U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 333-42640
ENDO NETWORKS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 75-2882833
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2624 DUNWIN DRIVE, UNIT #3, MISSISSAUGA, ONTARIO, CANADA L5L 3T5
(Address of principal executive offices)
(905) 820-8800
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (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:
YES: X NO:
As of April 28, 2006, there were 12,720,366 shares of common stock of the issuer
outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis Or
Plan of Operations 11
Item 3 Controls and Procedures 15
PART II OTHER INFORMATION
Item 1 Legal Proceedings 16
Item 2 Changes in Securities 16
Item 3 Default upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits and Reports on Form 8-K 16
2
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
ENDO NETWORKS, INC.
BALANCE SHEET
March 31, 2006
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash $ 260
Accounts receivable, net of allowance for doubtful accounts of $0 136,008
Prepaid expenses 58,412
---------
Total current assets 194,680
---------
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $1,018,139 358,335
---------
TOTAL ASSETS $ 553,015
=========
LIABILITIES AND STOCKHOLDERS' DEFICIT
---------
LIABILITIES
Current Liabilities:
Current maturities of capital leases payable $ 182,222
Accounts payable 224,486
Accrued expenses - related party 314,948
Accrued expenses - other 197,733
---------
Total current liabilities 919,389
---------
Total liabilities 919,389
COMMITMENTS
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value, 50,000,000 authorized,
12,720,366 shares issued and outstanding 12,720
Additional paid-in-capital 304,550
Accumulated deficit (822,627)
Accumulated other comprehensive income 138,983
---------
Total Stockholders' Deficit (366,374)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 553,015
=========
See accompanying summary of accounting policies and notes to financial
statements.
3
ENDO NETWORKS, INC.
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenue $ 170,963 $ 290,416 $ 533,102 $ 437,227
Cost of sales 32,477 59,976 193,035 95,107
------------ ------------ ------------ ------------
Gross profit 138,486 230,171 340,067 342,120
Operating expenses:
Depreciation 40,268 48,056 83,878 104,902
Other general and administrative 189,821 178,369 410,039 363,287
------------ ------------ ------------ ------------
Total operating expense 230,089 226,425 493,917 468,189
------------ ------------ ------------ ------------
Net income (loss) $ (91,603) $ 3,746 $ (153,850) $ (126,069)
============ ============ ============ ============
Net loss per share:
Basic and diluted $ (0.01) $ (0.00) $ (0.01) $ (0.01)
============ ============ ============ ============
Weighted average shares outstanding:
Basic and diluted 12,720,366 12,665,366 12,720,366 12,665,366
============ ============ ============ ============
See accompanying summary of accounting policies and notes to financial
statements
4
ENDO NETWORKS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
Twelve Months Ended September 30, 2006, and
Six Months Ended March 31, 2006
(unaudited)
Accumulated
Additional Other
Common Stock Paid In Accumulated Comprehensive
Shares Amount Capital Deficit Income Total
------------------------------------------------------------------------------------
Balance,
September 30, 2004 12,665,366 $ 12,665 $ 299,105 $ (454,556) $ 44,115 $ (98,671)
Common stock issued
for services 55,000 55 5,445
Net loss (214,221) (214,221)
Foreign currency
Translation
adjustment 92,883 92,883
-----------
Total comprehensive
loss (121,338)
-----------
Balance
September 30, 2005 12,720,366 $ 12,720 $ 304,550 $ (668,777) $ 136,998 $ (214,509)
Net loss (153,850) (153,850)
Foreign currency
translation adjustment 1,985 1,985
-----------
Total comprehensive
loss (151,865)
Balance
March 31, 2006 12,720,366 $ 12,720 $ 304,550 $ (822,627) $ 138,983 $ (366,374)
=========== =========== =========== =========== =========== ===========
See accompanying summary of accounting policies and notes to financial
statements.
5
ENDO NETWORKS, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended March 31, 2006 and 2005
(Unaudited)
2006 2005
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(153,850) $(126,069)
Adjustments to reconcile net loss to net cash
provided by operations:
Items not requiring cash:
Depreciation and amortization 83,878 104,902
Provision for bad debt -- 22,307
Changes in assets and liabilities:
Accounts receivable (52,799) (1,490)
Prepaid expenses 1,316 3,319
Accounts payable and accrued expenses 136,711 (6,652)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 15,256 3,683
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,819) (124,503)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (2,819) (124,503)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lease financing (20,746) 16,471
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (20,746) 16,471
Effect of foreign exchange rate changes on cash 8,569 100,215
--------- ---------
NET CHANGE IN CASH 260 (11,500)
Cash, beginning of period -- 11,612
--------- ---------
Cash, end of period $ 260 $ 112
========= =========
See accompanying summary of accounting policies and notes to financial
statements.
6
ENDO NETWORKS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1: MANAGEMENT REPRESENTATION AND PRESENTATION
The balance sheet of ENDO Networks, Inc. ("ENDO") as of March 31, 2006, the
related statements of operations for the three and six months ended March 31,
2006 and 2005 and the statements of cash flows for the six months ended March
31, 2006 included in the financial statements have been prepared by ENDO without
audit. In the opinion of management, the accompanying financial statements
include all adjustments (consisting of normal, recurring adjustments) necessary
to summarize fairly the ENDO'S financial position and results of operations. The
results of operations for the three and six months ended March 31, 2006 are not
necessarily indicative of the results of operations for the full year or any
other interim period. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial
statements for the most recent fiscal year ended September 30, 2005 to be
reported in Form 10-KSB, have been omitted.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
ENDO is an interactive media, promotion, application, and advertising aggregator
deploying through wireless capable public access portals to retail and
restaurant locations across North America. ENDO also develops application
software and client controlled media including television and radio.
Cash Equivalents
ENDO considers all highly liquid investment instruments purchased with original
maturities of three months or less when acquired to be cash equivalents.
Revenue Recognition
ENDO recognizes revenue when persuasive evidence of an arrangement exists,
delivery has occurred, the sales price is fixed or determinable and
collectibility is probable. ENDO recognizes revenue from the sale of advertising
related products and services like interactive advertising, studio promotion,
and event management as the services are performed.
Revenue derived from professional services provided on a time and materials
basis is recognized as services are performed.
For time and material contracts, revenue is recognized and billed by multiplying
the number of hours expended by our professionals in the performance of the
contract by the established billing rates. For fixed fee projects, revenue is
generally recognized using the proportionate performance method. Provisions for
estimated losses on uncompleted contracts are made on a contract-by-contract
7
basis and are recognized in the period in which such losses are determined.
ENDO maintains allowances for doubtful accounts on all its accounts receivable
for estimated losses resulting from the inability of its customers and others to
make required payments. If the financial condition of ENDO's customers and
others were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required.
Use of Estimates
The preparation of 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 amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
Intangible assets
Intangible assets are recorded at cost. Cost is amortized over the estimated
useful life of the asset unless that life is determined to be indefinite.
Intangible assets not subject to amortization are tested for impairment on at
least an annual basis. If the fair value of the intangible asset is determined
to be less than the carrying amount, an impairment loss is recognized in the
amount of that difference.
Intangible assets subject to amortization are reviewed for impairment in
accordance with the provisions applying to long-live assets.
Property and Equipment
Property and equipment are stated at cost. Depreciation of property and
equipment is calculated on straight-line method over the estimated useful lives
of the assets. Impairment losses are recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. No impairment losses have been recorded since inception.
Impairment of long-lived assets
The Company monitors the recoverability of long-lived assets, including property
and equipment and intangible assets, based upon estimates using factors such as
expected future asset utilization, business climate, and undiscounted cash flows
resulting from the use of the related assets or to be realized on sale. The
Company's policy is to write down assets to the estimated net recoverable
amount, in the period in which it is determined likely that the carrying amount
of the asset will not be recoverable.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
8
based on the differences between the financial reporting and tax basis of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.
Loss per Share
The basic net loss per common share is computed by dividing the net loss
applicable to common stockholders by the weighted average number of common
shares outstanding.
Diluted net loss per common share is computed by dividing the net loss
applicable to common stockholders, adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities. For the three and six months ended March 31, 2006 and 2005 potential
dilutive securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share. These securities consisted of
634,000 of stock options at March 31, 2006 and 2005.
Stock-Based Compensation
During the first quarter of 2006 ENDO adopted FASB issued Statement No. 123(R)
(revised 2004) ("FAS 123(R)"). FAS 123(R) revises FASB Statement No. 123,
Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25. FAS
123(R) and requires the Company to measure the cost of employee services
received in exchange for stock option awards based on the grant-date fair value
of such awards. That cost will be recognized over the period during which an
employee is required to provide service in exchange for the award, which is
usually the vesting period. The Company will report such costs as part of our
general and administrative expenses.
Prior to the adoption of FAS 123(R), ENDO accounted for its stock-based
compensation plans under Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees.
Foreign Currency Translation
As nearly all operations are conducted in Canada, the Canadian dollar is the
functional currency. All balance sheet accounts have been translated at the
current exchange rate as of March 31, 2006. Statement of operations items have
been translated at average currency exchange rates during the periods ended
March 31, 2006 and 2005. The resulting translation adjustment is recorded as a
separate component of comprehensive loss within stockholders' deficit.
NOTE 3 - GOING CONCERN
For the six months ended March 31, 2006 and the year ended September 30, 2005,
ENDO incurred losses totaling $153,850 and $214,221, respectively, and at March
31, 2006 had a working capital deficit of $724,709.
9
There are no assurances that ENDO will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations; or (2)
obtain additional financing through either private placement, public offerings
and/or bank financing necessary to support ENDO's working capital requirements.
To the extent that funds generated from any private placements, public offerings
and/or bank financing are insufficient, ENDO will have to raise additional
working capital. No assurance can be given that additional financing will be
available, or if available, will be on terms acceptable to ENDO. If adequate
working capital is not available ENDO may not continue its operations. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE 4 - LEASE FINANCING OBLIGATIONS
In September 2005 the ENDO restructured its lease payable obligation. As of
March 31, 2006, ENDO is in technical default on its current lease obligations
since it has missed payments totaling approximately $20,391. As a result the
entire lease payable has been classified as a current liability, and is included
with current maturities of capital leases payable in the accompanying financial
statements.
NOTE 5 - PAYROLL TAXES
ENDO is required to remit employer payroll and employee payroll and income tax
withholding payments in the month following the payroll period. As of March 31,
2006 payroll tax and income tax withholding payments in the amount of $39,407
are in arrears.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this Form 10-QSB and in our
Form 10-KSB. This report contains forward-looking statements including, without
limitation, statements regarding trends, cyclicality, seasonality, volatility
and growth in the markets we sell into, our strategic direction, new product
introductions, our liquidity position, our ability to generate cash from
continuing operations, our expected order and revenue growth, the potential
impact of our adopting new accounting pronouncements, our financial results, the
impact and timing of our enterprise resource planning and customer relationship
management systems implementation, our obligations under our retirement and
post-retirement benefit plans, timing of, costs related to, and savings from our
restructuring programs, the existence or length of an economic recovery and our
ability to take advantage of a recovery that involve risks and uncertainties.
Our actual results could differ materially from the results contemplated by
these forward-looking statements due to various factors, including those
discussed below in "Factors That May Affect Future Results" and elsewhere in
this Form 10-QSB.
OVERVIEW
Endo Networks Inc. helps businesses acquire new customers and build sales and
loyalty with existing customers. We use interactive technology such as touch
screen kiosks, handheld computers, and websites, combined with promotional
marketing tactics to filter large numbers of consumers, to find qualified
prospects, and even precondition them for a sale. Our services can be deployed
within a business' own retail environment, to increase sales with their own
customer base by increasing frequency of visit and/or average spend with
individual customers , or they can be deployed within a partner location such as
an office tower or a consumer show, to find and acquire qualified new customers.
Our solutions are:
- Permission based
- Integratable with legacy systems
- Scaleable
- Measurable
- Conducive to brand partnerships
Our areas of expertise include: Web, Kiosk, Handheld, Wireless, Loyalty,
Promotional Marketing, Direct Marketing, Integration with Point of Sale, Survey,
Incentive, Sampling, and Field and Event Marketing. Our client base includes
11
specialty retail, general retail, food service, automotive, alcohol, energy,
consumer packaged goods, entertainment, amateur sports, and telecommunications
companies.
The corporate head office is located at 2624 Dunwin Drive, Unit 3, Mississauga,
Ontario, Canada, 20 minutes from Toronto and 60 minutes from Buffalo. Endo
Networks was incorporated in Texas as Discount Mortgage Services, Inc. on July
11, 2000 and in September 2001 purchased Endo Networks, a company incorporated
in Ontario, Canada on January 30, 2001, in which conceptual and software
development was ongoing prior to this date for approximately two years by
company founders. Endo Networks Inc. (Canada) was acquired by Discount Mortgage
Services Inc. (Texas) in September, 2001. Discount Mortgage Services Inc.
(Texas) underwent a name change to Endo Networks, Inc. (US) in November, 2001
and was re-domiciled to Nevada in December, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Total assets decreased by $31,092 during the six months ended March 31, 2006
from $584,107 at December 31, 2005 to $553,015 at March 31, 2006 We do expect to
incur material capital expenditures during the next 12 months for equipment
relating to new client deployments. There is no assurance we will be able to
generate sufficient revenues or obtain sufficient funds when needed, or whether
such funds, if available, will be obtained on terms satisfactory to us. We do
not have any long term or contingent obligations that must be satisfied.
CRITICAL ACCOUNTING POLICIES
Our unaudited Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements 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. 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 of 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 believe the
following critical accounting policies, among others, affect our more
significant judgments and estimates used in the preparation of our financial
statements.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
We maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our customers to make required payments. The allowance for
12
doubtful accounts is based on specific identification of customer accounts and
our best estimate of the likelihood of potential loss, taking into account such
factors as the financial condition and payment history of major customers. We
evaluate the collectability of our receivables at least quarterly. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required. The differences could be material and could significantly impact cash
flows from operating activities.
VALUATION OF INTANGIBLES
From time to time, we acquire intangible assets that are beneficial to our
product development processes. We periodically evaluate the carrying value of
intangibles, including the related amortization periods. In evaluating acquired
intangible assets, we determine whether there has been impairment by comparing
the anticipated undiscounted cash flows from the operation and eventual
disposition of the product line with its carrying value. If the undiscounted
cash flows are less than the carrying value, the amount of the impairment, if
any, will be determined by comparing the carrying value of each intangible asset
with its fair value. Fair value is generally based on either a discounted cash
flows analysis or market analysis. Future operating income is based on various
assumptions, including regulatory approvals, patents being granted, and the type
and nature of competing products. If regulatory approvals or patents are not
obtained or are substantially delayed, or other competing technologies are
developed and obtain general market acceptance or market conditions otherwise
change, our intangibles may have a substantially reduced value, which could be
material.
DEFERRED TAXES
We record a valuation allowance to reduce the deferred tax assets to the amount
that is more likely than not to be realized. We have considered estimated future
taxable income and ongoing tax planning strategies in assessing the amount
needed for the valuation allowance. Based on these estimates, all of our
deferred tax assets have been reserved. If actual results differ favorably from
those estimates used, we may be able to realize all or part of our net deferred
tax assets. Such realization could positively impact our operating results and
cash flows from operating activities.
RESULTS OF OPERATIONS
COMPARISON OF RESULTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2006 TO THE
THREE AND SIX MONTHS ENDED MARCH 31, 2005
REVENUE. During the three months ended March 31, 2006, the company generated
revenues of $170,963 from sales compared to revenues from sales for the three
months ended March 31, 2005 of $290,146, which represents a decrease of $119,183
over the same period of the prior year. In the six months ended March 31, 2006
the company had sales of $533,102 compared with sales of $437,227 for the same
13
period the prior year. This decrease for the three months and increase for the
six months is because the company had strong sales in the first three months and
light sales in the three months ended March 31, 2006. The winter has
historically been a slower sales period for our company but in the three months
ended December 31, 2005, our sales were strong but weakened in the three months
ended March 31, 2006.
COST OF SALES. Cost of goods sold decreased from $59,976 or 21% of sales for the
three months ended March 31, 2005 to $32,477 or 19% of sales for the three
months ended March 31, 2006, a decrease of 2%. For the six months ended March
31, 2006 our cost of sales increased to $193,035 or 36% from $95,107 or 22% for
the six months ended March 31, 2005, due to having higher ongoing contract labor
costs for the projects we are planning for the coming quarters.
GROSS PROFIT. Based on the foregoing, gross profit decreased from $138,486 for
the three months ended March 31, 2006 compared to $230,171 for the three months
ended March 31, 2005. For the six months ended March 31, 2006, our gross profit
was $340,067 compared to $342,120 for the six months ended March 31, 2005. The
gross profit for both six month periods was similar. Gross profit decreased from
78% for the six months ended March 31, 2005 to 64% for the six months ended
March 31, 2006 due to a higher number of contract laborers and higher labor
rates.
GENERAL, ADMINISTRATIVE AND SELLING EXPENSES. General, Administrative and
Selling expenses were $189,821 for the three months ended March 31, 2006,
compared to $178,369 for the three months ended March 31, 2005, representing an
increase of $11,452. General, Administrative and Selling expenses were $410,039
for the six months ended March 31, 2006, compared to $363,287 for the six months
ended March 31, 2005. The increase is due to our increased sales activity.
Amortization and depreciation expense are not included in our general and
administrative expenses. These expenses were $40,268 and $48,056 for the three
months ended March 31, 2006 and 2005 respectively. Also, depreciation and
amortization expense was $83,878 and $104,902 for the six months ended March 31,
2006 and 2005 respectively.
NET INCOME (LOSS) AND INCOME (LOSS) PER SHARE.
As a result of the above, in the three months ended March 31, 2006, our net loss
was $91,603 or $0.01 per share, compared to a net income of $3,746 or $0.00 per
share for the three months ended March 31, 2005. Similarly, in the six months
ended March 31, 2006, our net loss was $153,850 or $0.01 per share, compared to
a net loss of $126,029 or $0.01 per share for the three months ended March 31,
2005.
FORWARD LOOKING STATEMENTS. This Form 10-QSB contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements made by Endo Networks involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
14
forward-looking statements. Factors that could cause actual results to differ
materially from the forward looking statements include, but are not limited to,
risks associated with lack of significant operating history, demand for the Endo
Networks' products, international business operations, dependence on licensees,
governmental regulations, technological changes, intense competition and
dependence on management. Given these uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements. The Company's
management disclaims any obligation to forward-looking statements contained
herein to reflect any change in the Endo Networks' expectation with regard
thereto or any change in events, conditions, circumstances or assumptions
underlying such statements.
ITEM 3. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation
of the Endo Networks' management, including our Chief Executive Officer and
Chief Financial Officer, regarding the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of
1934) as of March 31, 2006. As a result of their evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that the Endo Networks'
disclosure controls and procedures are effective to ensure that information
required to be disclosed by Endo Networks in reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms. There were no changes in Endo Networks' internal
control over financial reporting that occurred during the quarter ended March
31, 2006, that has materially affected and is reasonably likely to materially
affect, the Endo Networks' internal control over financial reporting.
15
PART III
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. EMPLOYMENT AGREEMENTS
None
ITEM 3. RECENT SALES OF UNREGISTERED SECURITIES
None
ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
Exhibit No. Document
31.1 Certification of Chief Executive Officer required by Rule
13a-14a/15d-14(a) under the Exchange Act.
31.2 Certification of Chief Financial Officer required by Rule
13a-14a/15d-14(a) under the Exchange Act.
32.1 Certification of Chief Executive Officer pursuant to Section 8 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(b) Reports of Form 8-K
None
16
SIGNATURES.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
/s/ Peter B. Day
---------------------------
Peter B. Day
Chief Executive Officer
May 10, 2006
17
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Peter B. Day, certify that:
1. I have reviewed this annual report on Form 10-QSB of ENDO NETWORKS, INC.
2. Based on my 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 my 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. The small business issuer's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14 for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b. Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
18
5. The small business issuer's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the audit committee of
the small business issuer's board of directors (or persons performing the
equivalent functions):
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Date: May 10, 2006
/s/ Peter B. Day
---------------------------
Peter B. Day
Chief Executive Officer
19
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Peter B. Day, certify that:
1. I have reviewed this annual report on Form 10-QSB of Endo Networks, Inc.
2. Based on my 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 my 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. The small business issuer's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14 for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b. Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the audit committee of
the small business issuer's board of directors (or persons performing the
equivalent functions):
20
a. All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Date: May 10, 2006
/s/ Peter B. Day
-----------------------
Peter B. Day,
Chief Financial Officer
21
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Endo Networks, Inc. (the "Company") on
Form 10-QSB for the period ending March 31, 2006, as filed with the Securities
and Exchange Commission on the date hereof (the "Report'), I, Peter B. Day,
Chief Executive 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:
(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 operations of the Company at
the dates and for the periods indicated.
/s/ Peter B. Day
---------------------------
Peter B. Day,
Chief Executive Officer
May 10, 2006
22
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of Endo Networks, Inc. (the "Company") on Form
10-QSB for the period ending March 31, 2006, as filed with the Securities and
Exchange Commission on the date hereof (the "Report'), I, Peter B. Day, 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:
(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 operations of the
Company at the dates and for the periods indicated.
/s/ Peter B. Day
---------------------------
Peter B. Day,
Chief Financial Officer
May 10, 2006
23