U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-KSB

 

[X]  Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934

       For the fiscal year ended   December 31, 2005

 

Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

Commission file number:   333-18439

 

 

 

MOBILE  AREA  NETWORKS,  INC.

(Name of small business issuer in its charter)

 

                                                                                                                                                       

                                                                                                                                                                                                    Florida                                                                                     59-3482752

               (State or Other Jurisdiction of                                                                 (I.R.S. Employer

               Incorporation or Organization)                                                                 Identification No.)

 

 

2772 Depot Street, Sanford, Florida                                                                    32773

(Address of Principal Executive Offices)                                                                  (Zip Code)

 

407-333-2350

(Issuer’s telephone Number)

 

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       [X] Yes      No .                                                                        

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

Indicate by check mark if the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes    [X] No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act).Yes      [X] No

State issuer’s revenues for its most recent fiscal year.   $256,370

The registrant has not authorized non-voting common equity and as of December 31, 2005, 45,877,747 shares of the registrant’s voting common stock were outstanding and held by non-affiliates.  The Company’s stock began trading on January  10, 2001 on the OTCBB under the symbol "MANW".  

Shares of Common Stock, no par value outstanding at December 31, 2005: 45,877,747


PART I

Forward-Looking Statements:

In addition to historical information, this Annual report on Form 10-KSB may contain statements that could constitute “forward-looking statements” under the federal securities laws. Forward-looking statements often are characterized by terms such as “may”, “believes”, “projects”, “expects”, or “anticipates”, and do not reflect historical facts. Forward-looking statements involve risks, uncertainties, and other factors that may cause the Company’s actual results, performances or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could effect the Company’s results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified throughout this report and in the section in Item 6, below, as well as other factors that the Company currently is unable to identify or quantify, but that may exist in the future. In addition, the foregoing factors may effect generally the Company’s business, results of operations, and financial position. Forward-looking statements speak only as of the date the statement was made. The Company does not undertake and specifically declines any obligation to update any forward-looking statements included in this report on Form 10-KSB.     

Item 1. Description of Business.

Mobile Area Networks, Inc. (OTCBB: “MANW”) is a Company with a limited operating history. The Company was incorporated in Florida on November 28, 1997 and became the successor in interests to a Texas corporation of the same name, effective January 1, 1998. The Texas corporation, formed May 22, 1996, transferred all right, title, and interests in and to its assets ,over to the Company. Such transfer was made in exchange for the Company’s issuance of stock to the Texas Company’s shareholders on a five (5) for one (1) share basis. That is, each share of the previously outstanding stock was split up into five (5) shares of the Company’s stock. The Management of the Company had previously decided to operate from and be domiciled in the state of Florida, and therefore also decided to streamline its corporate operations, and at the same time created more authorized shares for the Corporation to use for funding, and or for acquisitions. This was accomplished without diluting the ownership of the then current owners of private shares. The effect of this action was to change the State of Incorporation of the Company.

The Company has not been a party to any bankruptcy proceedings.

Mobile Area Networks, Inc. (the “Company”) started operations in Heathrow, Florida in 1996 and in early 1997 the Company successfully developed and deployed T-1 speed wireless internet service for business users of laptop computers in hotels beginning in Waltham (Boston), Massachusetts. From its wireless LANs (local area networks) at hotels, office buildings, convention centers, or other locations, the Company then routed data traffic through broadband high speed data lines or wireless broadband data links which terminated at the Company’s operations center in Heathrow, Florida. The Company retains the technical expertise for providing this service and welcomes requests to deploy certain locations. At the time of this report the Company had entered into discussions to deploy its system in large residential neighborhoods as the market for this service continues to mature.

The technical success of this service was far in advance of the market and did not generate sufficient revenue to sustain those operations so consequently the Company’s management pursued other means of generating revenue to sustain the Company.

The Company decided to enter a Core Industry which is Technology driven, and oOn August 12, 2002 the Company entered into an agreement to acquire all of the operating assets of Vintage Industries, Inc. (“Vintage”) in a stock for assets purchase. The assets consisted of an ongoing business with highly computerized plastics molds engineering and manufacturing equipment, including a complete computer aided machine tool shop, patents pending, and trade secrets for a process that rapidly produces plastic injection molds, numerous plastics injection molding presses, office and support equipment, and the existing customer base of Vintage.

The Company agreed to issue 1,440,000 of its SEC Rule 144 Restricted Common Shares (having a market value of approximately $274,000 according to the trading price of public shares on the day of the agreement), to be disbursed among the shareholders of and by Vintage Industries, Inc. Vintage Industries, Inc. was to be dissolved and all future operations in a timely manner were to be consolidated into and owned by Mobile Area Networks, Inc. (the “Company”). The Company also agreed to assume responsibility for Certain Current and long-term liabilities of Vintage. After the issuance of the shares used in this transaction the effect would be that the former owners of Vintage would jointly own approximately four percent (4.0%) of the then outstanding shares of the Company.  During August of 2005, 864,000 shares of the original 1,440,000 Vintage shares were tendered back to the Company in exchange for  $38,200.00, which is herein classified as Treasury Stock.

Simultaneous to the acquisition of the Vintage assets, the Company acquired the complete plastic molding department machinery of Recoton Corporation in a distress sale, which allowed to Company to pay a small amount of cash and to furnish Recoton with needed parts production at that time. The effect of this transaction was to dramatically increase production capacity for the Company, however the short term effect was detrimental to the cash position of the Company. The Company consolidated operations from four (4) smaller facilities into one much larger manufacturing center and office space beginning in December 2002, and the Company began essentially operating in 2003 as a start up manufacturer. In the years when the demand for this service was tremendous, Vintage did not have the capacity to expand until this consolidation.     

The former Vintage Industries, Inc. was formed in 1991 and through the years became a leader in its core business of cCustom iInjection molding of pPlastics and r Rubber.  molding. Vintage developed has extensive capabilities to provide consulting, engineering, mold design, mold manufacturing, and parts molding production. The business and customer base of Vintage changed dramatically over the past several years, and changed even more after the Agreement to be acquired by the Company was signed. Initially Vintage derived a substantial portion of it revenues from the design, mold manufacture, and production of rifle stocks and other parts for the sporting gun industry. Customers included Colt, Henry Repeating Arms, North American Arms, Marlin Firearms, O.F. Mossberg, Savage Arms (both USA and Canada),, and Winchester. For several years the sporting arms industry suffered economically and Vintage consequently shifted its focus away from that industry.

THE  FUTURE  OF  PLASTICS  AND  THE  COMPANY: VINTAGE: The Vintage Division (renamed “Plastech Service” during 2003) of Mobile Area Networks, Inc. (the “Company”) During the year ended 2005 the Company   currently generated itss the majority of   plastics services revenues from a diverse mix of High-Tech Military parts, Medical Device parts, Consumer Products, Automotive Accessories, Irrigation Devices, Sporting Rifle Stocks, Archery Bow parts, Building Systems Devices, Snow Ski Equipment parts, Military Simulation Trainer Parts, and other Specialty Applications. The Company’s management is focused on developing additional and diversified proprietary products to manufacture, in addition to the custom molding currently done for customers.

The current customer base includes among others; Lockheed Martin (military application parts), AAMP of America (automotive after market accessory parts), Orthomerica (medical devices), Senninger (irrigation devices), Rapid Patient Monitoring (medical dispensing device parts), SoundParts (hearing aid parts), and Darton Archery (sporting bow handles). Plastech Services’ current customer base is industry diverse to minimize the effect of possible specific market segment declines.

THE  FUTURE  OF  PLASTIC  MOLD  MAKING:  The annual U.S. market for plastic injection molds is reported to be approximately twenty billion dollars ($20 billion) annually. Spending by U.S. companies on machinery to manufacture these molds amounts to approximately $3.8 billion annually. A significant share of this market could be gained with innovative machinery that could reduce the skilled labor requirements of mold making, and create high precision molds, while saving on time and costs of mold making. The Company  Vintage has developed and claims trade secretsowns for the unique patent pending and proprietary Nickel Composite Tooling (“NCT™”) process which reduces the time necessary to make plastic injection molds, while delivering the high quality and precision typified by the computer control of a process. The NCT™  system could allow manufacturers of plastic products to go from product design to full production in ten to fifteen workdays instead of the current twelve to eighteen weeks. This dramatic savings in time and labor is further enhanced by a substantial savings in mold manufacturing costs. The Company also claims trade secrets for a process to produce short run production parts direct from molds produced in polymer from CAD (computer aided design) files. During the next several years the Company intends to exploit the NCT™ technology with hopes to capture 5% to 10% of the annual market by offering mold manufacturers a system that will allow them to pass on significant savings in costs and time to their customers, even after increasing their own profit margins dramatically.

NCT™ closes aPlastic product prototyping and mold designs are already dominated by computer automation, but many of today’s mold manufacturers still rely on expensive and lengthy manual and semi-automated machining processes. The NCT™ process could apply computer automation to mold manufacturing.

Mobile Area Networks, Inc. (the “Company”) started operations in Heathrow, Florida in 1996 and to developed the mobiLAN® brand of broadband, high speed (T-1 speed) wireless Internet service for travelers and other business users of laptop computers. From its wireless LANs (local area networks) at hotels, office buildings, convention centers, and other locations. The Company routed data traffic through broadband high speed data lines or wireless broadband data links which terminated at the Company’s operations center in Heathrow, Florida. The circuits to the Mobile Area Networks communications center, whether by wireless or fiber optics, was a private data circuit and was not routed through the insecure public Internet. At its network center Mobile Area Networks directed data traffic onto the Internet or through a private connection commonly known as a VPN (virtual private network) directly to a user’s corporate LAN connection. The service provided by mobiLAN® didoes not operate through telephone lines and therefore saved hotel owners the expense of adding extra telephone trunk lines and hotel PBX upgrades for laptop computer owners to use for their Internet connections. Mobile Area Networks provisioned data lines to hotels or other properties and routed the data traffic to its operations center. The Company concealed  wireless transmitters throughout those properties through which the laptop user received data connections. 

The Company installed systems and had its first publicized and successfully operating T-1 speed wireless internet service in early 1997 at the Westin Hotel in Waltham (Boston) Massachusetts and otherseveral locations in Florida and other locations within the United States. The mobiLAN® systems in major hotel chain properties region were technologically successful, but the revenue never matched the expenditures required to maintain these services andon of the Company discontinued its service to hotels after its decision to acquire its Plastics Manufacturing operations. Plastech Service business. The Company retains the Trade Secrets and expertise for the mobiLAN®  wireless service and as of the date this filing is in discussions for providing the service to residential neighborhoods. 

In the year 1998 the Company registered the LearningPort.com™ name and began marketing its concept of CAI (computer assisted instruction) which is also known as E-Learning or Distance Learning solutions through its internet domain portal named LEARNINGPORT.COM™. After experiencing the downward slide of the hotel market, the Company began devoting more resources into the E-Learning market during 2001.  In  2001 this segment of the business generated the majority of the Company's revenue for the year and the Company's management believed that this product could be marketed successfully. However, due to severe economic condition down-turns in late 2001 these expectations were not met. The Company is currently not devoting any resources toward this market. The Company is not aware of any required government approval for any of its services, but should this need arise there is no reason for the Company to believe that it would not be able to obtain such approvals. The Company estimates that it has expended approximately $695,000 on research and development during the past eight years, the majority of which has been provided by investors in the Company and primarily with respect to the Company’s MobiLAN® efforts. The Company is unaware of any environmental issues that may impact the Company or its services.

The Company has approximately seven full time employees including its President. In addition there are two part time consultants available to the Company on an as-needed basis. The Company also has marketing arrangements with outside individuals on a commission only basis.

Item 2.Description of Property.

 

The Company leases its office and manufacturing facility at 2772 Depot Street in Sanford, Florida. That lease, which originally was a sub-lease, was executed on November 11, 2002 covering 20,680 square feet for a five year term with annual lease payments approximating $85,000 plus pro-rated real estate taxes approximating $9,500 per year. On  The Company had the option to assume the master lease under certain conditions, particularly, if the lessee may be declared insolvent.  The option to assume the master lease was exercised onJuly 31, 2003, the Company negotiated a new master lease covering the entire. The new lease now covers 25,000 square feet for a term of three years and ten months commencing on August 1, 2003 and continuing through May 31, 2007. The lease provides two options to renew the term for two years each. As of December 31, 2005 all office equipment and furnishings were owned outright and without leases.

The Company owns the registered trademark “mobiLAN®”, and claims copyright ownership of other creative and derivative works including, but not limited to the Learningport.com name. On April 28, 1998 Mobile Area Networks, Inc. was granted U.S. Patent #5,745,884 which covers “System And Method For Billing Data Grade Network Use On A Per Connection Basis”. which was accounted for as a fully amortized intangible asset on the balance sheet of the Company. The Company protects as “Trade Secrets” certain software processes and procedures used in network address procedures, bandwidth managing, and controlling access to its systems, certain methods of plastics molding and mold building, as well as certain working arrangements with suppliers, consultants and clients. There can be no guarantee of any tangible value for this patent or any other intangible property

Item 3. Legal Proceedings.

 

On October 3, 2002, a complaint was filed against the Company with the Circuit Court of Seminole County, Florida by David Byron, a former sshareholdertockholder of Vintage Industries, Inc., for non-delivery of 288,000 shares of restricted common stock of Mobile Area Networks, Inc., per the general mutual release and separation agreement between Vintage Industries, Inc. and Mr. Byron. Mr. Byron is seeking immediate delivery of the 288,000 shares of Restricted Common Stock of Mobile Area Networks, Inc. and damages in the amount of the value of the stock. The Company is withholding the delivery of the shares pending the return of various Vintage Industries owned assets allegedly held by Mr. Byron.  The Company intends to vigorously defend its position as it never entered into this or any other agreement with Mr. Byron, and does not believe the range of loss, if any, can be reasonably estimated at this time. Accordingly, no provision for possible loss has been made in these financial statements.

 

The Company has not been a party to any bankruptcy proceedings.

Item 4. Submission of Matters to a vote of Security Holders.

None.

 

 

 

 

PART II

 

Item 5. Market for Common Equity and Related Stockholder Matters.

 

On February 16, 1999 the Company’s registration statement covering the registration of 5,000,000 shares of common stock was declared effective by the U.S. Securities and Exchange Commission (SEC). Provisions of the registration statement included a maximum offering price of $6.00 per share for projected gross proceeds of  $30,000,000. The securities associated with the offering were sold on a best efforts, no minimum amount basis and as of December 31, 2000 the Company had sold and issued 100,103 shares of common stock under the is offering, which was closed on November 24, 2000 in anticipation of being traded on the OTCBB system.

On January 10, 2001, the Company’s stock began public trading on the OTCBB system under the symbol “MANW”.

The following table shows the reported high and low sales price at which the Common Stock of the Company was traded during the year 2005.                                                          

                                                                            High                            Low

                             First Quarter                            .12                              .07

                             Second Quarter                       .10                                .05

                             Third Quarter                          .05                                .04                                                                                                                        
                             Fourth Quarter                        .40                              .08

The proceeds from the Company’s stock sales to date have been for, and are being used primarily to fund the continuing deployment and operations of the Company’s plastics manufacturing infrastructure and demonstration systems as well as for funding administrative activities and marketing programs of the Company which now includes the consolidated ing of theVintage and Recoton equipment for plastics production. Industries acquisition. The Company continues to explore acquisition opportunities in order to improve the revenue base and build value for the Company.

A majority of the Company’s total outstanding shares, 45,877,747, are restricted for sale under SEC Rule 144. Total authorized shares are 50 million. Most of the outstanding shares are owned by Company founders or insiders as reported in the Prospectus of the Company dated February 16, 1999 and in subsequent periodic reports including this Annual Report, such insider owned shares being further restricted as to resale. The Company has no obligation or requirement to register any of the restricted shares for public sales. However, shares held for the required time period under Rule 144 could under certain conditions be sold by the owners of those shares who are not considered to be insiders or owners of control shares when sold through broker transactions and with the proper Form 144 documentation and filing.

 

As of December 31, 2005, the Company had 417 registered shareholders of record.

Item 6. Management’s Discussion and Analysis or Plan of Operation.

 

Management’s Discussion and Analysis or Plan of Operation should be read in conjunction with the financial statements and related notes which are contained herein in the following pages under Item 7.

Revenues decreased from $503,052 in 2004 to $256,370 in 2005, a decrease of 49%.  During 2005, the Company’s receipt of orders decreased due toech competitive pressures and lack of working capital to initiate marketing strategies. The decrease was also related to cutbacks in military orders for one of its major customers because of cancelled or phased out government defense programs such as the Comanche and Miles systems.  

Cost of Goods Sold decreased from $194,575 in 2004 to $179,591 in 2005, a decrease of 8%.  The decrease was commensurate with the reduction in revenues. Included in Cost of Goods Sold is Factory Rent which increased from $70,956 in 2004 to $123,826 in 2005. The rent increase related to catch up for a past-due condition in 2004. ech

Total  Operating Expenses decreased from $748,968 in 2004 to $690,170 in 2005, a decrease of  8%.

Bad Debts expense increased from $23,726 in 2004 to $(2,220) in 2005. The Allowance for Doubtful Accounts was decreased to recognize the improvement in past-due balances.

Depreciation expense decreased from $168,023 in 2004 to $161,020 in 2005, a decrease of 4%. The decrease reflects certain assets that became fully-depreciated during the year.ech

Interest expense increased from $46,997 in 2004 to $60,212 in 2005, an increase of 28%.  The increase reflects interest incurred on credit card balances in addition to late charges and penalties on long-term debt balances, as well as dramatic increases in variable interest rates on financing.assumed ech

Payroll and payroll taxes decreased from $388,684 in 2004 to $339,877 in 2005, a decrease of 13%. The decrease is attributable to the termination of excess staff.ech

Professional Services increased from $15,300 in 2004 to $15,622 in 2004, an increase of 2%. The increase is not material.ech

Other Operating Expenses, which includes such expenses as telephone, utilities, postage, office supplies, and local taxes, increased from $106,238 in 2004 to $115,659 in 2005, an increase of  9%. The increase again relates principally to liability and health insurance and travel expenses.ech  

The Company realized a Gain on Forgiveness of Debt of $49,165 during 2005 resulting from the successful negotiation of outstanding long-term debt to amounts less than what was originally required.  Also, the Company recovered $70,432 from its insurance carrier for loss of business and repairs following the 2004 hurricanes.  During 2004, the Company also realized a Gain on Forgiveness of Debt of $62,546.

The Net Loss increased from $377,945 in 2004 to $506,701 in 2005. The increased loss is attributable to the decrease in revenues. The Net Loss Per Share was $.01 in 2005 and $.01 in 2004.

 The Company’s operating loss carry-forwards are approximately four million-seven hundred thousand dollars ($4,700,000) which are recoverable as income tax savings through the year 2025.

The Company’s short term liquidity and capital needs have been satisfied primarily from the continuing sale of the Company’s common stock in private sales, and loans from shareholders. The Company continues to seek the support of underwriters and market makers for the handling of its stock sales.

 The Company’s stock Registrar ishas engaged Atlas Stock Transfer Corporation which handles all its outside Stock share Registrations and Transfers.

 

 


MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

 

TABLE OF CONTENTS

 

 

Report of Independent Registered Public Accounting Firm                                                   F – 2

 

Balance Sheets at December 31, 2005 and 2004                                                               F – 3

 

Statements of Changes in Stockholders' Deficit for the Years

  Ended December 31, 2005 and 2004                                                                               F – 4

 

Statements of Operations for the Years Ended December 31,

  2005 and 2004                                                                                                              F – 5

 

Statements of Cash Flows for the Years Ended December 31,

  2005 and 2004                                                                                                       F - 6 – F – 7

 

Notes to Financial Statements                                                                                 F - 8 – F –16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-1                                                                                                                           PO BOX 1670

                                                                                                       

 

To The Board of Directors

Mobile Area Networks, Inc.

                                                    Report of Independent Registered Public Accounting Firm

 

We have audited the accompanying balance sheet of Mobile Area Networks, Inc. as of December 31, 2005 and the related statement of operations, changes in stockholder’s deficit and cash flows for the year then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.  The 2004 financial statements were audited by another auditor whose report dated March 30, 2005, included an explanatory paragraph describing conditions that raised substantial doubt about the Company’s ability to continue as a going concern.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board ( United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mobile Area Networks, Inc. as of December 31, 2005 and the results of its operations, changes in its stockholder’s deficit and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note K to the financial statements, the Company has suffered recurring losses from operations and has no commitments for funding future operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note K. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

S/ Berman Hopkins Wright & Laham, CPAs, LLP

Winter Park, Florida

March 10, 2006

 

 

 

 

 

 

 

 

F-2

 

 

 

 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

 (A FLORIDA CORPORATION)

 

 

Sanford, Florida

 

 

 

 

 

 

 

 

BALANCE SHEETS

 

 

 

 

 

December 31,

2005

2004

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

Cash and Cash Equivalents

$        6,621

$        11,325

Accounts Receivable - Net of Allowance for Doubtful Accounts

19,009

40,487

Inventory

47,626

25,582

 

 

 

Total Current Assets

73,256

77,394

 

 

 

Property and Equipment – Net of Accumulated Depreciation

240,897

414,825

 

 

 

Other Assets

 

 

Security Deposits

7,091

4,314

 

 

 

Total Assets

$    321,244

$      469,533

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

Notes and Capital Leases Payable - Due Within One Year

$           112,745

$           136,404

Accounts Payable

241,687

276,699

Accrued Expenses

59,284

56,997

 

 

 

Total Current Liabilities

413,716

470,100

 

 

 

Other Liabilities

 

 

Notes and Capital Leases Payable - Due After One Year

114,256

235,430

Accrued Salaries - Related Party

774,973

720,000

Advances from Stockholders

31,147

124,205

 

 

 

Total Liabilities

1,334,092

1,549,735

 

 

 

Stockholders’ Deficit

 

 

Common Stock:  No Par; 50,000,000 Shares Authorized,

 

 

                         45,877,747 and 42,915,470 Shares Issued

 

 

                         And Outstanding, respectively

3,742,069

3,156,814

Treasury Stock, 864,000 shares

(38,200)

Accumulated Deficit

(4,716,717)

         (4,210,016)

 

 

 

Total Stockholders’ Deficit

(1,012,848)

          (1,053,202)

 

 

 

Total Liabilities and Stockholders’ Deficit

$    321,244

$     496,533

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

 

F-3

 

 

Mobile Area Networks, Inc. (A Florida Corporation)

Sanford, Florida

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

Number

Of Shares

Common

Stock

Treasury

Stock

Accumulated

Deficit

Stockholders’

Deficit

 

 

 

 

 

 

 

 

Balances – December 31, 2003

41,910,817

$ 2,973,490

 

$(3,832,071)

      $(858,581)

 

 

 

 

 

 

 

 

Issuance of Common Stock for Cash

1,004,653

183,324

 

183,324

 

 

 

 

 

 

 

 

Net Loss

 

(377,945)

(377,945)

 

 

 

 

 

 

 

 

Balances – December 31, 2004

42,915,470

$ 3,156,814

 

$(4,210,016)

$(1,053,202)

 

 

 

 

 

 

 

 

Issuance of Common Stock for Cash

2,802,277

559,255

 

         559,255

 

 

 

 

 

 

 

 

Issuance of Common Stock for Notes

160,000

26,000

 

 

             26,000

 

 

 

 

 

 

 

 

Purchase of Shares for Treasury

 

 

(38,200)

 

(38,200)

 

 

 

 

 

 

 

 

Net Loss

 

(506,701)

(506,701)

 

 

 

 

 

 

 

 

Balances – December 31, 2005

45,877,747

$ 3,742,069

$(38,200)

$(4,716,717)

$(1,012,848)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-4


MOBILE AREA NETWORKS, INC.

 

 

(A FLORIDA CORPORATION)

 

 

Sanford, Florida

 

 

 

 

 

 

 

 

STATEMENTS OF OPERATIONS

 

 

 

 

 

Years Ended December 31,

2005

2004

 

 

 

Revenues - Net of Returns and Allowances

$      256,370

$      503,052

 

 

 

Cost of Goods Sold

179,591

194,575

 

 

 

Gross Profit

76,779

308,477

 

 

 

Operating Expenses

 

 

Bad Debts

(2,220)

23,726

Depreciation

161,020

168,023

Interest

60,212

46,997

Payroll and Payroll Taxes

339,877

388,684

Professional Services

15,622

15,300

Other Operating Expenses

115,659

106,238

Total Operating Expenses

690,170

748,968

 

 

 

Loss Before Other Income and (Expenses)

            (613,391)

            (440,491)

Other Income and (Expenses)

  

 

 Loss on disposal of fixed assets

(12,907)

¾

Gain on Forgiveness of Debt

49,165

62,546

Insurance Recovery

70,432

 

 

 

Loss Before Provision for Taxes

            (506,701)

            (377,945)

 

 

 

Provision for Taxes

 

 

 

Net Loss

      $    (506,701)

     $     (377,945)

 

 

 

Weighted Average Number of Common Shares

 

 

  Outstanding – Basic and Diluted

45,003,518

42,355,928

 

 

 

Net Loss per Share – Basic and Diluted

      $          (0.01)

     $           (0.01)

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

 

 

 

 

 

 

 

 

 

 

 

 

F-5

 

 

MOBILE AREA NETWORKS, INC.

 

 

(A FLORIDA CORPORATION)

 

 

Sanford, Florida

 

 

 

 

 

 

 

 

STATEMENT OF CASH FLOWS

 

 

 

 

 

Years Ended December 31,

2005

 

2004

 

 

 

Cash Flows Used By Operating Activities

 

 

 

 

 

Net Loss

          $(506,701)

          $(377,945)

 

 

 

Adjustments to Reconcile Net Loss to

 

 

  Net Cash Flows Used By Operating Activities:

 

 

Bad Debts

     (2,220)

23,726

Depreciation

161,020

168,023

Interest on Advances from Stockholders

2,201

8,451

Loss on Disposal of Fixed Assets

12,907

¾

Changes in Assets and Liabilities:

 

 

Accounts Receivable

               23,699

           (36,381)

Inventory

(22,044)

   51,898

Other Assets

(2,777)

Accounts Payable

(35,012)

40,018

Accrued Expenses

2,287

Accrued Salaries – Related Party

54,973

120,000

 

 

 

Net Cash Flows Used By Operating Activities

         (311,667)

         (2,210)

 

 

 

Cash Flows Used By Investing Activities

 

 

 

Acquisition of Property and Equipment

                  

                 

 

 

 

Cash Flows Provided By Financing Activities

 

 

Advances from Stockholders

       (54,914)(95,259)

20,233

Proceeds from Issuance of Common Stock

    585,255

183,323

Purchase of Treasury Stock

            (38,200)

 

Repayment of Notes and Capital Leases Payable

           (144,833)

(207,399)

 

 

 

Net Cash Flows Provided By Financing Activities

217,376306,963

(3,843)

 

 

 

 

Net Change in Cash and Cash Equivalents

(4,704)

           (6,053)

 

 

 

Cash and Cash Equivalents – Beginning of Year

11,325

  17,378

 

 

 

Cash and Cash Equivalents – End of Year

$     6,621

$ 11,325  

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

 

 

F-6


MOBILE AREA NETWORKS, INC.

 

 

(A FLORIDA CORPORATION)

 

 

Sanford, Florida

 

 

 

 

 

 

 

 

STATEMENTS OF CASH FLOWS – continued

 

 

 

 

 

Years Ended December 31,

2005

2004

 

 

 

Supplemental Disclosures

 

 

 

 

 

Interest Paid

$       58,011

$         37,546

Income Taxes Paid

   $               

              

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-7


MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

 

Note A -  Nature of Operations

               Mobile Area Networks, Inc. (the “Company”) was incorporated on May 23, 1996 in the State of Texas, and subsequently transferred all of its assets to a Florida Corporation of the same name, which was formed for the purpose of changing the state of Incorporation, and providing all aspects of wireless data communication including LAN-speed data connectivity service to remote home-office network services and to the Internet from frequently traveled routes and places such as hotels and airports.

 

               Operations of the Company up to the date of acquiring the assets of Vintage Industries, Inc. (“Plastics Services”), was devoted primarily to product development and marketing, raising capital, administrative activities and deployment of communications network infrastructure and service demonstration systems for both the MobiLAN® and Learningport.com™ services. Since the date of the Vintage Assets acquisition the operations of the Company have been devoted primarily to consolidating the assets and operations of Plastics Services into the Company. The primary business function of the Plastics Services assets is the design, engineering, production of intricate plastic and rubber injection molds, and the production of molded plastic and rubber parts. The Company had entered into discussions at the date of this filing to re-enter the wireless market with its secure wireless networks into residential housing communities.

 

               Resources of the Company up to the date of the acquisition of the Plastics Services facilities were also devoted to marketing the Company’s concept of computer assisted instruction solutions through its internet domain portal named Learningport.com™.  Since the date of the Vintage assets acquisition, the resources of the Company have been devoted to consolidating and operating the Plastics Services equipment of the Company.

 

Note B -  Summary of Significant Accounting Policies

               Recent Accounting Pronouncements

               In November, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs-an amendment of ARB No.43” (SFAS 151), in an effort to converge U.S. accounting standards for inventories with International Accounting Standards.  SFAS 1551 requires idle facility expenses, freight, handling costs, and wasted material (spoilage) costs to be recognized as current-period charges.  It also requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of the production facilities.  SFAS 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company believes its current accounting policy complies with the requirements of the new standard and as such the adoption of this standard is not expected to have a material impact on the Company’s financial statements.

 

               In December, 2004, the FASB issued a revision to SFAS No. 123, “Share-Based Payment” (SFAS 123). This statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions).  That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.  Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met; those conditions are much the same as the related conditions in SFAS 123.  This Statement is effective for public entities that file as a small business issuer as of the beginning of the first interim or annual reporting period that begins after December 15, 2005.  This Statement applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. The cumulative effect of initially applying this Statement, if any, is recognized as of the required effective date and is not expected to have a material impact on the Company’s financial statements.

 

              

F-8

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

 

               Note B -Summary of Significant Accounting Policies-continued

               In December, 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets-an amendment of APB  Opinion No. 29” (SFAS No. 153).  This Statement amends Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The adoption of SFAS 153 will not have a material impact on the Company’s financial statements.

 

               In May, 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (SFAS 154), which replaces APB Opinion No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements-An Amendment of APB No. 28.”  SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application, or the latest practicable date, as the required method for accounting for and reporting a change in accounting principle and a correction of an error.  SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  The Company does not expect that the adoption of SFAS 154 will have a material impact on its financial position, results of operations or cash flows.

              

               Impairment of Long-Lived Assets

               Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets which considers the discounted future net cash flows.

 

               Method of Accounting

               The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

 

Cash and Cash Equivalents

Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.

 

               Allowance for Doubtful Accounts and Bad Debts

               The Company provides for estimated losses on accounts receivable based on prior bad debt experience and a review of existing receivables.  Based on these factors, there is an allowance for doubtful accounts of $35,000 at December 31, 2005 and $37,221 at December 31, 2004, respectively.

 

               Inventory

               Inventory consists of raw materials, work-in-process, and finished goods, and is stated at the lower of cost or market using the first-in, first-out method.

 

 

 

 

 

F-9

 

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

               Note B -Summary of Significant Accounting Policies-continued

               Property, Equipment and Depreciation

               Property and equipment are stated at cost, less accumulated depreciation computed using the straight line method over the estimated useful lives as follows:

 

                                    Manufacturing Equipment                                                           5 Years

                                    Computer Equipment and Software                                             5 Years

                                    Office Furniture and Equipment                                              5 - 7 Years

                                    Leasehold Improvements                                                            5 Years

 

               Maintenance and repairs are charged to expense.  The cost of the assets retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts.

 

               Advances from Stockholders

               Advances from stockholders consists of advances due on demand for working capital purposes.  The amount due has an unstated interest rate and contains no formal repayment terms.  Accordingly, the Company has imputed interest at the prime rate plus 1%.  Imputed interest expense for the years ended December 31, 2003 and 2005 and 2004 was $2,201 and $8,451, respectively.

 

               Revenue Recognition

               Revenues from product sales are recognized when both the goods are shipped and the customer’s right of return has expired for Plastics Services.  Unearned revenue results from deposits received on jobs still in progress.

 

               In accordance with the provisions of the AICPA’s Statement of Position 97-2, “Software Revenue Recognition”, revenue is recognized on sales of Learningport.comä products when evidence of a sales order exists with a fixed sales price, delivery has occurred and collectability of amounts involved are deemed probable.

 

               For the MobiLAN® products, revenue is recognized as data communication and consulting services are provided, or upon sale for installation of related computer hardware and software.

 

               Use of Estimates

               The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results can differ from those estimates.

 

               Concentrations of Credit Risk

               Financial instruments, which potentially expose the Company to significant concentrations of credit risk, consist principally of bank deposits, which may at times exceed federally insured limits, and trade accounts receivable.  The Company had no cash balances that exceeded insured limits at December 31, 2005 or 2004.  Cash is placed primarily in high quality short-term interest bearing financial instruments.

 

                      The Company had sales in 2005 to eighteen different customers, one of which comprised twenty-five percent (25%) of the total. Also, the one significant customer comprised approximately eighteen (18%) and zero (0%) of the accounts receivable balance at December 31, 2005 and December 31, 2004, respectively.

 

F-10

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

 

 

               Note B -Summary of Significant Accounting Policies-continued                            

               Concentrations of Credit Risk-continued

               The Company periodically monitors the credit worthiness of its customers to which it grants credit terms in the ordinary course of business and maintains an allowance for anticipated credit losses.

 

               Fair Value of Financial Instruments

               The fair value of cash and cash equivalents, accounts receivables, inventory, security deposits, accounts payable, and accrued expenses approximated book value at December 31, 2005 and 2004, because of the immediate or short-term maturity of these financial instruments.

 

               The fair value of property and equipment, line of credit, notes and capital leases payable, and advances from stockholders could not be obtained without incurring excessive costs as they have no readily determinable market price.

 

               Stock Transactions

               Shares of common stock or common stock equivalents issued for services performed are valued at either the fair value of the equity instruments issued or the value of services performed, whichever is the more reliable measure.

 

               During the year ended December 31, 2005, two stockholders were issued 160,000 shares of common stock in satisfaction of repayment of their advances totaling $26,000 to the Company.  These stock issuances are separately included in the Statement of Changes in Stockholders’ Deficit.

   

              

               Net Loss Per Common Share

               Net loss per common share is computed in accordance with SFAS No. 128, “Earnings Per Share.”  Basic Earnings Per Share is calculated by dividing loss available to common stockholders by the weighted average number of common shares outstanding for each period.  Diluted Earnings per share is the same as Basic Earnings Per Share since no common stock equivalents were outstanding for the years ended December 31, 2005 and 2004.

 

               Reclassifications

               Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

 

               Income Taxes

               The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred tax assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards. Deferred income tax expense represents the change in net deferred tax assets and liability balances.  The Company had no material deferred tax assets or liabilities at December 31, 2005 and 2004.

 

 

              

F-11

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

Note B -Summary of Significant Accounting Policies-continued

Provision for Income Taxes

               Deferred income taxes result from temporary differences between the basis of assets and liabilities recognized for differences between the financial statement and tax basis thereon, and for the expected future tax benefits to be derived from net operating losses and tax credit carry forwards.  The Company has approximately four million-seven hundred thousand dollars ($4.7 million) in net operating losses as of

               December 31, 2005, and a valuation allowance equal to the tax benefit of the accumulated net operating losses has been established since it is uncertain that future taxable income will be realized during the applicable carry-forward periods. Accordingly, no income tax provision has been recognized in the accompanying financial statements.

 

Note C -  Accounts Receivable

               Accounts receivable consisted of the following:

 

December 31,

2005

2004

 

 

 

Trade

$ 54,009

$   77,708

Less:  Allowance for Doubtful Accounts

35,000

37,221

 

 

 

Net Accounts Receivable

$19,009

    $     40,487

 

 

 

 

 

 

Note D -  Inventory

               Inventory consisted of the following:

 

December 31,

2005

2004

 

 

 

Raw Materials

$   47,627  

    $     25,582        

Work-in-Process

Finished Goods

 

 

 

Total Inventory

$ 47,627

  $    25,582

 

 

 

 

 

 

 

 

F-12

 

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

 

 

Note E -   Property and Equipment

               Property and equipment consisted of the following:

 

December 31,

2005

2004

Manufacturing Equipment

$ 772,462

$       775,174

Computer Equipment and Software

66,912

66,912

Office Furniture and Equipment

42,725

42,725

Leasehold Improvements

42,921

72,477

 

$ 925,020

$ 957,288

Less:  Accumulated Depreciation

684,123

542,463

Net Property and Equipment

$ 240,897

$   414,825

 

               Depreciation expense for the years ended December 31, 2005 and 2004 was $161,020 and $168,023, respectively.

 

Note F -   Notes and Capital Leases Payable

               Notes and capital leases payable consisted of the following:

 

December 31,

2005

2004

Notes Payable

 

 

Business Loan Center, Inc.

Note payable due December, 2007, payable in monthly installments of $4,209, including principal and interest at prime plus 2¾% (10.00% at December 31, 2005).  The loan is secured by all assets of Vintage Industries, Inc., with personal guarantees by four shareholders of Vintage Industries, Inc. and their spouses, with their residences pledged as additional security, assignment of life insurance in the amount of $350,000 on each of the Vintage Industries, Inc. stockholders, and a guarantee by the Small Business Association.

 

 

 

 

 

 

 

 

 

$ 31,145

 

 

 

 

 

 

 

 

 

$    119,058

 

 

 

GE Capital Small Business Finance Corporation

Note payable due June, 2008, payable in monthly installments of $6,250, including principal and interest at prime plus 2¼% (9.50% at December 31, 20032005).  The loan is secured by certain equipment of Vintage Industries, Inc. in excess of $350,000 with personal guarantees by four shareholders of Vintage Industries, Inc. with their residences pledged as additional security, and a guarantee by the Small Business Association.

 

 

 

 

 

 

 

195,856

 

 

 

 

 

 

 

245,600

 

 

 

 

 

 

Stearns Bank, N.A. Note Payable

 

 

Note Payable due May, 2007, payable in monthly installments of $2,728, including principal and interest at 6.25%.  The loan is secured by

 

 

 

125,223

Capital Leases Payable

 

 

Intech Funding Corp.

Equipment lease originally executed as a four-year term, due February 2004.  Restructured during 2004 to a series of installment payments of $1,026.98 including interest of 6.0% terminating in July, 2005.

 

 

 

¾

 

 

 

7,176

 

F-13

 

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

Note F -   Notes and Capital Leases Payable - continued

 

December 31,

2005

2004

 

 

 

Total Notes and Capital Leases Payable

$ 227,001

$   371,834

 

 

 

Less:  Amount Due Within One Year

112,745

136,404

 

 

 

Amount Due After One Year

$ 114,256

$     235,430

 

               Annual maturities of notes payable for the five years succeeding December 31, 2005 are as follows:

 

2006

2007

2008

2009

2010

Thereafter

Total

$ 185,614$ 112,745

$ 146,749$ 81,600

$ 146,750$32,656

$ 127,655$

 $      33,310

$           

$ 227,001

 

              

               Interest expense on the notes and capital leases payable for the years ended December 31, 2005 and 2004 was $39,307 and $34,200, respectively

 

 

Note G -  Leases

               On March 31, 1997, the Company entered into a building lease for administrative facilities, with an unrelated third party, commencing June 1, 1997.  The term of the lease was for seventy-five months, with monthly rental payments of $2,083 for the first year, and increasing each year thereafter based on the Cost of Living Index.  As of December 31, 2002, the monthly rental payments were $2,466.  This lease expired in August, 2003 and the Company was allowed to maintain offices at that location as a hold over tenant until November, 2003 at which time the offices of the Company were consolidated within the manufacturing facility offices. The amount of lease payments for the expired lease which included amounts for previous periods was negotiated with the building owner and settled for $8,000 during 2004.

 

               On November 11, 2002, the Company entered into a building sub-lease for office and manufacturing space, with an unrelated third party.  The term of the lease was for five years and required monthly rental payments of $8,414.  This sub-lease was subsequently negotiated into a master lease on July 31,2003 covering 25,000 square feet for a term of three years and ten months with two options to renew for two years each.  The details are further itemized in Part I, Item 2, Description of Property.

 

               Future minimum lease payments for the five years succeeding December 31, 20032005 is as follows:

2006

2007

2008

2009

2010

Total

$ 131,865

$ 137,139

$ 142,625

$148,330

$ 154,263

$ 714,222

 

 

Note H -   Acquisitions

               Vintage Industries, Inc.

               On August 12, 2002, Mobile Area Networks, Inc. (“the Company”) entered into an asset purchase agreement to acquire all of the operating assets of Vintage Industries, Inc. (“Vintage”) in a stock for assets purchase. A portion of the results of Vintage’s operations have been included in the Company’s financial statements since that date. The assets acquired consisted of an on going business with

 

F-14

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

Note H-Acquisitions-continued

               computerized plastics injection mold engineering and manufacturing equipment including a complete mold making machine tool shop, patents pending for a process that rapidly produces plastic injection molds, numerous plastics injection molds and molding presses, all office and support equipment, and the then existing customer base of the company.

 

The Company pledged 1,440,000 shares of Restricted Common Stock, with a fair market value of approximately $274,000 according to the trading price of public shares on the day of the agreement, to be disbursed among the then shareholders of and by Vintage Industries, Inc. Vintage was to be dissolved in a timely manner, and future operations were to continue as a business segment of the Company.  The Company also agreed to assume responsibility for Certain Current and long-term liabilities of Vintage. After the issuance of the shares used in this transaction, the effect would be that the former shareholders of Vintage would then own jointly approximately four percent (4%) of the then outstanding shares of the Company. During August, 2005, 864,000 shares of the 1,440,000 Vintage shares were tendered back to the Company in exchange for $38,200 which is classified as Treasury Stock. The agreement also includes a Non-Competition Agreement from the former shareholders of Vintage for three years as well as a stock share “leak-out” restriction clause.

 

Note I -    Litigation

               On October 3, 2002, a complaint was filed against the Company with the Circuit Court of Seminole County, Florida by David Byron, a former shareholder of Vintage Industries, Inc., for non-delivery of 288,000 shares of Restricted Common Stock of Mobile Area Networks, Inc., per the general mutual release and separation agreement between Vintage Industries, Inc. and Mr. Byron.  Mr. Byron is seeking immediate delivery of the 288,000 shares of restricted common stock of Mobile Area Networks, Inc. and damages in the amount of the value of the stock.  The Company is withholding the delivery of the shares pending the return of Vintage division owned assets allegedly held by Mr. Byron. There has never been any agreement between Mr. Byron and Mobile Area Networks, Inc. relating to shares or any other matter. The Company intends to vigorously defend its position and does not believe the range of loss, if any, can be reasonably estimated at this time. Accordingly, no provision for possible loss has been made in these financial statements. 

 

              

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-15

 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A FLORIDA Corporation)

Sanford, Florida

 

NOTES TO FINANCIAL STATEMENTS

 

Note J -   Related Party Transaction

               The Company’s President and Chief Executive Officer has, in six of the seven years prior to 2005, deferred his salary of $120,000 until such time the Company’s cash position will allow such payments. During 2005, he deferred $80,000 and received $40,000 as cash compensation.  The 2005 deferral has been offset by advances ($25,027).  The item has been accounted for as Accrued Salaries - Related Party caption on the Balance Sheet. It is acknowledged by the Company’s management and ratified by its Board of Directors that this deferred salary along with personal notes to the Company by the CEO and his wife are considered wages and is the most superior lien and bond against all of the Company’s assets.

 

 

Note K -   Going Concern

               The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. 

              

               The Company has reported net losses of $506,701 and $377,945 for the years ended December 31, 2005 and 2004, respectively.  As a result, there is an accumulated deficit of $4,716,716 at December 31, 2005.  The primary causes of the losses are attributable to the write-off of un-collectable receivables and increased operating costs, due to the acquisition of the Plastics Services operations in 2002, and general operating costs associated with start-up activities, while generating minimal revenue.

              

               The Company’s continued existence is dependent upon its ability to raise capital and/or achieving profitable operations. The Company continues to attempt to raise sufficient working capital through equity offerings, and to restructure debt to lower its monthly debt service payments. The Company continues to fund operational deficits through equity financing through private individuals. The Company is currently renegotiating bank lines of credit and is pursuing other capital. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

 

Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

 

A change in Accountants was made during 2005 due to the sudden and unexpected death of Robert Clemons, its former Accountant.  A Form 8-K was filed on December 8, 2005.

 

 

 

 

F-16

 

 

PART III

 

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

 

(a)                                Directors and Executive Officers:

 

Consistent with Florida corporate law and the Company’s By-Laws, during the fourth quarter of 2003 the Company’s Board of Directors unanimously voted to increase the number of Board members from three to four and simultaneously elected members to fill vacancies as described herein. Robert Good announced that he would be retiring after serving many terms past his original term. The remaining Board members elected Jerome L. Nettuno to fill the vacancy created when Dr. Russell Graham completed five terms. The third Board position was filled with the election of Noah V. Savant.  There remains once vacancy after the term expired for Daniel Mault at the end of 2005 with no replacement nominated at that time.

 

George E. Wimbish, age 62, is a founder of the Company and its concept, and has been a Director of the predecessor (Texas) Company since November 3, 1996, and Chairman, President and CEO since March 28, 1997. His term of office is yearly until a successor is chosen. His business experience for the past 5 years includes serving as the Company’s Chief Executive Officer.  Mr. Wimbish  does not serve as a Director in any other reporting company. He resides in Heathrow, Florida.

Jerome L. Nettuno, age 43, is the director of business development for Nettworth Financial Services and has extensive experience consulting with public companies in such matters as financial planning. Mr. Nettuno has been a valued resource to the Company since its inception. He does not serve as a director of any other public company. He resides in Bozeman, Montana.

Noah V. Savant, age 62, attended McNeese State University in Lake Charles, LA. He is the Assistant to the Vice President of Communications Workers of America in Atlanta, GA. He has been the Chief negotiator for all Bell South Agreements and is very active in legislative and political issues. He has served budget director for C.W.A. district 3. He does not serve as a director of any other public company. He resides in Covington, GA.

Jerald R. Hoeft, CPA, age 63, was appointed Chief Financial Officer in January, 2001.  Mr. Hoeft has been a practicing CPA in the Orlando area since the end of 1998.  Prior to 1999, he was in the financial services industry for over twenty-five years where he served as a chief financial officer and director for several leading public and privately-held companies. Mr. Hoeft does not serve as a Director in any other reporting company. He resides in Heathrow, Florida.

Judy D. Wimbish:  Corporate Secretary and Executive Assistant to the CEO. Mrs. Wimbish is the wife of the CEO and has served full time with only token compensation since the beginning of 1998 until the present. She has assisted with structuring the office and has been a valued member of the marketing team. She has served as a communicator to the investment community.

 

(b)    Significant Employees and Consultants

 

Paul Savage: Research and Development Director. Mr. Savage has more than 25 years experience in Principal wireless product design in digital, analog, RF, and microwave circuit design. He also possesses extensive field experience in the implementation of wireless on towers and other locations. Mr. Savage currently serves in a consulting role to the Company as needed.

Angel Martinez: Computer Analyst with vast knowledge and experience in software applications including database and Electronic Commerce systems. Mr. Martinez was an early private investor in the Company and has served as a volunteer technical resource since 1998. He became a full-time employee in January, 2000, and in the third quarter of 2001 chose to revert to part-time consultant status and remains available as needed.

(c)   Family Relationships

 

Judy D. Wimbish who serves as Executive Assistant, is the wife of CEO and majority shareholder George Wimbish, whose shares are jointly owned by Mrs. Wimbish. She currently serves full time and has received only token compensation to date.

(d)   Certain Legal Proceedings:

 

The Company is not aware of any legal proceedings within the last five years against any Director, Officer, Significant Employee, or candidate for any such position involving a petition under the Bankruptcy Act or any State insolvency law or of any receiver, fiscal agent or similar officer appointed by a court for the business or property of such person or any partnership in which he was general partner or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing; nor is the Company aware of any of the above-mentioned persons being convicted in a criminal proceeding; except as follows: NONE

Item 10. Executive Compensation.

 

The Company’s current policy is that Directors serve without compensation. However, in the future it may be in the Company’s best interests to compensate Directors in a manner that will attract the most qualified people to serve on the Company’s Board. Through December 31, 2003 2005 the officers of the Company have served without compensation other than the allowance to acquire Restricted founders stock at a preferred price. The Company’s management may determine when it is in the best interest of the Company to compensate Officers and Directors. For the years 1998 through 2005, Mr. Wimbish’s annual salary was approved to be $120,000, a portion of which has not been collected and remains in accrued expenses on the 2005 and 2004 balance sheets.


Item 11. Security Ownership of Certain Beneficial Owners and Management.

 

The following table sets forth certain information regarding beneficial ownership of the Company’s Common Stock as of December 31, 2005 with respect to each director and officer and any person who is known to the Company to be the beneficial owner of five percent (5%) or more of the Company’s outstanding Common Stock. Also set forth in the table is the beneficial ownership of all shares held by all directors and officers, individually and as a group.

(1)                                                                         (2)                                            (3)                                            (4)                       

Name  And  Address                                          Shares  Owned.           Percent                                             Percent   After            

Of  Owner.                                                                                                          Before  Offering                             Sales of

                                                                                                                    Total Sold.                              Maximum  Offering.

George E. Wimbish*                                         25,500,000(a)                55.58%                                    52.38%

Director, Chairman, President, & CEO

2772 Depot Street

Sanford, Fl 32773

 

Judy D. Wimbish*-Secretary, Jointly owns all shares with George Wimbish, CEO.

 

Dr. Robert M. Good                                           2,150,000(a)(c)     4.69%                                      4.42%

1282 Regency Place

Heathrow, FL  32746

 

Jerome L. Nettuno                                                 978,000(d)                   2.13%                                      2.01%               

Director

Company Address

 

Jerald R. Hoeft                                                      270,000   (d)                  .59%                                       .55%

Chief Financial Officer-Treasurer

Company Address

 

Noah V. Savant                                                        15,000                        0.03%                                       0.03%

Director

Company Address

                                               

Subtotal                                                                  28,913,000                     63.02%                                   59.39%                                           

 

Other Private Shareholders                                   14,773,447(b)               32.20%(c)                                30.34%(c)

 

Publicly traded shares                                               2,191,300                      4.78%                                       4.50%                                

 

New Shareholders                                                     2,808,700                  -----------                                       5.77%

From Offering If All Sold                                             

Total                                                                    48,686,447(e)             100.0%                                100.0%

(a)     Within the knowledge of the issuer, no other person holds or shares the power to vote or direct the voting of securities described pursuant to subsection (a) above. No other person holds shares or the power to vote  5% or more of the issuer’s voting securities.                                                                                

 

(b)     The Company may utilize private stock shares as incentive or compensation for the product and service marketing   efforts of the Company’s employees, when appropriate.

 

(c)     Some of the restricted shares included in this total have been conditionally assigned to certain employees or consultants with performance and or tenure requirements. The possibility that all of these private shares may or may not be rescinded would not dramatically affect this percentage.

(d)     A portion of these shares were acquired in private transactions between unrelated private shareholders.

 

        (e)  This amount includes 2,808,700 publicly registered shares that have not been sold to date. 

 

 

Item 12. Certain Relationships and Related Transactions.

 

All transactions during the previous two years and any presently proposed transaction to which the issuer is a party in which any person having a relationship with the issuer has a direct or indirect material interest are the following transactions, and no others:

None.

 

 

Item 13. Exhibits and Reports on Form 8-K.

 

(a)                                  Exhibits

                            

                           Exhibit 31               CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT

                  

                             Exhibit 32            CERTIFICATION

 

(b)              Reports on Form  8-K

                   The Company filed a Form 8-K on December 8, 2005 to report a change in auditors.

              

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MOBILE AREA NETWORKS, INC.

/s/ George Wimbish

 

By:________________________________________________

George Wimbish

President & CEO

 

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.

Signature                                         Title                                                                                                                         Date

 

/s/ George Wimbish                                                                                                                      

____________________________

George Wimbish                                                                                                                                 

Director, Chairman,  President,  Chief Executive.                                                                            March 31, 2006

 

 

/s/ Jerald R. Hoeft

______________________________Chief Financial Officer                                                   March 31, 2006

Jerald R. Hoeft

 

/s/ Jerome L. Nettuno

_______________________________Director                                                                         March 31, 2006

Jerome L. Nettuno

 

/s/ Noah V. Savant

_______________________________Director                                                                                   March 31, 2006

Noah V. Savant

 

 

 

 

CERTIFICATION

In connection with the Annual Report of Mobile Area Networks, Inc. (the “Company”) on Form 10-KSB for the fiscal year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, George Wimbish, Chief Executive Officer and Jerald R. Hoeft, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)                 The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)                 The information contained in the Report fairly presents, in all material respects the financial condition and results of the Company.

 

Date:  March  31, 2006                                                           /s/  George Wimbish                              

                                                                                                George Wimbish

                                                                                                Chief Executive Officer

 

                                                                                                  /s/  Jerald R. Hoeft             

                                                                                                Jerald R. Hoeft

                                                                                                Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CERTIFICATION PURSUANT TO THE

SARBANES-OXLEY ACT

We, George Wimbish, the Chief Executive Officer, and Jerald R. Hoeft, the Chief Financial Officer of

Mobile Area Networks, Inc., certify that:

1.      We have reviewed this annual report on Form 10-KSB of Mobile Area Networks, Inc.;

2.      Based on our knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.      Based on our knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.      We are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)   designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.      We have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.      We have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  March 31, 2006                                         /s/  George Wimbish           

                                                                        George Wimbish

                                                                        Chief Executive Officer

                                                                          /s/  Jerald R. Hoeft             

                                                                        Jerald R. Hoeft

                                                                        Chief Financial Officer