Note 2- Going Concern

Going Concern

These financial statements have been prepared on a going concern basis. However, during the nine

months ended March 31, 2007 and the year ended June 30, 2006, the Company incurred net losses of $1,457,697 and $845,393, respectively, and had an accumulated deficit of $7,699,406 and $6,241,709, at March 31, 2007 and June 30, 2006, respectively. In addition, as of March 31, 2007, the Company had a working capital deficit of $1,443,202 and is in default on $220,963 of debt and interest. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and as such raise substantial doubt as to the Company’s ability to continue as a going concern. Since inception, the Company has satisfied its capital needs through debt and equity financings and expects to fund the Company from these sources until profitability is achieved. There can be no assurance that funds will be available at terms favorable to the Company or that future profitability can be achieved. These condensed consolidated financial statements do not include any adjustments

 

6

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BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management’s Plans

Management's plans to eliminate the going concern situation include, but are not limited to, the following:

· Obtain additional equity or debt financing from investors.

· Increase revenue from the sale of its software. The Company is anticipating to release an upgraded version of its software during the next twelve months that will address customer enterprise level requirements.

· If necessary, the Company will initiate cost cutting programs that would reduce cash requirements.

Note 3 - Loss Per Share

The Company utilizes SFAS No. 128, “Earnings per Share.” Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

For the nine months ended March 31, 2007 and 2006, the following common equivalent shares were excluded from the computation of loss per share since their effects are anti-dilutive.

	March 31,
	2007		2006
			(Post-merger)
Convertible debentures	3,385,000		-
Options	4,685,000		3,840,000
Warrants	7,470,667		54,000
Total	15,540,667		3,894,000

Estimates

The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Note 4-  Notes Payable In Default

Notes payable in default consisted of the following:

 

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BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

 

		March 31,			June 30,
		2007			2006
Two unsecured, senior subordinated
notes payable, due on various dates on or before
September 2004, bearing interest at 8% per annum.		$	130,000		$	130,000
Unsecured, note payable for $125,000,
with interest at a rate of 12% per annum.						125,000
		$	130,000		$	255,000

The unsecured note for $125,000 was repaid during the quarter ended September 30, 2006.

Note 5- 8% Convertible Debentures

Overview. During the period of June 20, 2006 through March 31, 2007, we sold an aggregate of $1,692,500 of 8% convertible debentures to a group of 19 individual investors, two of which are affiliates of the Company, and one institutional investor. Subsequent to March 31, 2007, we sold an additional aggregate of $160,000 of 8% convertible debentures to a group of four individual investors. The convertible debentures entitle the debenture holder to convert the principal into our common stock for two years from the date of closing. Interest on the debentures is payable quarterly in cash. In accordance with Emerging Issues Task Force Issue 98-5, Accounting for Convertible Securities with a Beneficial Conversion Features or Contingently Adjustable Conversion Ratios (“EITF 98-5”), the Company recognized an embedded beneficial conversion feature present in the Convertible Note. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital and recorded a corresponding discount against the carrying value of the Convertible Notes. The Company valued the warrants in accordance with EITF 00-27 using the Black-Scholes pricing model and the following assumptions: contractual terms of from 1 to 5 years, an average risk free interest rate of 4.57% to 5.09%, a dividend yield of 0%, and volatility of 39% to 43%. The debt discount attributed to the beneficial conversion feature and value of the warrants issued are amortized over the term of the Convertible Note (2 years) as interest expense. If the debenture is converted to common stock previous to its maturity date, any debt discount not previously amortized is expensed to non-cash interest at the time of the conversion.

 

Number of Shares Debentures May Be Converted Into. The debentures can be converted into a number of our common shares at a conversion price equal to $0.50 per share.

Warrants. Concurrent with the issuance of the convertible debentures, we issued to the debenture holders warrants to purchase shares of our common stock. These warrants are exercisable for one to five years from the date of issuance at exercise prices ranging from $0.60 to $1.00 per share.

Right of First Refusal. The debenture holders have a right of first refusal to purchase or participate in any equity securities offered by us in any private transaction which closes on or prior to the date that is two years after the issue date of each debenture.

Registration Rights. We are responsible for registering the resale of the shares of our common stock which will be issued on the conversion of the debentures.

Restrictions on Use of Funds. We may not pay any cash dividends without the debenture holders prior written approval.

 

 

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BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

The following table presents the status, as of March 31, 2007 and June 30, 2006, of our

convertible debentures:

 

			As of
			March 31, 2007			June 30, 2006
Convertible debentures issued		$	1,692,500		$	125,000
Less debt discount			(489,627	)		(18,346	)
			1,202,873			106,654
Less current portion			-			-
Long term portion		$	1,202,873		$	106,654
Issued to related parties		$	120,603		$	83,652
Maturity dates of outstanding
convertible debentures
Year Ending
June 30, 2007		$	-		$	-
June 30, 2008			125,000			125,000
June 30, 2009			1,567,500			-
		$	1,692,500		$	125,000

 

Note 6- Shareholder’s Deficit

Common Stock

The Company has authorized 50,000,000 shares of common stock at $.004995 par value.

 

			Common
			Shares			Dollars
Balance July 1, 2006			25,498,794		$	4,645,180
Cancellation of shares			(1,793,200	)		-
Warrant valuation related to financing costs			-			27,905
Warrant valuation as result of services provided			-			30,390
Non cash issuance of stock options			-			58,426
Non cash debt discount on issuance of
8% convertible debentures, net of amortization			-			572,698
Balance March 31, 2007			23,705,594		$	5,334,599

 

During the nine months ended March 31, 2007, the Company cancelled 1,793,200 shares reserved for issuance to an individual as a result of a 1999 agreement with an investment banking firm in which the individual was a principal. The individual was obligated to use his best efforts to secure private placement financings and the investment banking firm was to underwrite an initial public offering for the Company. The Company determined that due to the failure to meet any measurable performance as called for in the agreement, the individual was not entitled to these shares.

 

9

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BRENDAN TECHNOLOGIES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements (Continued)

Warrants

During the nine months ended March 31, 2007, the Company issued warrants exercisable into up to 6,750,000 shares of common stock to investors as part of the issuance of 8% convertible debentures. In addition, the Company issued a warrant for the purchase of up to 240,000 shares to one individual who assisted the Company in raising funds and a warrant for the purchase of up to 240,000 shares to one individual who is providing investor relations services to the Company. The Company estimated the fair value of the warrants at the issuance date by using the Black-Scholes pricing model with the following weighted average assumptions used for the nine months ended March 31, 2007: dividend yield of zero percent; expected volatility of 39% to 43%; risk free interest rate of 4.57% to 5.09%; and expected lives of 1 to 5 years.

In August 2005, Brendan issued a warrant exercisable, after giving effect to the reverse merger on December 29, 2005, into 54,000 shares of the Company’s stock at an exercise price of $.75 per share with

an expiration date of five years from the date of grant. The Company estimated the fair value of the warrant at the issuance date by using the Black-Scholes pricing model with the following weighted average assumptions used for the nine months ended March 31, 2006: dividend yield of

zero percent; expected volatility of 100%; risk free interest rate of 4.08%; and expected life of 5 years. The valuation of the warrant, $7,407, was recorded as a stock offering cost.

As of March 31, 2007, 7,470,667 warrants are outstanding at prices ranging from $0.60 to $6.00 per share with expiration dates ranging from 2007 to 2012. Included in the warrants outstanding are 166,667 warrants remaining from the predecessor’s obligations transferred to the Company.

Stock Option Plan

 

In April 2006 we adopted a Stock Option Plan, which we refer to as the "Plan," which provides for the grant of stock options intended to qualify as "incentive stock options" and "nonqualified stock options" (collectively "stock options") within the meaning of Section 422 of the United States Internal Revenue Code of 1986 (the "Code"). Stock options may be issued to any of our officers, directors, key employees or consultants.

 

 

Under the Plan, we have reserved 7.5 million shares underlying stock options for issuance to executive officers, employees and consultants of the Company. The Plan is administered by the full Board of Directors, who determine which individuals shall receive stock options, the time period during which the stock options may be exercised, the number of shares of common stock that may be purchased under each stock option and the stock option price.

 

During the nine months ended March 31, 2007, the Company issued stock options exercisable into up to 360,000 shares of common stock to employees and a director of the Company. The Company estimated the fair value of the stock options at the date of grant by using the Black-Scholes pricing model with the following weighted average assumptions used for the nine months ended March 31, 2007: dividend yield of zero percent; expected volatility of 39% to 43%; risk free interest rate of 4.62% to 4.78%; and expected lives of 5 years. During the nine months ended March 31, 2007, a stock option that would have been exercisable into up to 297,334 shares expired. The stock option had been issued from the predecessor’s stock option plan.

As of March 31, 2007, 4,685,000 options are outstanding at prices ranging from $0.025 to $4.87 per share with expiration dates ranging from 2009 to 2012. Included in the options outstanding are 25,000 options remaining from the predecessor’s stock option plan.

 

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ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. 

THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "RISK FACTORS." SEE ALSO OUR ANNUAL REPORT ON FORM 10-KSB FOR OUR FISCAL YEAR ENDED JUNE 30, 2006.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to our product returns, bad debts, intangible assets, long-lived assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We have identified three accounting policies that we believe are key to an understanding of our financial statements. These important accounting policies require management's most difficult, subjective judgments.

1. Revenue Recognition

The Company recognizes revenues related to software licenses and software maintenance in accordance with the American Institute of Certified Public Accountants (“AICPA”) Statements of Position (“SOP”) No. 97-2, “Software Revenue Recognition,” as amended by SOP No. 94-4 and SOP No. 98-9. We follow the guidance established by the SEC in Staff Accounting Bulletin No. 104, as well as generally accepted criteria for revenue recognition, which require that, before revenue is recorded, there is persuasive evidence of an arrangement, the fee is fixed or determinable, collection is reasonably assured, and delivery to our customer has occurred. In addition, our invoices may include multiple elements that identify vendor specific objective evidence of fair value for each of those elements. The Company recognizes revenue as follows:

Software- our software is sold with an indefinite license period, and as such, product revenue is recorded at the time of the customer’s acceptance (generally 30 days after shipment which allows for a 30 day return guarantee if the customer is not satisfied with the product), net of estimated allowances and returns.

Post-contract customer support- (“PCS”) obligations are generally for annual services and are recognized over the period of service. Revenues for which payment has been received are treated as deferred revenue until services are provided and revenues have been earned.

Training and service calls- recognized at the time training or service calls are provided.

Royalties- we recognize revenue from royalties only after the cash has been collected (typically 30 days after the end of the quarter on which the royalty payment is based.)

Licensing- we also derive license revenue from fees for the transfer of proven and reusable intellectual property components. Generally, these payments will include a nonrefundable technology license fee, which will be payable upon the transfer of intellectual property. License fees will be recognized upon the execution of the license agreement and transfer of intellectual property provided no further significant performance obligations exist and collectibility is deemed probable.

Customization revenue- fees related to software service contracts to aid customers in adapting such intellectual property to their particular instruments, which will be performed on a best efforts basis and for which we will receive periodic milestone payments, will be recognized as revenue over the estimated development period, using a cost-based percentage of completion method.

 

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2. Debt Discount 

In determining the accounting treatment to be used for our convertible debentures and associated stock warrants we relied upon Emerging Issues Task Force Issue (EITFI) 98-5 "Accounting for Convertible Securities with Beneficial

Conversion Features or Contingently Adjustable Conversion Ratios" and EITFI 00-27 "Application of Issue No. 98-5 to Certain Convertible Securities." We issue warrants as part of our convertible debentures and other financings. We value the warrants using the Black-Scholes pricing model based on expected fair value at issuance and the estimated fair value and any beneficial conversion feature expense is recorded as debt discount. The debt discount is amortized to non-cash interest over the life of the debenture assuming the debenture will be held to maturity which is normally 2 years. If the debenture is converted to common stock previous to its maturity date, any debt discount not previously amortized is expensed to non-cash interest at the time of the conversion.

3. Going Concern

These financial statements have been prepared on a going concern basis. However, during the nine months ended March 31, 2007 and the year ended June 30, 2006, the Company incurred net losses of $1,457,697 and $845,393, respectively, and had an accumulated deficit of $7,699,406 and $6,241,709, at March 31, 2007 and June 30, 2006, respectively. In addition, as of March 31, 2007, the Company had a working capital deficit of $1,443,202 and is in default on $220,963 of debt and interest. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and as such raise substantial doubt as to the Company’s ability to continue as a going concern. Since inception, the Company has satisfied its capital needs through debt and equity financings and expects to fund the Company from these sources until profitability is achieved. There can be no assurance that funds will be available at terms favorable to the Company or that future profitability can be achieved.

 

Results of Operations

 

On December 29, 2005, the Company completed the acquisition of substantially all the assets of Brendan Sub pursuant to a Merger Agreement and completed the disposition of substantially all the assets of Omni-Washington and Butler pursuant to a Stock Purchase Agreement. As a result of these transactions and the issuance of common stock to the shareholders, noteholders and individuals who assisted in the merger, Brendan Sub, a now wholly-owned subsidiary of the Company, became the accounting acquirer and the transaction was accounted for as a reverse merger acquisition.

 

As a result of Brendan Sub being the accounting acquirer and the post acquisition financial statements being the historical statements of Brendan Sub, the fiscal year end of Brendan Sub was changed from December 31 to June 30. The Company’s transition period was the six months ended June 30, 2005.

 

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Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006

 

Selected Financial Information

 

		Three Months Ended March 31,						Increase
		2007			2006			(Decrease)			%
Statements of Operations
Revenues		$	164,888		$	251,449		$	(86,561	)		-34.4	%
Selling expenses			10,608			24,067			(13,459	)		-55.9	%
General and administrative
expenses			519,230			306,663			212,567			69.3	%
Interest expense			128,046			30,508			97,538			-319.7	%
Total expenses			657,884			361,238			296,646			82.1	%
Net (loss)		$	(492,996	)	$	(109,789	)	$	383,207			349.0	%
Net (loss) per basic and
diluted share		$	(0.02	)	$	-		$	0.02			N/A

 

 

Revenues

 

 

Revenues for the quarter ended March 31, 2007 decreased $86,561, 34.4%, to $164,888 compared to $251,449 for the quarter ended March 31, 2006. The primary reason for the revenue decrease was an initial order for a minor prerelease component of our upgraded version of the StatLIA software which amounted to approximately $127,000 during the quarter ended March 31, 2006, was not repeated during the current quarter. We anticipate that revenue will decline for the next several quarters as our customers are anticipating the release of our upgraded version of the StatLIA software to an enterprise level during the second half of calendar year 2007.

 

 

Selling Expenses

 

 

Selling expenses decreased by $13,459, a 55.9% decrease, to $10,608 for the three months ended March 31, 2007 from $24,067 for the three months ended March 31, 2006. This decrease was primarily due to a reduction in commission expense for the three months ended March 31, 2007 related to customer validations.

 

 

General and Administrative Expenses

 

 

General and administrative expenses increased by $212,567, a 69.3% increase, to $519,230 for the quarter ended March 31, 2007 from $306,663 for the quarter ended March 31, 2006. The primary reasons for the increase were approximately $38,000 increase in expenses related to investor relations and $183,000 related to an increase in personnel and infrastructure related to upgrading our StatLIA software to an enterprise version.

 

 

Interest Expense

 

 

Interest expense increased by $97,538, a 319.7% increase, to $128,046 for the quarter ended March 31, 2007 from $30,508 for the quarter ended March 31, 2006. The primary reason for the increase was the increase in interest related to the issuance of 8% convertible debentures.

 

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Nine Months Ended March 31, 2007 Compared to Nine Months Ended March 31, 2006

 

Selected Financial Information

 

		Nine Months Ended March 31,						Increase
		2007			2006			(Decrease)			%
Statements of Operations
Revenues		$	387,536		$	473,097		$	(85,561	)		-18.1	%
Selling expenses			58,570			75,930			(17,360	)		-22.9	%
General and administrative
expenses			1,485,513			821,550			663,963			80.8	%
Interest expense			301,150			178,249			122,901			-68.9	%
Total expenses			1,845,233			1,075,729			769,504			71.5	%
Net (loss)		$	(1,457,697	)	$	(602,632	)	$	855,065			141.9	%
Net (loss) per basic and
diluted share		$	(0.06	)	$	(0.05	)	$	0.01			20.0	%

 

 

Revenues

 

 

Revenues for the nine months ended March 31, 2007 decreased $85,561, 18.1%, to $387,536 for the nine months ended March 31, 2007 compared to $473,097 for the nine months ended March 31, 2006. The primary reason for the revenue decrease was an initial order for a minor prerelease component of our upgraded version of the StatLIA software which amounted to approximately $127,000 during the fiscal nine months ended March 31, 2006, was not repeated during the current fiscal year. We anticipate that revenue will decline for the next several quarters as our customers are anticipating the release of our upgraded version of the StatLIA software to an enterprise level during the second half of calendar year 2007.

 

 

Selling Expenses

 

 

Selling expenses decreased by $17,360, a 22.9% decrease, to $58,570 for the nine months ended March 31, 2007 from $75,930 for the nine months ended March 31, 2006. This decrease was primarily due to a reduction in commission expense for the nine months ended March 31, 2007 related to customer validations.

 

 

General and Administrative Expenses

 

 

General and administrative expenses increased by $663,963, an 80.8% increase, to $1,485,513 for the nine months ended March 31, 2007 from $821,550 for the nine months ended March 31, 2006. The primary reasons for the increase were $58,000 increase in non-cash compensation as a result of expensing employee stock options, and $459,000 related to an increase in personnel and infrastructure related to upgrading our StatLIA software to an enterprise version and approximately $76,000 increase in investor relation expenses.

 

 

Interest Expense

 

 

Interest expense increased by $122,901, a 68.9% increase, to $301,150 for the nine months ended March 31, 2007 from $178,249 for the nine months ended March 31, 2006. The primary reason for the increase was the increase in interest related to the issuance of 8% convertible debentures partially offset by the conversion of notes payable into common stock of Omni in December 2005.

 

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Capital Resources

 

			As of						Increase
			March 31, 2007			June 30, 2006			(Decrease)
Working Capital
Current assets		$	212,424		$	205,920		$	6,504
Current liabilities			1,655,626			1,765,729			(110,103	)
Working capital deficit		$	(1,443,202	)	$	(1,559,809	)	$	(116,607	)
Long-term debt		$	1,208,180		$	117,650		$	1,090,530
Stockholders' deficit		$	(2,364,807	)	$	(1,596,529	)	$	768,278
Nine Months Ended March 31,			Nine Months Ended March 31,						Increase
			2007			2006			(Decrease	)
Statements of Cash Flows Select Information
Net cash provided (used) by:
Operating activities		$	(1,247,463	)	$	(504,734	)	$	742,729
Investing activities		$	(112,507	)	$	(59,841	)	$	52,666
Financing activities		$	1,317,782		$	697,424		$	620,358
			As of						Increase
			March 31, 2007			June 30, 2006			(Decrease	)
Balance Sheet Select Information
Cash and cash equivalents		$	107,324		$	149,512		$	(42,188	)
Accounts receivable		$	74,489		$	56,107		$	18,382
Accounts payable and accrued expenses		$	1,314,089		$	1,348,419		$	(34,330	)

 

Liquidity

 

Brendan has historically financed its operations through debt and equity financings. At March 31, 2007, we had cash holdings of $107,324, a decrease of $42,188 compared to June 30, 2006. Our net working capital deficit at March 31, 2007, was $1,443,202 compared to $1,559,809 as of June 30, 2006.

These financial statements have been prepared on a going concern basis. However, during the nine months ended March 31, 2007 and the year ended June 30, 2006, the Company incurred net losses of $1,457,697 and $845,393, respectively, and had an accumulated deficit of $7,699,406 and $6,241,709, at March 31, 2007 and June 30, 2006, respectively. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time. Since inception, the Company has satisfied its capital needs through debt and equity financings. During the nine months ended March 31, 2007, the Company issued $1,567,500 of 8% convertible debentures, net of costs amounting to $120,000.

Management plans to continue to provide for its capital needs during the twelve months ending March 31, 2008, by increasing sales through the continued development of its products and by debt and/or equity financings. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

 

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Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides entities with an option to report selected financial assets and liabilities at fair value, with the objective to reduce both the complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. We will be required to adopt SFAS No. 159 in the first quarter of fiscal year 2008. We are currently evaluating the requirements of SFAS No. 159 and have not yet determined the impact, if any, its adoption will have on our consolidated financial position and results of operations.

 

 

ITEM 3.     CONTROLS AND PROCEDURES. 

 

(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-QSB (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There were no significant changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably

likely to materially affect, our internal control over financial reporting.

 

PART II.

OTHER INFORMATION

ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES

During the period of October 1, 2006 through April 26, 2007, the Company sold to and received cash from a group of investors 8% Convertible Debentures for an aggregate $567,500 and common stock purchase warrants to purchase up to 2,270,000 common shares. In addition, the Company issued warrants to purchase up to 280,000 common shares to two individuals for services they provided.

 

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8% Convertible Debentures

		Issuance						Number of Shares			Maturity
		Date of			Amount of			May Be Converted			Date of
Debenture holder		Debenture			Debenture			Into			Debenture
Tim Flowers			12/18/2006		$	10,000			20,000			12/18/2008
Steven Pratt			12/18/2006		$	10,000			20,000			12/18/2008
Donald Opperman			12/18/2006		$	10,000			20,000			12/18/2008
Mitchell Luedloff			12/18/2006		$	10,000			20,000			12/18/2008
Nazeah Aladray			12/18/2006		$	10,000			20,000			12/18/2008
James and Josephine Zolin			12/18/2006		$	25,000			50,000			12/18/2008
Lowell Giffhorn			12/18/2006		$	50,000			100,000			12/18/2008
Victor Gabourel			12/18/2006		$	50,000			100,000			12/18/2008
Anthony Wayne Opperman			12/18/2006		$	50,000			100,000			12/18/2008
Jesse Giffhorn			1/2/2007		$	12,500			25,000			1/2/2009
Todd Flannery			1/10/2007		$	50,000			100,000			1/10/2009
Jason Neilitz			1/10/2007		$	75,000			150,000			1/10/2009
Doug Kincaid Jr.			1/10/2007		$	75,000			150,000			1/10/2009
Adnan Aladray			1/15/2007		$	20,000			40,000			1/15/2009
James and Josephine Zolin			1/24/2007		$	10,000			20,000			1/24/2009
Jerome Chrobak			1/24/2007		$	25,000			50,000			1/24/2009
Bruce Belz, Trustee Belz Family Trust			1/24/2007		$	25,000			50,000			1/24/2009
Victor Gabourel			1/24/2007		$	50,000			100,000			1/24/2009
Richard Daniels			4/12/2007		$	25,000			50,000			4/12/2009
Victor Gabourel			4/26/2007		$	100,000			200,000			4/26/2009
James and Josephine Zolin			4/26/2007		$	10,000			20,000			4/26/2009
Jerome Chrobak			4/26/2007		$	25,000			50,000			4/26/2009
					$	727,500			1,455,000

 

 

17

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Common Stock Purchase Warrants

 

Name		Date of Issuance		Number of Shares		Exercise Price		Expiraton Date
Dian Griesel		10/1/2006		240,000		$0.60		10/1/2011		Services
Lowell Giffhorn		12/18/2006		100,000		$0.60		12/18/2011		Debenture
James and Josephine Zolin		12/18/2006		50,000		$0.60		12/18/2011		Debenture
Victor Gabourel		12/18/2006		100,000		$0.60		12/18/2011		Debenture
Anthony Wayne Opperman		12/18/2006		100,000		$0.60		12/18/2011		Debenture
Tim Flowers		12/18/2006		20,000		$0.60		12/18/2011		Debenture
Steven Pratt		12/18/2006		20,000		$0.60		12/18/2011		Debenture
Donald Opperman		12/18/2006		20,000		$0.60		12/18/2011		Debenture
Mitchell Luedloff		12/18/2006		20,000		$0.60		12/18/2011		Debenture
Nazeah Aladray		12/18/2006		20,000		$0.60		12/18/2011		Debenture
Lowell Giffhorn		12/18/2006		100,000		$1.00		12/18/2007		Debenture
James and Josephine Zolin		12/18/2006		50,000		$1.00		12/18/2007		Debenture
Victor Gabourel		12/18/2006		100,000		$1.00		12/18/2007		Debenture
Anthony Wayne Opperman		12/18/2006		100,000		$1.00		12/18/2007		Debenture
Tim Flowers		12/18/2006		20,000		$1.00		12/18/2007		Debenture
Steven Pratt		12/18/2006		20,000		$1.00		12/18/2007		Debenture
Donald Opperman		12/18/2006		20,000		$1.00		12/18/2007		Debenture
Mitchell Luedloff		12/18/2006		20,000		$1.00		12/18/2007		Debenture
Nazeah Aladray		12/18/2006		20,000		$1.00		12/18/2007		Debenture
Jesse Giffhorn		1/2/2007		25,000		$0.60		1/2/2012		Debenture
Jesse Giffhorn		1/2/2007		25,000		$1.00		1/2/2008		Debenture
Jason Neilitz		1/10/2007		150,000		$0.60		1/10/2012		Debenture
Doug Kincaid Jr.		1/10/2007		150,000		$0.60		1/10/2012		Debenture
Todd Flannery		1/10/2007		100,000		$0.60		1/10/2012		Debenture
Michael Morrisett		1/10/2007		40,000		$0.60		1/10/2008		Services
Jason Neilitz		1/10/2007		150,000		$1.00		1/10/2008		Debenture
Doug Kincaid Jr.		1/10/2007		150,000		$1.00		1/10/2008		Debenture
Todd Flannery		1/10/2007		100,000		$1.00		1/10/2008		Debenture
Adnan Aladray		1/15/2007		40,000		$0.60		1/15/2012		Debenture
Adnan Aladray		1/15/2007		40,000		$1.00		1/15/2008		Debenture
James and Josephine Zolin		1/24/2007		20,000		$0.60		1/24/2012		Debenture
Victor Gabourel		1/24/2007		100,000		$0.60		1/24/2012		Debenture
Jerome Chrobak		1/24/2007		50,000		$0.60		1/24/2012		Debenture
Bruce Belz, Trustee Belz Family Trust		1/24/2007		50,000		$0.60		1/24/2012		Debenture
James and Josephine Zolin		1/24/2007		20,000		$1.00		1/24/2008		Debenture
Victor Gabourel		1/24/2007		100,000		$1.00		1/24/2008		Debenture
Jerome Chrobak		1/24/2007		50,000		$1.00		1/24/2008		Debenture
Bruce Belz, Trustee Belz Family Trust		1/24/2007		50,000		$1.00		1/24/2008		Debenture
Richard Daniels		4/12/2007		50,000		$0.60		4/12/2012		Debenture
Richard Daniels		4/12/2007		50,000		$1.00		4/12/2008		Debenture
Victor Gabourel		4/26/2007		200,000		$0.60		4/26/2012		Debenture
James and Josephine Zolin		4/26/2007		20,000		$0.60		4/26/2012		Debenture
Jerome Chrobak		4/26/2007		50,000		$0.60		4/26/2012		Debenture
Victor Gabourel		4/26/2007		200,000		$1.00		4/26/2008		Debenture
James and Josephine Zolin		4/26/2007		20,000		$1.00		4/26/2008		Debenture
Jerome Chrobak		4/26/2007		50,000		$1.00		4/26/2008		Debenture
				3,190,000

 

 

 

 

With respect to the above securities issuances, the Registrant relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 under the Securities Act. No advertising or general solicitation was employed in offering the securities. The securities were issued to a limited number of persons all of whom were accredited investors as that term is defined in Rule 501 of Regulation D under the Securities Act. All were capable of analyzing the merits and risks of their investment, acknowledged in writing that they were acquiring the securities for investment and not with a view toward distribution or resale, and understood the speculative nature of their investment. All securities issued contained a restrictive legend prohibiting transfer of the shares except in accordance with federal securities laws.

18

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ITEM 6.     EXHIBITS.

 

(a)

Exhibits -

 

 

Exhibit No.		Title
31.1		302 Certification of John R. Dunn II, Chief Executive Officer
31.2		302 Certification of Lowell W. Giffhorn, Chief Financial Officer
32.1		906 Certification of John R. Dunn II, Chief Executive Officer
32.2		906 Certification of Lowell W. Giffhorn, Chief Financial Officer

 

 

 

SIGNATURES

 

 

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	BRENDAN TECHNOLOGIES, INC. a Nevada Corporation
Date: May 14, 2007	By:	/s/ JOHN R. DUNN II
		John R. Dunn II
		Chief Executive Officer
		(Principal Executive and duly authorized to sign on behalf of the Registrant)