Delaware		0-21743		36-3680347
(State or Other Jurisdiction Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
2201 Second Street, Suite 600, Fort Myers, Florida				33901
(Address of Principal Executive Offices)				(Zip Code)
		(239) - 337-3434
		(Registrant's Telephone Number, including Area Code)

 

 

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

 

 

 

(a)	Financial Statements of Acquired Business - BSD Software, Inc.

 

 

1.	Nature of business:

 

 

 

 

 

6.	Restatement of previously reported financial information:

 

The Company, in reviewing its accounting practices with respect to revenue recognition, became aware that it incorrectly applied the principles of EITF 99-19, “Reporting Revenue Gross as a Principal vs. Net as an Agent.” As a result, the company had overstated its net sales and its cost of goods sold during the three and six month periods ended January 31, 2006 and 2005. These corrected amounts are reflected on the restated statement of operations. The adjustment does not affect net income (loss) during any period. The adjustment does not affect the statement of cash flows or balance sheet.

As a result, the Company has restated certain financial information for the three and six month periods ended January 31, 2006 and 2005. The following tables provide a reconciliation of amounts previously reported by the Company.

		Previously			Restatement			Restated
		Reported			Adjustment			Total
Three months ended January 31, 2006
Revenue		$	2,049,676			($1,534,456	)	$	515,220
Cost of revenue			1,665,359			(1,534,456	)		130,903
Six months ended January 31, 2006
Revenue		$	4,344,686			($3,410,887	)	$	933,799
Cost of revenue			3,671,838			(3,410,887	)		260,951
Three months ended January 31, 2005
Revenue		$	1,679,171			($1,356,498	)	$	322,673
Cost of revenue			1,379,583			(1,356,498	)		23,085
Six months ended January 31, 2005
Revenue		$	3,257,503			($2,528,542	)	$	728,961
Cost of revenue			2,555,498			(2,528,542	)		26,956

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Report of Independent Registered Public Accounting Firm

To the Board of Directors of BSD Software, Inc and Subsidiaries

We have audited the accompanying consolidated balance sheet of BSD Software, Inc. (the "Company") as of July 31, 2005, and the related consolidated statements of operations and comprehensive loss, cash flows, and shareholders’ deficit for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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. 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 the Company as of July 31, 2005, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has experienced operating losses and has a working capital deficiency 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 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Stonefield Josephson, Inc.

CERTIFIED PUBLIC ACCOUNTANTS

Irvine, California

September 28, 2005, except for Notes 11 and 12,

as to which the dates are December 15, 2005 and June 7, 2007, respectively

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of BSD Software, Inc.

We have audited the consolidated statements of operations and comprehensive loss, shareholders’ deficit and cash flows of BSD Software, Inc. (the "Company") for the year ended July 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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. 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 results of the Company’s operations and its cash flows for the year ended July 31, 2004 in conformity with U.S. generally accepted accounting principles.

The consolidated financial statements described above have been restated from those previously issued as described in notes 11 and 12.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has experienced operating losses and has a working capital deficiency 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 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Chartered Accountants

Regina, Canada

September 24, 2004, except for note 11, which is as of December 15. 2005,

and note 12, which is as of June 5, 2007

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BSD SOFTWARE, INC.    

Consolidated Balance Sheet

(U.S. dollars)		July 31, 2005
Assets
Current assets:
Cash		$	23,184
Accounts receivable			1,582,891
Prepaid expenses			12,452
			1,618,527
Property and equipment			87,392
		$	1,705,919
Liabilities and Stockholders' Deficiency
Current liabilities:
Accounts payable and accrued liabilities		$	3,187,028
Shareholder loans			243,256
Due to Officer			463,973
Due to Wayside Solutions Inc.			827,041
Notes payable			102,445
			4,823,743
Commitments and contingencies (Note 7)
Stockholders' deficiency:
Share capital:
Authorized:
Preferred stock 5,000,000 shares at $.001 par value
Common stock 50,000,000 shares at $.001 par value
Issued and outstanding:
32,560,897 common shares (July 31, 2004 - 31,684,597)			32,561
Additional paid-in capital (as restated - Note 11)			3,193,697
Accumulated Deficit			(5,704,542	)
Accumulated other comprehensive loss (as restated - Note 11)			( 639,540	)
			(3,117,824	)
		$	1,705,919

 

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

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BSD SOFTWARE, INC.    

Consolidated Statements of Operations and Comprehensive Income, as restated (Notes 11 and 12)

 

			Years Ended July 31,
(U.S. dollars)			2005			2004
Revenue (as restated - Note 12)		$	1,682,180		$	1,530,346
Cost of revenues (as restated - Note 12)			187,494			57,616
			1,494,686			1,472,730
Operating expenses:
Administration			140,209			182,938
Professional fees			186,736			334,946
Rent			57,244			90,396
Payroll			603,260			537,391
Depreciation and amortization			73,187			77,093
			1,060,636			1,222,764
Income from operations			434,050			249,966
Other income (expenses)
Interest expense			(153,533	)		(253,328	)
Loss on sales of assets			(9,167	)		(3,179	)
Gain on sale of contracts			-			51,090
Total other income (expense)			(162,700	)		(205,417	)
Income before provision for taxes			271,350			44,549
Income taxes			-			-
Net Income			271,350			44,549
Other comprehensive loss
Foreign currency translation adjustment (as restated - Note 11)			(266,642	)		(220,584	)
Comprehensive income (loss) (as restated - Note 11)		$	4,708		$	(176,035	)
Basic and diluted earnings per share		$	0.01		$	0.00
Weighted average shares outstanding, basic			31,780,707			30,494,009
Weighted average shares outstanding, diluted			31,921,884			31,494,009

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

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BSD SOFTWARE, INC.    

Consolidated Statements of Cash Flows   

		Years Ended July 31,
(U.S. dollars)		2005			2004
Cash flows from (used in):
Operations:
Net income		$	271,350		$	44,549
Items not involving cash:
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Non-cash financing costs			-			98,550
Shares issued to non-executive employees			30,000			-
Loss on sale of assets			9,167			3,179
Depreciation and amortization			73,187			77,093
Change in non-cash operating working capital:
Accounts receivable			(683,317	)		(305,947	)
Income taxes recoverable			-			33,048
Prepaid expenses			10,709			2,092
Accounts payable and accrued liabilities			493,251			169,927
			204,347			122,491
Investing:
Proceeds on sale of property and equipment			16,677			35,188
Purchase of property and equipment			-			(2,259	)
			16,677			32,929
Financing:
Repayment of shareholder loans			(93,952	)		(38,395	)
Repayment of notes payable			(69,027	)		(10,599	)
Repayment of due to Wayside Solutions Inc.			(68,806	)		(63,706	)
			(231,785	)		(112,700	)
Effect of exchange rate changes on cash and cash equivalents			(95,000	)		11,295
Net decrease in cash and cash equivalents			(105,761	)		54,015
Cash, beginning of period			128,945			74,930
Cash, end of period		$	23,184		$	128,945
Supplemental Cash Flow Information
Interest Paid		$	11,527		$	723
Taxes Paid		$	-		$	-
Non-cash investing and financing activities:
Reduction of accounts payable and accrued liabilities
in lieu of stock issuance		$	4,348		$	-
Reduction of shareholder loans in lieu of stock issuance		$	39,153		$	-
Shares issued to employees		$	30,000		$	-

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

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BSD SOFTWARE, INC.    

Consolidated Statements of Shareholders' Deficit

			Common Stock									Accumulated
			Shares			Amount			Additional Paid-in Capital			Other Comprehensive Loss			Accumulated Deficit			Total
Balance July 31, 2003, as originally reported			30,710,427		$	30,710		$	2,213,161		$	(349,020	)	$	(6,020,441	)	$	(4,125,590	)
Correction of error								$	(196,706	)	$	196,706					$	-
Balance July 31, 2003, as restated			30,710,427		$	30,710		$	2,016,455		$	(152,314	)	$	(6,020,441	)	$	(4,125,590	)
Shares issued of subsidiary company								$	886,964								$	886,964
Stock issued re: extension of financing
agreements			252,170		$	253		$	100,616								$	100,869
Stock issued for employee salary			30,000		$	30		$	9,527								$	9,557
Stock issued for professional services
rendered			35,000		$	35		$	13,965								$	14,000
Stock issued re: Accomodation Agreements			657,000		$	657		$	97,893								$	98,550
Comprehensive loss - foreign currency
translation adjustment											$	(220,584	)				$	(220,584	)
Net Income											$	-		$	44,549		$	44,549
Balance July 31, 2004			31,684,597			31,685			3,125,420			(372,898	)		(5,975,892	)		(3,191,685	)
Stock issued to pay debt			126,300		$	126		$	39,027								$	39,153
Restricted stock issued to employees			750,000		$	750		$	29,250								$	30,000
Comprehensive loss - foreign currency
translation adjustment											$	(266,642	)				$	(266,642	)
Net Income														$	271,350		$	271,350
Balance July 31, 2005			32,560,897		$	32,561		$	3,193,697		$	(639,540	)	$	(5,704,542	)	$	(3,117,824	)

 

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

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BSD SOFTWARE, INC.

Notes to Consolidated Financial Statements - See Notes 11 and 12 for restatements

(U. S. Dollars)

Periods ended July 31, 2005 and July 31, 2004

1.	Nature of business:

 

BSD Software, Inc. (the “Company”) operates as a holding company of Triton Global Communications Inc. (“TGCI”), which is a provider of billings, clearing house and information management services to the tele-communications industry.

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for financial information. The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates.

On December 21, 2004, NeoMedia Technologies, Inc. (NeoMedia) and the Company signed a definitive Agreement and Plan of Merger. Upon the closing of the merger transaction discussed therein, the Company’s shareholders will receive, for each share of the Company’s stock owned, NeoMedia common stock equivalent to $0.07 divided by the volume-weighted average price of NeoMedia common stock for the five trading days immediately prior to the effective time of the merger. The agreement has been approved by holders of approximately 63% of the Company’s outstanding shares and its Board. Closing is subject to the terms and conditions outlined in the merger agreement, as well as regulatory approval of the merger and registration/information statement by the United States Securities and Exchange Commission. Prior to closing, the merger can be terminated by the Company if more than 5% of the Company’s outstanding shares dissent to the merger. The merger can be terminated prior to closing by NeoMedia if, at the time of closing, the Company has: (i) less than $850,000 in assets, (ii) more than $5,000,000 in liabilities, or (iii) more than 38,000,000 shares of common stock outstanding. Either party can terminate the merger if the merger has not closed by December 31, 2005, which date may be extended by mutual consent of NeoMedia and the Company. There is no assurance that the merger will be completed.

2.	Going concern:

These financial statements have been prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company has reported net income of $271,350 and $44,549 for the years ended July 31, 2005 and 2004 respectively and has an accumulated deficit of $5,704,542 as of July 31, 2005. As of July 31, 2005 the Company had a working capital deficit of $3,205,216.

The Company's ability to continue as a going concern is dependent upon management's ability to raise additional financing and continue profitable operations. During the year ended July 31, 2005, management continued to take actions to reduce operating losses and is in the process of securing additional financing. There is no assurance that additional financing will be obtained.

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2.	Going concern (continued):

The ability of the Company to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on the successful completion of the actions taken or planned, some of which are described above, which management believes will mitigate the adverse conditions and events which raise substantial doubt about the validity of the "going concern" assumption used in preparing these financial statements. There is no certainty that these and other strategies will be sufficient to permit the Company to continue to meet its obligations in the normal course of business.

The financial statements do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate. If the "going concern" basis was not appropriate for these financial statements, adjustments would be necessary to the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

3.	Significant accounting policies:

(a)

Principles of consolidation:

The consolidated financial statements include the accounts of Triton Global Communications Inc. ("TGCI") and Triton Global Business Services Inc. ("TGBSI"). TGCI was acquired by TGBSI on October 22, 2002 and these financial statements reflect the results of operations for TGCI from that date forward. TGBSI acquired the Company in a reverse takeover transaction effective November 4, 2002. As a result, the Company changed its year end to July 31, 2003. These statements reflect the consolidated operations of TGBSI from August 1, 2002 forward consolidated with the Company from November 4, 2002. All significant inter-company balances and transactions have been eliminated upon consolidation.

Use of Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Significant estimates made by management include, among others, realization of long lived assets, accrued liabilities, and valuation allowance for defined income taxes. Actual results could differ from those estimates.

Fair Value of Financial Instruments:

The Company has adopted SFAS No. 107, “Disclosures About Fair Value of Financial Instruments.” SFAS No. 107 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value.

For certain of the Company’s financial instruments including cash, accounts receivable, and accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. The amounts shown for notes payable also approximate fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.

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3.	Significant accounting policies (continued):

 

(b)

Property and equipment:

 

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Amortization is provided using the straight-line method at the following rates:

Asset	Method
Office furniture and equipment	Straight line		5 years
Computer equipment	Straight line		5 years
Computer software	Straight line		3 years
Leasehold improvements	Straight line		5 years

 

Property and equipment are assessed for potential impairment when triggering events occur that indicate the carrying value may not be recoverable. If the undiscounted estimated future net cash flows are less than the carrying value of the asset, the impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value has been calculated as the present value of estimated future net cash flows.

 

(c)

Translation of foreign currency:

 

The functional currency of the operations is the Canadian dollar. The financial statements are reported in United States dollars and are translated to United States dollars at the exchange rates in effect at the balance sheet date for assets and liabilities and at average rates for the period for revenues and expenses. Resulting exchange differences are accumulated as a component of accumulated other comprehensive loss.

 

Revenue and expense transactions originating in U.S. dollars are translated to Canadian dollars at rates in effect at the time of the transaction. Foreign exchange gains and losses are included in income.

 

(d)

Revenue recognition:

 

We record revenue in accordance with SEC SAB No. 104 “Revenue Recognition in Financial Statements” and Emerging Issues Task Force Issues No. 99-19 (EITF 99-19), “Reporting Revenue Gross as Principal or Net as an Agent.” SAB No. 104 requires that service sales be recognized when there is persuasive evidence of an arrangement which states a fixed and determinable price and terms, delivery of the product has occurred in accordance with the terms of the sale, and collectibility of the sale is reasonably assured. Revenue is recognized at the time that calls are accepted by the clearing house for billing to customers. In accordance with EITF 99-19, revenue is recognized on a net basis as earned by the Company.

 

(e)

Reclassification:

 

Certain reclassifications have been made to the prior year balance sheet to conform to the current year presentation.

 

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3.	Significant accounting policies (continued):

 

(f)

Stock-based compensation:   Under the fair value based method, stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date. In November of 2004 the Company issued 126,300 common shares to pay down debt owed to shareholders of Triton Global Business Services Inc. In July of 2005 the Company issued 750,000 common shares to employees. These transactions were recorded at their fair value and are included in the statements of the company.