LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2003 we had cash on hand of $3,005. Our primary source of
cash during the nine months ended December 31, 2003 was loans totaling $395,425
and revenues totaling $127,831. Net cash used in operating activities was
$262,959 during the nine months ended December 31, 2003. The primary uses of
cash for the quarter ended December 31, 2003 consisted of general operating
costs and product research and development expenses. At this time, to conserve
cash, we outsource the manufacture of our products and our sales and marketing
functions. In addition, our officers and certain employees have deferred their
salaries. We have applied for grants from various government agencies that, if
approved, will provide funding for the development of new products and for the
enhancement of our current products. We are also negotiating with various
government agencies and private companies in the areas of defense, homeland
security, law enforcement and aerospace for the sale of our products. We cannot
be certain, however, that we will be awarded any funds through grants or that
sales of our products will ever generate enough cash to fund our business.
During the next 12 months, if we cannot generate sufficient funds to operate our
business from grants and product sales, we will be required to seek financing
from our largest stockholder, who has provided financing and a loan guarantee
for us in the past, although he is under no obligation to loan any money to us.
We may also consider selling debt or equity securities. We cannot be certain
that we will be successful in obtaining financing if we need it. If we cannot
obtain financing when we need it, we may be unable to maintain our operations.
We had no investing activities that used or generated cash during the nine
months ended December 31, 2003 as compared to $2,946 of cash from investing
activities that was acquired in conjunction with the share exchange we entered
into on May 17, 2002 with USDR Global Aerospace, Ltd., a Delaware corporation,
and its stockholders.
Cash flows from financing activities for the nine months ended December
31, 2003 included loan proceeds in the amount of $395,425. Cash flows from
financing activities for the nine months ended December 31, 2002 consisted of
proceeds from lines of credit in the amount of $1,307,879 from a bank, and
$1,280,000 from a shareholder and other third parties.
During the nine months ended December 31, 2003, in order to conserve cash,
we issued our common stock to satisfy accounts payable totaling $376,851 and
wages totaling $2,502,743. |
