may exercise collection rights, may take possession of, sell or dispose of, and otherwise deal with, the Collateral and may exercise or enforce any right or remedy available to TCA under the Transaction Documents with respect to the Collateral, whether available prior to or after the occurrence of any default in connection with the Subordinated Debt.


7. Additional Security. In order to effectuate the foregoing subordination, Loan Holder does hereby transfer and assign to TCA, as additional collateral and security for the obligations evidenced by the SPA and the other Transaction Documents, any and all debts and obligations of TOOT to Loan Holder, all of the said claims or demands of Loan Holder against TOOT, with full right on the part of TCA, in its own name or in the name of Loan Holder, to collect and enforce said claims by suit, proof of debt in bankruptcy, or other liquidation proceedings or otherwise.


8. Payments Upon Bankruptcy Events. Upon any distribution of the assets or readjustment of indebtedness of the TOOT, whether by reason of reorganization, liquidation, dissolution, bankruptcy, receivership, assignment for the benefit of creditors, or any other action or proceeding involving the readjustment of all or any part of the Subordinated Debt or the application of the assets of the TOOT to the payment or liquidation thereof, either in whole or in part, TCA shall be entitled to receive payment in full of any and all indebtedness under the SPA and the other Transaction Documents or otherwise then owing to TCA by TOOT prior to the payment of all or any of the Subordinated Debt.


9. Restrictions on Transferability of Subordinated Debt. Loan Holder agrees that he shall not transfer, assign, encumber, hypothecate or subordinate, at any time while this Agreement remains in effect, any right, claim or interest of any kind in or to any of the Subordinated Debt, either principal or interest or otherwise, and there shall promptly be placed on each promissory note or other document or agreement constituting a portion of the Subordinated Debt, a legend reciting that the same is subject to this Agreement.

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10. TCA’s Rights. Loan Holder acknowledges that TCA may, at any time, in its discretion, renew or extend the time of payment of all or any portion of the obligations evidenced by the SPA and other Transaction Documents, or any other existing or future indebtedness or obligations of TOOT to TCA and/or waive or delay in enforcing any rights or release any collateral relative thereto at any time(s) and, in reference thereto, to modify or amend the Transaction Documents and/or make and enter into such agreement(s), compromise(s) and other indulgence(s), as TCA may deem proper or desirable, without notice to or further assent of Loan Holder, all without in any manner impairing or affecting this Agreement or any of TCA’s rights hereunder.


11. Statement of Account. Loan Holder hereby agrees that he will provide and deliver to TCA, upon demand, from time to time, a statement of the account of Loan Holder with TOOT, and that TOOT will duly comply with and conform with each and every term of this Agreement, on its part required to be performed.


12. Entire Agreement. This Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against TOOT and Loan Holder in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions of Loan Holder, TOOT and TCA. No promises, either expressed or implied, exist between Loan Holder, TOOT and TCA, unless contained herein or therein. This Agreement, together with the other Transaction Documents, supersedes all negotiations, representations, warranties, commitments, term sheets, discussions, negotiations, offers or contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof with respect to any matter, directly or indirectly related to the terms of this Agreement and the other Transaction Documents. This Agreement and the other Transaction Documents are the result of negotiations between Loan Holder, TOOT and TCA and have been reviewed (or have had the opportunity to be reviewed) by counsel to all such parties, and are the products of all parties. Accordingly, this Agreement and the other Transaction Documents shall not be construed more strictly against TCA merely because of TCA’s involvement in their preparation.


13. Amendments; Waivers. No delay on the part of TCA in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by TCA of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Transaction Documents shall in any event be effective unless the same shall be in writing and acknowledged by TCA, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.


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14. WAIVER OF DEFENSES. LOAN HOLDER AND TOOT, AND EACH OF THEM, WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH EITHER OF THEM MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY TCA IN ENFORCING THIS AGREEMENT. PROVIDED TCA ACTS IN GOOD FAITH, LOAN HOLDER AND TOOT EACH RATIFIES AND CONFIRMS WHATEVER TCA MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR TCA GRANTING ANY FINANCIAL ACCOMMODATION TO TOOT.


15. FORUM SELECTION AND CONSENT TO JURISDICTION. TO INDUCE TCA TO MAKE FINANCIAL ACCOMODATIONS TO TOOT, LOAN HOLDER AND TOOT EACH AGREES THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF CLARK COUNTY, NEVADA; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE TCA FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. LOAN HOLDER AND TOOT EACH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF CLARK COUNTY, NEVADA, FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. LOAN HOLDER, TOOT AND TCA EACH FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEVADA. LOAN HOLDER AND TOOT EACH HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.


16. WAIVER OF JURY TRIAL. LOAN HOLDER, TOOT AND TCA, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH TCA, TOOT AND LOAN HOLDER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR TCA GRANTING ANY FINANCIAL ACCOMMODATION TO TOOT.



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17. Assignability. TCA, prior to the occurrence of an Event of Default and with the consent of TOOT, which consent will not be unreasonably withheld, and after the occurrence of an Event of Default without consent from or notice to anyone, may at any time assign TCA’s rights in this Agreement, the other Transaction Documents, the Obligations, or any part thereof and transfer TCA’s rights in any or all of the Collateral, and TCA thereafter shall be relieved from all liability with respect to such Collateral. This Agreement shall be binding upon TCA, Loan Holder and TOOT and their respective legal representatives, heirs and successors.


18. Binding Effect. This Agreement shall become effective upon execution by Loan Holder, TOOT and TCA.


19. Governing Law. This Agreement shall be delivered and accepted in and shall be deemed to be a contract made under and governed by the internal laws of the State of Nevada, without regard to conflict of laws principles.


20. Enforceability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.


21. Time of Essence. Time is of the essence in making payments of all amounts due TCA under the Transaction Documents and in the performance and observance by Loan Holder and TOOT of each covenant, agreement, provision and term of this Agreement and the other Transaction Documents.


22. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Transaction Documents maintained by TCA shall be deemed to be originals thereof for all purposes.


23. Notices. Except as otherwise provided herein, Loan Holder and TOOT each waives all notices and demands in connection with the enforcement of TCA’s rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be made in accordance with the terms of the SPA.




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24. Costs, Fees and Expenses. Loan Holder and TOOT, and each of them, jointly and severally, shall pay or reimburse TCA for all reasonable costs, fees and expenses incurred by TCA or for which TCA becomes obligated in connection with the enforcement of this Agreement, including costs and expenses and attorneys’ fees, costs and time charges of counsel to TCA throughout all court levels.


25. Termination. This Agreement shall not terminate until the termination of the SPA, the Debentures and the commitments to make any further purchases or funding commitments under the SPA thereunder and the full and complete performance and satisfaction and payment in full of all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).


[Signatures on the following page]



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IN WITNESS WHEREOF, the undersigned have executed this Subordination Agreement as of the date first written above.



LOAN HOLDER:

/s/ Don L. Merrill, Jr.
Don L. Merrill, Jr.


TOOT:

TOOTIE PIE COMPANY, INC.

By: /s/ Don L. Merrill, Jr.
Name: Don L. Merrill, Jr.
Its: President and Chief Executive Officer


TCA:

TCA GLOBAL CREDIT MASTER FUND, LP

By: TCA Global Credit Fund GP, Ltd.
Its: General Partner

By: /s/ Robert Press
Name: Robert Press
Title: Director








Subordination of Loans Agreement - Signature Page



8
Exhibit 10.1


SECURITIES PURCHASE AGREEMENT


This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of the 30th day of March, 2012, by and between TOOTIE PIE COMPANY, INC., a Nevada corporation (the “Company”) and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Buyer”).


RECITALS


WHEREAS, Buyer desires to purchase from Company, and the Company desires to sell and issue to Buyer, upon the terms and subject to the conditions contained herein, up to One Million Dollars ($1,000,000) of senior secured redeemable debentures in the form attached hereto as Exhibit “A” (the “Debentures”), of which Three Hundred Fifty Thousand Dollars ($350,000) shall be purchased on the date hereof (the “First Closing”), and up to Six Hundred Fifty Thousand Dollars ($650,000) may be purchased in additional closings as set forth in Section 4.2 below (the “Additional Closings”)(each of the First Closing and the Additional Closings are sometimes hereinafter individually referred to as a “Closing” and collectively as the “Closings”), all for the total purchase price of up to One Million Dollars ($1,000,000) (the “Purchase Price”), and all otherwise subject to the terms and provisions hereinafter set forth; and


WHEREAS, the Company has agreed to secure all of its “Obligations” (as hereinafter defined) to Buyer under the Debentures by granting to the Buyer a continuing and first priority security interest in all of the assets and properties of the Company pursuant to a Security Agreement dated as of the date hereof (the “Security Agreement”);


NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:


ARTICLE I
RECITALS, EXHIBITS, SCHEDULES


The foregoing recitals are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated into this Agreement by this reference.



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ARTICLE II
DEFINITIONS


For purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless the context otherwise requires, the capitalized terms in this Agreement shall have the meanings assigned to them in this Article as follows:


2.1 “Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term “control,” “controlling,” “controlled” and words of similar import, when used in this context, means, with respect to any Person, the possession, directly or indirectly, of the power to direct, or cause the direction of, management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.


2.2 “Assets” means all of the properties and assets of the Company or used by the Company in its business as presently conducted or as proposed to be conducted in the future, whether real, personal or mixed, tangible or intangible, wherever located, whether now owned or hereafter acquired.


2.3 “Claims” means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments, charges, costs and expenses of any nature or kind.


2.4 “Common Stock” means the Company’s common stock, $0.001 par value per share.


2.5 “Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific result.


2.6 “Contract” means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement, buy-sell agreement, option, warrant, debenture, subscription, call or put.


2.7 “Effective Date” means the date set forth in the introductory paragraph of this Agreement.


2.8 “Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant, restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden or charge of any nature whatsoever.


2.9 “Environmental Requirements” means all Laws and requirements relating to human, health, safety or protection of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.


2.10 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.



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2.11 “GAAP” means generally accepted accounting principles, methods and practices set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial Accounting Standards Board, the SEC or of such other Person as may be approved by a significant segment of the U.S. accounting profession, in each case as of the date or period at issue, and as applied in the U.S. to U.S. companies.


2.12 “Governmental Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial, regulatory or administrative function of government.


2.13 “Hazardous Materials” means: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls (PCB’s); (ii) any chemicals, materials, substances or wastes which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import, under any Law; and (iii) any other chemical, material, substance, or waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.


2.14 “Incentive Shares” means the shares of the Company’s Common Stock to be issued by the Company to Buyer in accordance with Section 7.5 below.


2.15 “Judgment” means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature whatsoever of any Governmental Authority.


2.16 “Law” means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any Governmental Authority.


2.17 “Leases” means all leases for real or personal property.


2.18 “Material Adverse Effect” means with respect to the event, item or question at issue, that such event, item or question would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any of the Transaction Documents; (ii) a material adverse effect on the results of operations, Assets, business or condition (financial or otherwise) or prospects of the Company or any of its subsidiaries, either individually or taken as a whole; or (iii) a material adverse effect on the Company’s ability to perform, on a timely basis, its Obligations under this Agreement or any Transaction Documents.


2.19 “Material Contract” shall mean any Contract to which the Company is a party or by which the Company or any of its Assets are bound and which: (i) involves aggregate payments of Twenty-Five Thousand Dollars ($25,000) or more to or from the Company; (ii) involves delivery, purchase, licensing or provision, by or to the Company, of any goods, services, assets or other items having a value (or potential value) over the term of such Contract of Twenty-five Thousand Dollars ($25,000) or more or is otherwise material to the conduct of the Company’s business as now conducted and as contemplated to be conducted in the future; (iii) involves a Company Lease; (iv) imposes any guaranty, surety or indemnification Obligations on the Company; or (v) prohibits the Company from engaging in any business or competing anywhere in the world.



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2.20 “Obligation” means any debt, liability or obligation of any nature whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown or obligations under executory Contracts.


2.21 “Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity, quality and frequency).


2.22 “Permit” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued, approved or allowed by any Governmental Authority.


2.23 “Person” means any individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.


2.24 “Principal Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Markets, including the Bulletin Board and Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.


2.25 “Proceeding” means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other proceeding of any nature whatsoever.


2.26 “Real Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature whatsoever, including, but not limited to, fee and leasehold interests.


2.27 “SEC” means the United States Securities and Exchange Commission.


2.28 “Securities” means, collectively, the Debentures and the Incentive Shares.


2.29 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


2.30 “Tax” means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use, occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings, personal holding company, unemployment compensation, social security, withholding taxes, payroll taxes, or any other tax of any nature whatsoever, (ii) any foreign, federal, state or local organization fee, qualification fee, annual report fee, filing fee, occupation fee, assessment, rent, or any other fee or charge of any nature whatsoever, or (iii) any deficiency, interest or penalty imposed with respect to any of the foregoing.


2.31 “Tax Return” means any tax return, filing, declaration, information statement or other form or document required to be filed in connection with or with respect to any Tax.


2.32 “Transaction Documents” means any documents or instruments to be executed by Company in connection with this Agreement, including the Debentures and the Security Agreement.


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ARTICLE III
INTERPRETATION


In this Agreement, unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references to the words “Article” or “Section” refer to the respective Articles and Sections of this Agreement, and references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules annexed hereto; (iii) references to a “party” mean a party to this Agreement and include references to such party’s permitted successors and permitted assigns; (iv) references to a “third party” mean a Person not a party to this Agreement; (v) the terms “dollars” and “$” means U.S. dollars; (vi) wherever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.”


ARTICLE IV
PURCHASE AND SALE OF DEBENTURES


4.1 Purchase and Sale of Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Buyer agrees to purchase, at each Closing, and Company agrees to sell and issue to Buyer, at each Closing, Debentures in the amount of the Purchase Price applicable to each Closing as more specifically set forth below.


4.2 Closing Dates. The First Closing of the purchase and sale of the Debentures shall be for Three Hundred Fifty Thousand Dollars ($350,000), and shall take place on the Effective Date, subject to satisfaction of the conditions to the First Closing set forth in this Agreement (the “First Closing Date”). Additional Closings of the purchase and sale of the Debentures shall be at such times and for such amounts as determined in accordance with Section 4.4 below, subject to satisfaction of the conditions to the Additional Closings set forth in this Agreement (the “Additional Closing Dates”) (collectively referred to as the “Closing Dates”). The Closings shall occur on the respective Closing Dates through the use of overnight mails and subject to customary escrow instructions from Buyer and its counsel, or in such other manner as is mutually agreed to by the Company and the Buyer.


4.3 Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on each Closing Date: (i) the Buyer shall deliver to the Company, to a Company account designated by the Company, the aggregate proceeds for the Debentures to be issued and sold to Buyer at each such Closing, minus the fees to be paid directly from the proceeds of each such Closing as set forth in this Agreement, in the form of wire transfers of immediately available U.S. funds; and (ii) the Company shall deliver to Buyer the Securities which Buyer is purchasing hereunder at each Closing, duly executed on behalf of the Company, together with any other documents required to be delivered pursuant to this Agreement.


4.4 Additional Closings. At any time after the First Closing but prior to the maturity date of any of the Debentures issued in the First Closing, the Company may request that Buyer purchase additional Debentures hereunder in Additional Closings by written notice to Buyer, and, subject to the conditions below, Buyer shall purchase such additional Debentures in such amounts and at such times as Buyer and the Company may mutually agree, so long as the following conditions have been satisfied, in Buyer’s sole and absolute discretion: (i) no default or “Event of Default” (as such term is defined in any of the Transaction Documents) shall have occurred or be continuing under this Agreement or any other Transaction Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default hereunder or thereunder; and (ii) any additional purchase of Debentures beyond the purchase of Debentures at the First Closing shall have been approved by Buyer, which approval may be given or withheld in Buyer’s sole and absolute discretion.



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ARTICLE V
BUYER’S REPRESENTATIONS AND WARRANTIES


Buyer represents and warrants to the Company, that:

5.1 Investment Purpose. Buyer is acquiring the Securities for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, Buyer reserves the right to dispose of the Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities or an available exemption under the Securities Act.


5.2 Accredited Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501(a) (3) of Regulation D, as promulgated under the Securities Act.


5.3 Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.


5.4 Information. Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and information Buyer deemed material to making an informed investment decision regarding its purchase of the Securities, which have been requested by Buyer. Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries, nor any other due diligence investigations conducted by Buyer or its advisors, if any, or its representatives, shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Article VI below. Buyer understands that its investment in the Securities involves a high degree of risk. Buyer is in a position regarding the Company, which, based upon employment, family relationship or economic bargaining power, enabled and enables Buyer to obtain information from the Company in order to evaluate the merits and risks of this investment. Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.


5.5 No Governmental Review. Buyer understands that no United States federal or state Governmental Authority has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have such Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.


5.6 Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer and is a valid and binding agreement of Buyer, enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.



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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SELLER


Except as set forth and disclosed in the disclosure schedule attached to this Agreement and made a part hereof, the Company hereby makes the following representations and warranties to the Buyer:


6.1 Subsidiaries. Except as may be disclosed in Schedule 6.1, the Company has no subsidiaries and the Company does not own, directly or indirectly, any outstanding voting securities of or other interests in, or have any control over, any other Person. For purposes of the representations and warranties of the Company set forth in this Article VI, all representations and warranties from or related to the Company, its business, Assets, operations or prospects shall be deemed to mean and be construed to include the same representation and warranty from and with respect to each subsidiary of the Company, as applicable, regardless of whether each of such representations and warranties in Article VI specifically refers to subsidiaries or not.


6.2 Organization. The Company and its subsidiaries are corporations, duly organized, validly existing and in good standing under the Laws of the jurisdiction in which they are incorporated. The Company has the full corporate power and authority and all necessary certificates, licenses, approvals and Permits to: (i) enter into and execute this Agreement and the Transaction Documents and to perform all of its Obligations hereunder and thereunder; and (ii) own and operate its Assets and properties and to conduct and carry on its business as and to the extent now conducted. The Company is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties requires such qualification. Schedule 6.2 contain a correct and complete list of the jurisdictions in which the Company is qualified to do business as a foreign corporation.


6.3 Authority and Approval of Agreement; Binding Effect. The execution and delivery by Company of this Agreement and the Transaction Documents, and the performance by Company of all of its Obligations hereunder and thereunder, including the issuance of the Securities, have been duly and validly authorized and approved by Company and its board of directors pursuant to all applicable Laws and no other corporate action or Consent on the part of Company, its board of directors, stockholders or any other Person is necessary or required by the Company to execute this Agreement and the Transaction Documents, consummate the transactions contemplated herein and therein, perform all of Company’s Obligations hereunder and thereunder, or to issue the Securities. This Agreement and each of the Transaction Documents have been duly and validly executed by Company (and the officer executing this Agreement and all such other Transaction Documents is duly authorized to act and execute same on behalf of Company) and constitute the valid and legally binding agreements of Company, enforceable against Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.



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6.4 Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 100,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”), of which 14,903,092 shares of Common Stock are issued and outstanding as of the date hereof, and no shares of Preferred Stock issued and outstanding as of the date hereof. All of such outstanding shares have been validly issued and are fully paid and nonassessable. The Common Stock is currently quoted on the OTC Pink Sheets under the trading symbol “TOOT.PK” The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation. Except as disclosed in the “SEC Documents” (as hereinafter defined), no shares of Common Stock are subject to preemptive rights or any other similar rights or any Encumbrances suffered or permitted by the Company. Except as disclosed in the SEC Documents, as of the date hereof: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or Contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Company or any of its subsidiaries, or by which the Company or any of its subsidiaries is or may become bound; (iii) there are no outstanding registration statements with respect to the Company or any of its securities; (iv) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this Agreement); (v) there are no financing statements securing obligations filed in connection with the Company or any of its Assets; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein; and (vii) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no Contracts by which the Company is or may become bound to redeem a security of the Company. The Company has furnished to the Buyer true, complete and correct copies of: (I) the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”); and (II) the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”). Except for the Certificate of Incorporation and the Bylaws, there are no other shareholder agreements, voting agreements or other Contracts of any nature or kind that restrict, limit or in any manner impose Obligations on the governance of the Company.


6.5 No Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities, will not: (i) constitute a violation of or conflict with the Certificate of Incorporation, Bylaws or any other organizational or governing documents of Company; (ii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract to which Company is a party or by which any of its Assets or properties may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal and state securities Laws and the rules and regulations of any market or exchange on which the Common Stock is quoted); or (v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of, Company or any of Company’s Assets. The Company is not in violation of its Certificate of Incorporation, Bylaws or other organizational or governing documents and the Company is not in default or breach (and no event has occurred which with notice or lapse of time or both could put the Company in default or breach) under, and the Company has not taken any action or failed to take any action that would give to any other Person any rights of termination, amendment, acceleration or cancellation of, any Contract to which the Company is a party or by which any property or Assets of the Company are bound or affected. The businesses of the Company are not being conducted, and shall not be conducted so long as Buyer owns any of the Securities, in violation of any Law. Except as specifically contemplated by this Agreement, the Company is not required to obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its Obligations under this Agreement or the Transaction Documents in accordance with the terms hereof or thereof, or to issue and sell the Securities in accordance with the terms hereof. Except as disclosed in Schedule 6.5, all Consents which the Company is required to obtain pursuant to the immediately preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not aware of any facts or circumstances which might give rise to any of the foregoing.



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6.6 Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities Laws. Assuming the accuracy of the representations and warranties of the Buyer set forth in Article V above, the offer and sale by the Company of the Securities is exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; and (ii) the registration and/or qualification provisions of all applicable state and provincial securities and “blue sky” laws.


6.7 SEC Documents; Financial Statements. The Common Stock is registered pursuant to Section 12 of the Exchange Act and the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC under the Exchange Act (all of the foregoing filed within the two (2) years preceding the date hereof or amended after the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the “SEC Documents”). The Company is current with its filing obligations under the Exchange Act and all SEC Documents have been filed on a timely basis or the Company has received a valid extension of such time of filing and has filed any such SEC Document prior to the expiration of any such extension. The Company represents and warrants that true and complete copies of the SEC Documents are available on the SEC’s website (www.sec.gov) at no charge to Buyer, and Buyer acknowledges that it may retrieve all SEC Documents from such website and Buyer’s access to such SEC Documents through such website shall constitute delivery of the SEC Documents to Buyer; provided, however, that if Buyer is unable to obtain any of such SEC Documents from such website at no charge, as result of such website not being available or any other reason beyond Buyer’s control, then upon request from Buyer, the Company shall deliver to Buyer true and complete copies of such SEC Documents. The Buyer shall also deliver to Buyer true and complete copies of all draft filings, reports, schedules, statements and other documents required to be filed with the SEC that have been prepared but not filed with the SEC as of the date hereof. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable Law (except as set forth in Schedule 6.7 or such statements as have been amended or updated in subsequent filings prior the date hereof, which amendments or updates are also part of the SEC Documents). As of their respective dates, except as set forth in the Schedule 6.7, the financial statements of the Company included in the SEC Documents (“Financial Statements”) complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. All of the Financial Statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other information provided by or on behalf of the Company to the Buyer which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.



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6.8 Absence of Certain Changes. Since the date the last of the SEC Documents was filed with the SEC, none of the following have occurred:


(a) There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; or


(b) Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Company other than in the Ordinary Course of Business.


6.9 Absence of Litigation or Adverse Matters. Except as set forth in Schedule 6.9: (i) there is no Proceeding before or by any Governmental Authority or any other Person, pending, or the best of Company’s knowledge, threatened or contemplated by, against or affecting the Company, its business or Assets; (ii) there is no outstanding Judgments against or affecting the Company, its business or Assets; (iii) the Company is not in breach or violation of any Contract; and (iv) the Company has not received any material complaint from any customer, supplier, vendor or employee.


6.10 Liabilities and Indebtedness of the Company. The Company does not have any Obligations of any nature whatsoever, except: (i) as disclosed in Schedule 6.10; (ii) as disclosed in the Financial Statements; or (iii) Obligations incurred in the Ordinary Course of Business since the date of the last Financial Statements filed by the Company with the SEC which do not or would not, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000) or otherwise have a Material Adverse Effect.


6.11 Title to Assets. The Company has good and marketable title to, or a valid leasehold interest in, all of its Assets which are material to the business and operations of the Company as presently conducted, free and clear of all Encumbrances or restrictions on the transfer or use of same. Except as set forth in Schedule 6.11 and except as would not have a Material Adverse Effect, the Company’s Assets are in good operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are currently used and for the purposes for which they are proposed to be used.



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6.12 Real Estate.


(a) Real Property Ownership. The Company does not own any Real Property.


(b) Real Property Leases. Except for the Leases described in Schedule 6.12(b) (the “Company Leases”), the Company does not lease any other Real Property. With respect to each of the Company Leases: (i) the Company has been in peaceful possession of the property leased thereunder and neither the Company nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations thereunder has been granted by the Company or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known to the Company which, upon notice or lapse of time or both, would be or could become a default thereunder or which could result in the termination of the Company Leases, or any of them, or have a Material Adverse Effect on the business of the Company, its Assets or its operations or financial results. The Company has not violated nor breached any provision of any such Company Leases, and all Obligations required to be performed by the Company under any of such Company Leases have been fully, timely and properly performed. The Company has delivered to the Buyer true, correct and complete copies of all Company Leases, including all modifications and amendments thereto, whether in writing or otherwise. The Company has not received any written or oral notice to the effect that any of the Company Leases will not be renewed at the termination of the term of such Company Leases, or that any of such Company Leases will be renewed only at higher rents.


6.13 Material Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to Buyer and each of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof. There are no outstanding offers, bids, proposals or quotations made by Company which, if accepted, would create a Material Contract with Company. Each of the Material Contracts is in full force and effect and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. All Obligations required to be performed under the terms of each of the Material Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification of any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Company. Further, the Company has received no notice, nor does the Company have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such termination is proposed or has been threatened, whether in writing or orally.


6.14 Compliance with Laws. The Company is and at all times has been in full compliance with all Laws. The Company has not received any notice that it is in violation of, has violated, or is under investigation with respect to, or has been threatened to be charged with, any violation of any Law.


6.15 Intellectual Property. The Company owns or possesses adequate and legally enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now conducted. The Company does not have any knowledge of any infringement by the Company of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other intellectual property rights of others, and, to the knowledge of the Company, there is no Claim being made or brought against, or to the Company’s knowledge, being threatened against, the Company regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other intellectual property infringement; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.



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6.16 Labor and Employment Matters. The Company is not involved in any labor dispute or, to the knowledge of the Company, is any such dispute threatened. None of the Company’s employees is a member of a union and the Company believes that its relations with its employees are good. The Company has complied in all material respects with all Laws relating to employment matters, civil rights and equal employment opportunities.


6.17 Employee Benefit Plans. Except as set forth in Schedule 6.17, the Company does not have and has not ever maintained, and has no Obligations with respect to any employee benefit plans or arrangements, including employee pension benefit plans, as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans, stock option plans, bonus plans, stock purchase plans, hospitalization, disability and other insurance plans, severance or termination pay plans and policies, whether or not described in Section 3(3) of ERISA, in which employees, their spouses or dependents of the Company participate (collectively, the “Employee Benefit Plans”). To the Company’s knowledge, all Employee Benefit Plans meet the minimum funding standards of Section 302 of ERISA, where applicable, and each such Employee Benefit Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Benefit Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with respect to any such Employee Benefit Plans, unless approved by the appropriate Governmental Authority. To the Company’s knowledge, the Company has promptly paid and discharged all Obligations arising under ERISA of a character which if unpaid or unperformed might result in the imposition of an Encumbrance against any of its Assets or otherwise have a Material Adverse Effect.


6.18 Tax Matters. The Company has made and timely filed all Tax Returns required by any jurisdiction to which it is subject, and each such Tax Return has been prepared in compliance with all applicable Laws, and all such Tax Returns are true and accurate in all respects. Except and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes, the Company has timely paid all Taxes shown or determined to be due on such Tax Returns, except those being contested in good faith, and the Company has set aside on its books provision reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such Tax Returns apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in connection with amounts paid or owing to any Person. There is no Proceeding or Claim for refund now in progress, pending or threatened against or with respect to the Company regarding Taxes.



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6.19 Insurance. The Company is covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses and risks normally insured against by other corporations or entities in the same or similar lines of businesses as the Company is engaged and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the “Insurance Policies”). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement. The Company has complied with the provisions of such Insurance Policies. The Company has not been refused any insurance coverage sought or applied for and the Company does not have any reason to believe that it will not be able to renew its existing Insurance Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company.


6.20 Permits. The Company possesses all Permits necessary to conduct its business, and the Company has not received any notice of, or is otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are valid and in full force and effect and the Company is in full compliance with the respective requirements of all such Permits.


6.21 Bank Accounts; Business Location. Schedule 6.21 set forth, with respect to each account of the Company with any bank, broker or other depository institution: (i) the name and account number of such account; (ii) the name and address of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account. The Company has no office or place of business other than as identified on Schedule 6.21, and the Company's principal places of business and chief executive offices are indicated on Schedule 6.21. All books and records of the Company and other material Assets of the Company are held or located at the principal offices of the Company indicated on Schedule 6.21.


6.22 Environmental Laws. The Company is and has at all times been in compliance with any and all applicable Environmental Requirements, and there are no pending Claims against the Company relating to any Environmental Requirements, nor to the best knowledge of the Company, is there any basis for any such Claims.


6.23 Illegal Payments. Neither the Company, nor any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of his actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.



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6.24 Related Party Transactions. Except for arm’s length transactions pursuant to which the Company makes payments in the Ordinary Course of Business upon terms no less favorable than the Company could obtain from third parties, none of the officers, directors or employees of the Company, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the issued and outstanding shares of any class of the Company’s capital stock (each a “Material Shareholder”), is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material Shareholder or, to the best knowledge of the Company, any other Person in which any officer, director, or any such employee or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of the Company or Material Shareholder is an officer, director, trustee or partner. There are no Claims or disputes of any nature or kind between the Company and any officer, director or employee of the Company or any Material Shareholder, or between any of them, relating to the Company and its business.


6.25 Internal Accounting Controls. The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to Assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for Assets is compared with the existing Assets at reasonable intervals and appropriate action is taken with respect to any differences.


6.26 Acknowledgment Regarding Buyer’s Purchase of the Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by Buyer or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to Buyer’s purchase of the Securities. The Company further represents to Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.


6.27 Seniority. No indebtedness or other equity or security of the Company is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, except only purchase money security interests (which are senior only as to underlying Assets covered thereby).


6.28 Brokerage Fees. There is no Person acting on behalf of the Company who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby.


6.29 Full Disclosure. All the representations and warranties made by Company herein or in the Schedules hereto, and all of the statements, documents or other information pertaining to the transaction contemplated herein made or given by Company, its agents or representatives, are complete and accurate, and do not omit any information required to make the statements and information provided, in light of the transaction contemplated herein and in light of the circumstances under which they were made, not misleading, accurate and meaningful.



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ARTICLE VII
COVENANTS


7.1 Negative Covenants.


(a) Indebtedness. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly, create, assume, incur or have outstanding any indebtedness for borrowed money of any nature or kind (including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any Obligation of any other Person, except for: (i) the Debentures; (ii) Obligations for accounts payable, other than for money borrowed, incurred in the Ordinary Course of Business; and (iii) indebtedness existing on the date hereof and set forth in the Company Financial Statements, provided such indebtedness is subordinated to the Obligations owed to Buyer under the Debentures pursuant to a subordination agreement, in form and content acceptable to Buyer in its sole discretion, which shall include an indefinite standstill on remedies and payment blockage rights during any default hereunder.


(b) Encumbrances. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly, create, assume, incur or suffer or permit to exist any Encumbrance upon any Asset of the Company or any of its subsidiaries, whether owned at the date hereof or hereafter acquired.


(c) Investments. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly, make or have outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in, or loans or advances to, any other Person, or acquire all or any substantial part of the Assets, business, stock or other evidence of beneficial ownership of any other Person, except: (i) investments in direct obligations of the United States or any state in the United States; (ii) trade credit extended by the Company in the Ordinary Course of Business; and (iii) investments existing as of the Effective Date and set forth in the Company Financial Statements.


(d) Transfer; Merger. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly, permit or enter into any transaction involving a “Change in Control” (as hereinafter defined), or any other merger, consolidation, sale, transfer, license, lease, encumbrance or otherwise disposition of all or any part of its properties or business or all or any substantial part of its Assets, except for the sale, lease or licensing of property or Assets of the Company in the Ordinary Course of Business. For purposes of this Agreement, the term “Change of Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of the Company or any of its subsidiaries which results in any change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Company or any of its subsidiaries, or the grant of a security interest in any ownership interest of any Person directly or indirectly controlling the Company, which could result in a change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Company or any of its subsidiaries.


(e) Capital Expenditures. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly, make or incur Obligations or undertake expenditures for the acquisition or lease of any fixed Assets or other Obligations or expenditures which are required to be capitalized under GAAP; provided, however, notwithstanding the foregoing, so long as no default or Event of Default has occurred under this Agreement or any other Transaction Documents, the Company shall have the right to make or incur Obligations or undertake expenditures for the acquisition or lease of any fixed Assets or other Obligations or expenditures which are required to be capitalized under GAAP, so long as such Obligations or expenditures are incurred in the Ordinary Course of Business, and so long as written notice of any Obligation or expenditure greater than $50,000 is promptly given to Buyer.



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(f) Distributions; Restricted Payments. So long as Buyer owns, legally or beneficially, any of the Debentures, neither the Company, nor any of its subsidiaries shall, either directly or indirectly: (i) purchase or redeem any shares of its capital stock; (ii) declare or pay any dividends or distributions, whether in cash or otherwise, or set aside any funds for any such purpose; (iii) make any loans, advances or extensions of credit to, or investments in, any Person, including, without limitation, any Affiliates of the Company or its subsidiaries, or the Company’s officers, directors, employees or Material Shareholders, or the officers, directors, employees of any subsidiary of the Company; or (iv) increase the annual salary paid to any officers or directors of the Company or any of its subsidiaries as of the Effective Date.


(g) Use of Proceeds. The proceeds from the purchase and sale of the Debentures shall be used by the Company for general working capital purposes.


(h) Business Activities; Change of Legal Status and Organizational Documents. Neither the Company, nor any of its subsidiaries, shall: (i) engage in any line of business other than the businesses engaged in as of the Effective Date and business reasonably related thereto; (ii) change its respective name, organizational identification number, its type of organization, its jurisdiction of organization or other legal structure; or (iii) permit its Certificate of Incorporation, Bylaws or other organizational documents to be amended or modified in any way which could reasonably be expected to have a Material Adverse Effect.


(i) Transactions with Affiliates. Neither the Company, nor any of its subsidiaries, shall enter into any transaction with any of its Affiliates, officers, directors, employees, Material Shareholders or other insiders, except in the Ordinary Course of Business and upon fair and reasonable terms that are no less favorable to the Company or its subsidiaries, as applicable, than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Company or any of its subsidiaries.


7.2 Affirmative Covenants.


(a) Corporate Existence. The Company and each of its subsidiaries shall at all times preserve and maintain their respective: (i) existence and good standing in the jurisdiction of its and their organization; and (ii) its and their qualification to do business and good standing in each jurisdiction where the nature of its and their business makes such qualification necessary, and shall at all times continue as a going concern in the business which the Company is presently conducting.


(b) Tax Liabilities. The Company and each of its subsidiaries shall at all times pay and discharge all Taxes upon, and all Claims (including claims for labor, materials and supplies) against the Company and each of its subsidiaries or any of its or their properties or Assets, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained.



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(c) Notice of Proceedings. The Company shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention of any officer of the Company, give written notice to the Buyer of all threatened or pending Proceedings before any Governmental Authority which may have a Material Adverse Effect.


(d) Material Adverse Effect. The Company shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention of any officer of the Company, give written notice to the Buyer of any event, circumstance, fact or other matter that could in any way have or be reasonably expected to have a Material Adverse Effect.


(e) Notice of Default. The Company shall, promptly, but not more than five (5) days after the commencement thereof, give notice to the Buyer in writing of the occurrence of any “Event of Default” (as such term is defined in any of the Transaction Documents) or of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default hereunder or under any other Transaction Documents.


(f) Maintain Property. The Company shall at all times maintain, preserve and keep all of its Assets in good repair, working order and condition, normal wear and tear excepted, and shall from time to time, as the Company deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements, and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained. The Company shall permit Buyer to examine and inspect such Assets at all reasonable times upon reasonable notice during business hours. During the continuance of any Event of Default hereunder or under any Transaction Documents, the Buyer shall, at the Company’s expense, have the right to make additional inspections without providing advance notice.


(g) Maintain Insurance. The Company shall at all times insure and keep insured with insurance companies acceptable to Buyer, all insurable property owned by the Company which is of a character usually insured by companies similarly situated and operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily insured against by companies similarly situated and operating like properties; and shall similarly insure employers’, public and professional liability risks. Prior to any Closing Date, the Company shall deliver to the Buyer a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section. All such policies of insurance must be satisfactory to Buyer in relation to the amount and term of the Debentures and type and value of the Assets of the Company, shall identify Buyer as sole/lender’s loss payee and as an additional insured. In the event the Company fails to provide Buyer with evidence of the insurance coverage required by this Section or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole or in part relating thereto, then the Buyer, without waiving or releasing any obligation or default by the Company hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premium and take any other action with respect thereto, which Buyer deems advisable. This insurance coverage: (i) may, but need not, protect the Company’s interest in such property; and (ii) may not pay any claim made by, or against, the Company in connection with such property. The Company may later request that the Buyer cancel any such insurance purchased by Buyer, but only after providing Buyer with evidence that the insurance coverage required by this Section is in force. The costs of such insurance obtained by Buyer, through and including the effective date such insurance coverage is canceled or expires, shall be payable on demand by the Company to Buyer, together with interest at the highest non-usurious rate permitted by law on such amounts until repaid and any other charges by Buyer in connection with the placement of such insurance. The costs of such insurance, which may be greater than the cost of insurance which the Company may be able to obtain on its own, together with interest thereon at the highest non-usurious rate permitted by Law and any other charges incurred by Buyer in connection with the placement of such insurance may be added to the total Obligations due and owing by the Company hereunder and under the Debentures to the extent not paid by the Company.



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(h) Reporting Status; Listing. So long as Buyer owns, legally or beneficially, any of the Securities, the Company shall: (i) file in a timely manner all reports required to be filed under the Securities Act, the Exchange Act or any securities Laws and regulations thereof applicable to the Company of any state of the United States, or by the rules and regulations of the Principal Trading Market, and, to provide a copy thereof to the Buyer promptly after such filing; (ii) not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; (iii) if required by the rules and regulations of the Principal Trading Market, promptly secure the listing of the Incentive Shares upon the Principal Trading Market (subject to official notice of issuance) and, take all reasonable action under its control to maintain the continued listing, quotation and trading of its Common Stock (including, without limitation, the Incentive Shares) on the Principal Trading Market, and the Company shall comply in all respects with the Company’s reporting, filing and other Obligations under the bylaws or rules of the Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable. The Company shall promptly provide to Buyer copies of any notices it receives from the SEC or any Principal Trading Market.


(i) Rule 144. With a view to making available to Buyer the benefits of Rule 144 under the Securities Act (“Rule 144”), or any similar rule or regulation of the SEC that may at any time permit Buyer to sell the Incentive Shares to the public without registration, the Company represents and warrants that: (i) the Company is, and has been for a period of at least ninety (90) days immediately preceding the date hereof, subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (ii) the Company has filed all required reports under Section 13 or 15(d) of the Exchange Act, as applicable, during the twelve (12) months preceding the First Closing Date (or for such shorter period that the Company was required to file such reports); (iii) the Company is not an issuer defined as a “Shell Company” (as hereinafter defined); and (iv) if the Company has, at any time, been an issuer defined as a Shell Company, the Company has: (A) not been an issuer defined as a Shell Company for at least six (6) months prior to the First Closing Date; and (B) has satisfied the requirements of Rule 144(i) (including, without limitation, the proper filing of “Form 10 information” at least six (6) months prior to the First Closing Date). For the purposes hereof, the term “Shell Company” shall mean an issuer that meets the description defined under Rule 144. In addition, so long as Buyer owns, legally or beneficially, any of the Securities, the Company shall, at its sole expense:


(i) Make, keep and ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144, is publicly available;


(ii) furnish to the Buyer, promptly upon reasonable request: (A) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably requested by Buyer to permit the Buyer to sell any of the Securities pursuant to Rule 144 without limitation or restriction; and



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(iii) promptly at the request of the Buyer, give the Company’s transfer agent instructions to the effect that, upon the transfer agent’s receipt from the Buyer of a certificate (a “Rule 144 Certificate”) certifying that the Buyer’s holding period (as determined in accordance with the provisions of Rule 144) for any portion of the Incentive Shares which the Buyer proposes to sell (the “Securities Being Sold”) is not less than six (6) months, and receipt by the transfer agent of the “Rule 144 Opinion” (as hereinafter defined) from the Company or its counsel, the transfer agent is to effect the transfer of the Securities Being Sold and issue to the Buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the transfer agent’s books and records. In this regard, upon Buyer’s request, the Company shall have an affirmative obligation to cause its counsel to promptly issue to the transfer agent a legal opinion providing that, based on the Rule 144 Certificate, the Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration statement (the “Rule 144 Opinion”). If the transfer agent requires any additional documentation in connection with any proposed transfer by the Buyer of any Securities being Sold, the Company shall promptly deliver or cause to be delivered to the transfer agent or to any other Person, all such additional documentation as may be necessary to effectuate the transfer of the Securities being Sold and the issuance of an unlegended certificate to any transferee thereof, all at the Company’s expense.


7.3 Reporting Requirements. The Company shall furnish to the Buyer the following:


(a) Annual Audited Financial Statements. Within ninety (90) days after the close of each fiscal year of the Company, a copy of the annual audited financial statements of the Company, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Buyer, containing an unqualified opinion of such accountant;


(b) Quarterly Financial Statements. Within fifteen (15) days following the end of each fiscal quarter of the Company, a copy of the financial statements of the Company regarding such quarter, including balance sheet, statement of income and retained earnings, statement of cash flows for the quarter then ended, in reasonable detail, prepared and certified as accurate in all material respects by the an officer of the Company; and


(c) Quarterly Cash Flow Analysis. Within fifteen (15) days following the end of each fiscal quarter of the Company, a cash flow analysis in form and content reasonably acceptable to the Buyer, showing in reasonable detail, all incoming and outgoing cash flows of the Company during the immediately preceding quarter, and identifying any variance between such actual cash flows and the cash flow projections provided by the Company to the Buyer in connection with Buyer’s due diligence review of the Company, which cash flow analysis shall be prepared and certified as accurate in all material respects by the an officer of the Company; and


(d) Monthly Compliance Certificate. On the first (1st) day of every month, the Company shall deliver to the Buyer a compliance certificate in substantial substance and form as attached hereto as Exhibit “B”.


(e) Bank Statements. The Company shall submit to the Buyer, within five (5) days after receipt thereof each month, true and correct copies of all bank statements received by the Company for each bank or other financial institution where the Company has a depository relationship.



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7.4 Fees and Expenses.


(a) Transaction Fees. The Company agrees to pay to Buyer a transaction advisory fee equal to three percent (3%) of the amount of the Debentures purchased by Buyer at the First Closing, which fee shall be due and payable on the Effective Date and withheld from the gross purchase price paid by Buyer for the Debentures. In the event of any Additional Closings, the Company shall pay to Buyer a transaction advisory fee equal to two percent (2%) of the amount of the Debentures purchased by Buyer at any such Additional Closings, which fee shall be due and payable upon such Additional Closing and withheld from the gross purchase price paid by Buyer for the Debentures at such Additional Closing.


(b) Due Diligence Fees. The Company agrees to pay to the Buyer a due diligence fee equal to Seven Thousand Five Hundred and No/100 Dollars ($7,500.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.


(c) Document Review and Legal Fees. The Company agrees to pay to the Buyer or its counsel a document review and legal fee equal to Twelve Thousand Five Hundred and No/100 Dollars ($12,500.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement. In addition, in the event of any Additional Closings, before any such Additional Closings are consummated and as a condition precedent to the consummation of any Additional Closings, the Company and the Buyer shall mutually agree as to the amount of additional legal fees to be incurred and paid for by the Company in connection with any such Additional Closings. The Company also agrees to be responsible for the prompt payment of all legal fees and expenses of the Company and its own counsel and other professionals incurred by the Company in connection with the negotiation and execution of this Agreement and the Transaction Documents.


(d) Other Fees. Upon the occurrence of a default or Event of Default under this Agreement or any other Transaction Documents, the Company also agrees to pay to the Buyer (or any designee of the Buyer), upon demand, or to otherwise be responsible for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Buyer and of any experts and agents, which the Buyer may incur or which may otherwise be due and payable in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement or any other Transaction Documents; (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Transaction Documents; (iii) the exercise or enforcement of any of the rights of the Buyer under this Agreement or the Transaction Documents; or (iv) the failure by the Company to perform or observe any of the provisions of this Agreement or any of the Transaction Documents. Included in the foregoing shall be the amount of all expenses paid or incurred by Buyer in consulting with counsel concerning any of its rights under this Agreement or any other Transaction Document or under applicable law. To the extent any such costs, fees, charges, taxes or expenses are incurred prior to the funding of proceeds from a Closing, same shall be paid directly from the proceeds of each such Closing. All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the highest rate set forth in the Debenture, or if none is so stated, the highest rate allowed by law. All of such costs and expenses shall be additional Obligations of the Company to Buyer secured under the Transaction Documents. The provisions of this Subsection shall survive the termination of this Agreement.



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7.5 Incentive Shares.


(a) Share Issuance. The Company shall pay to Buyer a fee for corporate advisory and investment banking services provided by the Buyer to the Company prior to the Effective Date by issuing to Buyer that number of shares of the Company’s Common Stock that equal to a dollar amount equal to $60,000.00 (the “Share Value”). For purposes of determining the number of Incentive Shares issuable to Buyer under this Section 7.5(a), the Company’s Common Stock shall be valued at the volume weighted average price as of the close of the business day immediately prior to the date the Company executes this Agreement (the “Valuation Date”), as reported by Bloomberg (the “VWAP”). The Buyer shall confirm to the Company in writing, the VWAP for the Common Stock as of the Valuation Date, and the corresponding number of Shares issuable to the Buyer based on such price. The Company shall instruct its transfer agent to issue certificates representing the Incentive Shares issuable to the Buyer immediately upon the Company’s execution of this Agreement, and shall cause its transfer agent to deliver such certificates to Buyer within fifteen (15) business days from the date the Company executes this Agreement. In the event such certificates representing the Incentive Shares issuable hereunder shall not be delivered to the Buyer within said fifteen (15) business day period, same shall be an immediate default under this Agreement and the other Transaction Documents. The Incentive Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Company’s Common Stock. The Incentive Shares shall be deemed fully earned as of the date the Company executes this Agreement, regardless of whether any Additional Closings are funded hereunder.


(b) Adjustments. It is the intention of the Company and Buyer that by a date that is nine (9) months after the Valuation Date (the “Nine Month Valuation Date”) the Buyer shall have generated net proceeds from the sale of the Incentive Shares equal to the Share Value. The Buyer shall have the right to sell the Incentive Shares in the Principal Trading Market or otherwise, at any time in accordance with applicable securities laws. At any time the Buyer may elect after the Nine Month Valuation Date (or prior to such Nine Month Valuation Date, if Buyer has sold all Incentive Shares prior to such Nine Month Valuation Date), the Buyer may deliver to the Company a reconciliation statement showing the net proceeds actually received by the Buyer from the sale of the Incentive Shares (the “Sale Reconciliation”). If, as of the date of the delivery by Buyer of the Sale Reconciliation, the Buyer has not realized net proceeds from the sale of such Incentive Shares equal to at least the Share Value, as shown on the Sale Reconciliation, then the Company shall immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Buyer in an amount sufficient such that, when sold and the net proceeds thereof are added to the net proceeds from the sale of any of the previously issued and sold Incentive Shares, the Buyer shall have received total net funds equal to the Share Value. If additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock, the Buyer still has not received net proceeds equal to at least the Share Value, then the Company shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Buyer as contemplated above, and such additional issuances shall continue until the Buyer has received net proceeds from the sale of such Common Stock equal to the Share Value. In the event the Buyer receives net proceeds from the sale of Incentive Shares equal to the Share Value, and the Buyer still has Incentive Shares remaining to be sold, the Buyer shall return all such remaining Incentive Shares to the Company. In the event additional Common Stock is required to be issued as outlined above, the Company shall instruct its transfer agent to issue certificates representing such additional shares of Common Stock to the Buyer immediately subsequent to the Buyer’s notification to the Company that additional shares of Common Stock are issuable hereunder, and the Company shall in any event cause its transfer agent to deliver such certificates to Buyer within fifteen (15) business days following the date Buyer notifies the Company that additional shares of Common Stock are to be issued hereunder. In the event such certificates representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Buyer within said fifteen (15) business day period, same shall be an immediate default under this Agreement and the Transaction Documents. Notwithstanding anything contained in this Section 7.5 to the contrary, at any time on or prior to the Nine Month Valuation Date, but not thereafter (unless agreed to by the Buyer), the Company shall have the right, at any time during such period, to redeem any Incentive Shares then in the Buyer’s possession for an amount payable by the Company to Buyer in cleared United States currency equal to the Share Value, less any net cash proceeds received by the Buyer from any previous sales of Incentive Shares. Upon Buyer’s receipt of such cash payment in accordance with the immediately preceding sentence, the Buyer shall return any then remaining Incentive Shares in its possession back to the Company.



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(c) Mandatory Redemption. In the event the Buyer, in its sole and absolute discretion, at any time determines that the Incentive Shares are not likely to be monetized into at least the Share Value within a three (3) month period from when the Buyer may lawfully begin to sell such Incentive Shares, then Buyer may require, upon written notice to the Company, that the Company redeem all Incentive Shares then in Buyer’s possession for cash equal to the Share Value, less any cash proceeds received by the Buyer from any previous sales of Incentive Shares, if any. In the event such redemption notice is given by the Buyer, the Company shall redeem the then remaining Incentive Shares in Buyer’s possession for cash payable in cleared and good United States currency equal to the Share Value, less any cash proceeds received by the Buyer from any previous sales of Incentive Shares, if any, within five (5) business days from the date the Buyer delivers such redemption notice to the Company.


(d) Registration of Shares. The Common Stock to be issued to Buyer pursuant to this Section 7.5 shall be included on any registration statement filed by the Company after the date hereof, unless such shares may be resold without any limitation or restriction pursuant to Rule 144.


ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL


The obligation of the Company hereunder to issue and sell the Securities to the Buyer at the Closings is subject to the satisfaction, at or before the respective Closing Dates, of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:


8.1 Buyer shall have executed the Transaction Documents and delivered them to the Company.


8.2 The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Dates as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Dates.



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ARTICLE IX
CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATIONS TO PURCHASE


9.1 First Closing. The obligation of the Buyer hereunder to purchase the Debentures at the First Closing is subject to the satisfaction, at or before the First Closing Date, of each of the following conditions (in addition to any other conditions precedent elsewhere in this Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:


(a) The Company shall have executed and delivered the Transaction Documents applicable to the First Closing and delivered the same to the Buyer.


(b) The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such representations and warranties shall be true and correct in all respects without further qualification) as of the date when made and as of the First Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the First Closing Date.


(c) The Buyer shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Buyer and its counsel.


(d) The Buyer shall have issued an irrevocable issuance instruction letter and board resolution, authorizing the issuance of the Incentive Shares and directing its transfer agent to issue and deliver the Incentive Shares to Buyer or its designee.


(e) The Company shall have executed and delivered to Buyer a closing certificate in substance and form required by Buyer, which closing certificate shall include and attach as exhibits: (i) a true copy of a certificate of good standing evidencing the formation and good standing of the Company from the secretary of state (or comparable office) from the jurisdiction in which the Company is incorporated, as of a date within ten (10) days of the First Closing Date; (ii) the Company’s Certificate of Incorporation; (iii) the Company’s Bylaws; and (iv) copies of the resolutions of the board of directors of the Company consistent with Section 6.3, as adopted by the Company’s board of directors in a form reasonably acceptable to Buyer.


(f) No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


(g) The Company shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may required to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and joint disbursement instructions as may be required by Buyer.


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9.2 Additional Closings. Provided the Buyer is to purchase additional Debentures in accordance with Section 4.4 at an Additional Closing, the obligation of the Buyer hereunder to accept and purchase the Debentures at any Additional Closing is subject to the satisfaction, at or before the Additional Closing Date, of each of the following conditions:


(a) The Company shall have executed the Transaction Documents applicable to the Additional Closing and delivered the same to the Buyer.


(b) The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such representations and warranties shall be true and correct in all respects without further qualification) as of the date when made and as of the Additional Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Additional Closing Date.


(c) No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.


(d) No default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default under this Agreement or any other Transaction Documents.


(e) The Company shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may required to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and joint disbursement instructions as may be required by Buyer.

ARTICLE X
INDEMNIFICATION


10.1 Company’s Obligation to Indemnify. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company hereby agrees to defend and indemnify Buyer and its Affiliates and subsidiaries and their respective directors, officers, employees, agents and representatives, and the successors and assigns of each of them (collectively, the “Buyer Indemnified Parties”) and Company does hereby agree to hold the Buyer Indemnified Parties forever harmless, from and against any and all Claims made, brought or asserted against the Buyer Indemnified Parties, or any one of them, and Company hereby agrees to pay or reimburse the Buyer Indemnified Parties for any and all Claims payable by any of the Buyer Indemnified Parties to any Person, including reasonable attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable Law, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement or Obligation of the Company contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made against the Buyer Indemnified Parties, or any one of them, by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, the Transaction Documents or any other instrument, document or agreement executed pursuant hereto or thereto by any of the Buyer Indemnified Parties, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Debentures, or the status of the Buyer or holder of any of the Securities, as a buyer of such Securities in the Company. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law.



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ARTICLE XI
MISCELLANEOUS


11.1 Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:


If to the Company: Tootie Pie Company, Inc.
129 Industrial Drive
Boerne, TX 78006
Attn: Mr. Don Merrill, Jr., CEO

With a copy to: David P. Strolle, Jr., Esq.
Law Offices of David P. Strolle, Jr.
8000 I.H. 10 West, Suite 600
San Antonio, Texas 78230

If to the Buyer: TCA Global Credit Master Fund, LP
1404 Rodman Street
Hollywood, FL 33020
Attn: Mr. Robert Press

With a copy to: David Kahan, P.A.
6420 Congress Ave., Suite 1800
Boca Raton, FL 33487
Attn: David Kahan, Esq.



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unless the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Debenture may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.


11.2 Entire Agreement. This Agreement, including the Exhibits and Schedules attached hereto and the documents delivered pursuant hereto, including the Transaction Documents, set forth all the promises, covenants, agreements, conditions and understandings between the parties hereto with respect to the subject matter hereof and thereof, and supersede all prior and contemporaneous agreements, understandings, inducements or conditions, expressed or implied, oral or written, except as contained herein and in the Transaction Documents.


11.3 Assignment. The Buyer may at any time assign its rights in this Agreement or any of the other Transaction Documents, or any part thereof, without the Company’s consent or approval. In addition, the Buyer may at any time sell one or more participations in the Debentures. The Company may not sell or assign this Agreement or any of the Transaction Documents, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior written consent of the Buyer, which consent may be withheld in Buyer’s sole and absolute discretion.


11.4 Binding Effect. This Agreement shall be binding upon the parties hereto, their respective successors and permitted assigns.


11.5 Amendment. The parties hereby irrevocably agree that no attempted amendment, modification, or change of this Agreement shall be valid and effective, unless the parties shall unanimously agree in writing to such amendment, modification or change.


11.6 No Waiver. No waiver of any provision of this Agreement shall be effective, unless it is in writing and signed by the party against whom it is asserted, and any such written waiver shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver.


11.7 Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.


11.8 Counterparts. This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall be deemed an original and all of which together will constitute one and the same instrument.



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11.9 Electronic Signatures. The Buyer is hereby authorized to rely upon and accept as an original for all purposes, this Agreement, any other Transaction Document or other communication which is sent to Buyer or its counsel by facsimile, telegraphic, .pdf, or other electronic transmission (each, a “Communication”) which Buyer or its counsel in good faith believes has been signed by the Company and has been delivered to Buyer or its counsel by a properly authorized representative of the Company, whether or not that is in fact the case. Notwithstanding the foregoing, the Buyer shall not be obligated to accept any such Communication as an original and may in any instance require that an original document be submitted to Buyer in lieu of, or in addition to, any such Communication.


11.10 Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement.


11.11 Governing Law. This Agreement shall be construed in accordance with the laws of the State of Nevada, without regard to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in Clark County, Nevada and expressly consent to the jurisdiction and venue of the State Courts sitting in Clark County, Nevada and the United States District Court for the District of Nevada for the adjudication of any civil action asserted pursuant to this Agreement; provided, however, nothing contained herein shall limit the Buyer’s ability to bring suit or enforce this Agreement or any other Transaction Documents in any other jurisdiction.


11.12 Further Assurances. The parties hereto will execute and deliver such further instruments and do such further acts and things as may be reasonably required to carry out the intent and purposes of this Agreement.


11.13 Survival. All covenants, agreements, representations and warranties made by the Company herein shall, notwithstanding any investigation by the Buyer, be deemed material and relied upon by Buyer and shall survive the making and execution of this Agreement and the Transaction Documents and the issuance of the Debentures, and shall be deemed to be continuing representations and warranties until such time as the Company has fulfilled all of its Obligations to Buyer, the Debentures have been repaid in full and Buyer no longer owns any of the Incentive Shares.


11.14 Time is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties’ Obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day thereafter occurring.


11.15 Joint Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.


11.16 Severability. If any one of the provisions contained in this Agreement, for any reason, shall be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall remain in full force and effect and be construed as if the invalid, illegal or unenforceable provision had never been contained herein.



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11.17 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


11.18 WAIVER OF JURY TRIAL. THE BUYER AND THE COMPANY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BUYER AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BUYER TO PURCHASE THE DEBENTURES.


11.19 Compliance with Federal Law. The Company shall: (i) ensure that no Person who owns a controlling interest in or otherwise controls the Company is or shall at any time be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included in any Executive Orders or in any other similar lists of any Governmental Authority; (ii) not use or permit the use of the proceeds of the purchase of the Debentures to violate any of the foreign asset control regulations of OFAC or any enabling statute, Executive Order relating thereto or any other requirements or restrictions imposed by any Governmental Authority; and (iii) comply with all applicable Lender Secrecy Act (“BSA”) laws and regulations, as amended. As required by federal law and Buyer’s policies and practices, Buyer may need to obtain, verify and record certain customer identification information and documentation in connection with opening or maintaining accounts or establishing or continuing to provide services.


[SIGNATURES ON THE FOLLOWING PAGE]


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.

COMPANY:

TOOTIE PIE COMPANY, INC., a Nevada corporation

By: /s/ Don L. Merrill, Jr.
Name: Don L. Merrill, Jr.
Title: President and Chief Executive Officer

Date: April 5, 2012


BUYER:

TCA GLOBAL CREDIT MASTER FUND, LP

By: TCA Global Credit Fund GP, Ltd.
Its: General Partner

By: /s/ Robert Press
Name: Robert Press
Title: Director

Date: April 9, 2012



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EXHIBIT “A”


FORM OF DEBENTURE



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EXHIBIT “B”


Form of Compliance Certificate



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SELLER'S DISCLOSURE SCHEDULES

32

Exhibit 10.2


SECURITY AGREEMENT


THIS SECURITY AGREEMENT (“Agreement”) is made as of this 30th day of March, 2012, by and between TOOTIE PIE COMPANY, INC., a Nevada corporation (the “Company”), in favor of TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Secured Party”).


RECITALS


WHEREAS, pursuant to a Securities Purchase Agreement dated of even date herewith between Company and the Secured Party (the “Purchase Agreement”), Company has agreed to issue to the Secured Party and the Secured Party has agreed to purchase from Company certain senior secured redeemable debentures (the “Debentures”), as more specifically set forth in the Purchase Agreement; and

WHEREAS, in order to induce the Secured Party to purchase the Debentures, Company has agreed to execute and deliver to the Secured Party this Agreement for the benefit of the Secured Party and to grant to it a continuing, first priority security interest and lien in all of the assets and property of Company to secure the prompt payment, performance and discharge in full of all of Company’s obligations under the Debentures, the Purchase Agreement and the other Transaction Documents;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties each intending to be legally bound, hereby do agree as follows:


1. Recitals. The recitations set forth in the preamble of this Agreement are true and correct and incorporated herein by this reference.


2. Construction and Definition of Terms. In this Agreement, unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references to the words “Section” or “Subsection” refer to the respective Sections and Subsections of this Agreement, and references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules attached hereto; (iii) wherever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.” All capitalized terms used in this Agreement that are defined in the Purchase Agreement or otherwise defined in Articles 8 or 9 of the Code shall have the meanings assigned to them in the Purchase Agreement or the Code, respectively and as applicable, unless the context of this Agreement requires otherwise. In addition to the capitalized terms defined in the Code and the Purchase Agreement, unless the context otherwise requires, when used herein, the following capitalized terms shall have the following meanings (provided that if a capitalized term used herein is defined in the Purchase Agreement and separately defined in this Agreement, the meaning of such term as defined in this Agreement shall control for purposes of this Agreement):



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(a) “Agreement” means this Security Agreement and all amendments, modifications and supplements hereto.


(b) “Bankruptcy Code” means the United States Bankruptcy Code, as amended from time to time, or any other similar laws, codes, rules or regulations relating to bankruptcy, insolvency or the protection of creditors.


(c) “Business Premises” shall mean the Company’s offices located at 129 Industrial Drive, Boerne, Texas 78006.


(d) “Closing” shall mean the date on which this Agreement is fully executed by both parties.


(e) “Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of Nevada, provided that terms used herein which are defined in the Code as in effect in the State of Nevada on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute, except as the Secured Party may otherwise agree.


(f) “Collateral” shall mean any and all property of the Company, of any kind or description, tangible or intangible, real, personal or mixed, wheresoever located and whether now existing or hereafter arising or acquired, including the following: (i) all property of, or for the account of, the Company now or hereafter coming into the possession, control or custody of, or in transit to, Secured Party or any agent or bailee for Secured Party or any parent, affiliate or subsidiary of Secured Party or any participant with Secured Party in the Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), including all cash, earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom, including the proceeds of insurance thereon; (ii) the following additional property of the Company, whether now existing or hereafter arising or acquired, and wherever now or hereafter located, together with all additions and accessions thereto, substitutions, betterments and replacements therefor, products and Proceeds therefrom, and all of the Company’s books and records and recorded data relating thereto (regardless of the medium of recording or storage), together with all of the Company’s right, title and interest in and to all computer software required to utilize, create, maintain and process any such records or data on electronic media, including all: (A) Accounts, and all goods whose sale, lease or other disposition by the Company has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, the Company, or rejected or refused by an Account debtor; (B) As-extracted Collateral; (C) Chattel Paper (whether tangible or electronic); (D) Commodity Accounts; (E) Commodity Contracts; (F) Deposit Accounts, including all cash and other property from time to time deposited therein and the monies and property in the possession or under the control of the Secured Party or any affiliate, representative, agent, designee or correspondent of the Secured Party; (G) Documents; (H) Equipment; (I) Farm Products; (J) Fixtures; (K) General Intangibles (including all Payment Intangibles); (L) Goods, and all accessions thereto and goods with which the Goods are commingled; (M) Health-Care Insurance Receivables; (N) Instruments; (O) Inventory, including raw materials, work-in-process and finished goods; (P) Investment Property; (Q) Letter-of-Credit Rights; (R) Promissory Notes; (S) Software; (T) all Supporting Obligations; (U) all commercial tort claims hereafter arising; (V) all other tangible and intangible personal property of the Company (whether or not subject to the Code), including, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Company described within the definition of Collateral (including, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Company in respect of any of the items listed within the definition of Collateral), and all books, correspondence, files and other Records, including, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of the Company or any other Person from time to time acting for the Company, in each case, to the extent of the Company’s rights therein, that at any time evidence or contain information relating to any of the property described or listed within the definition of Collateral or which are otherwise necessary or helpful in the collection or realization thereof; (W) real estate property owned by the Company, leasehold interests owned by the Company in real property and the interest of the Company in fixtures or any other assets or property related to such real property or leasehold interests; and (X) Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any or all of the foregoing, in each case howsoever the Company’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).



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(g) “Event of Default” shall mean any of the events described in Section 4 hereof.


(h) “Obligations” shall mean any and all obligations of the Company to Secured Party, whether arising, existing or incurred under this Agreement, the Purchase Agreement or any other Transaction Documents, or any other agreement between the Company and the Secured Party, in each case, whether now or hereafter existing or incurred, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.


3. Security.


(a) Grant of Security Interest. As security for the full payment and performance of all of the Obligations, whether or not any instrument or agreement relating to any Obligation specifically refers to this Agreement or the security interest created hereunder, the Company hereby assigns, pledges and grants to Secured Party an unconditional, continuing, first-priority security interest in all of the Collateral. Secured Party’s security interest shall continually exist until all Obligations have been indefeasibly satisfied and/or paid in full.


(b) Representations, Warranties, Covenants and Agreement of the Company. With respect to all of the Collateral, Company covenants, warrants and represents, for the benefit of the Secured Party, as follows:


(i) The Company has the requisite corporate power and authority to enter into this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Company of this Agreement and the filings contemplated herein have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor’s rights generally.


(ii) The Company represents and warrants that it has no place of business or offices where its respective books of account and records are kept or places where Collateral is stored or located, except for the Business Premises.


(iii) The Company is the sole owner of the Collateral (except for non-exclusive licenses granted by the Company in the Ordinary Course of Business), free and clear of any and all Encumbrances, except for statutory landlord’s liens which may exist under applicable law. The Company is fully authorized to grant the security interests in and to pledge the Collateral to Secured Party. There is not on file in any agency, land records or other office of any Governmental Authority, an effective financing statement, security agreement, license or transfer or any notice of any of the foregoing (other than those that have been filed in favor of the Secured Party pursuant to this Agreement) covering or affecting any of the Collateral. So long as this Agreement shall be in effect, the Company shall not execute and shall not permit to be on file in any such agency, land records or other office any such financing statement or other document or instrument (except to the extent filed or recorded in favor of the Secured Party pursuant to the terms of this Agreement).



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(iv) No part of the Collateral has been judged invalid or unenforceable. No Claim, Proceeding or other notice or other similar item has been received by the Company that any Collateral or the Company’s use of any Collateral violates the rights of any Person. There has been no adverse decision or claim to the Company’s ownership rights in or exclusive rights to use the Collateral in any jurisdiction or to the Company’s right to keep and maintain such Collateral in full force and effect, and there is no Claim or Proceeding of any nature involving said rights pending or, to the best knowledge of the Company, threatened, before any Governmental Authority.


(v) The Company shall at all times maintain its books of account and records relating to the Collateral and maintain the Collateral at the Business Premises, and the Company shall not relocate such books of account and records or Collateral, except and unless: (A) Secured Party first approves of such relocation, which approval may be withheld in Secured Party’s sole and absolute discretion; and (B) evidence that appropriate financing statements and other necessary documents have been filed and recorded and other steps have been taken to create in favor of the Secured Party valid, perfected and continuing liens in the Collateral.


(vi) Upon making the filings described in the immediately following sentence, this Agreement creates, in favor of the Secured Party, a valid, perfected, first-priority security interest in the Collateral. Except for the filing of financing statements on Form-1 under the Code with the State of Nevada, no authorization or approval of, or filing with, or notice to any Governmental Authority is required either: (A) for the grant by the Company of, or the effectiveness of, the security interest granted hereby or for the execution, delivery and performance of this Agreement by the Company; or (B) for the perfection of or exercise by the Secured Party of its rights and remedies hereunder.


(vii) Simultaneous with the execution of this Agreement, the Company hereby authorizes the Secured Party to file one or more UCC financing statements, and any continuations, amendments, or assignments thereof, with respect to the security interests on the Collateral granted hereby, with the State of Florida and in such other jurisdictions as may be requested or desired by the Secured Party.


(viii) The execution, delivery and performance of this Agreement, and the granting of the security interests contemplated hereby, will not: (A) constitute a violation of or conflict with the Certificate of Incorporation, Bylaws or any other organizational or governing documents of the Company; (B) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract or agreement to which Company is a party or by which any of the Collateral may be bound; (C) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any Judgment of any Governmental Authority; (D) constitute a violation of, or conflict with, any Law; or (E) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of, the Company or any of the Collateral. No Consent (including from stockholders or creditors of the Company) is required for the Company to enter into and perform its obligations hereunder.



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(ix) The Company shall at all times maintain the liens and security interests provided for hereunder as valid and perfected first-priority liens and security interests in the Collateral in favor of the Secured Party until this Agreement and the security interests hereunder shall terminate pursuant to Section 8(o) below. The Company shall at all times safeguard and protect all Collateral, at its own expense, for the account of the Secured Party. At the request of the Secured Party, the Company will sign and deliver to the Secured Party at any time, or from time to time, one or more financing statements pursuant to the Code (or any other applicable statute) in form reasonably satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Secured Party to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Company shall pay all fees, taxes and other amounts necessary to maintain the Collateral and the security interests granted hereunder, and the Company shall obtain and furnish to the Secured Party from time to time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the security interests hereunder.


(x) The Company will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral without the prior written consent of the Secured Party, which consent may be withheld in the Secured Party’s sole and absolute discretion, except for transfers, sales or licenses made in the Ordinary Course of Business.


(xi) The Company shall keep, maintain and preserve all of the Collateral in good condition, repair and order and the Company will use, operate and maintain the Collateral in compliance with all Laws, and in compliance with all applicable insurance requirements and regulations.


(xii) The Company shall, within five (5) days of obtaining knowledge thereof, advise the Secured Party promptly, in sufficient detail, of any substantial or material change in the Collateral, and of the occurrence of any event which would have a Material Adverse Effect on the value of the Collateral or on the Secured Party’s security interest therein.


(xiii) The Company shall promptly execute and deliver to the Secured Party such further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Secured Party may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the Collateral, including, placing legends on Collateral or on books and records pertaining to Collateral stating that Secured Party has a security interest therein.


(xiv) The Company will take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims, causes of action and accounts receivable in respect of the Collateral.


(xv) The Company shall promptly notify the Secured Party in sufficient detail upon becoming aware of any litigation, attachment, garnishment, execution or other legal process levied against any Collateral or of any litigation, attachment, garnishment, execution or other legal process which Company knows or has reason to believe is pending or threatened against it or the Collateral, and of any other information received by the Company that may materially affect the value of the Collateral, the security interests granted hereunder or the rights and remedies of the Secured Party hereunder.



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(xvi) All information heretofore, herein or hereafter supplied to the Secured Party by or on behalf of the Company with respect to the Collateral is accurate and complete in all material respects as of the date furnished.


(xvii) Company will promptly pay when due all taxes and all transportation, storage, warehousing and all other charges and fees affecting or arising out of or relating to the Collateral and shall defend the Collateral, at Company’s expense, against all claims of any Persons claiming any interest in the Collateral adverse to Company or Secured Party.


(xviii) At all reasonable times, Secured Party and its agents and designees may enter the Business Premises and any other premises of the Company and inspect the Collateral and all books and records of the Company (in whatever form), and the Company shall pay the reasonable costs of such inspections, provided, however, so long as no default or Event of Default exists or is continuing under any of the Transaction Documents, the Company shall only be obligated to pay for any such inspections the Secured Party may undertake hereunder up to a maximum of four (4) times per year at a cost not to exceed $750.00 per inspection (provided, however, that once a default or Event of Default exists or is continuing under any of the Transaction Documents, the foregoing limitation shall not apply and the Company shall be responsible for all reasonable costs of all inspections conducted by the Secured Party, without limitation).


(xix) The Company shall maintain comprehensive casualty insurance on the Collateral against such risks, in such amounts, with such loss deductible amounts and with such companies as may be reasonably satisfactory to the Secured Party, and each such policy shall contain a clause or endorsement satisfactory to Secured Party naming Secured Party as loss payee and a clause or endorsement satisfactory to Secured Party that such policy may not be canceled or altered and Secured Party may not be removed as loss payee without at least thirty (30) days prior written notice to Secured Party. In all events, the amounts of such insurance coverages shall conform to prudent business practices and shall be in such minimum amounts that Company will not be deemed a co-insurer under applicable insurance laws, policies or practices. The Company hereby assigns to Secured Party and grants to Secured Party a security interest in any and all proceeds of such policies and authorizes and empowers Secured Party to adjust or compromise any loss under such policies and to collect and receive all such proceeds. The Company hereby authorizes and directs each insurance company to pay all such proceeds directly and solely to Secured Party and not to the Company and Secured Party jointly. The Company authorizes and empowers Secured Party to execute and endorse in Company’s name all proofs of loss, drafts, checks and any other documents or instruments necessary to accomplish such collection, and any persons making payments to Secured Party under the terms of this subsection are hereby relieved absolutely from any obligation or responsibility to see to the application of any sums so paid. After deduction from any such proceeds of all costs and expenses (including attorney’s fees) incurred by Secured Party in the collection and handling of such proceeds, the net proceeds shall be applied as follows: if no Event of Default shall have occurred and be continuing, such net proceeds may be applied, at Company’s option, either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to Secured Party, or as a credit against such of the Obligations, whether matured or unmatured, as Secured Party shall determine in Secured Party’s sole discretion. In the event that Company may and does elect to replace or restore any of the Collateral as aforesaid, then such net proceeds shall be deposited in a segregated account opened in the name and for the benefit of Secured Party, and such net proceeds shall be disbursed therefrom by Secured Party in such manner and at such times as Secured Party deems appropriate to complete and insure such replacement or restoration; provided, however, that if an Event of Default shall occur at any time before or after replacement or restoration has commenced, then thereupon Secured Party shall have the option to apply all remaining net proceeds either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to Secured Party, or as a credit against such of the Obligations, whether matured or unmatured, as Secured Party shall determine in Secured Party’s sole discretion. If an Event of Default shall have occurred prior to such deposit of the net proceeds, then Secured Party may, in its sole discretion, apply such net proceeds either toward replacing or restoring the Collateral, in a manner and on terms satisfactory to Secured Party, or as a credit against such of the Obligations, whether matured or unmatured, as Secured Party shall determine in Secured Party’s sole discretion.



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(xx) The Company shall cooperate with Secured Party to obtain and keep in effect one or more control agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral, or any other Collateral that may, in Secured Party’s sole discretion, require any such control agreements, provided, however, such control agreements shall only be required upon the occurrence of an Event of Default. In addition, the Company, at the Company’s expense, shall promptly: (A) execute all notices of security interest for each relevant type of Software and other General Intangibles in forms suitable for filing with any United States or foreign office handling the registration or filing of patents, trademarks, copyrights and other intellectual property and any successor office or agency thereto; and (B) take all commercially reasonable steps in any Proceeding before any such office or any similar office or agency in any other country or any political subdivision thereof, to diligently prosecute or maintain, as applicable, each application and registration of any Software, General Intangibles or any other intellectual property rights and assets that are part of the Collateral, including filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings.


(xxi) Company shall not file any amendments, correction statements or termination statements concerning the Collateral without the prior written consent of Secured Party.


(c) Collateral Collections. After an Event of Default shall have occurred, Secured Party shall have the right at any and all times to enforce the Company’s rights against all Persons obligated on any of the Collateral, including the right to: (i) notify and/or require the Company to notify any or all Persons obligated on any of the Collateral to make payments directly to Secured Party or in care of a post office lock box under the sole control of Secured Party established at Company’s expense, and to take any or all action with respect to Collateral as Secured Party shall determine in its sole discretion, including, the right to demand, collect, sue for and receive any money or property at any time due, payable or receivable on account thereof, compromise and settle with any Person liable thereon, and extend the time of payment or otherwise change the terms thereof, without incurring any liability or responsibility to the Company whatsoever; and/or (ii) require the Company to segregate and hold in trust for Secured Party and, on the day of Company’s receipt thereof, transmit to Secured Party in the exact form received by the Company (except for such assignments and endorsements as may be required by Secured Party), all cash, checks, drafts, money orders and other items of payment constituting any portion of the Collateral or proceeds of the Collateral. Secured Party’s collection and enforcement of Collateral against Persons obligated thereon shall be deemed to be commercially reasonable if Secured Party exercises the care and follows the procedures that Secured Party generally applies to the collection of obligations owed to Secured Party.



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(d) Care of Collateral. Company shall have all risk of loss of the Collateral. Secured Party shall have no liability or duty, either before or after the occurrence of an Event of Default, on account of loss of or damage to, to collect or enforce any of its rights against, the Collateral, to collect any income accruing on the Collateral, or to preserve rights against Persons with prior interests in the Collateral. If Secured Party actually receives any notices requiring action with respect to Collateral in Secured Party’s possession, Secured Party shall take reasonable steps to forward such notices to the Company. The Company is responsible for responding to notices concerning the Collateral, voting the Collateral, and exercising rights and options, calls and conversions of the Collateral. Secured Party’s sole responsibility is to take such action as is reasonably requested by Company in writing, however, Secured Party is not responsible to take any action that, in Secured Party’s sole judgment, would affect the value of the Collateral as security for the Obligations adversely. While Secured Party is not required to take certain actions, if action is needed, in Secured Party’s sole discretion, to preserve and maintain the Collateral, Company authorizes Secured Party to take such actions, but Secured Party is not obligated to do so.


4. Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:


(a) Failure to Pay. The failure of Company to pay any sum due under or as part of the Obligations as and when due and payable (whether by acceleration, declaration, extension or otherwise).


(b) Covenants and Agreements. The failure of Company to perform, observe or comply with any and all of the covenants, promises and agreements of the Company in this Agreement, the Purchase Agreement or any other Transaction Documents, which such failure is not cured by the Company within ten (10) days after receipt of written notice thereof from Secured Party, except that there shall be no notice or cure period with respect to any failure to pay any sums due under or as part of the Obligations.


(c) Information, Representations and Warranties. If any representation or warranty made herein, in the Purchase Agreement or any other Transaction Documents, or if any information contained in any financial statement, application, schedule, report or any other document given by the Company in connection with the Obligations, with the Collateral, or with any Transaction Document, is not in all respects true, accurate and complete, or if the Company omitted to state any material fact or any fact necessary to make such information not misleading.


(d) Default on Other Obligations. The occurrence of any default under any other borrowing or Obligation of the Company, if the result of such default would: (i) permit the acceleration of the maturity of any note, loan or other Contract between Company and any Person other than Secured Party; or (ii) materially and adversely affect, as determined by Secured Party in good faith, but in its sole discretion, any of the Collateral, the value thereof or Secured Party’s rights and remedies to realize upon such Collateral as set forth herein.


(e) Insolvency. Company shall be or become insolvent or unable to pay its debts as they become due, or admits in writing to such insolvency or to such inability to pay its debts as they become due.


(f) Involuntary Bankruptcy. There shall be filed against Company an involuntary petition or other pleading seeking the entry of a decree or order for relief under the Bankruptcy Code or any similar foreign, federal or state insolvency or similar laws ordering: (i) the liquidation of the Company; or (ii) a reorganization of Company or the business and affairs of Company; or (iii) the appointment of a receiver, liquidator, assignee, custodian, trustee, or similar official for Company of the property of Company, and the failure to have such petition or other pleading denied or dismissed within thirty (30) calendar days from the date of filing.



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(g) Voluntary Bankruptcy. The commencement by the Company of a voluntary case under the Bankruptcy Code or any foreign, federal or state insolvency or similar laws or the consent by the Company to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, or similar official for Company of any of the property of the Company or the making by the Company of an assignment for the benefit of creditors, or the failure by the Company generally to pay its debts as the debts become due.


(h) Judgments, Awards. The entry of any final and non-appealable Judgment or other determination or adjudication against the Company and a determination by Secured Party, in good faith but in its sole discretion, that any such Judgment or other determination or adjudication could have a Material Adverse Effect on the prospect for Secured Party to fully and punctually realize the full benefits conferred on Secured Party by this Agreement.


(i) Injunction. The injunction or restraint of the Company in any manner from conducting its business in whole or in part and a determination by Secured Party, in good faith but in its sole discretion, that the same could have a Material Adverse Effect on the prospect for Secured Party to fully and punctually realize the full benefits conferred on Secured Party by this Agreement.


(j) Attachment by Other Parties. Any Assets of the Company shall be attached, levied upon, seized or repossessed, or come into the possession of a trustee, receiver or other custodian and a determination by Secured Party, in good faith but in its sole discretion, that the same could have a Material Adverse Effect on the prospect for Secured Party to fully and punctually realize the full benefits conferred on Secured Party by this Agreement.


(k) Adverse Change in Financial Condition. The determination in good faith by Secured Party that a Material Adverse Change has occurred in the financial condition or operations of the Company, or the Collateral, which change could have a Material Adverse Effect on the prospect for Secured Party to fully and punctually realize the full benefits conferred on Secured Party by this Agreement.


(l) Adverse Change in Value of Collateral. The determination in good faith by Secured Party that the security for the Obligations is or has become inadequate.


(m) Prospect of Payment or Performance. The determination in good faith by Secured Party that the prospect for payment or performance of any of the Obligations is impaired for any reason.


5. Rights and Remedies.


(a) Rights and Remedies of Secured Party. Upon and after the occurrence of an Event of Default, Secured Party may, without notice or demand, exercise in any jurisdiction in which enforcement hereof is sought, the following rights and remedies, in addition to the rights and remedies available to Secured Party under the Purchase Agreement and any other Transaction Documents, the rights and remedies of a secured party under the Code, and all other rights and remedies available to Secured Party under applicable law or in equity, all such rights and remedies being cumulative and enforceable alternatively, successively or concurrently:



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(i) Take absolute control of the Collateral, including transferring into the Secured Party’s name or into the name of its nominee or nominees (to the extent the Secured Party has not theretofore done so) and thereafter receive, for the benefit of the Secured Party, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof;


(ii) Require the Company to, and the Company hereby agrees that it will at its expense and upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place or places to be designated by the Secured Party that is convenient to Secured Party, and the Secured Party may enter into and occupy the Business Premises or any other premises owned or leased by the Company where the Collateral or any part thereof is located or assembled in order to effectuate the Secured Party’s rights and remedies hereunder or under law, including removing such Collateral therefrom, without any obligation or liability to the Company in respect of such occupation, the Company HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL AND THE COMPANY HEREBY GRANTING TO SECURED PARTY AND ITS AGENTS AND REPRESENTATIVES FULL AUTHORITY TO ENTER SUCH PREMISES;


(iii) Without notice, except as specified below, and without any obligation to prepare or process the Collateral for sale: (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable; and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Secured Party may deem commercially reasonable. The Company agrees that, to the extent notice of sale or any other disposition of the Collateral shall be required by law, at least ten (10) days’ notice to the Company of the time and place of any public sale or the time after which any private sale or other disposition of the Collateral is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Company hereby waives any claims and actions against the Secured Party arising by reason of the fact that the price at which any of the Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that the Company may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof. The Company hereby acknowledges that: (X) any such sale of the Collateral by the Secured Party shall be made without warranty; (Y) the Secured Party may specifically disclaim any warranties of title, possession, quiet enjoyment or the like; and (Z) such actions set forth in clauses (X) and (Y) above shall not adversely affect the commercial reasonableness of any such sale of Collateral. In addition to the foregoing: (1) upon written notice to the Company from the Secured Party after and during the continuance of an Event of Default, the Company shall cease any use of any intellectual property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2) the Secured Party may, at any time and from time to time after and during the continuance of an Event of Default, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Company’s intellectual property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Secured Party shall in its sole discretion determine; and (3) the Secured Party may, at any time, pursuant to the authority granted under this Agreement (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of the Company, one or more instruments of assignment of any intellectual property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.



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(iv) Operate, manage and control the Collateral (including use of the Collateral and any other property or assets of Company in order to continue or complete performance of Company’s obligations under any contracts of Company), or permit the Collateral or any portion thereof to remain idle or store the same, and collect all rents and revenues therefrom.


(v) Enforce the Company’s rights against any Persons obligated upon any of the Collateral.


(vi) The Company hereby acknowledges that if the Secured Party complies with any applicable foreign, state, provincial or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.


(vii) The Secured Party shall not be required to marshal any present or future collateral security (including, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Secured Party’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that the Company lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Company hereby irrevocably waives the benefits of all such laws.


(b) Power of Attorney. Effective upon the occurrence of an Event of Default, Company hereby designates and appoints Secured Party and its designees as attorney-in-fact of and for the Company, irrevocably and with full power of substitution, with authority to endorse the Company’s name on any notes, acceptances, checks, drafts, money orders, instruments or other evidences of payment or proceeds of the Collateral that may come into Secured Party’s possession; to execute proofs of claim and loss; to adjust and compromise any claims under insurance policies; and to perform all other acts necessary and advisable, in Secured Party’s sole discretion, to carry out and enforce this Agreement and the rights and remedies conferred upon the Secured Party by this Agreement, the Purchase Agreement or any other Transaction Documents. All acts of said attorney or designee are hereby ratified and approved by the Company and said attorney or designee shall not be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law. This power of attorney is coupled with an interest and is irrevocable so long as any of the Obligations remain unpaid or unperformed or there exists any commitment by Secured Party which could give rise to any Obligations.


(c) Costs and Expenses. Upon the occurrence of a default or Event of Default under this Agreement or any other Transaction Documents, the Company agrees to pay to the Secured Party, upon demand, the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Secured Party and of any experts and agents, which the Secured Party may incur in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement; (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral; (iii) the exercise or enforcement of any of the rights of the Secured Party hereunder; or (iv) the failure by the Company to perform or observe any of the provisions hereof. Included in the foregoing shall be the amount of all expenses paid or incurred by Secured Party in consulting with counsel concerning any of its rights hereunder, under the Purchase Agreement or under applicable law, as well as such portion of Secured Party’s overhead as Secured Party shall allocate to collection and enforcement of the Obligations in Secured Party’s sole but reasonable discretion. All such costs and expenses shall bear interest from the date of outlay until paid, at the highest rate set forth in the Debenture, or if none is so stated, the highest rate allowed by law. The provisions of this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment of all Obligations.



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6. Security Interest Absolute. All rights of the Secured Party and all Obligations of the Company hereunder, shall be absolute and unconditional, irrespective of: (i) any lack of validity or enforceability of this Agreement, the Purchase Agreement, and any other Transaction Documents or any agreement entered into in connection with the foregoing, or any portion hereof or thereof; (ii) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the terms and provisions of the Purchase Agreement, any other Transaction Documents, or any other agreement entered into in connection with the foregoing; (iii) any exchange, release or non-perfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guaranty, or any other security, for all or any of the Obligations; (iv) any action by the Secured Party to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (v) any other circumstance which might otherwise constitute any legal or equitable defense available to the Company, or a discharge of all or any part of the security interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Party shall continue even if the Obligations are barred for any reason, including, the running of the statute of limitations or bankruptcy. In the event that at any time any transfer of any Collateral or any payment received by the Secured Party hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the Bankruptcy Code or any other similar insolvency or bankruptcy laws of any jurisdiction, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in any such event, the Company’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The Company waives all right to require the Secured Party to proceed against any other Person or to apply any Collateral which the Secured Party may hold at any time, or to pursue any other remedy. The Company waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby.


7. Indemnity. The Company agrees to defend, protect, indemnify and hold the Secured Party forever harmless from and against any and all Claims of any nature or kind (including reasonable legal fees, costs, expenses, and disbursements of counsel) to the extent that they arise out of, or otherwise result from, this Agreement (including, enforcement of this Agreement). This indemnity shall survive termination of this Agreement but only until the statute of limitations with respect to any Claims has expired, at which time this indemnity shall no longer survive.



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8. Miscellaneous.


(a) Performance for Company. The Company agrees and hereby authorizes that Secured Party may, in Secured Party’s sole discretion, but Secured Party shall not be obligated to, whether or not an Event of Default shall have occurred, advance funds on behalf of the Company, without prior notice to the Company, in order to insure the Company’s compliance with any covenant, warranty, representation or agreement of the Company made in or pursuant to this Agreement, the Purchase Agreement, or any other Transaction Documents, to continue or complete, or cause to be continued or completed, performance of the Company’s obligations under any Contracts of the Company, or to preserve or protect any right or interest of Secured Party in the Collateral or under or pursuant to this Agreement, the Purchase Agreement or any other Transaction Documents, including, the payment of any insurance premiums or taxes and the satisfaction or discharge of any Claim, Obligation, Judgment or any other Encumbrance upon the Collateral or other property or Assets of Company; provided, however, that the making of any such advance by Secured Party shall not constitute a waiver by Secured Party of any Event of Default with respect to which such advance is made, nor relieve the Company of any such Event of Default. The Company shall pay to Secured Party upon demand all such advances made by Secured Party with interest thereon at the highest rate set forth in the Debenture, or if none is so stated, the highest rate allowed by law. All such advances shall be deemed to be included in the Obligations and secured by the security interest granted Secured Party hereunder; provided, however, that the provisions of this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment of all other Obligations.


(b) Applications of Payments and Collateral. Except as may be otherwise specifically provided in this Agreement or the Purchase Agreement, all Collateral and proceeds of Collateral coming into Secured Party’s possession and all payments made by any Person to Secured Party with respect to any Collateral may be applied by Secured Party (after payment of any amounts payable to the Secured Party pursuant to Section 5(c) hereof) to any of the Obligations, whether matured or unmatured, as Secured Party shall determine in its sole, but reasonable discretion. Any surplus held by the Secured Party and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct. Secured Party may defer the application of Noncash Proceeds of Collateral, to the Obligations until Cash Proceeds are actually received by Secured Party. In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, the Company shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Debenture for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to collect such deficiency.


(c) Waivers by Company. The Company hereby waives, to the extent the same may be waived under applicable law: (i) notice of acceptance of this Agreement; (ii) all claims and rights of the Company against Secured Party on account of actions taken or not taken by Secured Party in the exercise of Secured Party’s rights or remedies hereunder, under the Purchase Agreement, and other Transaction Documents or under applicable law; (iii) all claims of the Company for failure of Secured Party to comply with any requirement of applicable law relating to enforcement of Secured Party’s rights or remedies hereunder, under the Purchase Agreement, under any other Transaction Documents or under applicable law; (iv) all rights of redemption of the Company with respect to the Collateral; (v) in the event Secured Party seeks to repossess any or all of the Collateral by judicial proceedings, any bond(s) or demand(s) for possession which otherwise may be necessary or required; (vi) presentment, demand for payment, protest and notice of non-payment and all exemptions applicable to any of the Collateral or the Company; (vii) any and all other notices or demands which by applicable law must be given to or made upon the Company by Secured Party; (viii) settlement, compromise or release of the obligations of any Person primarily or secondarily liable upon any of the Obligations; (ix) all rights of the Company to demand that Secured Party release account debtors or other Persons liable on any of the Collateral from further obligation to Secured Party; and (x) substitution, impairment, exchange or release of any Collateral for any of the Obligations. The Company agrees that Secured Party may exercise any or all of its rights and/or remedies hereunder, under the Purchase Agreement, the other Transaction Documents and under applicable law without resorting to and without regard to any Collateral or sources of liability with respect to any of the Obligations. Upon termination of this Agreement and Secured Party’s security interest hereunder and payment of all Obligations, within ten (10) business days following the Company’s request to Secured Party, Secured Party shall release control of any security interest in the Collateral perfected by control and Secured Party shall send Company a statement terminating any financing statement filed against the Collateral.



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(d) Waivers by Secured Party. No failure or any delay on the part of Secured Party in exercising any right, power or remedy hereunder, under this Agreement, the Purchase Agreement, and other Transaction Documents or under applicable law, shall operate as a waiver thereof.


(e) Secured Party’s Setoff. Secured Party shall have the right, in addition to all other rights and remedies available to it, following an Event of Default, to set off against any Obligations due Secured Party, any debt owing to the Company by Secured Party.


(f) Modifications, Waivers and Consents. No modifications or waiver of any provision of this Agreement, the Purchase Agreement, or any other Transaction Documents, and no consent by Secured Party to any departure by the Company therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given, and any single or partial written waiver by Secured Party of any term, provision or right of Secured Party hereunder shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver of any other right, power or remedy. No notice to or demand upon the Company in any case shall entitle Company to any other or further notice or demand in the same, similar or other circumstances.


(g) Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:

If to the Company: Tootie Pie Company, Inc.
129 Industrial Drive
Boerne, TX 78006
Attn: Mr. Don Merrill, Jr., CEO

With a copy to: David P. Strolle, Jr., Esq.
Law Offices of David P. Strolle, Jr.
8000 I.H. 10 West, Suite 600
San Antonio, Texas 78230

If to the Secured Party: TCA Global Credit Master Fund, LP
1404 Rodman Street
Hollywood, FL 33020
Attn: Mr. Robert Press

With a copy to: David Kahan, P.A.
6420 Congress Ave., Suite 1800
Boca Raton, FL 33487
Attn: David Kahan, Esq.



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unless the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Debenture may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.


(h) Applicable Law and Consent to Jurisdiction. This Agreement shall be construed in accordance with the laws of the State of Nevada, without regard to the principles of conflicts of laws, except to the extent that the validity and perfection or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder, in respect of any particular Collateral are governed under the Code by the law of a jurisdiction other than the State of Nevada, in which case such issues shall be governed by the laws of the jurisdiction governing such issues under the Code. The parties further agree that any action between them shall be heard in Clark County, Nevada and expressly consent to the jurisdiction and venue of the State Court sitting in Clark County, Nevada and the United States District Court for the District of Nevada for the adjudication of any civil action asserted pursuant to this Agreement, provided, however, that nothing herein shall prevent Secured Party from bringing suit or taking legal action in any other jurisdiction. By its execution hereof, the Company hereby irrevocably waives any objection and any right of immunity on the ground of venue, the convenience of the forum or the jurisdiction of such courts or from the execution of judgments resulting therefrom. The Company hereby irrevocably accepts and submits to the jurisdiction of the aforesaid courts in any such suit, action or proceeding.


(i) Survival: Successors and Assigns. All covenants, agreements, representations and warranties made herein shall survive the execution and delivery hereof, shall survive Closing and shall continue in full force and effect until all Obligations have been paid in full, there exists no commitment by Secured Party which could give rise to any Obligations and all appropriate termination statements have been filed terminating the security interest granted Secured Party hereunder. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. In the event that Secured Party assigns this Agreement and/or its security interest in the Collateral, Secured Party shall give written notice to the Company of any such assignment and such assignment shall be binding upon and recognized by the Company. All covenants, agreements, representations and warranties by or on behalf of the Company which are contained in this Agreement shall inure to the benefit of Secured Party, its successors and assigns. The Company may not assign this Agreement or delegate any of its rights or obligations hereunder, without the prior written consent of Secured Party, which consent may be withheld in Secured Party’s sole and absolute discretion.



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(j) Severability. If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable by any court or governmental authority of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed as if such invalid or unenforceable term, provision or condition had not been contained therein.


(k) Merger and Integration. This Agreement and the attached Schedules (if any), together with the Purchase Agreement and the other Transaction Documents, contain the entire agreement of the parties hereto with respect to the matters covered and the transactions contemplated hereby and thereby, and no other agreement, statement or promise made by any party hereto or thereto, or by any employee, officer, agent or attorney of any party hereto, which is not contained herein or therein shall be valid or binding.


(l) WAIVER OF JURY TRIAL. THE COMPANY HEREBY: (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY; AND (b) WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE COMPANY AND SECURED PARTY MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS AGREEMENT, THE PURCHASE AGREEMENT AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN THE PARTIES. IT IS UNDERSTOOD AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS SECURITY AGREEMENT. THIS WAIVER OF JURY TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE COMPANY AND THE COMPANY HEREBY AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. SECURED PARTY IS HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE COMPANY AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO TRIAL BY JURY. THE COMPANY REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.



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(m) Execution. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.


(n) Headings. The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall not be used or deemed to limit or diminish any of the provisions hereof.


(o) Termination. This Agreement and the security interests hereunder shall terminate on the date on which all Obligations have been indefeasibly paid or discharged in full. Upon such termination, the Secured Party, at the request and at the expense of the Company, will join in executing any termination statement with respect to any financing statement executed and filed pursuant to this Agreement.


(p) Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.


(q) Further Assurances. The parties hereto will execute and deliver such further instruments and do such further acts and things as may be reasonably required to carry out the intent and purposes of this Agreement.


(r) Time is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties’ obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day thereafter occurring.


(s) Joint Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.


(t) Increase in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may increase from time to time in accordance with the terms and provisions of the Purchase Agreement, and all of the Obligations, as so increased from time to time, shall be and are secured hereby. Upon the execution hereof, the Company shall pay any and all documentary stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Purchase Agreement and this Agreement, and if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Debenture, then the Company shall immediately pay any additional documentary stamp taxes or other charges in connection therewith.




[Signatures on the following page]


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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the day and year first above written.


COMPANY:

TOOTIE PIE COMPANY, INC.

By: /s/ Don L. Merrill, Jr.
Name: Don L. Merrill, Jr.
Title: President and Chief Executive Officer
Date: April 5, 2012


SECURED PARTY:

TCA GLOBAL CREDIT MASTER FUND, LP

By: TCA Global Credit Fund GP, Ltd., its general partner

By: /s/ Robert Press
Name: Robert Press
Title: Director
Date: April 9, 2012



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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Cautionary Statement: This Form 10-Q contains certain statements relating to future results of the Company that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political and economic conditions; interest rate fluctuation; competitive pricing pressures within the Company’s market; equity and fixed income market fluctuation; technological change; changes in law; changes in fiscal, monetary regulatory and tax policies; monetary fluctuations as well as other risks and uncertainties detailed elsewhere in the Form 10-Q or from time-to-time in the filings of the Company with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

The following discussion should be read in conjunction with our financial statements and the related notes included in this Form 10-Q.

Operations

Premier’s Advisory, Consulting and Resourcing business consists of providing professional services (business and technology consulting focused services) to its clients. Premier’s services began a transformation in 2005 from a pure technology focus to a business consulting focus that can encompass technology impact and effort. Premier now provides 360° Intelligence Delivery, a holistic approach and view to clients’ business initiatives or problems. Premier does this by providing Knowledge Based Expertise that helps its clients drive key initiatives forward. Much of its expertise is focused on core areas of business processes used throughout the corporate world including: project management, business analysis, business consulting, and strategic consulting. Typical initiatives in which Premier provides solutions include compliance and regulatory, merger and acquisition, and business process reengineering efforts.


A typical Premier client is an organization with complex business processes, large amounts of data to manage, and change driven by regulatory or market environments, or strategic, growth and profitability initiatives. Premier promotes its Professional services through its Advisory, Consulting and Resources delivery channels.


Advisory services are provided by Premier’s Knowledge Based Experts (KBE's) within its core areas of expertise: (a) Governance, Risk and Compliance (GRC), (b) Business Performance & Technology (BP&T) and (c) Finance & Accounting (F&A). Advisory engagements within this realm include: (a) GRC efforts with enterprise risk management, control and governance frameworks, internal audit services, regulatory and compliance efforts (ie, BASEL, SOX), (b) BP&T efforts with systems planning, organizational effectiveness, business process re-engineering, business intelligence, workflow analysis, and (c) F&A efforts with financial reporting and financial advisory services. Engagements are typically structured in a Statement of Work and can be billed on fixed fee/delivery based arrangements or on a time-and-materials basis for all work performed. Premier is focused on providing Knowledge Based


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Expertise and because of the expertise involved and the complexity of a typical initiative, clients seeking such services from Premier typically engage Premier on strategic or high priority initiatives.



Consulting and Resource services are provided across a broad range of knowledge, skills and expertise including project management, systems implementation and architecture, information management, business intelligence, business expertise and analysis. Premier recruits, retains, manages, and provides to its clients skilled business, technical, financial and accounting expertise, which helps lead and train clients or supplement their knowledge requirements. Because of the expertise involved and the complexity of a typical initiative, many clients seeking such services from Premier commit to long-term engagements that are usually a minimum of 9 months in which Premier consultants work on site at client facilities under the daily direction of the client.

On March 5, 2012, the Company consummated its Merger Agreement with GHH. GHH is a provider of energy efficiency and sustainable facilities services and solutions. GHH audits, designs, engineers and installs solutions and technologies that enable its clients to reduce their energy costs and carbon footprint. GHH has two primary areas of focus, energy efficiency solutions (‘‘EES’’) and sustainable facilities solutions (‘‘SFS’’). GHH is focused on industrial, commercial, governmental and military markets in the United States and abroad and has “past performance” status with the Department of Defense. Substantially all of GHH’s revenue has historically come from its EES business focus to this point. GHH operates as the “Solutions” segment of Premier.


In the recent past, Premier has made several acquisitions seeking to expand the scope of its business and achieve growth in revenues and profitability. As a strategic advisory and consulting services firm, Premier's task is to have the capability to help clients deal with external change driven by regulatory or market environments or internal change driven by strategic, growth, and profitability initiatives. To compete more effectively, part of the strategic growth plan for Premier is to identify target firms that expand or enhance the 360° Intelligence Delivery capability. To do this Premier must have the knowledge, history, and experience, Knowledge Based Expertise, as it believes this will be a key to continued growth and opportunity. Premier has focused on expanding its Knowledge Based Expertise in targeted industry sectors which include the energy, healthcare and federal government sectors as well as by enhancing or expanding practice areas which include business process/analysis, risk and compliance, business intelligence, and program management. Premier believes that GHH business adds significantly to Premier’s expertise in the energy and engineering sectors and offers the opportunity for substantial growth in different but complementary areas. GHH is positioned as a market leader regarding strategic direction and approach as it relates to energy use. GHH has skills that complement Premier’s including: audit capabilities in the energy sector, project management, program management, and engineering capability. With a past acquisition and Premier’s current focus on the southern California market, GHH can expand Premier’s current presence and help Premier establish a stronger foothold in this target market while expanding capability.


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As mentioned above, GHH, a wholly owned subsidiary, is now operating as the Solutions segment of Premier, and has two “vertical operations” consisting of Energy and Sustainable Infrastructure. The Solutions segment will have a primary focus on energy related projects. With Automated Demand Response and Demand Side Management expected to be a $20 billion market before 2020, the Solutions segement is strategically positioned to take advantage of this growing industry. The energy efficiency and alternative energy markets are also experiencing significant growth and have not focused just in the commercial sector, but also have become a focus of military leaders looking for cost savings and revenue generation from these projects as a part of the Federal Leadership in Environmental, Energy and Economic Performance Act signed into law by the President. While the Solutions segment will have a primary focus on energy projects, it is anticipated that some of its legacy projects will fall under the Sustainable Infrastructure vertical. Future business development will focus on the growth in energy sector.


Premier Strategy

Premier’s core consulting business focus is to provide subject matter expertise through its consulting teams in a variety of ways that continue to help its clients navigate the changing business climate. Premier’s approach is built 100% around its people — it is about knowledge, expertise and execution. Premier has a focus on building its knowledge practices with talent in core areas and industries it feels offer opportunities including: compliance/regulatory, business performance and process, finance, life science, energy, government and health sectors. Premier’s recruiting and sales organization work with clients closely — a consultative approach — to understand the business direction, initiatives or issues they are dealing with. The Company’s goal is to provide industry expertise as well as in our core disciplines to allow for successful efforts.


Premier’s typical clients have historically been Fortune 500 companies (including AIG, Lincoln Financial Group, Duke Power, Bank of America, and Wells Fargo), and they continually seek expertise and knowledge in areas such as project management, business consulting, and business analysis. With Premier’s recent acquisitions, Premier is better positioned to service emerging business and the mid-market arena, especially as it relates to life sciences, biotech and technology focused companies.


In delivering its services, Premier has five key functional areas or groups that ensure delivery and support our Professional Services and Solution divisions:


(a) Talent Acquisition — sources and identifies the business and consulting staff we hire;

(b) Business Development — works with Premier’s clients in a consultative approach to identify opportunities where we can assist and provide our services;


(c) Practice Areas — Premier’s knowledge based experts, works with clients on strategic and complex issues;


(d) Consultants — these are Premier’s knowledge based experts and professionals that deliver consulting services to our clients; and


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(e) Operations – provides back office support and capability for the enterprise, including finance, HR and financial reporting.


Talent Acquisition

Premier’s success depends on its ability to hire and retain qualified employees. Premier’s recruiting team contacts prospective employment candidates by telephone, through postings on the internet, and by means of our internal recruiting software and databases. For internet postings, Premier maintains its own web page at www.premieralliance.com and uses other internet job-posting bulletin board services as well as professional and social networking sites. Premier uses a sophisticated computer application as its central repository to track applicants’ information, manage skills verification, background checks, etc. and then match them with potential client opportunities. Premier only hires candidates after they have gone through a rigorous qualification process involving multiple interviews and screening.



Market Development Team and Service Leaders

Premier’s Market Development Team and Service Leaders are its primary interface with clients, prior to delivery of services. They develop and maintain business relationships by building knowledge of Premier’s client's businesses, technical environments and strategic direction. Premier’s Market Development Team and Service Leaders use the same central repository system as recruiting, this links recruiter information with client information to manage the process efficiently and effectively.



Operations

Premier’s operations team encompasses several core functions within Premier (human resources (‘‘HR’’) and finance (‘‘Finance’’)). Encompassed within HR is our employee relations function. This provides primary support and service for our consultants on a daily basis, which is critical. This support ensures regular interaction and information sharing leading to quality services, better retention, and successful delivery to Premier’s clients. Within HR, Premier has standard human resource functions (benefit administration, payroll, background processing). Finance provides all financial processing — billing, AP, AR, and SEC reporting. The operations team has already integrated the “back office” support functions of all GHH companies. Our goal is to centralize all operations functions for all acquisitions successfully consummated through our merger activity.




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Results of Operations

The GHH acquisition became effective on March 5, 2012; the results of operations for the six months ended June 30, 2012 therfore, only include GHH's results of operations from March 5, 2012 through June 30, 2012.

Results of Operations for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

Net revenue for the six months ended June 30, 2012 was $10,280,000, an increase of 13.6%, compared to $9,047,000 for the same period in 2011. Net revenue for the six months ended June 30, 2012 contributed by the Solutions segment of GHH was $1,496,000 or 14.6% of total revenue. Excluding the second quarter contribution of GHH, net revenue would have been $8,784,000 compared to $9,047,000 for the same period in the prior year, a decrease of $263,000 or 2.9%. As for the six months ended June 30, 2012, this decline in core revenue is primarily attributable to declines in Charlotte, Kansas City and San Diego, and was partially offset by gains in Los Angeles and Winston-Salem. In the Charlotte branch, decreases in revenue were attributable to clients decisions to defer anticipated GRC projects, as well as the overall loss of consultants engaged in client billing activities; in Kansas City to the loss of two major clients and our inability to replace that business to date and in San Diego due to the lower than anticipated advisory and consulting billings hours in the Finance & Consultings areas. In all cases proactive steps are being taken to by management to address these declines.

Cost of revenues, defined as all costs for billable staff for Premier and cost of goods for GHH, was $7,808,000 or 76.0% of revenue for the six months ended June 30, 2012, as compared to $6,753,000 or 74.6% of revenue for the same period in 2011. Cost of revenue for GHH was $1,055,000 or 70.5% or total revenue. Cost of revenue for the core Premier business was 76.9% for the six months ended June 30, 2012 compared to 74.6% for the same period in the prior year and reflects the slight decrease in revenue in second quarter 2012, which did not offset fixed consultant personnel costs, lower margins and utilization rates.

Selling, general and administrative expenses (SG&A) were $3,919,000 or 38.1% of revenue for the six months ended June 30, 2012, as compared to $2,942,000 or 32.5% for the same period in 2011. For the six months ended June 30, 2012 (or since the March 5, 2012 acquisition) GHH incurred $799,000 in SG&A representing 53.4% of its total revenue. Management continues to take steps to monitor GHH’s SG&A while GHH continues to grow and gain new contract wins. SG&A, excluding GHH, for Premier’s core business would have been $3,007,000, or 35.4% of Premier's core business revenue compared to $2,942,000 and 32.5% outlined above for the six months ended June 30, 2011, an increase of $65,000. SG&A also included non-cash compensation expense related to the issuance of stock options and warrants and the amortization of stock option/warrant expense for previously awarded options/warrants that vest over time in the amount of $247,000 for the six months ended June 30, 2012 compared to $235,000 in the same period in the prior year. In addition, one-time costs of $294,000 related to M&A integration were also recorded in the six months ended June 30, 2012.

As a cumulative effect of the above, loss from operations for the six months ended June 30, 2012 was $1,560,000 compared to a loss of $728,000 for the same period in the prior year. The Company's efforts to integrate GHH into its core, at the same time it refines its business development focus, accounted for $409,000 of that loss. The remainder of the loss for the six months ended June 30, 2012 was $1,151,000 attributable to core Premier functions, an increase over the loss for the six months ended June 30, 2011 of $422,00 or 58%. A decline in core Premier revenues without corresponding decreases in fixed costs was the primary reason for this loss. Management has and will continue to take steps to realign fixed costs with revenues.



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Other income and expense, net resulted in a net loss of $171,000 for the six months ended June 30, 2012 versus a net loss of $205,000 for the same period in the prior year. For the six months ended June 30, 2012 the loss is almost entirely attributable to derivative expense, a non-cash item recorded as a result of the revaluation of warrants and the related derivative liability at June 30, 2012 compared to December 31, 2012. In the six months ended June 30, 2011, the loss is almost entirely attributable to interest expense on the Company’s debentures (subsequently paid in full in November 2011) and loss incurred as a result of the early extinguishment of a portion of these debentures converted to common stock.

The income tax benefit of $266,000 and effective rate of 15% is attributable to the impact of permanent differences (nontaxable items such as certain stock compensation expense, nondeductible meals & entertainment, certain derivative expense, etc.), that do not have any effect on Premier's actual tax return.

Net loss of $1,731,000 for the six months ended June 30, 2012 compared to a loss of $934,000 for the corresponding period in the prior year is directly attributable to the indiviudal factors outlined above. Net loss for common stockholders was affected by the dividends paid on the preferred stock in the quarter ended June 30, 2012 and June 30, 2011, resulting in a net loss to common stockholders for the six months ended June 30, 2012 of $1,786,000 and basic and fully diluted net loss per share of $0.14 and $2,613,063 for the six months ended June 30, 2011 and basic and fully diluted net loss per share of $0.33.

Results of Operations for the three months ended June 30, 2012 compared to the three months ended June 30, 2011.

Net revenue for the three months ended June 30, 2012 was $5,494,000, an increase of 30%, compared to $4,214,000 for the same period in 2011. Net revenue for the three months ended June 30, 2012 contributed by GHH was $1,261,000 or 23% of total revenue. Excluding the second quarter contribution of GHH, net revenue would have been $4,233,000 compared to $4,214,000 for the same period in the prior year.

Cost of revenues was $4,103,000 or 74.7% of revenue for the three months ended June 30, 2012, as compared to $3,066,000 or 72.8% of revenue for the same period in 2011. Cost of revenue for GHH was $871,000 or 69.1% or total revenue. Cost of revenue for the core Premier business was 76.3% and reflects the flat revenue in second quarter 2012, which did not offset fixed consultant personnel expense, lower margins and utilization rates.

SG&A expenses were $2,073,000 or 37.7% of revenue for the three months ended June 30, 2012, as compared to $1,548,000 or 36.7% for the same period in 2011. But for the SG&A expenses of GHH of $556,000 (which represented 44.1% of their total revenue), SG&A for Premier’s core business would have been $1,517,000, a decrease of $31,000 for the same period in 2011. SG&A also included non-cash compensation expense related to the issuance of stock options and warrants and the amortization of stock option/warrant expense for previously awarded options/warrants that vest over time in the amount of $84,000 for the three months ended June 30, 2012 compared to $94,000 in the same period in the prior year.



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Loss from operations for the three months ended June 30, 2012, was $751,000 as compared to a loss of $453,000 for the same period in 2011. The increase in the loss in 2012 over 2011 is primarily attributable to the loss from operations from GHH for the period from the second quarter of $204,000 and an increase in Cost of Revenues for the three months ended June 31, 2012 compared to the same period in the prior year.

Other income and expense, net resulted in a net income of $1,580,000 and was comprised almost exclusively of derivative income, a non-cash item, resulting from the revaluation of warrants and the related derivative liability at June 30, 2012 resulting in derivative income of $1,619,000, offset by interest expense of $17,000 and a decline in the market value of officers life insurance.

The effective income tax rate is 24.1% and is impacted by the permanent differences attributable to certain derivative income and certain stock compensation expense which are considered permanent differences; hence, nontaxable, and not providing a tax deduction or benefit.

Net income for the three months ended June 30, 2012 was $628,000 compared to a loss of $625,000 for the same period in the prior year. The positive swing in income of $1,253,000 is primarily attributable to the derivative income recorded for the three months ended June 30, 2012 as described above, offset by an increased loss from operations of $298,000. This resulted in basic net income per share of $0.04 per share and $0.02 on a fully diluted basis for the three months ended June 30, 2012 compared to a net loss per share of $0.08 on a basic and fully diluted basis for the three months ended June 30, 2011.

Dividend

No dividend for common stock has been declared as of June 30, 2012, and the Company does not anticipate declaring dividends in the future.

Critical Accounting Policies

Revenue Recognition

Premier primarily follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of any agreement exists, services have been rendered, and collectability is reasonably assured, therefore, revenue is recognized when the Company invoices clients for completed services at contracted rates and terms. GHH’s Control Engineering division records revenue on a percentage of completion accounting basis.

Income Taxes

The Company makes certain estimates and judgments in determining income tax expense/benefit for financial statement purposes. These estimates and judgments occur in calculating tax credits, tax benefits, and deductions that arise from differences in the timing of recognition of revenue and expense for tax and financial-statement purposes.



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Further, the Company assesses the likelihood that deferred tax assets are recoverable. If recovery is unlikely, the Company increases the provision for taxes by recording a valuation allowance against the estimated deferred tax assets that will not ultimately be recoverable. As of June 30, 2012, all deferred tax assets were evaluated and an allowance against certain current deferred tax assets was provided in the amount of $514,000. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which the Company determines that the recovery is unlikely.

Financial Condition and Liquidity

As of June 30, 2012, the Company had cash and cash equivalents of $1,058,000 representing a decrease of $1,993,000 from December 31, 2011. Net working capital at June 30, 2012, was $923,000, as compared to $4,381,000 on December 31, 2011 a decrease of $3,458,000. This decrease is primarily attributable to increased borrowing under the bank line of credit of $614,000, an increase in accounts payable and accrued expenses of $1,126,000 (which is almost exclusively attributable to the GHH acquisition) with the remainder being cash used in operating activities described below. Current assets at June 30, 2012, were $5,179,000. At June 30, 2012, the Company had long-term liabilities of $1,059,000, which is primarily comprised of a non-cash item, a derivative liability of $738,000 representing the current fair value calculation of detachable stock warrants. Shareholders’ equity as of June 30, 2012, was $13,287,000 which represented 71% of total assets.

During the six months ended June 30, 2012, the net cash used by operating activities was $2,251,000 and was primarily a result of the net loss of $1,465,000, offset by the non-cash charge of derivative expense of $185,000, non-cash stock option / warrant compensation expense of $247,000, and depreciation and amortization expense of $113,000. These increases were offset by an increase in deferred income taxes of $266,000, an increase in accounts receivable of $213,000, an increase in costs and estimated earnings in excess of billings on uncompleted contracts of $590,000 and a decrease in billings in excess of costs and estimated earnings on uncompleted contracts of $255,000. Cash flows from investing activities used $286,000 and were attributable to issuance of secured notes receivable of $195,000, expenditures for stock issuance costs related to the GHH acquisition of $193,000, net purchases of property and equipment of $4,000, offset by the receipt of $107,000 in cash from the GHH acquisition.


Financing activities provided $544,000 of cash for the six months ended June 30, 2012. This increase is directly attributable to net proceeds from borrowings on the bank line of credit of $614,000, offset by required payments on long-term debt of $70,000.

Outlook

Major trends or issues that Premier must deal with involve the following: 1) consolidation of primary consulting lists and standardized pricing by our clients and potential clients, 2) competitive nature of attracting knowledge based experts in Premier’s core areas of focus, and 3) fully integrating GHH and realizing its full potential.

Clients are consolidating their primary consulting lists to much smaller numbers of approved firms to work with while at the same time attempting to standardize pricing and have all the approved firms involved in more opportunities within the client. The benefit of this is that in



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many cases, the Company’s pricing is being compared to large specialty and big 4 consulting firms, which is a competitive benefit for Premier based on the Company’s model. This focus by clients however, is opening up more competition for engagements that in the past might not have been pursued by many of the competitors that are thrust into the forum now. Premier must continue to build its expertise to be competitive. With the pace of current regulatory and business change, attracting the proper talent is a key to future opportunity. Individuals that have experience or can mold their past experiences to current business times, especially as it relates to regulatory, compliance, or organizational effectiveness as well as with industry specific knowledge are in high demand by many firms.

Premier has addressed these issues from three (3) perspectives. First the Company has laid the foundation and made a shift of core services from a pure technology focus to a complete business consulting focus. This shift has allowed Premier to reposition the Company with our clients, promote Premier’s capabilities and Knowledge Based Expertise (KBE) and increase visibility with clients, moving to a value added provider for clients. Secondly the Company has structured the organization with a Professional Services and Consulting focus. This allows the Company to promote the benefits of a focused professional service firm with the advantages of a consulting arm, which is a benefit to both to clients and employees. Lastly, Premier has changed the talent acquisition processes to a more focused approach for effectively identifying, sourcing, and qualifying the KBE resource, creating a pool of talent the Company can network and utilize, and ensure Premier is positioned for growth by building practice areas within the company.

The Company’s top priority is to broaden the range of services we offer by building “areas of business expertise and knowledge and increased industry specific knowledge” while simultaneously building a more geographically diverse client base. Premier believes that achieving this goal will require a combination of merger activity and organic growth. This will in part depend on continued improvement in the U.S. business market.

In 2010, the Company completed two acquisitions with firms based in Kansas City, MO and San Diego, CA. These transactions contributed to a broader client base crossing additional industries (engineering, technology, life sciences, biotechnology), better geographic coverage, added to our professional services strengths (GRC and F&A) and added more capabilities on the business development and fulfillment ends.

The GHH acquisition presents tremendous opportunities for Premier both from GHH’s business model and in cross selling opportunities, particularly in the energy sector, one of Premier’s target industries.

The Company’s line of credit expires in October 2012 and the Company is in negotiation with its lender to increase its line of credit at the time the line of credit expires. The current line of credit is limited to a borrowing base of 75% of eligible receivables or $1,500,000. The Company is also anticipating an equity funding event in the foreseeable future, potentially in conjunction with an acquisition which would also provide additional working capital

Off-Balance-Sheet Arrangements

As of June 30, 2012, and during the prior three months then ended, there were no other transactions, agreements or other contractual arrangements to which an unconsolidated entity was a party under which we (1) had any direct or contingent obligation under a guarantee contract, derivative instrument, or variable interest in the unconsolidated entity, or (2) had a retained or contingent interest in assets transferred to the unconsolidated entity.



22
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table of contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk


The Company’s primary market risk exposures consist of interest rate risk associated with variable rate borrowings and investment market fluctuation impact on long term assets. Management believes that interest rate fluctuations will not have a material impact on Premier’s results of operations. Market fluctuation provides investment gain or loss on variable life insurance policies (managed by Metropolitan Life). The policies are long term assets which contribute to the financial stability of the company and can impact funding and loan capability.


Interest Rate Risks

At June 30, 2012, the Company had an outstanding balance of $1,356,966 under its revolving credit agreement. Interest on borrowings under the facilities is based on the daily LIBOR rate plus a 3.50% margin, and no less than 4%. The Company renewed this line in July 2012 for an additional three months and it now expires October 18, 2012. Daily average borrowings for the first six months ended June 30, 2012 were $1,095,898.


Market fluctuation impact on assets


For the three and six months ending June 30, 2012, the valuation of the Variable Life Insurance policies had an investment loss of $32,249 and a gain of $7,149, respectively.


Equity Market Risks

The trading price of our common stock has been and is likely to continue to be volatile and could be subject to wide fluctuations. Such fluctuations could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.

[10 bagger]

Stocks that should to be added to in October 2012.. Sept. SUCKED..

hank
==================================================================

BIOYF,, $0.9811

BioSyent Inc. is a specialty pharmaceutical company whose wholly owned subsidiary, BioSyent Pharma Inc., sources, acquires or in-licences pharmaceutical products and markets these products in Canada.

Wholly owned BioSyent subsidiary Hedley Technologies Ltd. operates the company’s legacy business marketing bio and health friendly non-chemical insecticides.

BioSyent common shares are listed for trading on the TSX Venture Exchange (TSXV) under the symbol RX.

BioSyent sources pharmaceutical products that have been successfully developed and proven to be safe and effective; manages these products through the regulatory process and product registration (approval); and once approved, markets these products in Canada. These pharmaceuticals compete in both the branded and generic market segments and do not require further product development investment other than regulatory costs.

Company Contact
Headquarters: Suite 520, 170 Attwell Drive
TORONTO M9W 5Z5
CAN
Web Address:
http://www.biosyent.com/
==================================================================

BNCC,, $6.25 BNCCORP, Inc.

(BNCCORP) is a bank holding company. The Company is the parent company of BNC National Bank (together with its wholly owned subsidiary, BNC Insurance Services, Inc., collectively the Bank). The Company operates community banking and wealth management business from 20 locations in Arizona, Minnesota and North Dakota. The Company also conducts mortgage banking from 10 locations in Arizona, Minnesota, Iowa, Kansas, Nebraska and Missouri. In its banking and wealth management operations, the Company provides relationship-based services to small and mid-sized businesses, business owners, professionals and consumers in its primary market areas of Arizona, Minnesota and North Dakota. The Company's loan portfolio consists of commercial and industrial loan, real estate mortgage loan, real estate construction loan, participating interests in mortgage loan and agricultural loan.

Company Contact
Headquarters: 322 East Main Avenue,
PO Box 4050
BISMARCK, ND 58502-4050
Web Address:
http://www.bnccorp.com/
==================================================================

BNLB.. $0.094

Bond Laboratories, Inc. (Bond Laboratories) is a provider of nutritional supplements and beverage products for health conscious consumers. The Company produces and markets its products through its two primary operating divisions: NDS Nutrition Products, Inc. (NDS) and Fusion Premium Beverages, Inc. (Fusion Premium Beverages). NDS manufactures and distributes a line of nutritional supplements to support healthy living through GNC franchise locations located throughout the United States. Fusion Premium Beverages distributes a line of health and energy beverages that help to support and promote an active lifestyle.

Company Contact
Headquarters: Suite 106A, 11011 Q Street
OMAHA, NE 68137
Web Address:
http://www.bond-labs.com
==================================================================

DDXS,, $0.34

diaDexus, Inc., formerly VaxGen, Inc., is a life sciences company focused on the development and commercialization of in vitro diagnostic products addressing unmet needs in cardiovascular disease. The diaDexus PLAC Test for Lp-PLA2 provides new information, over and above traditional risk factors, to help identify individuals at increased risk of suffering a heart attack or stroke. The Company owns a biopharmaceutical manufacturing facility with a 1,000-liter bioreactor that can be used to make cell culture or microbial biologic products. This facility is located within leased premises. The Company leases a 65,000 square-foot facility in South San Francisco, California, of which approximately 15,000 square feet is dedicated to biologics manufacturing. The Company has ended all product development activities and sold or otherwise terminated its drug development programs. In July 2010, the Company merged with diaDexus, Inc.

Company Contact
Headquarters: 343 Oyster Point Boulevard
SOUTH SAN FRANCISCO, CA 94080
Web Address:
http://www.diadexus.com/
==================================================================

EIPC,, $0.01

Enable IPC Corporation (Enable) is a development-stage company. The Company is engaged in the development of power technologies that combine thin films and nanotechnology. As of March 31, 2008, the Company had no revenue from its operations. Enable IPC (intellectual property commercialization) is focused on developing micro battery technologies, consisting primarily of cathodes using structures on the nanoscale and ultracapacitor technologies utilizing nanoparticles.

Company Contact
Headquarters: Suite 107, 4005 Felland Road
MADISON, WI 53718
Web Address:
http://www.enableipc.com
==================================================================

ENSV,, $0.45

Enservco Corporation, formerly Aspen Exploration Corporation primarily conducts its business operations through two subsidiaries, Dillco Fluid Service, Inc. (Dillco), and Heat Waves Hot Oil Services LLC (Heat Waves), which provides oil field services to the domestic onshore oil and natural gas industry. These services include pressure testing, hot oiling, acidizing, frac heating, freshwater and saltwater hauling, frac tank rental, well site construction and other general oil field services. The Company operates in southern Kansas, northwestern Oklahoma, northeastern Utah, northern New Mexico, southern Wyoming, northwestern West Virginia, Colorado, and southwest Pennsylvania, and western North Dakota and eastern Montana. The Company operates in three categories: fluid services, including water hauling, frac tank rental and disposal services; well enhancement services, including hot oiling, acidizing, frac hearing and pressure testing, and construction and Roustabout Services.

Company Contact
Headquarters: Suite 320, 501 South Cherry Street
COLORADO SPRINGS, CO 80246
Web Address:
http://www.enservco.com/
=================================================================

FECOF,, $0.0139

FEC Resources Inc. (FEC) is engaged in the acquisition, exploration, and when warranted, development of natural resource and mineral properties. As of December 31, 2011, the Company is pursuing exploration and development opportunities for oil, natural gas, iron ore, gold, and coal in the Philippines through various companies, in which the Company hold interests. The principal investment of FEC is in Forum Energy Plc (FEP). As of December 31, 2011, the Company held 25.63% interest in FEP. The principal asset of FEP is the oil and gas rights over an 8,800 square-kilometer block located in the South China Sea. In addition FEP holds interests in various other concessions located in the Philippines. The parent Company of the FEC is Philex Petroleum Corporation, which holds 50.4% interest in the Company.

Company Contact
Headquarters: 46 Royal Ridge Rise NW
CALGARY T3G 4V2
CAN
Web Address:
http://www.fecresources.com
==================================================================

GAMR,, $0.41

Great American Group, Inc. (Great American) is a provider of asset disposition and valuation and appraisal services to a range of retail, wholesale and industrial customers, as well as lenders, capital providers, private equity investors and professional service firms. The Company operates in two segments: liquidation and auction solutions and valuation and appraisal services. Its liquidation and auction divisions assist customers in the disposition of assets. Such assets include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property. Great American's valuation and appraisal services division provides its clients with independent appraisals in connection with asset-based loans, acquisitions, divestitures and other business needs. Its valuation and appraisal services division provides valuation and appraisal services to financial institutions, lenders, private equity investors and other providers of capital.

Company Contact
Headquarters: Suite 300 South, 21860 Burbank Boulevard
WOODLAND HILLS, CA 91367
Web Address:
http://www.greatamerican.com
==================================================================

GLMB,, $0.135

Global MobileTech (www.globalmobiletech.com) provides a proprietary technology platform used to deliver e-Shopping and mobile/online advertising to users participating in a rewards program. Users have several redemption options to utilize their reward points that include making free long distance and international calls, sending text messages, and converting the reward points earned into cash for donation to charitable organizations. Global MobileTech provides its patented technology to private label partners and operates the MobiCAST platform and MobiREWARDS program. Its principal user base is located in Asia. In addition, Global MobileTech operates an alternative energy segment providing biomass energy consulting services in South East Asia.
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JNSH,,, $0.015

JNS Holdings Corporation Reports Second Quarter 2012 Financial Results
August 14, 2012 11:00 AM Eastern Daylight Time

CHICAGO--(BUSINESS WIRE)--JNS Holdings Corporation (OTC Markets Group: JNSH) today announced financial results for the second quarter, ending June 30, 2012. JNS Power & Control Systems, Inc. reported revenues of $747,202, which is 47% greater than the same period in 2011. Gross profits were $438,989 or 59% for 2012, net profits also rose to $119,813 or 68% compared to $71,486 in 2011. Second quarter financials have already been uploaded to OTC Markets for additional information.

S&H Leasing, Inc. also reported revenues of $59,755, another positive increase from last year, net profits climbed to $20,229 or 34%.

Jean Howe, President and Chief Executive Officer stated, “Our quarterly revenue & profit numbers continue to improve as we stayed true to our core principals. As we look to the future I feel we have gained new flexibility with our new line of credit and we will be able to resume larger projects and explore the possibilities for future expansion into different regions in the near future.”

JNS Holdings Corporation Announces Revenue Increase by 68% for the First Quarter of 2012
May 14, 2012 10:23 AM Eastern Daylight Time

CHICAGO--(BUSINESS WIRE)--JNS Holdings Corporation (OTC Markets Group: JNSH) is pleased to announce that JNS has successfully increased its revenue by more than 68%. JNS’s revenues increased from $323,609 for the period ending March 31, 2011, to $542,891 for the same period this year. This was achieved by continued repeat business from long term customers. Interested investors are encouraged to go to OTC Markets Group and compare the 2010 year end financials to the latest first quarter 2012 financials, which was uploaded last week. Once a comparison has been made, you will discover that JNS has paid off U.S. Bank and reduced our debt with Bayview by more than 32%.

Jean Howe, President and Chief Executive Officer stated, “Management has worked tirelessly to strengthen our balance sheet over the last year. Due to our new financial position, we are currently able to negotiate with a local bank to establish a new line of credit. This line of credit will insure access to additional cash flow necessary to accept larger, more complex and profitable projects. Our continued dedication to excellence has afforded us major business opportunities – opportunities that will be fully realized when we have significant cash flow access.”

JNS Holdings Corporation
Jean Howe, [phone]
President
[e-mail]
www.jnsholdings.com
=================================================================

KLYG,, $0.229

Kelyniam Global Inc. specializes in the use of CAD/CAM technology to provide patient specific custom implants to assist medical professionals by allowing them to operate more effectively, improve patient care, and reduce health care costs by providing the highest quality products available with today's technology. The company is continually researching and developing new products and processes to help patients live more active and productive lives.

www.kelyniam.com for more information.
=================================================================

LVWD,, 0.2428

LiveWorld, a user content management company, is a trusted partner to the world’s largest brands, including the number-one companies in retail, CPG, pharmaceutical, and financial/travel services. We revolutionize the management of user content through innovative proprietary technology, leading edge services, and deep integration with client marketing and customer support teams. Scaling human review of user content and human touch points, LiveWorld removes obstacles that brands face, allowing them to engage more deeply in social media. In an innovative approach that encompasses review, management, and analysis of user content, LiveWorld provides 24/7 brand protection through “always on” moderation and engagement across social channels, applications, and sites. The LiveWorld solution offers a competitive advantage through management of user content in sheer volume, resulting in amplified brand presence, and proven to improve social media marketing and increase customer loyalty. LiveWorld is headquartered in California, with offices in San Jose, CA and New York City.

www.liveworld.com.

IR:
LiveWorld
David Houston, 1 408-615-8496
[e-mail]
or
PR:
TallGrass PR
Erica Rutan, 1 908-684-4332
[e-mail]
==================================================================

PAOS,, $0.285

Precision Aerospace Components, Inc. incorporated on December 28, 2005, operates through its wholly owned subsidiary Freundlich Supply Company, Inc. (Freundlich). The Company, through Freundlich is a stocking distributor of aerospace , internally-threaded fasteners. Freundlich focuses on aero-space and nuclear nut products, serving as an authorized stocking distributor for seven of the r nut manufacturers in the United States. The Company distributes domestically-manufactured nut products that are used primarily for aerospace and military applications and for industrial/commercial applications. The Company's products are manufactured, by others, to exacting specifications and are made from raw materials. In June 2012, the Company acquired the assets of Fastener Distribution and Marketing Company, (FDMC).

Precision Aerospace Components, Inc. announced it has acquired the assets of Fastener Distribution and Marketing Company, (FDMC). FDMC is the parent company of Aero-Missile Components, (AMC) and Creative Assembly Systems, (CAS). AMC provides fasteners and other components to the military and aerospace industries; CAS provides fasteners, tooling and other products to the transportation, housing infrastructure and white goods markets. With this acquisition Precision Aerospace Components, Inc. and its subsidiaries Aero-Missile Components, Inc. and Freundlich Supply Company, Inc. and Creative Assembly Systems, Inc., will have operations throughout the United States, will provide a responsive and knowledgeable fastener solution to customer needs and provide the support to introduce the Tiger-Tight locking washer - the domestically fabricated lock washer that really holds without loosening and does not destroy the surface material to which it is holding. Terms of the transaction were not disclosed.

Precision Aerospace Components, Inc. (the “Company”) plans to relocate and consolidate the activities of its headquarters operations, as well as the operations of its Freundlich Supply Company Inc. and Tiger-Tight Inc. subsidiaries from Staten Island, New York to Bensalem, Pennsylvania, at the present location of its Aero-Missile Components Inc. subsidiary, prior to the end of the calendar year 2012.

This relocation will allow the Company to better serve its customers through the co-location of a broadened inventory and will enable the Company to realize additional efficiencies from its recent acquisition of the assets of Fastener Distribution and Marketing Company, Inc.; these assets included Aero- Missile and Creative Assembly Systems, Inc.

The operations and service provided by Freundlich Supply Company and Tiger Tight Corp. will continue unabated at their new location.

As a result of this relocation, the Company anticipates significant and continuing savings from the elimination of the facilities costs associated with its Staten Island location. Additionally, the lower overall tax environment outside of New York City and State will be beneficial to the Company.
==================================================================

PBSV,, $0.8312

Pharma-Bio Serv, Inc. (Pharma-Bio) is compliance and technology transfer services consulting company with a laboratory testing facility with headquarters in Puerto Rico, servicing the Puerto Rico, United States and Europe markets. The Company has three segments: Puerto Rico and United States technical compliance consulting, Ireland technical compliance consulting, and a Puerto Rico microbiological and chemical laboratory testing division (Lab). The Company provides a range of compliance related consulting services. It also provides microbiological testing services and chemical testing services through its laboratory testing facility (Lab) in Puerto Rico. Pharma-Bio also provides information technology consulting services and technical trainings/seminars, which services. The subsidiary of the Company includes Pharma-Bio Serv PR, Inc. (Pharma-PR), Pharma Serv, Inc. (Pharma-Serv) and Pharma-Bio Serv US, Inc. (Pharma-US).

Company Contact
Headquarters: Lot 14 Higuillard Ward
Street 1, Industrial Zone
00646 Dorado
PRI
Web Address:
http://www.pharmabioserv.com
==================================================================

PYDS,, $0.11

Payment Data Systems is an integrated payment solutions provider to merchants and billers. The organization provides an extensive set of products to deliver world-class payment acceptance. Payment Data has solutions for merchants, billers, banks, service bureaus and card issuers. The strength of the company is its ability to offer specifically tailored solutions for card issuance, payment acceptance and bill payments.

For additional information, visit www.paymentdata.com. Contact Michael Long for Investor Relations information at 210.249.4040 or email at [e-mail].

Website: www.paymentdata.com, www.ficentive.com, www.zbill.com
Payment Data Systems, Inc.
Michael Long, 210-249-4040
[e-mail]
www.paymentdata.com
==================================================================

SNFCA,, $4.17

Security National Financial Corporation is a holding company. The Company operates in three business segments: life insurance, cemetery and mortuary, and mortgage loans. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance. The cemetery and mortuary segment of the Company consists of five cemeteries in the state of Utah and one cemetery in the state of California, and seven mortuaries in the state of Utah and one mortuary in the state of Arizona. The mortgage loan segment is an approved government and conventional lender, which originates and underwrites or otherwise purchases residential and commercial loans for new construction, existing homes and real estate projects. On March 30, 2011, the Company, through its wholly owned subsidiary, Security National Life, completed a Coinsurance Agreement with North America Life Insurance Company (North America Life).

Scott M. Quist or Stephen M. Sill, 801-264-1060
fax: [phone]
=================================================================

SPND,, $2.09

Spindletop Oil & Gas Co. (Spindletop) is an independent oil and gas company engaged in the exploration, development and production of oil and natural gas, the rental of oilfield equipment, and through one of its subsidiaries, the gathering and marketing of natural gas. The Company's wholly owned subsidiaries are Prairie Pipeline Co. (PPC) and Spindletop Drilling Company (SDC). The Company has focused its oil and gas operations principally in Texas, although it operates properties in six states, including Texas, Oklahoma, New Mexico, Louisiana, Alabama and Arkansas. Spindletop operates a majority of its projects through the drilling and production phases. In addition, the Company, through PPC, owns approximately 26.1 miles of pipelines located in Texas, which are used for the gathering of natural gas. These gathering lines are located in the Fort Worth Basin and are being utilized to transport the Company's natural gas, as well as natural gas produced by third parties.

Company Contact
Headquarters: One Spindletop Centre
Suite 200, 12850 Spurling Road
DALLAS, TX 75230-1279
Web Address:
http://www.spindletopoil.com/
==================================================================

TEXC,, $0.14

About TexCom, Inc.
TexCom, headquartered in Houston, Texas, is a growth-oriented environmental services company with a primary focus on the disposal of nonhazardous wastes generated by the oil & gas industry. For more information, please visit www.texcomresources.com.
=================================================================

VSTI,, $0.064

Versus Technology, Inc. specializes in real-time locating solutions for the healthcare industry. The Company's technology combines infrared (IR) and radio frequency identification (RFID) signals to locate patients, staff, visitors, equipment, charts and other assets tagged with its badges. Next, the Versus software platform captures and transmits the location data directly to information systems to manage resources, services and processes. Its software suite facilitates alert messaging and event automation, real-time and historic reporting, as well as integration to healthcare information systems, including nurse call, asset and bed management, security, ADT and billing. The Company's implementation services include on-site survey, needs assessment, real time locating systems (RTLS) network design and layout, sensory network certification, Database building, Interface development, Rules-writing for automation and alerts On-site Go-Live support.

Company Contact
Headquarters: 2600 Miller Creek Road
TRAVERSE CITY, MI 49684
Web Address:
http://www.versustech.com

[10 bagger]

test

[10 bagger]

[10 bagger]

[10 bagger]

Some have asked me how I found out about the little company trading at $0.005..

As I was pm'ed by someone that I was out of the loop so I made a list of all those that appeared to be in the loop because I would never hear about a stock until he was a seller,, .. It was an easy way to monitor activity and play with the boys,, the same boys that posted on the other boards of those in the know.. The list had 22 names that were common.. .. Put all those in the loop and monitor thier posts.. Seemed easy and simple enough as I-Hub did all the work..

The following posts were made on 09/21/12.. Just a little DD and research on my part revieled the names simular to other postings ny that same group.. When I saw the volume climbing and the names associated with the IN group I acted.. Until the constant jabs at NITE occured I would of remained DD dump and happy and actually tried to help it being marked up but as the 3 Mil. float kept coming I did my DD and the previous pages were put on my note pad.. Hanks Links..

Since I know that I picked up 7 followers today the word got out what I posted on this board W/O ever mention of the company.. Jeeze I was was just trying to be one of the boys and I got all those nasty PM's today..

51 This could move like DNDT, if not better. DOLLARLAND 09/21/12 04:08:14 PM
#50 That's where I tried to make a little DeeDog 09/21/12 03:50:08 PM
#49 Bought a starter at .0075 this morning. DOLLARLAND 09/21/12 03:04:13 PM
#48 Very nice day here so far. If the MrGreenPenny 09/21/12 02:56:45 PM
#47 They're up to date with the SEC as DeeDog 09/21/12 01:40:16 PM
#46 Checking this one out June. Could be at MrGreenPenny 09/20/12 01:06:07 PM
#45 Hi junewong. hmm.. no mod here. investorshub.advfn.com/uimage/uplo PoemStone 09/20/12 12:47:50 PM

[10 bagger]

#4.. Thru these control provisions by the debt holder the company has lost complete control of it's own future and direction.. It cant beg,, borrow or steal any money that is used for debt retirement or thru the sale of shares w/o making the wts provision due.. This will prohibit the company from any pledgeing of assets if even for floor plan and build purposes.. Even if the company had the ability to borrow against orders the current debt holders will rule.. They have it all and possibilly only interest that curent managers of the company is on a fully diluted balance sheet is 11%,,

The Company issued 104,333,335 warrants with the convertible debt. These warrants are exercisable at $0.01 and expire in
2018. Due to changes in the terms, the warrants are re-valued, using the Black-Scholes method each quarter.

At June 30, 2012 the warrants were valued at approximately $2,085,000.

These warrants have created a derivative liability in the amount of approximately $2,085,000. This liability is included in accrued liabilities on the balance sheet, net of the unamortized warrant value.

==================================

At June 30, 2012, we had cash of $308,487 and we owed approximately $2.6 million in principal (without discounts) and
approximately $2.3 million in payables and accruals. We anticipate that our future liquidity requirements will arise from the need to finance our accounts receivable and inventories, and from the need to fund our growth from operations, current debt obligations and capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional capital from the sale of equity and/or debt securities

.

The Company is seeking financing. Our Agreements with the current Note holder states that in the event of default, change
in control, change in a majority of directors and in the most recent Note investment of $500,000 a change in CEO would trigger a mandatory redemption of the Notes at 120% of the balance of the Notes and a buy out of their Warrants based upon a valuation of the Warrants as provided in the Agreement, which could be substantial.

(These warrants have created a derivative liability in the amount of approximately $2,085,000. This liability is included in accrued liabilities on the balance sheet, net of the unamortized warrant value.

However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to
attain profitability.

The Company is attempting to obtain cash to finance its operations through the sale of equity, debt borrowing and/or through the receipt of product licensing fees.

We can provide no assurances that financing will be available to us on terms satisfactory to us, if at all, or that we will be able to continue as a going concern. Further, we can provide no assurances that a mutually acceptable licensing agreement will be entered into on terms satisfactory to us, if at all. In this respect, see “Note 1 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”


To date, we have relied on management’s ability to raise capital through equity private placement financings to fund our
operations. We estimate that we will require between $3.0 million and $3.5 million in additional financing and cash flow from
operations to support our operations and to meet our debt obligations as they become due and payable over the next 15 months of operations. We can provide no assurances that cash generated from operations will occur or additional financing will be obtained on terms satisfactory to us, if at all, or that additional debt conversions will occur.


The Company is seeking financing. Our Agreements with the current Note holder states that in the event of default, change
in control, change in a majority of directors and in the most recent Note investment of $500,000 a change in CEO would trigger a mandatory redemption of the Notes at 120% of the balance of the Notes and a buy out of their Warrants based upon a valuation of the Warrants as provided in the Agreement, which could be substantial.

[10 bagger]

#3.. Now this where it gets spooky..

But what you end up with is 121 mil. shares on debt. conversion and wts. to buy another 104,333,335 shares on a $0.01 wt.. ALSO this is the company killer In the event a fundamental transaction occurs as defined in the warrants, which includes without limitation any person or group acquiring 50% of the aggregate Common Stock of the Company,
then the holder of the warrants may have the right to have the warrants redeemed at a price equal to the Black-Scholes value of said warrants

At June 30, 2012, the company had convertible secured debt of $1,210,000. CONV at $0.01... Added together the shares avil on dilution including wts. at $0.01 there are over 225 Mil and there is basicly a block from anyone ever taking control of the company..

The 50% provision is cute because as I read it is like a Barron Deal where they convert,, get thier money back and have the wt's to still control the company with.. So you sell the stock ,, get paid back and keep control thru the wts. .. I had NITE sell my position.. Made no money but I do believe it will be hard to mark up because IMO it will be impossinle to maintain any bid..

There are 50 Mil. Plus unaccounted shares that could be looking for a home,, 121,000,000 shares that need to be sold to get the money back for the CONV. loan unless the company poneys up the money but if it does there is no way they can ever finace with the WT provisions intact plus another 0ver 100,000,000 wts. exercisable @$0.01 and if another company buy's 50% or more of the outstanding,, not converted shares out standing they will have to come up more money for the wts than the debt that is still outstanding and still have the debt..
---------------------------------------------------
It is fully explained in the info from the 10Q below..
------------------------------------------------
Alpha Capital Aktiengesellschaft, a holder of 2004 Debt, loaned us $160,000 in February 2010, an additional $300,000 in March 2011, an additional $300,000 in June 2011 and an additional $500,000 in November 2011 pursuant to secured convertible promissory notes convertible.

With respect to the November 2011 financing transaction, all outstanding loans had the conversion price of the notes lowered to $.01 per share and the exercise price of all outstanding warrants extended to seven years, exercisable at $.01 per share. The secured debt has mandatory redemption provisions. A large portion of the secured debt provides that in the event

(i) the Company is prohibited from issuing Conversion Shares,

(ii) upon the occurrence of any other Event of Default (as
defined in the Transaction Documents), that continues beyond any applicable cure period,

(iii) a Change in Control (as defined below) occurs, or

(iv) upon the liquidation, dissolution or winding up of the Company or any Subsidiary, then at the Secured Debt Holder’s election, the Company must pay to the Secured Debt Holder not later than ten (10) days after request by such Secured Debt Holder, a sum of money determined by multiplying up to the outstanding principal amount of the Note designated by the Secured Debt Holder, at the Secured Debt Holder’s election, the greater of

(i) 120%, or

(ii) a fraction the numerator of which is the highest closing price of the Common Stock for the thirty days preceding the date demand is made by Secured Debt Holder and the denominator of which is the lowest applicable conversion price during such thirty (30) day period, plus accrued but unpaid interest and any other amounts due under the Transaction Documents ("Mandatory Redemption Payment"). The Mandatory Redemption Payment must be received by the Secured Debt Holder on the same date as the Conversion Shares otherwise deliverable or within ten (10) days after request, whichever is sooner ("Mandatory Redemption Payment Date").

Upon receipt of the Mandatory Redemption Payment, the corresponding Note principal, interest and other amounts will be
deemed paid and no longer outstanding. The Secured Debt Holder may rescind the election to receive a Mandatory Redemption Payment at any time until such payment is actually received.

Liquidated damages calculated that have been paid or accrued for the ten day period prior to the actual receipt of the Mandatory
Redemption Payment by such Secured Debt Holder shall be credited against the Mandatory Redemption Payment provided the balance of the Mandatory Redemption Payment is timely paid. “Change in Control” is defined as

(i) the Company becoming a Subsidiary of another entity (other than a corporation formed by the Company for purposes of reincorporation in another U.S. jurisdiction),

(ii) the sale, lease or transfer of substantially all the assets of the Company or any Subsidiary,

(iii) a majority of the members of the Company’s board of directors as of the Closing Date no longer serving as directors of the Company, except as a result of natural causes or as a result of hiring additional outside directors in order to meet appropriate stock exchange requirements, or

(iv) Michael Gordon, the Chief Executive Officer of the Company is no longer serving as Chief Executive Officer unless prior written consent of the Secured Debt Holder had been obtained by the Company. =====================================================
In connection with the aforementioned loan transactions, we also issued to our Secured Debt Holder, warrants to purchase 104,333,335 shares of the Company’s Common Stock which warrants are currently exercisable over a seven year period at an exercise price of $.01 per share, which exercise price is subject to adjustment pursuant to the provisions of the warrant.

In the event a fundamental transaction occurs as defined in the warrants, which includes without limitation any person or group acquiring 50% of the aggregate Common Stock of the Company, then the holder of the warrants may have the right to have the warrants redeemed at a price equal to the Black-Scholes value of said warrants

#4.. Next..

[10 bagger]

#2..

I called the Trans. agent today who made the remark this was one that they haven't seen any activity in in years and gave me a Tel. Number of an ATT,, In Long Island that could answer the questions of shares outstanding,, wt's and any debt that was Conv.. That was her referral number which she passed to me W/o any problem.. She indicated that it was a name from the past and had to go to her file cards to look it up.. She made no indication that they were still the transfere agent,, nor did I ask or even care.... I was looking for answers and didn't really care where they came from..

I spoke to the ATT and asked him about the shares outstanding,, the wts. and if there was any CONV. Debt.. Off the top off his head he gave me names of persons also listed in the 10Q with about 15 to 20 Million shares so fast I didn't have the time to add and remember.. He also said that they had wts and they were also shown in the 10Q.. He at one time thru his voice gave me the feeling why I was asking questions that if I had spent 10 Min with the 10Q i would of known the answer to.. I don't know if he was the corp. ATT. or if he was an ATT. that had done work for the company.. Below transactions that were done needed ATT. work recently and if he was just a Corp. Att. unless he had done recent work for the company,, my guess he would not know names or share amounts for a company in another state..

After steering me to the 10Q I thanked him and asked him one more question and that was I had read that the float was just 3 million shares and is that right,, his voice perked up and almost with pleasure he cameback with something like "really",, I don't think so and the shares that he gave me the names for were all that he would verify except that this company came public thru a shell.. That's the same shell that had not filled for years.. But he gave me the terms of the recent financing which will be spelled out in #3..

My take is that there are maybe 25 Mil. shares accounted for and the rest are in the doman of others that have either been left behind when the shell was acquired or or put away by some that may even be part of the company and it's friends looking for a way to be sold.. They are but just a guess on my part as to where they are at present but it appears that someone is selling some of them into the 3 Million Float JOKE...

With the terms of the new financing and the wts. plus shares obtained for steering someone to the group providing financing I would sell any that I have held for years waiting for a payday that appears not to be in reach any time soon.. This is just opinion on my part so don't go out and seel your stake in the pot of GOLD just yet.. Do your own DD which I know you are capable of.. hank

#3 is coming..

[10 bagger]

#1.. Someone keeps on saying that the float is 3 Mil .. and the shares outstanding are at 90 Mil.. It appears a group has gotten in it and they are going to try to run it.. Because of posts by some that I monitor I bought some 900,000 between $0.0095 and $0.103 the otherday,, yesterday and today and thought I would help them along to higher prices W/O ANY OF THEM KNOWING AND MAKE SOME MONEY.. but then like the otherday,, yesterday and today the stock came out of the woodwork and today 1.2 mil trades w/o movement traded along with that amount trading the two days before.. and still a 3 Mil float is indicated and still being touted.... ??

========================================================

It was becoming clear as I tried to mark it yesterday with a $0.0103 bid that all I did was get the board posting with stupid posts of to the moon shots with idiot one even projecting even a $0.44 PPS value if you multiply sales X 4 and give it a 5X multible.. It was also became clear as yesterday the bid,, mine became a disposal for shares coming not from the pumpers but a leak somewhere from a seller of endless supply above $0.01.. As long as the pump prices were for shares that didn't cover comm. charges it appeared that the bids would rise and the offer always for 20,000 or a few would also rise after usually a 5K to 20K up tic.. I tested the offer at $0.0149,, with a wopping $2235.00 sell ticket and then smaller offers could not trip over themselves quick enough to offer shares at lower prices and then a seller came around in size At $0.122 or a hair below.. It became obvuious that small bids were left untouched but as soon as at least $1,000.00 bids, were created shares were avil to find them.. When smaller bids above the larger bids were topped even by a bid for 5000 by any market maket the depth was covered and as soon as the little painter bids were pulled the larger bids for over $1000.00 were exposed and being expossed were hit by the ready and willing seller..

I know for a fact that they were not created at NITE.. This is because all shares to my knowledge were sold at the offer thru NITE or ETRF on the offer during the past week.. Bids that were hit were either the obvious other order handling other firms..

When this happened several times I thought a few calls were in order and this is what I found out.. So the question was to find out where all those shares were coming from..?? #2 is now being prepaired..

[10 bagger]

FUNNNNNNNY.............

I think the JBII board is dead b/c Raw is in the Hoosegow. He gets both the detractors and proJBIactors juiced. That board hasnt been interesting in a while....but without Raw its just drab and dreary.

Fortunately, 9Dogs3Pets6Goats is still letting us know the real deal of whats happening with JBI trading. Those posts give you a feel of whats happening if you could look beneath the 'Level 2' quote rock, then get an oil rig and dig about two miles under that, then crack through the earth's final layer of crust, then dive into the liquid magma beneath that, then drill into the center of the earths core, then find the atom directly in that cores center.................then study that atom under the microscope that only 9Dogs3Pets6Goats has in his investment toolkit; and a whole new solar sytem is found...a sun (nucleus) orbited by planets (electrons).....it is within this world that the true secrets of the 'Bid' and 'Ask' are found.

Of course you could also get these secrets by shooting up a speedball (mix some smack and cocaine and shoot it up); but thats not for everyone.

bes

[10 bagger]

May I invite you to look at our Under $0.25 board and other VMC boards.. We are a serious group of old farts that do our DD.. If you look me up you will find the links necessary to go to them..

Please participate on our Below $0.25 board but to put a company there you must follow the listing rules.. thanks again for stopping by..hank

[10 bagger]

While I don't do stocks from China I do respect the way you came with DD.. May I invite you to look at our Under $0.25 board and other VMC boards.. We are a serious group of old farts that do our DD.. If you look me up you will hind the links necessary to go to them.. Please participate on our Below $0.25 board but to put a company there you must follow the listing rules.. thanks again for stopping by..hank

[10 bagger]

AA AAA.TO ACOM AERL AEZS AIG ALJJ ALS.TO ALU ALXN AM.TO ANR AOD ARNA AUMN AUN.V AXU AZK BAC BDR BEAV BFCF BMBM BMRN BNLB BTH BVTI CAST CCIX CCNI CDE CECO CEN.TO CJES CLF COBR COOL CTIX CTRX CUM.TO CVO DCMT DCO DPDW DRRX DTLK DTX.TO ECPG EDV.TO EE.TO EGO EKDKQ ELTK FFEX FIGI FLT FMG.AX FOLD FSM FTK FTP.TO GAMR GENT GLBS GLGI GLMB GORO GPIC GV HA HDA.V HDSN HNR HYD.TO IAE.TO IMSC INO IRE ISR JAG JBII JCTCF KTCC LGL LVS LVWD MDMN MIMV MJX.V MMT.V MNTA MPAA MSEH MTOR NAVB NGSX NHTC NVS.V OCO.V OGC.TO ORT.TO PBG.TO PBN.TO PEC.V PETM PFHO PLSB PLUS POE.V PRY.V PSN.TO PTQ.TO PTSC PVG PYDS RCKY RFMD RIC RLE.V RPM.V RX.V SARA SEA.AX SFY SGMO SIAF SKO.V SLG.V SODA SPCHA SPIN SPPI SRPT SSN SSYS STRN STS STSI SVU TEXC TGD TGE UCU.V UPG UPRO USMO UVE VFX.V VHC VRNG VRS.V VRTA WDC WND.V XIDE XIN XRA XTLS

[10 bagger]

GFCI.. More prison terms.. I love it.. This stock was almost a crusade by me several years ago.. I'm happy and saddened at the same time.. Those involved in the Scam got punishment while those that lost lost sometimes thier whole life savings.. hank

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22384 / June 1, 2012
Securities and Exchange Commission v. James Roland Dial et al, Case No. 4.12-CV-01654 (S.D. Tex. filed June 1, 2012)
SEC Files Action Against Three Penny-Stock Fraudsters

The Securities and Exchange Commission ("SEC") today charged three individuals for their roles in a $3.9 million scheme to manipulate the market and to profit from the issuance and sale of Grifco International, Inc. (“Grifco”) stock. The SEC's complaint alleges that the stock manipulation scheme was orchestrated and devised by James Roland Dial, Grifco’s former president, chief executive officer, and sole director, Evan Nicolas Jarvis, a stock promoter and de facto Grifco officer, and Alex W. Ellerman, another stock promoter.

The complaint alleges that between December 2004 through November 2006, Dial and Jarvis caused Grifco, a publicly-traded corporation that claimed to be an international provider of oil and gas services equipment, to issue over 13 million purportedly unrestricted Grifco securities to Ellerman, themselves or their nominees. The complaint alleges that Dial, Jarvis and Ellerman sold the Grifco securities to the investing public shortly after receiving their shares, often times selling those shares into a rising, artificial market they created by disseminating false and material misleading information about Grifco to prospective investors and shareholders. None of the securities transactions were registered with the SEC and the transactions did not satisfy any exemption from registration according to the complaint. The SEC alleges that, as a result of this conduct, Dial, Jarvis, and Ellerman collectively received nearly $3.3 million in ill-gotten gains from the sale of newly-issued Grifco stock. The complaint also alleges that Dial misappropriated at least $600,000 by looting Grifco’s cash account from September 2005 through December 2006.

The SEC’s complaint also alleges that Dial, Jarvis, and Ellerman engaged in a pump-and-dump scheme designed to defraud and deceive existing and potential investors into purchasing Grifco shares while they sold Grifco shares at inflated prices into an artificially active market that they created. The complaint alleges that Dial made false and misleading information about Grifco through press releases, investor conference calls, and other statements to Grifco shareholders that Jarvis and Ellerman, at times, disseminated. Dial, Jarvis, and Ellerman sold many of their own Grifco shares at or near the release of this information, even though they knew that the press releases and other statements contained false and misleading information regarding Grifco’s financial position and projected sales, its products and product development, and the company’s total outstanding shares.

The complaint charges that Dial, Ellerman, and Jarvis violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, officer and director bars, and penny stock bars against each.

Dial, Jarvis, and Ellerman have consented to the entry of a final judgment that: (i) enjoins them from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (ii) and bars them from serving as an officer or director of a public company or participating in an offering of any penny stock. Dial, Jarvis, and Ellerman also consented to entry of a final judgment that orders them to pay disgorgement and prejudgment interest in the amount of $1,600,628, $2,095,524, and $939,650, respectively, which will be deemed satisfied upon entry of a restitution order in an equal or greater amount in a related enforcement action brought by the United States Attorney’s Office for the Southern District of Texas (Houston); United States v. Alex Ellerman et al., Cr. NO. H-10-56-S (S.D. Tex.) (U.S. v. Ellerman).

On May 22, 2012, the Honorable David Hittner, United States District Court Judge for the Southern District of Texas, sentenced Dial to a five-year prison sentence for conspiring to commit wire fraud. Today, Judge Hittner also sentenced Jarvis to a five-year term of imprisonment for conspiring to commit wire fraud while Ellerman received a reduced prison sentence of 40 months because he cooperated with the prosecution and provided evidence against his co-defendants. The sentencings followed March 2011 pleas of guilty by Dial, Jarvis and Ellerman for conspiracy to commit wire fraud.

The SEC acknowledges the assistance of the United States Attorney's Office for the Southern District of Texas, the Federal Bureau of Investigation, and the Harris County (Houston, Texas) District Attorney's Office. "With experience, no explanation is necessary,
without experience, no explanation is possible."

[10 bagger]

EIPC DD $0.01..

Enable IPC Corporation, a development stage company, engages in developing and commercializing rechargeable batteries for use in low power applications in the United States. It develops new power technologies, including microbatteries on microscopically thin film; and ultracapacitors on carbon sheets impregnated with nanoparticles. The company?s micro batteries are used in various applications, including hearing aids, radio frequency identification tags, smart cards, micro-electrical-mechanical and nano-electrical-mechanical systems, military identification, automotive remotes, sensors, and chip memory backup, as well as micro/nano satellites, miniature transmitters, M2M communications, neurological stimulators, smart active labels, and sneaker lights. Its ultracapacitors are used in renewable energy, consumer electronics, industrial, and transportation applications. The company also offers potentiostat systems to test batteries, capacitors, fuel cells, solar devices, and sensors, as well as corrosion levels and electroplating. In addition, it provides radio frequency identification tags for use in various applications, including inventory warehousing, fleet tracking, pallet tracking, military tracking, logging, and tracking of containers at docks and ports. The company was founded in 2005 and is based in Madison, Wisconsin.

Quote: "March 31st is the fiscal year end for Enable IPC, and the final quarter of this fiscal year has been the best in the company's short history. The company has successfully secured revenues sufficient to make this the company's first profitable quarter."

Enable IPC Website: http://www.enableipc.com
Enable IPC Blog: http://enableipc.blogspot.com/
Enable IPC on YouTube: http://www.youtube.com/enableipc
Enable IPC on Twitter: http://www.twitter.com/enableipc
Enable IPC on Facebook: http://www.facebook.com/pages/Enable-IPC/140064176054394

Investor relations: [phone]

Email: [e-mail]

Total shares issued and outstanding: 183.3 million common (December 2011; float approx. 73 million), 250 preferred.

Subsidiary: SolRayo, Inc.

==================================================================
William Frick & Company Releases Solar Powered UHF RFID Tag With Enable IPC.. The New Durable UHF Tag Maintains up to 75 Foot Read Range and Comes With Seven-Year Warranty...

VALENCIA, CA--(Marketwire -07/26/12)- William Frick & Company is pleased to announce that it is the exclusive Americas distributor for the newly developed and released Solar Powered RFID UHF Tag, manufactured with Enable IPC (EIPC) of Madison, Wis. The tag will be branded as a part of Frick's SmartMark™ product line.

The Solar Powered RFID UHF Tag continuously recharges under any light source, even moonlight, and stores energy in an on-board capacitor. As a result, the tag can also be tracked in the dark for up to 48 hours. Even when it is completely drained of power, it functions as a standard passive UHF tag until it is exposed again to light, where it recharges in as little as two minutes and delivers its extended read performance.

In addition, the durable Solar Powered UHF RFID Tag comes in both metal-mount and standard configurations, each with an industry-leading seven-year warranty. With an Ingress Protection Rating of IP67, the tag withstands dust, dirt and moisture. The polycarbonate shell of the tag is impact-resistant and resists UV rays, harsh chemicals and oils -- making it ideal for indoor and outdoor applications.

"We have found that companies would rather not spend the extra time and money it takes to replace tags in hard-to-reach locations every six months or every year, nor do they want to use a tag half the size of a laptop to get a decent read range," Enable IPC CEO David Walker said. "Customers want to place a relatively small RFID tag on an asset and not have to worry about it for half a decade or more."

Enable IPC developed the patent pending tag and sought William Frick & Company's marketing and sales expertise to distribute the tag. Both firms look forward to combining their respective strengths of technological innovation and product distribution to deliver this innovative solution to consumers.

"We are excited about this product and our partnership with Enable IPC," William Frick & Company President Jeff Brandt said. "I think Enable has developed a product very well-suited for our markets. The extended range, long life and 'Green Power' of this tag will generate a lot of interest. It's a great compliment to our SmartMark™ product line."

The unique combination of features makes the Solar Powered RFID UHF Tag the preferred solution in a variety of industries -- including: aerospace, fixed asset management, logistics, and vehicle tracking.

"At William Frick & Company, we deliver products that customers implement more efficient identification and tracking systems," Brandt said. "This RFID tag is yet another product that fills that purpose."

About William Frick & Company

A leading producer of customized identification products like RFID tags, barcode labels, signs and utility markers, William Frick & Company is a trusted supplier to the telecommunications industry, oil and gas companies, electric utilities, governments and others needing labeling solutions. Frick offers best-in-class identification products and services customized to client specifications. The company is ISO 9001-2008 process certified.

For more information about William Frick & Company product offerings, procurement options, service and solutions, call [phone], or visit the company's website at http://www.fricknet.com.

==================================================================
Enable IPC Issues Corporate Update in Advance of Its Annual Report and Stockholders Meeting....

VALENCIA, CA--(Marketwire -06/20/12)- Enable IPC Corporation (EIPC) today issued an update to stockholders and interested parties.

Financial Outlook

March 31st is the fiscal year end for Enable IPC, and the last fiscal year has been the best in the Company's short history. Revenues, which will be officially reported later this month, were over $200,000, most of which were realized in the final quarter.

The first quarter of this new fiscal year will see revenues increasing, as the Company has secured agreements to bring in total revenues of between $1-2 million for the current fiscal year, which would make it the first profitable year, with net profits estimated at 25% of revenues. First quarter results are due to be reported on or before August 14th.

Revenues and net profits in subsequent fiscal years are expected to be significantly higher.

"The Company's revenues have increased substantially, quarter-to-quarter, beginning with the S/Cap RFID Tag® product announcement in June 2011," stated CEO David Walker. "As the Company continues its efforts to commercialize new products, notably RFID tags and lithium-ion battery cathode coating materials, we anticipate revenues to continue to grow through the next fiscal year and beyond. We are pleased with the current pace of revenue and product development and expect these exciting times for Enable IPC to continue."

Enable IPC's Unique Business Model

The Company's business model is unique and uncommon and is beginning to be very profitable, explained Mr. Walker. "The Company receives most of its revenue from licensing activities related to the S/Cap RFID Tag®. 'IPC' stands for Intellectual Property Commercialization -- the Company does not see itself as an RFID company, nor a nanotech company or manufacturer, but rather, a developer and licensor of commercialized technologies."

As such, the Company's outlook is very bright. Mr. Walker continued, "We participate in revenues in the sales of products by others in the industries who have existing market paths and unique, valuable experience and knowledge of the markets. In doing so, we avoid much of the manufacturing and sales risks and are able to reap larger net profit percentages."

The Company plans to discuss this business model at length during the upcoming annual meeting of stockholders, scheduled for August 3rd. Details on this meeting will be sent to stockholders in the coming weeks.

S/Cap RFID Tag® Developments

The new, on-metal version of the S/Cap RFID Tag® is now available and is being sold by the Company's distributors and integrators in the US, China and the rest of the world.

The S/Cap RFID Tag® is unique to the RFID tag market in that it utilizes an ultracapacitor for its power source. The ultracapacitor provides the tag with many of the benefits of a battery-assisted passive tag while negating most of the problems of short battery life. Ultracapacitors can exceed as much as 1000 times the cycle life of a battery meaning the useful life of an S/Cap RFID Tag® can be significantly longer than that of active or battery-assisted passive RFID tags powered with common battery chemistries.

Other enhancements to the tag are on the way and will be announced as warranted.

Update on National Science Foundation Phase II Grant for $500,000

Enable IPC's subsidiary, SolRayo, Inc., was awarded a grant from the National Science Foundation (NSF) that is funding the commercialization of a lithium-ion battery performance enhancing technology. Lithium-ion batteries experience performance degradation after repeated cycles, particularly in high temperature applications. The new technology is an inexpensive nanoparticle based coating that is applied to critical components of the battery and protects the battery from degradation, significantly extending lithium-ion battery life. The NSF funding is provided under the Small Business Technology Transfer Phase II program.
==================================================================
SolRayo, Inc. Awarded Phase II NSF Grant...

MADISON, WI--(Marketwire -04/17/12)- SolRayo, Inc., a subsidiary of Enable IPC Corporation (Pinksheets: EIPC.PK - News), announced today that it has been awarded a National Science Foundation Small Business Technology Transfer (NSF-STTR) Phase II grant of $499,998 for the development of coatings to extend the life of batteries.

This award builds on the successful NSF-STTR Phase I project titled, "Using Nanoparticle Oxide Coatings to Extend Cycle Life of Cathode Materials in Lithium-Ion Batteries." During the Phase I research, this inexpensive and easy-to-apply coating was shown to help increase the cycle life of certain rechargeable lithium ion batteries by several times. This Phase II grant is designed to allow the full commercialization of the product. The research and technology is being developed in collaboration with the University of Wisconsin in Madison.

Dr. Walter Zeltner, who will oversee the project at SolRayo and serves as the Company's Director of Battery Research, said, "This grant, once again, points to the significance of the work being done at SolRayo and the University of Wisconsin. We are thrilled to be working with the National Science Foundation on this important research."

This work, under Dr. Zeltner's direction, was proven effective during the Phase I program, which was completed June 30, 2011. Dr. Zeltner has also stated that he expects to see improved results during Phase II and anticipates having a fully commercialized product for insertion into battery manufacturing processes at the conclusion of the Phase II program.

STTR is a vital, US government-funded, highly competitive small business program that expands funding opportunities in the federal innovation research and development arena. The program funds certain opportunities between businesses and non-profit research institutions. The goal of the STTR program is to fully transfer the technologies and products from the laboratory to the marketplace. The small business generates profits from the commercialization of the technology, which, in turn, stimulates the U.S. economy.

The work is being conducted jointly at SolRayo's facility in Madison at the lab of Professor Marc Anderson at the University of Wisconsin. The project officially commenced on April 1, 2012 and is scheduled to conclude on March 31, 2014.

About SolRayo, Inc.

SolRayo, Inc. (http://www.solrayo.com) is a Madison, Wisconsin-based company focused on developing new nanoparticle based materials for use in various renewable energy, industrial, consumer, and automotive applications. SolRayo is a subsidiary of Enable IPC Corporation.

Forward-looking Statements

This release may contain forward-looking statements, such as "estimated," "could," "should" and similar terminology made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results in the future to differ materially from forecasted results. These risks and uncertainties include, among other things, the ability to secure additional financing for the company, changing economic conditions, business conditions, and the risks inherent in the operations of a company.

David Walker
Email Contact
[phone]
==================================================================
Enable IPC Issues Update on Its First Profitable Quarter and Its Patent Pending S/Cap RFID TagPress Release...:

VALENCIA, CA--(Marketwire -03/13/12)- Enable IPC Corporation (Pinksheets: EIPC.PK - News) today issued an update to shareholders and interested parties regarding its first profitable quarter and its patent pending S/Cap RFID Tag. The company has secured an agreement to begin selling its S/Cap RFID Tag® in China, the world's second largest RFID Tag market, and plans to launch a new on-metal version of the S/Cap RFID Tag® within the next two weeks.

First Profitable Quarter

March 31st is the fiscal year end for Enable IPC, and the final quarter of this fiscal year has been the best in the company's short history. The company has successfully secured revenues sufficient to make this the company's first profitable quarter.

"The company's revenues have increased substantially, quarter-to-quarter, beginning with the S/Cap RFID Tag® product announcement in June 2011," stated CEO David Walker. "As the company continues its efforts to commercialize new products including RFID tags, AAO nanopore templates, ultracapacitors and lithium-ion battery cathode coating materials, we anticipate revenues to continue to grow through the next fiscal year and beyond. We are pleased with the current pace of revenue and product development and expect these exciting times for Enable IPC to continue."

S/Cap RFID Tag® Developments

Enable IPC previously announced completion of design and testing of a new on-metal version of the S/Cap RFID Tag® and today announced that manufacturing is underway and the new on-metal version of the S/Cap RFID Tag® is expected to be available within the next two weeks.

In addition the company has secured an agreement with a commercialization and marketing company with strong ties to China to begin sales of S/Cap RFID Tag® products in that country, the world's second largest market for RFID tags. This group, with offices in Shanghai and Los Angeles, brings decades of experience working in this product area, and utilizing an existing network, is expected to help secure a foothold for S/Cap RFID Tag® products in the Chinese market.

Enable IPC also announced today that it has completed its initial patent application and that the S/Cap RFID Tag® is now officially "patent pending." The company expects to file additional patent applications in the near future. The S/Cap RFID Tag® is unique to the RFID tag market in that it utilizes an ultracapacitor for its power source. The ultracapacitor provides the tag with many of the benefits of a battery-assisted passive tag while negating most of the problems of short battery life. Ultracapacitors can exceed as much as 1000 times the cycle life of a battery meaning the useful life of an S/Cap RFID Tag® can be significantly longer than that of active or battery-assisted passive RFID Tags powered with common battery chemistries.

Update on National Science Foundation Phase II Grant for $500,000

Previously, Enable IPC announced that its subsidiary Solrayo, Inc. had successfully completed Phase I of its National Science Foundation STTR (Small Business Technology Transfer) grant and also submitted its application for Phase II funding. The NSF has yet to announce its decision for Phase II, which would fund two years of technological development towards the commercialization of a lithium-ion battery boosting technology. Lithium-ion batteries experience performance degradation after repeated cycles, particularly in high temperature applications. The new technology is an inexpensive nanoparticle based coating that is applied to critical components of the battery and protects the battery from degradation, significantly extending lithium-ion battery life. NSF Phase II grant funding is aimed at fully commercializing technologies.

==================================================================
Enable IPC Issues Update on National Science Foundation Project, New Board Member Dan Finch and S/Cap RFID Tag(R) Products..

VALENCIA, CA--(Marketwire -12/22/11)- Enable IPC Corporation (Pinksheets: EIPC.PK - News) today issued an update to shareholders and interested parties regarding its National Science Foundation Phase II Proposal for funding testing of its lithium-ion battery nanoparticulate technology, a new addition to the board of directors, Dan Finch, and updates on the S/Cap RFID Tag®.

NSF Phase II Proposal
Enable IPC has completed its proposal for Phase II funding from the National Science Foundation's STTR program. The Company expects to receive word in the next few weeks and, if the project is approved, the NSF will provide Enable IPC's subsidiary SolRayo, Inc., an additional $500,000 in funding for two years to commercialize the Company's nanoparticulate-based lithium-ion battery performance boosting technology. The promising new technology has been shown to decrease the degradation of battery cathode materials, especially at higher temperatures. This could provide the lithium-ion battery industry with an inexpensive solution to significantly increased battery life.

Daniel W. Finch Joins the Board of Directors
Dan Finch has joined Enable IPC's Board of Directors. Most recently Dan served as President and CEO of Advanced ID Corporation, a technology company focused on RFID Tags for livestock and tire tracking as well as universal ultra-high frequency (UHF) RFID Readers. He currently serves as Chief Operating Officer for Revolutionary Tracker, a people tracking start-up company based in New York and is a principal with Americas Technologies Solutions, a US-based RFID corporation with sales primarily in South America.

Dan has a long history of successfully managing growing companies including serving as President of Westell, a Chicago-based firm, which he led from startup to $18 million revenue per year. He also served as President of C-COR electronics, leading the company from $65 million to $136 million in annual sales within 3 years. In addition, he started an executive search firm in Dallas, Texas which reached $1 million in annual fees.

Dan holds a BS in Physics from the Indiana Institute of Technology and an MBA in Economics and Corporate Finance from the University of Chicago.

S/Cap® RFID Tag Updates
Enable IPC's S/Cap RFID Tags® are currently being evaluated by companies with applications in areas such as forestry, utilities, airlines, railroads and outdoor signs. The initial on-metal version of the S/Cap RFID Tag® has been completed and successfully tested and is now being designed with a new, slimmer profile and smaller footprint. Companies within the RFID industry have expressed interest in the S/Cap RFID Tags® especially due to their longevity. S/Cap RFID Tags® can provide the effectiveness of a battery-powered tag without concerns regarding having to replace the tag when the battery dies. Look for Enable IPC to provide further updates on its S/Cap RFID Tag® in the coming weeks.

Blog Article Series on Intellectual Property and Patents
Currently being published on the Enable IPC Blog is a series of articles about Intellectual Property and Patents. Previously published articles examined topics such as the Patent Process, Licensing, and Exclusivity. More articles on Intellectual Property and Patents are planned, as well as further articles on RFID, and a new article series discussing Nanotechnology and Small Business. Continue checking http://enableipc.blogspot.com/ for new blog posts.

Happy Holidays from Enable IPC
As 2011 draws to a close, it is nice to take a brief moment to reflect on what was an exciting year for Enable IPC. The Company successfully completed Phase I research of its National Science Foundation STTR Grant for its lithium-ion battery life technology and completed its application for Phase II. The Company developed and brought to market its unique S/Cap RFID Tag® which was featured in an article by RFID Journal (found here http://www.rfidjournal.com/article/view/8565), a major industry trade site, and the Company recently announced new products on the way in the form of a complete line of RFID tags, Enable IPC ultracapacitors, and AAO nanopore templates.

As exciting as 2011 was, we look toward 2012 as a breakthrough year for Enable IPC and in that spirit, want to wish you all Happy Holidays and an equally exciting new year!

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Enable IPC Issues Update on Upcoming Products Including an On-Metal Version of Its S/Cap RFID Tag(R)...

VALENCIA, CA--(Marketwire -11/02/11)- Enable IPC Corporation (Pinksheets: EIPC.PK - News) today issued an update to shareholders and interested parties regarding new products expected to be released within the coming weeks. These new products include an on-metal version of the Company's S/Cap RFID Tag® and a variety of RFID tags of different characteristics to broaden the Company's RFID product line.

Additional product announcements include anodized aluminum oxide (AAO) nanopore templates and ultracapacitors.

The Company also announced initial sample sales of its S/Cap RFID Tags®.

New RFID Tags Available Soon
S/Cap RFID Tags® contain a number of improvements on other competing designs, including:

•Ruggedized case
•Waterproof
•Wide operational range temperature and humidity ranges
•Multiple mounting options
•Longer read range
•Ability to be read across multiple frequency bands (860 to 960 MHz)
•Attractive warranty and
•Competitive pricing

Enable has had success selling initial samples of the S/Cap RFID Tags® to interested companies in North America, South America and Asia. The Company expects these initial sales to turn into larger transactions in the near future.

In order to further broaden its approach to an RFID tag market forecasted by one third party researcher to reach a total market value of $8 billion by 2014, Enable has announced the upcoming offering of an on-metal version of its already launched S/Cap RFID Tag®. The on-metal version has been successfully prototyped and tested; production is expected to begin in the coming weeks. The on-metal tag will combine the rugged, long life, long read range and competitive pricing of the original S/Cap RFID Tag® while allowing on-metal mounting for uninhibited tracking of fork-lifts, automobiles, cargo containers and other metal assets.

In addition to both its standard and on-metal versions of the S/Cap RFID Tag®, the Company plans to soon begin offering additional RFID tags of varying dimensions, performance characteristics and price points in order to form a complete RFID asset tag product line to allow wider access to the market.

S/Cap RFID Tag® Now a Registered Trademark
Enable was granted a trademark on the S/Cap RFID Tag® phrase by the US Patent and Trademark Office. Trademarks identify and distinguish the source of the goods of one party from another. For example, a trademark prevents Pepsi from naming its product "Coke" (and vice versa), keeps Burger King from naming its hamburger the "Big Mac," and they prohibit someone who builds custom cars in his garage from naming his enterprise "Ford Motor Company."

The Company's trademark prevents others from using the same product name on a different RFID tag.

Nanopore Template and Ultracapacitor Products on the Way
In addition to the expansion of its RFID tag product line, Enable IPC has announced the upcoming production for sale of both anodized aluminum oxide (AAO) nanopore templates and ultracapacitors.

Enable IPC has a patent pending on a new technology that economically allows the creation of alumina discs with precisely ordered tiny holes (called nanopores) 1/1000th the diameter of a human hair. The Company stated that production for sale of these AAO nanopore templates is expected to begin soon. These templates can be used to create nanotubes and nanowires, and they can also be used as filters.

Nanotubes and nanowires are used in many applications primarily to strengthen and increase resistance of materials. Examples include automobile bumpers, tennis rackets and perfume containers. Used as filters, the AAO nanopore templates have a wide variety of applications -- especially in medical or environmental areas where the ability to precisely filter toxins, viruses or other particles from air, water, liquids or other material is highly valued.

Ultracapacitors are used in many items, particularly for backup or clock memory in electronic devices (TVs, DVD players, mobile phones, etc.) but also in many applications where sudden bursts of energy are necessary, such as a camera flash or a device power up. Enable plans to soon begin offering a variety of ultracapacitors of various sizes and performance characteristics for purchase at the Company's online store.

National Science Foundation Project
Having completed the $150,000 Phase I STTR project for the National Science Foundation, SolRayo, Inc., a subsidiary of Enable IPC Corporation, has submitted its proposal for Phase II funding which, if approved, will provide an additional $500,000 of funding for two years beginning in 2012.

Under the Phase I grant, Solrayo developed a new nanoparticulate based technology to address an issue concerning the degradation of performance of certain lithium-ion ("Li-ion") batteries, particularly in high temperature applications. The Phase II funding will be aimed at commercializing the technology. The Company expects to hear the results of its application by the end of this year.

One reason for the rapid growth in portable electronics over the past few decades has been the availability of rechargeable Li-ion batteries that provide the required high gravimetric and volumetric energy densities. One of the problems with this technology, however, is the relatively high expense of cathode materials compared to other types of rechargeable batteries (like nickel cadmium and nickel metal hydride). While the Li-ion industry has grown exponentially over the past 20 years to be valued by Frost & Sullivan at approximately $8.4 billion in 2010, its growth has been mitigated by its relatively high expense. It is anticipated that this technology could allow for lower cost cathode materials for Li-ion batteries, making Li-ion price-competitive with other battery technologies and leading to further exponential growth for the industry.

Blog on Intellectual Property (IP)
At Enable IPC Corporation, the goal is to turn technologies into products (the IPC in the Company name stands for Intellectual Property Commercialization). As Enable begins expanding its product offerings, it is worth noting that these products are being manufactured elsewhere for Enable IPC. Enable holds the sales or technological rights to patented or patent pending technologies and the Company seeks to market and commercialize these technologies rather than manufacture the products outright. The Company believes this strategy has the potential to more quickly build ROI with less financial risk.

On the Enable IPC blog, at http://blog.enableipc.com, readers will find a multi-part series explaining and discussing many aspects of intellectual property. To date, the blog has addressed the process of filing for patents and other available protections. Future installments of this series are scheduled to include discussions on technology licensing and commercialization.
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Enable IPC Issues Update on Its New S/Cap RFID Tag, Upcoming RFID Products, and Phase II Proposal for the National Science Foundation's STTR Grant...

VALENCIA, CA--(Marketwire -09/13/11)- Enable IPC Corporation (Pinksheets: EIPC.PK - News) today issued an update to shareholders on initial developments of its recently launched rugged solar powered S/Cap RFID tag, upcoming additional versions of the product, and completion of the Company's proposal for Phase II funding from the National Science Foundation's STTR Grant.

Enable IPC's S/Cap RFID Tag Pilot Sales and Distribution Negotiations Underway; Additional Versions Under Development

Since the launch of the ruggedized S/Cap RFID tag in June of this year, Enable IPC has made initial, pilot sales of the tag to customers interested in testing the products within their own operations. Additionally, Enable is working to secure distribution agreements to broaden the sales channels for the S/Cap RFID tag. The Company previously announced an agreement with RFCamp Ltd., for non-exclusive rights to resell and distribute Enable IPC S/Cap RFID tags in South Korea and the Pacific Rim. Enable is negotiating agreements with other potential distributors and expects to make further announcements in the coming weeks.

In addition, product development is underway on the Company's new on-metal and livestock versions of the S/Cap RFID tag. The on-metal version, along with the recently released S/Cap RFID Tag, is designed to target outdoor asset tracking applications where durable, long lasting tags with long read ranges would be ideal. Potential applications are expected to include oil rigs, transportation, sports, equipment tracking, aerospace, DoD compliance (the largest user of RFID) and much more.

The RFID market is forecast by IDTechEx to reach $5.84 billion in 2011 and livestock tracking is expected to become the largest segment forecasted by IDTechEx to reach nearly $6.5 billion by 2017. To address this growing market Enable is beginning product development on a livestock tracking version of the S/Cap RFID tag. The new product should allow easier and more accurate tracking of livestock and livestock products for more efficient recalls and more efficient farm management. National Science Foundation Phase II Application Completed..

SolRayo, Inc., a subsidiary of Enable IPC Corporation, recently announced completion of Phase I of its Small Business Technology Transfer (STTR) grant from the National Science Foundation (NSF). Under the $150K grant, SolRayo developed a new nanoparticulate based technology to address an issue concerning the degradation of performance of certain lithium-ion ("Li-ion") batteries, particularly in high temperature applications. SolRayo has recently submitted its proposal for Phase II funding which, if approved, will provide an additional $500,000 of funding for two years beginning in 2012. This funding will be aimed at commercializing the technology. The Company expects to hear the results of its application by the end of 2011.

One reason for the rapid growth in portable electronics over the past few decades has been the availability of rechargeable Li-ion batteries that provide the required high gravimetric and volumetric energy densities. One of the problems with this technology, however, is the relatively high expense of cathode materials compared to other types of rechargeable batteries (like nickel cadmium and nickel metal hydride). While the Li-ion industry has grown exponentially over the past 20 years to be valued by Frost & Sullivan at approximately $8.4 billion in 2010, its growth has been mitigated by its relatively high expense. It is hoped that SolRayo's technology could allow for lower cost cathode materials for Li-ion batteries, making Li-ion price-competitive with other battery technologies and leading to further exponential growth for the industry.