Delaware | 7370 | 54-1614664 | ||
(State or jurisdiction of | (Primary Standard Industrial | (IRS Employer Identification No.) | ||
incorporation or organization) | Classification Number) |
McLean, Virginia 22102-4860
(Address and telephone number of principal executive offices)
McLean, Virginia 22102-4860
(Address of principal place of business or intended principal place of business)
President and Chief Executive Officer
1600 International Drive, Suite 110
McLean, Virginia 22102-4860
(703) 917-0880
(Name, address and telephone number of agent for service)
Ernest M. Stern, Esq.
Seyfarth Shaw LLP
815 Connecticut Avenue, N.W., Suite 500
Washington, D.C. 20006-4004
(202) 463-2400
Facsimile: (202) 828-5393
Title of each class of | Proposed maximum | Proposed minimum | Amount of | |||||||||||
securities to be registered | Amount to be registered | offering price per unit | offering price | registration fee | ||||||||||
Common stock(1) | 4,386,481 | $.50 | $2,193,241 | * | ||||||||||
Common stock(2) | 86,921 | $.50 | $43,460 | * | ||||||||||
* | Previously paid. |
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933. Rule 457(c) states that where the offering price will be based on a fluctuating market price, the fee should be calculated based on the historical market price of securities of the same class. Because there is no market for any of the Registrant’s securities, the Registrant has used the per share sale price paid in the Registrant’s most recent private placement. |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g). |
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Page | ||||
Summary | 1 | |||
Risk Factors | 3 | |||
Use of Proceeds | 7 | |||
Determination of Offering Price | 7 | |||
Our Business | 8 | |||
Management’s Discussion and Analysis or Plan of Operation | 14 | |||
Management | 20 | |||
Executive Compensation | 22 | |||
Security Ownership of Certain Beneficial Owners and Management | 22 | |||
Certain Relationships and Related Transactions | 24 | |||
Selling Stockholders | 25 | |||
Plan of Distribution | 28 | |||
Description of Securities | 29 | |||
Market for Common Equity and Related Stockholder Matters | 32 | |||
Experts | 32 | |||
Legal Matters | 32 | |||
Disclosure of SEC Position on Indemnification for Securities Act Liabilities | 32 | |||
Where You Can Find More Information | 33 | |||
Index to Financial Statements | 30 |
– 1 –
Issuer: | InferX Corporation | |
Selling stockholders: | The selling stockholders consist of certain existing stockholders who acquired common stock in connection with the founding of the company or the merger, as well as stockholders who purchased common stock and warrants to purchase common stock from us in October 2006 in a private placement transaction completed pursuant to Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). | |
Shares offered by the selling stockholders: | The selling stockholders are offering all of the 4,473,402 shares of common stock offered by this prospectus. | |
Offering price: | The selling stockholders will sell their shares at prevailing market prices at a price of $.50 or a range per share until our common stock is listed for quotation on the OTC Bulletin Board, and after that at privately negotiated prices. | |
Terms of the offering: | The selling stockholders will determine when and how they will sell the common stock offered by this prospectus. We will cover the expenses associated with the offering, which we estimate to be approximately $30,000. See “Plan of Distribution.” | |
Use of proceeds: | We will not receive any proceeds from this offering. However, we will receive the proceeds from the exercise of the warrants. We will incur all costs associated with the filing of the registration statement with the SEC in connection with this offering. | |
No market for our common stock: | Our common stock is presently not traded on any market or securities exchange and we have not applied for listing or quotation on any public market. We anticipate seeking sponsorship for trading of our common stock on the OTC Bulletin Board. | |
Outstanding shares of common stock: | There were 10,758,905 shares of our common stock issued and outstanding at April 20, 2007. All of the common stock to be sold under this prospectus will be sold by existing stockholders. If the selling stockholders exercise their warrants the underlying shares of which are offered to be sold under this prospectus, there will be 10,845,826 shares of our common stock issued and outstanding. | |
– 2 –
– 3 –
– 4 –
• | levels of government expenditures and authorizations for national and homeland security related programs decrease, remain constant or shift to programs in areas where we do not provide products and services; | ||
• | we are prevented from entering into new government contracts or extending existing government contracts based on violations or suspected violations of procurement laws or regulations; | ||
• | we are not granted security clearances that are required to sell our products or services or such security clearances are revoked; or | ||
• | our reputation or relationship with government agencies is impaired. |
– 5 –
– 6 –
– 7 –
– 8 –
• | Financial Services: Increase customer retention; optimization of cross selling; detection of money laundering; and fraud detection. | ||
• | Insurance: Increase customer profitability; fraud detection; optimization of cross selling; and customer compliance. | ||
• | Healthcare: Optimal treatment analysis; clinical drug trial analysis; analysis of medical images; and healthcare fraud and abuse detection. | ||
• | Retail: Promotion effectiveness analysis; product placement analysis; optimization of cross selling; and sales force optimization. |
– 9 –
– 10 –
Patent | Information | Dates | Status | |||
InferAgent | Full application | Filed July 2003 | Pending | |||
US Serial: | ||||||
10/616,718 | ||||||
A hybrid Bayesian | Full application | |||||
decision tree for | ||||||
classification | US Serial: | |||||
60/556,554 | Filed March 2003 | Pending | ||||
InferCluster | Provisional | Filed September 2006 | Filed | |||
application | ||||||
InferText | Provisional | Filed September 2006 | Filed | |||
application |
• | predictive modeling companies; | ||
• | CRM solutions providers; | ||
• | business intelligence solutions providers; and | ||
• | software companies supplying modeling, rules or analytic development tools. |
– 11 –
• | access and mine remote data | ||
• | provide predictive analysis where many future risks and opportunities can be identified | ||
• | work with multiple databases in different formats | ||
• | preserve the privacy of data | ||
• | maintain the security and ownership of data | ||
• | eliminate the need for creating data warehouses | ||
• | provide near real time analysis and prediction |
– 12 –
1. | components of DHS that are analyzing intelligence, detecting terrorist activities and detecting criminal activities or patterns; | ||
2. | other U.S. federal government departments where focus is on: | ||
• | detecting fraud, waste and abuse; | ||
• | detecting criminal activities; or | ||
• | improving service or performance; | ||
3. | international supply chain participants, such as importers, sea carriers, sea ports and terminal operators; and | ||
4. | commercial enterprises that we expect would be early adopters of advanced analytics technologies, such as financial services and insurance firms. |
– 13 –
– 14 –
– 15 –
– 16 –
– 17 –
– 18 –
– 19 –
Name and Position | Age | Director Since | ||||||
B.K. Gogia | 55 | 2006 | ||||||
President, Chief Executive Officer and Chairman of the Board of Directors | ||||||||
Dr. Jerzy W. Bala | 48 | 2006 | ||||||
Chief Technical Officer and a Director | ||||||||
Scott B. Parliament | 49 | 2006 | ||||||
Chief Financial Officer, Vice President of Business Development and Marketing and a Director | ||||||||
Jesus Mena | 60 | — | ||||||
Chief Strategy Officer |
– 20 –
– 21 –
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
B.K. Gogia | 2006 | $ | 82,500 | — | — | — | — | — | $ | 23,100 | (1) | $ | 105,600 | |||||||||||||||||||||||
President and Chief | 2005 | $ | 24,311 | — | — | — | — | — | $ | 23,254 | (1) | $ | 47,565 | |||||||||||||||||||||||
Executive Officer (PEO) | 2004 | $ | 55,370 | — | — | — | — | — | $ | 25,166 | (1) | $ | 80,536 |
(1) | Consists of an automobile allowance in the amounts of $9,073, $8,998 and $8,998, and life insurance premiums for which we are not the beneficiary in the amounts of $14,027, $14,256 and $16,168, for the years ended December 31, 2006, 2005 and 2004, respectively. | |
– 22 –
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||
Equity | Equity Incentive | Plan Awards: | ||||||||||||||||||||||||||||||||||
Incentive | Plan Awards: | Market or | ||||||||||||||||||||||||||||||||||
Plan Awards: | Market | Number of | Payout Value | |||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Number of | Value of | Unearned | of Unearned | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | Shares or | Shares or | Shares, Units | Shares, Units | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Units of | Units of | or Other | or Other | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Stock That | Stock That | Rights That | Rights That | |||||||||||||||||||||||||||||
Options | Options | Unearned | Exercise | Option | Have Not | Have Not | Have Not | Have Not | ||||||||||||||||||||||||||||
(#) | (#) | Options | Price | Expiration | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | (#) | ($) | Date | (#) | ($) | (#) | ($) | |||||||||||||||||||||||||||
B.K. Gogia | — | — | — | — | — | — | — | — | — |
Change | ||||||||||||||||||||||||||||
in Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||
Fees Earned or | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||
Paid in Cash | Stock Awards | Option Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
B.K. Gogia | — | — | — | — | — | — | — | |||||||||||||||||||||
Jerzy W. Bala | — | — | — | — | — | — | — | |||||||||||||||||||||
Scott B. Parliament | — | — | — | — | — | — | — |
– 23 –
Percentage of | ||||||||
Amount and Nature | Outstanding | |||||||
Name and Address | of Beneficial Ownership | Shares Owned | ||||||
B.K. Gogia | 4,239,579 | (1) | 39.4 | % | ||||
Jerzy W. Bala | 496,524 | 4.6 | % | |||||
Scott B. Parliament | 181,109 | (2) | 1.7 | % | ||||
Jesus Mena | — | — | ||||||
Robert B. Prag | 746,166 | (3) | 6.9 | % | ||||
2455 El Amigo Road Del Mar, CA 92014 | ||||||||
John Lemak | 1,080,236 | (4) | 9.9 | % | ||||
Sandor Capital Master Fund, L.P. 2828 Routh Street, Suite 500 Dallas, TX 75201 | ||||||||
Lacuna Hedge Fund LLLP | 2,283,298 | (5) | 19.9 | % | ||||
c/o Lacuna Ventures 1100 Spruce Street, Suite 202 Boulder, CO 80302 | ||||||||
All directors and executive | 4,917,212 | 45.7 | % | |||||
officers as a group (4 persons) |
(1) | Includes 177,330 shares owned directly by Mr. Gogia’s daughter, 177,330 shares owned directly by Mr. Gogia’s son, and 35,466 shares owned directly by Mr. Gogia’s spouse. Mr. Gogia disclaims beneficial ownership of all shares owned directly by others. | |
(2) | Includes 10,000 shares owned directly by one of Mr. Parliament’s sons, and 10,000 shares owned directly by another of Mr. Parliament’s sons. Mr. Parliament disclaims beneficial ownership of all shares owned directly by others. | |
(3) | Based upon information provided to or otherwise known by the company and contained in the amended Schedule 13G filed by Mr. Prag on November 3, 2006. Includes 124,181 shares issuable upon the exercise of warrants that are exercisable within 60 days. | |
(4) | Based upon information provided to or otherwise known to the company and contained in the Schedule 13G filed by Sandor Capital Advisors, LLC, a Texas limited liability company (“Sandor Advisors”), and Mr. Lemak, the principal of Sandor Advisors, on November 1, 2006. Includes 311,985 shares directly owned by Mr. Lemak. Also includes 54,276 of the 612,545 shares issuable upon the exercise of warrants owned by Sandor Advisors and held by Sandor Capital Master Fund, L.P. (“Sandor Capital”) (428,364 shares) and Mr. Lemak (184,181 shares), in the aggregate, that are exercisable within 60 days. By their terms, the warrants held by Sandor Capital and Mr. Lemak are not exercisable to the extent that exercise by either of them would result in the joint beneficial ownership by Sandor Advisors and Mr. Lemak of greater than 9.99% of the company’s issued and outstanding common stock. If all of the warrants were exercisable in full, Sandor Advisors and Mr. Lemak would jointly beneficially own 1,636,505 shares of common stock, which would represent beneficial ownership of approximately 14.4% of the company’s issued and outstanding common stock. Mr. Lemak makes investment decisions on behalf of Sandor Advisors. | |
(5) | Based upon information provided to or otherwise known by the company and contained in the Schedule 13G filed by Lacuna Venture Fund LLLP (“Lacuna Venture Fund”), Lacuna Ventures GP LLLP (“Lacuna GP”) and Lacuna, LLC (“Lacuna LLC”) on November 3, 2006. In April 2007, Lacuna Venture Fund transferred all of its InferX shares and warrants to Lacuna Hedge Fund, LLLP, one of its affiliates (“Lacuna Hedge Fund”, and together with Lacuna GP and Lacuna LLC, the “Lacuna Entities”). Also includes 663,298 of the 1,080,000 shares issuable upon the exercise of warrants owned by the Lacuna Entities that are exercisable within 60 days. By their terms, the warrants held by Lacuna Hedge Fund are not exercisable to the extent that exercise would result in the Lacuna Entities’ beneficial ownership of greater than 19.99% of the company’s issued and outstanding common stock. If all of the warrants were exercisable in full, the Lacuna Entities would beneficially own 2,700,000 shares of common stock, which would represent beneficial ownership of approximately 22.8% of the company’s issued and outstanding common stock. Rawleigh Ralls makes investment decisions on behalf of each of the Lacuna Entities. | |
– 24 –
– 25 –
Shares Held After | % Ownership After | |||||||||||||||
Name | Shares Owned | Shares Offered | Offering | Offering(1) | ||||||||||||
Jerzy W. Bala (2) | 496,524 | 70,000 | 426,524 | 4.0 | % | |||||||||||
Brian M. Barton (3) | 300,000 | 134,087 | 165,913 | 1.5 | % | |||||||||||
Cynthia M Boyle and John N. Boyle III (4) | 90,000 | 40,226 | 49,774 | * | ||||||||||||
Brian Corbman (5) | 300,000 | 134,087 | 165,913 | 1.5 | % | |||||||||||
Francisco de Cossio(6) | 10,000 | 10,000 | — | — | ||||||||||||
B.K. Gogia (7) | 4,239,579 | 225,000 | 4,014,579 | 37.3 | % | |||||||||||
Lacuna Hedge Fund LLLP (8) | 2,700,000 | 1,206,779 | 1,493,221 | 13.1 | % | |||||||||||
John Lemak (9) | 496,166 | 241,515 | 254,651 | 4.9 | % | |||||||||||
The London Family Trust (10) | 588,486 | 296,604 | 291,882 | 2.7 | % | |||||||||||
Paul T. Mannion, Jr. (11) | 400,000 | 250,000 | 150,000 | 1.4 | % | |||||||||||
Mark Nicosia (12) | 450,019 | 226,816 | 223,203 | 2.0 | % | |||||||||||
Richard O’Leary (13) | 300,000 | 134,087 | 165,913 | 1.5 | % | |||||||||||
Scott B. Parliament (14) | 181,109 | 45,000 | 136,109 | 1.3 | % | |||||||||||
Robert B. Prag (15) | 746,166 | 424,472 | 321,694 | 3.0 | % | |||||||||||
Michael Pruitt (16) | 75,000 | 33,521 | 41,479 | * | ||||||||||||
Andrew Reckles (17) | 400,000 | 250,000 | 150,000 | 1.4 | % | |||||||||||
Craig Samuels (18) | 300,000 | 134,087 | 165,913 | 1.5 | % | |||||||||||
Sandor Capital Master Fund, L.P. (19) | 1,142,339 | 550,078 | 592,261 | 4.9 | % | |||||||||||
David C. Stocking (20) | 152,500 | 67,043 | 85,457 | * |
* | Less than 1% | |
(1) | The calculation of the percentage owned is based on 10,758,905 shares outstanding (plus, with respect only to each holder of securities that are exercisable for or convertible into common stock within 60 days, shares underlying such securities). | |
(2) | Dr. Bala is Chief Technical Officer and a director of InferX. Dr. Bala acquired his shares in connection with the founding of InferX Delaware. |
– 26 –
(3) | Includes 120,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(4) | Includes 60,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholders purchased these securities in our October 2006 private placement. | |
(5) | Includes 200,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(6) | Mr. de Cossio acquired his shares in connection with the founding of Datamat and InferX Delaware. | |
(7) | Mr. Gogia is President, Chief Executive Officer and a director of InferX. Please see footnote 2 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Mr. Gogia’s beneficial ownership. Mr. Gogia acquired his shares in connection with the founding of Datamat and InferX Delaware. | |
(8) | Includes 1,080,000 shares issuable upon the exercise of warrants, of which 663,298 are exercisable within 60 days. Please see footnote 5 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Lacuna Hedge Fund LLLP’s beneficial ownership. The selling shareholder purchased these securities in our October 2006 private placement. | |
(9) | Includes 184,181 shares issuable upon the exercise of warrants, of which 54,276 are exercisable within 60 days. Please see footnote 5 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Mr. Lemak’s beneficial ownership. The percentage indicated under the column “% Ownership After Offering” does not include shares that Mr. Lemak does not have the right to acquire within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(10) | Includes 211,109 shares issuable upon the exercise of warrants, of which 167,869 are exercisable within 60 days. The natural person who holds voting and investment power over the securities held by The London Family Trust is Robert S. London. The selling shareholder purchased these securities in our October 2006 private placement. | |
(11) | Mr. Mannion was President, a director and a founder of our predecessor, Black Nickel Acquisition Corp. I, from inception through October 2006. Mr. Mannion acquired his shares in connection with the founding of Black Nickel. | |
(12) | Includes 161,436 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(13) | Includes 150,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(14) | Mr. Parliament is Chief Financial Officer, Vice President of Business Development and Marketing and a director of InferX. Please see footnote 3 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Mr. Parliament’s beneficial ownership. Mr. Parliament acquired his shares in connection with the founding of InferX Delaware. | |
(15) | Mr. Prag was a founder of our predecessor, Black Nickel Acquisition Corp. I. Please see footnote 4 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Mr. Prag’s beneficial ownership. Mr. Prag acquired 400,000 of his shares in connection with the founding of Black Nickel, and he purchased the remainder of his securities in our October 2006 private placement. | |
(16) | Includes 50,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(17) | Mr. Reckles was Secretary, a director and a founder of our predecessor, Black Nickel Acquisition Corp. I, from inception through October 2006. Mr. Mannion acquired his shares in connection with the founding of Black Nickel. | |
(18) | Includes 200,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(19) | Includes 428,364 shares issuable upon the exercise of warrants, up to 54,276 of which are exercisable within 60 days. Please see footnote 4 to the table under the heading “Security Ownership of Certain Beneficial Owners and Management” for an explanation of Sandor Capital Master Fund, L.P.’s beneficial ownership. The percentage indicated under the column “% Ownership After Offering” does not include shares that Sandor Capital Master Fund, L.P.does not have the right to acquire within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
(20) | Includes 60,000 shares issuable upon the exercise of warrants that are exercisable within 60 days. The selling shareholder purchased these securities in our October 2006 private placement. | |
– 27 –
1. | at fixed prices; | ||
2. | the market price prevailing at the time of sale; | ||
3. | a price related to such prevailing market price; or | ||
4. | such other price as the selling stockholders determine from time to time. |
1. | a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; | ||
2. | purchases by a broker-dealer as principal and resale by that broker-dealer for its account pursuant to this prospectus; | ||
3. | ordinary brokerage transactions in which the broker solicits purchasers; | ||
4. | through options, swaps or derivatives; | ||
5. | privately negotiated transactions; or | ||
6. | in a combination of any of the above methods. |
– 28 –
– 29 –
– 30 –
– 31 –
– 32 –
– 33 –
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page(s) | ||||
Audited Consolidated Financial Statements: | ||||
Report of Independent Registered Public Accounting Firm | F-1 | |||
Consolidated Balance Sheet as of December 31, 2006 | F-2 | |||
Consolidated Statements of Operations for the years ended December 31, 2006 and 2005 | F-3 | |||
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2006 and 2005 | F-4 | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2006 and 2005 | F-5 | |||
Notes to Consolidated Financial Statements | F-6 |
– 34 –
InferX Corporation
(Formerly Black Nickel Acquisition Corp. I)
February 16, 2007
F-1
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2006
2006 | ||||
ASSETS | ||||
CURRENT ASSETS | ||||
Cash | $ | 79,554 | ||
Accounts receivable, net | 50,000 | |||
Unbilled services | 33,334 | |||
Prepaid expenses and other current assets | 7,505 | |||
Total current assets | 170,393 | |||
Fixed assets, net of depreciation | 29,198 | |||
Other Asset | ||||
Computer software development costs, net of amortization | 371,439 | |||
Total other asset | 371,439 | |||
TOTAL ASSETS | $ | 571,030 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
CURRENT LIABILITIES | ||||
Accounts payable and accrued expenses | $ | 129,384 | ||
Derivative liability | 1,031,713 | |||
Current portion of notes payable | 16,900 | |||
Unearned revenue | 33,334 | |||
Total current liabilities | 1,211,331 | |||
Long-term Liabilities | ||||
Notes payable, net of current portion | 366,028 | |||
TOTAL LIABILITIES | 1,577,359 | |||
STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized and no shares issued and outstanding | — | |||
Common stock, par value $0.0001 per share, 75,000,000 shares authorized and 9,129,392 shares issued and outstanding | 913 | |||
Additional paid-in capital | 1,874,363 | |||
Retained earnings (defict) | (2,881,605 | ) | ||
Total stockholders’ equity (deficit) | (1,006,329 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 571,030 | ||
F-2
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
2006 | 2005 | |||||||
(Restated) | ||||||||
REVENUE | $ | 199,991 | $ | 225,275 | ||||
COST OF REVENUES | ||||||||
Direct labor and other finges | 104,782 | 31,897 | ||||||
Amortization of computer software development costs | 177,003 | 177,003 | ||||||
Total costs of revenues | 281,785 | 208,900 | ||||||
GROSS PROFIT | (81,794 | ) | 16,375 | |||||
OPERATING EXPENSES | ||||||||
Indirect and overhead labor and fringes | 460,261 | 108,368 | ||||||
Professional fees | 961,205 | 102,630 | ||||||
Advertising and marketing | 58,585 | 127,652 | ||||||
Travel related costs | 23,282 | 31,141 | ||||||
Rent | 104,181 | 97,734 | ||||||
General and administrative | 62,860 | 44,204 | ||||||
Depreciation | 15,290 | 14,770 | ||||||
Total operating expenses | 1,685,664 | 526,499 | ||||||
NET LOSS FROM OPERATIONS BEFORE OTHER EXPENSE AND PROVISION FOR INCOME TAXES | (1,767,458 | ) | (510,124 | ) | ||||
OTHER EXPENSE | ||||||||
Loss on debt conversion | — | 38,462 | ||||||
Loss on fair value of derivative liability | 484,616 | — | ||||||
Interest expense, net of interest income | 25,334 | 16,196 | ||||||
NET LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | (2,277,408 | ) | (564,782 | ) | ||||
Provision for income taxes | — | — | ||||||
NET (LOSS) APPLICABLE TO SHARES | $ | (2,277,408 | ) | $ | (564,782 | ) | ||
NET (LOSS) PER BASIC AND DILUTED SHARES | $ | (0.77 | ) | $ | (0.11 | ) | ||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 2,942,269 | 5,350,000 | ||||||
F-3
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
Additional | Retained | |||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Earnings | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | (Deficit) | Total | ||||||||||||||||||||||
Balance, May 25, 2005 | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of shares for cash | — | — | 1,500,000 | 150 | 49,850 | — | 50,000 | |||||||||||||||||||||
Net loss for the period May 25, 2005 (inception) through December 31, 2005 | — | — | — | — | — | (17,833 | ) | (17,833 | ) | |||||||||||||||||||
Balance, December 31, 2005 | — | — | 1,500,000 | 150 | 49,850 | (17,833 | ) | 32,167 | ||||||||||||||||||||
Net loss for the period January 1, 2006 through October 24, 2006 | — | — | — | — | — | (28,908 | ) | (28,908 | ) | |||||||||||||||||||
Redemption of shares in conjunction with reverse merger with InferX Corporation | — | — | (300,000 | ) | (30 | ) | 330 | — | 300 | |||||||||||||||||||
To reflect reverse merger with InferX Corporation | — | — | 5,350,000 | 535 | 1,288,075 | (557,456 | ) | 731,154 | ||||||||||||||||||||
Issuance of shares to promissory note lenders | — | — | 250,000 | 25 | 66,225 | — | 66,250 | |||||||||||||||||||||
Issuance of shares in the private placement, net of $147,493 of closing costs, and $547,087 applied to derivative liability for the proceeds of the warrants | — | — | 2,329,392 | 233 | 469,883 | — | 470,116 | |||||||||||||||||||||
Net loss for InferX for the year ended December 31, 2006 | — | — | — | — | — | (2,277,408 | ) | (2,277,408 | ) | |||||||||||||||||||
— | $ | — | 9,129,392 | $ | 913 | $ | 1,874,363 | $ | (2,881,605 | ) | $ | (1,006,329 | ) | |||||||||||||||
F-4
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
2006 | 2005 | |||||||
(Restated) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (loss) | $ | (2,277,408 | ) | $ | (564,782 | ) | ||
Adjustments to reconcile net (loss) to net cash used in operating activities: | ||||||||
Stock issued for services | 66,250 | 305 | ||||||
Stock issued for services and guarantees of debt — pre-merger | 781,423 | — | ||||||
Cash received in merger with Black Nickel | 3,559 | — | ||||||
Loss on fair value of derivative liability | 484,616 | — | ||||||
Loss on debt conversion | — | 38,462 | ||||||
Amortization of computer software development costs | 177,003 | 177,003 | ||||||
Depreciation | 15,290 | 14,770 | ||||||
Change in assets and liabilities | ||||||||
(Increase) decrease in accounts receivable | (25,002 | ) | 48,305 | |||||
(Increase) in unbilled services | (28,647 | ) | (4,687 | ) | ||||
Decrease in prepaid expenses and other current assets | 8,442 | 26,158 | ||||||
Increase (decrease) in accounts payable and accrued expenses | (22,049 | ) | 157,270 | |||||
Increase in unearned revenue | 28,647 | 4,687 | ||||||
Total adjustments | 1,489,532 | 462,273 | ||||||
Net cash (used in) operating activities | (787,876 | ) | (102,509 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Capital expenditures | (8,423 | ) | — | |||||
Computer software development costs | (34,896 | ) | (24,905 | ) | ||||
Net cash (used in) investing activities | (43,319 | ) | (24,905 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Increase (decrease) in cash overdraft | (12,071 | ) | (18,647 | ) | ||||
Issuance of stock for cash pre-merger | 20,000 | 75,000 | ||||||
Contributions of capital pre-merger | 6,029 | 56,851 | ||||||
Issuance of stock and warrants in private placement, net of closing costs of $147,493 | 1,017,203 | — | ||||||
Borrowings of promissory notes | 350,000 | — | ||||||
(Repayment) of promissory notes | (350,000 | ) | — | |||||
(Repayment) of notes payable | (75,412 | ) | (10,790 | ) | ||||
Borrowings (repayment) of note payable — related partry | (45,000 | ) | 25,000 | |||||
Net cash provided by financing activities | 910,749 | 127,414 | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 79,554 | — | ||||||
CASH AND CASH EQUIVALENTS — BEGINNING OF PERIOD | — | — | ||||||
CASH AND CASH EQUIVALENTS — END OF PERIOD | $ | 79,554 | $ | — | ||||
SUPPLEMENTAL INFORMATION OF CASH FLOW ACTIVITY | ||||||||
Cash paid during the year for interest | $ | 27,596 | $ | 6,791 | ||||
SUPPLEMENTAL INFORMATION ON NONCASH ACTIVITY | ||||||||
Conversion of notes payable to accounts payable | $ | 57,537 | $ | 288,462 | ||||
Conversion of accounts payable to stock — pre-merger | $ | 40,248 | $ | — | ||||
Stock issued for services — pre-merger | $ | 99,000 | $ | 305 | ||||
Stock issued for services — post-merger | $ | 66,250 | $ | — | ||||
F-5
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-6
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-7
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-8
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-9
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-10
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-11
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
December 31, | ||||
2005 | ||||
Net (loss), as reported | $ | (564,782 | ) | |
Add: Stock-based employee compensation expense included in reported net (loss), net of related tax effects | — | |||
Less: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effects | — | |||
Pro forma net (loss) | $ | (564,782 | ) | |
Basic and diluted (loss) per share: | ||||
As reported | $ | (0.11 | ) | |
Pro forma | $ | (0.11 | ) | |
F-12
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-13
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
Years Ended | ||||||||
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
Net (loss) | $ | (2,277,408 | ) | $ | (564,782 | ) | ||
Weighted-average common shares outstanding : | ||||||||
Basic | 2,942,269 | 5,350,000 | ||||||
Effect of dilutive securities- warrants | 4,658,784 | — | ||||||
Diluted | 7,601,053 | 5,350,000 | ||||||
Basic net (loss) per share | $ | (0.77 | ) | $ | (0.11 | ) | ||
Diluted net (loss) per share | $ | (0.77 | ) | $ | (0.11 | ) | ||
F-14
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-15
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-16
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
Estimated Useful | ||||||
Lives (Years) | 2006 | |||||
Computer equipment | 5 | $ | 71,004 | |||
Office machinery and equipment | 3 | 15,638 | ||||
Furniture and fixtures | 5 | 538 | ||||
Automobile | 5 | 58,476 | ||||
145,656 | ||||||
Less: Accumulated depreciation | (116,458 | ) | ||||
Total, net | $ | 29,198 | ||||
F-17
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
Estimated Useful | ||||||||
Lives (Years) | 2006 | |||||||
Computer software development costs | 5 | $ | 944,816 | |||||
Less: Accumulated amortization | (573,377 | ) | ||||||
Total, net | $ | 371,439 | ||||||
Year ended December 31: | ||||
2007 | $ | 163,187 | ||
2008 | 101,167 | |||
2009 | 107,085 | |||
$ | 371,439 | |||
F-18
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-19
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-20
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
2007 | $ | 16,900 | ||
2008 | 15,724 | |||
2009 | 8,559 | |||
2010 | 8,909 | |||
2011 | 9,271 | |||
Thereafter | 323,565 | |||
382,928 | ||||
Less: current portion | (16,900 | ) | ||
Long-term portion | $ | 366,028 | ||
F-21
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-22
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
Exercise | Date | |||||||
Warrants | Price | Issued | Term | |||||
2,329,392 | $ | 0.50 | 10/24/2006 | 5 years | ||||
2,329,392 | $ | 0.625 | 10/24/2006 | 5 years | ||||
4,658,784 | ||||||||
F-23
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
For the Years Ended | ||||
December 31, | ||||
2007 | $ | 105,357 | ||
2008 | 100,441 | |||
$ | 205,798 | |||
F-24
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
Net operating losses | $ | 833,000 | ||
Valuation allowance | (833,000 | ) | ||
$ | — | |||
2006 | 2005 | |||||||
Federal statutory rate | (34.0 | )% | (34.0 | )% | ||||
State income taxes, net of federal benefits | 6.0 | 6.0 | ||||||
Valuation allowance | 28.0 | 28.0 | ||||||
0 | % | 0 | % | |||||
F-25
(FORMERLY BLACK NICKEL ACQUISITION CORP. I)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
F-26
Information Not Required In Prospectus
• | any breach of the director’s duty of loyalty to the corporation or its stockholders; | ||
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | ||
• | payments of unlawful dividends or unlawful stock repurchases or redemptions; or | ||
• | any transaction from which the director derived an improper personal benefit. |
SEC registration fee | $ | 240 | ||
Legal fees and expenses | 26,760 | |||
Printing expenses | 2,000 | |||
Accounting fees | 1,000 | |||
Miscellaneous | -0- | |||
Total | $ | 30,000 |
II-1
II-2
3(i) | Certificate of Incorporation, as amended on October 27, 2006 (incorporated by reference to Exhibit 3(i) to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
3(ii) | By-laws (incorporated by reference to Exhibit 3(ii) to the registrant’s Registration Statement on Form 10-SB, on January 12, 2006) | |
4.1 | Form of common stock certificate (incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
4.2 | Form of Class A warrant to purchase common stock (incorporated by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
4.3 | Form of Class B warrant to purchase common stock (incorporated by reference to Exhibit 4.3 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
4.4 | Registration Rights Agreement (incorporated by reference to Exhibit 4.4 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
5.1 | Legal opinion of Seyfarth Shaw LLP * | |
10.1 | Lease of the registrant’s principal executive offices, as amended (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
10.2 | Employment Agreement with B.K. Gogia (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
10.3 | Employment Agreement with J. Bala (incorporated by reference to Exhibit 10.1 to Amendment No 1 to the registrant’s Current Report on Form 8-K, filed on November 1, 2006) | |
10.4 | Employment Agreement with S. Parliament (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed on November 16, 2006) | |
10.5 | Employment Agreement with J. Mena (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
10.6 | Subscription Agreement (incorporated by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
10.7 | Agreement and Plan of Merger by and among Black Nickel Acquisition Corp. I, InferX Acquisition Corp. and InferX Corporation, dated October 24, 2006 (incorporated by reference to Exhibit 10.8 to the registrant’s Current Report on Form 8-K, filed on October 30, 2006) | |
10.8 | Award/Contract issued by Missile Defense Agency, effective October 31, 2006 (incorporated by reference to Exhibit 10.8 to the registrant’s Registration Statement on Form SB-2, filed on November 24, 2006) | |
23.1 | Consent of Michael Pollack, CPA, LLC * | |
23.3 | Consent of Seyfarth Shaw LLP (included with Exhibit 5.1) | |
24.1 | Power of attorney (included on the signature page of the Registration Statement on Form SB-2 filed on November 24, 2006) |
* | Filed with this registration statement. |
II-3
II-4
InferX Corporation | ||||||
By: | /s/ B.K. Gogia | |||||
B.K. Gogia | ||||||
President, Chief Executive Officer, | ||||||
Principal Executive Officer and Director |
SIGNATURE | TITLE | DATE | ||
/s/ B.K. Gogia | President, Chief Executive Officer, | |||
Principal Executive Officer and Director | April 26, 2007 | |||
* | Chief Technical Officer and Director | April 26, 2007 | ||
* | Chief Financial Officer, Vice President of Business Development and Marketing, | |||
Principal Financial and Accounting Officer and Director | April 26, 2007 |
*By: | /s/ B.K. Gogia | |||
B.K. Gogia | ||||
(Attorney-in-fact) |