Item 2 of this Form
10-QSB.
The
July
quarter saw the company continue the execution of its updated business
strategy
in anticipation of new funding being finalized later in 2007. This resulted
in a
lift in expenditures compared to previous quarters. Apart from the requirement
since May 1, 2006 to reflect the compensation expense for the granting
and
vesting of existing options ($123,250 for the quarter), much of the additional
expenditure relates increased marketing with the release of new product
versions, and expenses associated with the funding and M&A activities that
are underway. We also began increasing staffing levels, particularly on
the
sales side, to prepare for the full launch of version 3 of INTERScepter.
The
company is also reviewing its options from a marketing and investor relations
perspective. From a sales and distribution perspective, the Company focused
on
growing our partnerships in the USA and UK with the focus on leveraging
from its
existing distribution arrangements as outlined below as well as promoting
the
company and product in key market segments. The company has also appointed
key
senior managers to help drive these opportunities in the USA, and now in
the UK
in conjunction with the setup of a branch office and new staff in the UK.
A key
focus from a development perspective has been the completion of the key
phases
of INTERScepter Version 3. This has seen the release of the INTERScepter
Home/SOHO and Enterprise “appliance” versions which are being presented to
distributors and communications systems manufacturers for OEM opportunities.
The
quarter also saw the introduction of new products through third party
partnerships, focused on internet/email security and compliance, and more
recently Voice over IP (VoIP).
The
Directors also noted that, the due diligence was continuing in relation
to the
proposed acquisitions. It is considered likely that the first of these
will be
completed in the next quarter.
Plan
of Operation
Synopsis
of Business Strategy and Status
visionGATEWAY
is continuing to execute on its updated business plan. The Company’s plan
combines organic growth and acquisitions creating greater opportunity for
revenue and sales growth through an enhanced corporate and solution package
:
INTERScepter
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The
Company has released the new “appliance”
version of INTERScepter for enterprise and SMB markets. Significant
enhancements
to INTERScepter version 3 have
been made from both a technical and user interface
perspective;
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version
3 is being implemented at Moreton
TAFE College in Queensland
-
long standing client of visionGATEWAY - Unisys who manage their
networks
is looking to expand the implementation of INTERScepter to other
TAFE
locations by the end of 2007 for one hundred thousand student
users; this
would equate to sale value over $800,000 per year when fully
operational;
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other
installations are arranged for new client sites in Australia,
as well as
in UK and USA;
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appliance
hardware arrangements
have been made for supply of fully specified appliance devices
from
Portwell of Taiwan and USA through distributors in Australia,
USA and UK -
Avnet - and their channel partners. Different appliance models
are
available for Enterprise and SMB level businesses at competitive
price
points;
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shipments
of these appliances began July within Australia, as well as to
USA and
UK;
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following
on from the “solution on a chip” box version of INTERScepter
for Home
and SOHO (Small Office Home Office) markets, the Company is to
begin
during its second fiscal quarter Community
trials of “The Smart
Parent
for the Smart Home” providing full INTERScepter Home/SOHO
capability;
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Global
Distribution & Sales Network
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Ø
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during
the year, the Company gained a specialist
Strategic Advisor
in
Tom Kielty of the USA who brings a strong technology background
as well as
a significant personal network into the Financial Services and
Pharmaceutical industries - introductions have already been made
to some
of the largest global banks, to a number of sales channels, as
well to
funding sources;
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Ø
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the
potential that has evolved from the organizations the Company
has already
had discussions and live demonstrations with is for 200,000
work stations
over the next 12 months;
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the
Company now has regional
sales management
established for Australia, USA and
UK;
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the
Company has expanded
market coverage to UK and South Africa
as
part of our Global Distribution
Network;
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an
online stealth marketing program
is
underway to achieve a rapid uptake and understanding of the benefits
INTERScepter v3.0 delivers to the Company’s
customers;
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Partnerships,
Acquisitions & New Products
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Ø
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the
Company intends to gain clients and sales plus new products/services
through acquisitions;
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the
Company has added additional synergistic
products
in
e-commerce and point of sale payment solutions, secure mail and
secure
data sharing, internet security, encryption technologies and
VoIP;
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the
exclusive licensing of Saturn
IQ’s
IP
and technology from the UK will bring a portfolio of revenue
generating
clients. It is predicted that the immediate sales opportunities
can be
converted to revenue of an estimated $1,000,000 over the first
nine months
of the arrangement being
implemented.
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visionGATEWAY
looks to provide, for the companies that it acquires, the ability to obtain
the
funding they require more cost effectively, strategic leadership and positioning
plus enhanced (global) growth potential. VGWA’s objective for the long term is
to grow a successful global technology company.
The
funding options the Company is progressing facilitate these objectives,
and the
strategic partnerships the Company has and is putting in place provide
the
capability to accelerate market access and sales growth.
Funding
The
visionGATEWAY business over the last two years has focused on product
development and building its market positioning, presence and global
distribution channels. In the last twelve months, the key aspects of expenditure
have been:
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Building
distribution and reseller networks and validating product acceptance
in
USA, UK, Australia and New Zealand;
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o
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Finding
and evaluating synergistic 3rd
party products to bring to the distribution mix;
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o
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Development
of INTERScepter version 3 with significant enhancements in functionality
and a new underlying platform in Linux for the iGateway component
of the
product; and
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Development
of INTERScepter version to address the Home and SOHO markets.
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Development
of INTERScepter “appliance” capability.
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During
all of fiscal 2007, the Company has focused on arranging major funding
that will
enable it to take full advantage of the platform that has been built through
its
product development and global distribution channels. This funding will
be used
during fiscal 2008 to drive sales in global markets with a key focus on
the
U.S., Australia and UK. It also enables the Company to focus on some new
product
initiatives that are aligned to market needs and sales potential.
In
the
twelve months ended April 2007, with a reduced level of activities,
visionGATEWAY has been able to acquire investment and loan funds for working
capital of approximately US$1,103,000 from existing and new investors.
This has
enabled us to pay key operational expenses in Australia and USA, as well
as
travel and marketing expenses related to the development of distribution
and
investor efforts in U.S., UK and Australia/New Zealand.
In
April
2006 visionGATEWAY announced that it had entered into a Standby
Equity Distribution Agreement
with
Cornell Capital Partners, LP (“Cornell”). Under the agreement, Cornell would
provide up to $15 million of funding that can be accessed at the Company’s
discretion over a 24-month period by issuing common stock of the Company,
pursuant to the conditions and limitations thereunder. Proceeds received
by the
Company would enable it to execute on its established sales growth
strategy.
Any
sale
of common stock under the agreement would occur pursuant to an effective
registration statement, which the Company would establish prior to selling
any
shares of common stock that it may sell under the agreement. This registration
statement is yet to be filed and the
SEDA
facility is yet to
be
activated.
While
this funding structure provides flexibility to access additional equity
capital
at selected times when additional capital or liquidity is desirable to
drive our
growth, it needs to be done at a time that is appropriate taking into account
all business and market factors. The Company believes the timing and market
factors have not yet been appropriate to access this facility.
The
Company has consequently revised its funding strategy moving forward. The
key
elements of the suggested funding strategy as outlined below are clearly
aligned
to the updated Corporate Strategy outlined in this report.
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Ø
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Initial
funding requirement has been increased to US$10 million - additional
requirement would be due to growth requirements in existing markets
with
the new and enhanced products(particularly the SmartParent),
and the initial needs of proposed acquired
companies.
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Additional
tranches of funding to total $20m in 2008 to be accelerated after
initial
acquisitions are completed to facilitate additional growth in
new markets
(particularly China, Japan and Korea), a move to a main board
listing, and
additional acquisitions.
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Target
Acquisitions
The
Company believes these prospective transactions will add real value to
the
business in the future and that they create the clear emerging leader in
our
sector. As a combined Company, the business would have a broad product
line and
technology portfolio, enabling it to provide unparalleled products and
support
for its customers. In addition, the Company believes it will have an increased
ability to address complementary high-growth markets.
As
the
Company’s markets continue their rapid growth, it expects that these markets
will become more attractive to larger players. The combined forces of the
companies VGWA bring together increase its abilities to face these competitive
challenges by creating a more efficient and financially stronger company,
and by
increasing the value the Company brings to its customers.
Furthermore,
by expanding the Company’s engineering capacity and broadening its technology
portfolio, it will be able to accelerate the development of products for
complementary markets. The Company’s competitive position is further enhanced by
increasing its combined financial strength, and by expanding its management
expertise and experience.
The
Company has identified significant synergies among the targeted companies,
such
that the acquisition is accretive to the Company’s earnings commencing in the
first full quarter of combined operations, excluding one-time costs associated
with the transaction(s). The Company is committed to achieving the synergies
it
has identified while enhancing its competitive position and momentum in
the
marketplace.
The
combined company would continue to have a significant management and R&D
presence in Australia, as well as other centers depending on the acquired
companies - most likely Europe. The combined company would also develop
sales
and support offices in all major regions as sales expand.
Research
& Development
The
key
focus of Research & Development over the last twelve months has been the
development of INTERScepter version 3. This version not only addresses
the Home
and SOHO markets, but also provides an “appliance” approach, database
independence and significant technological advantages.
As
a
result of global exposure to the visionGATEWAY Business Model through investor
forums and reseller networks, there is significant interest from other
businesses for the Company to consider adding on synergistic product modules
and
expand the product offering.
The
INTERScepter™
V3
product provides the underlying Internet Resource Management platform
on
which
other modules can be added. These include modules provided by visionGATEWAY
as
well as specialist modules from third parties such as :
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Whole
of network traffic monitoring, analysis and performance improvement
tools;
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Internet
Protection and Security tools;
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Secure
Mail & Secure Data Sharing (IQ Confidential);
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Integrated
encryption and digital rights management system;
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IP-based
e-Business, M-Commerce and smart card solutions (SmartCity);
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Facilities
to monitor, control and charge Internet traffic over mobile telephony
(including PDA’s with phones);
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Facilities
to monitor, control and charge VOIP traffic (an INTERScepter™
VoIP
Control module is now available);
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Specialist
security and content review modules as “plug-ins”; and
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Process
improvement tools e.g. video conferencing.
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INTERScepter
can also be integrated into Bundled Solutions
Ø Secure
VoIP - enable new telephony to be secure from threats !
Ø IP-based
Digital e-Business & m-Commerce - secure / track / measure
Ø iNTERNET
TRACKER - INTERScepter plus Billing Solution for Higher Education
market
Ø Internet
based security camera control solution - important for additional physical
security at key government and corporate locations
The
technology of INTERScepter enables visionGATEWAY to build and leverage a number
of strategic technology alliances. These can be categorized as follows
:
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Core
components
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Linux
operating system
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Database
systems - MS, IBM, Oracle, etc
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Client
workstations - MS, Linux/Novell,
Apple
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User
Authentication - MS, Novell, etc
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Hardware/Networking
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Server
Appliances - IBM, Intel, HP, Tyan
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Wi-Fi
- various technology and solution
providers
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Specialist
devices
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IP
based video conferencing
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IP
based Security cameras
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Voice
Over IP (VOIP)
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Specialist
software plug-ins
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Filters
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Whole
of network bandwidth management
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Spam
management
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E-mail
content checking
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IM
content checking
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Telcos
and ISP’s - differentiate data lines with management
tool
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New
Solutions - INTERScepter@Home - Prototype Overview
Initially
designed as a prototype to be embedded onto ADSL/Cable Modems and Wired/Wireless
routers, INTERScepter@Home, now also known as SmartParent,
is a
version of INTERScepter specifically targeted to the home, home office
and small
business market segments. INTERScepter@Home / SmartParent
has been
engineered using the NG platform that has been developed by the R&D team as
the foundation for all future INTERScepter product variations.
A
number
of brand name Wireless Routers had been used as a “proof of concept” with the
initial version of INTERScepter@Home installed. This work complements the
ongoing work using software-based emulators and ensures the product functions
on
physical hardware.
Features
/ Functionality
The
aim
of INTERScepter@Home is to provide control and basic usage statistics for
all
computers that access the Internet via the INTERScepter@Home hardware device.
INTERScepter@Home manages connected computers with “Access Policies” that are
assigned and usage statistics that are recorded.
Management
of @Home is browser based via a very simple and intuitive interface. @Home
is
very simple to configure and requires very little on-going
management.
Key
Points
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Using
INTERScepter@Home provides the information required to verify
ISP usages
charges.
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INTERScepter@Home
on a wireless router / gateway protects unsecured wireless networks
by not
allowing new computers to access the internet. It will also identify
foreign computers using the unsecured wireless
network.
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INTERScepter@Home
is available on ADSL/Cable modems for new broadband users and
on
Wired/Wireless routers for existing broadband
users.
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INTERScepter@Home
is based on the NG/Linux platform and supports a wide variety
of platforms
including (but not limited to) PowerPC, ARM, MIPS and Intel
CPU’s.
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iSmartParent
- “The SmartParent for the Smart Home”
visionGATEWAY’s
product innovation for its INTERScepter solution continued with the release
of
the Linux platform version, and now reaches a significant milestone with
the
release of a version for the Home/SOHO markets -
INTERScepter SmartParent.
The
next
generation home will be increasingly dependant on Internet-based technologies.
From MySpace and YouTube to television and radio and alarm systems, nearly
every
aspect of the home is being networked and redefined in the Internet age.
But
with these positive advances and conveniences, there are serious issues
to
consider, especially when children are involved.
visionGATEWAY
is on the cutting-edge of this trend with products and solutions originally
developed for government agencies and major corporate clients that allow
parents
to have virtual control and monitoring capabilities over every aspect of
the
next generation home to ensure total security for personal information
as well
as powerful tools to ensure that each child is 100 percent safe from predators
and unauthorized communications.
Distribution,
Marketing & Sales
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Current
Situation
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INTERScepter
is currently installed in sites covering over 5,000 workstations and 50,000
users. The Company’s focus over 2006 and early 2007 has been to continue to
prove the market potential of the product (particularly in the USA and
UK),
consolidate case studies of the business value of the product, and to continue
building the distribution and support channels while awaiting the completion
of
the new version 3 full “appliance” model.
In
addition the arrangements to add new 3rd
party
products have provided new opportunities for cross-selling of products
into
specific target market segments.
In
conjunction with new funding the Company will begin scaling up its resources
to
meet the demands of the distribution solutions and channels. The approach
is twofold :
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industry
specialization - the Company will bring in industry specialists
to drive
sales and market opportunities for its solutions in specific
target
sectors
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solution
specialization - the Company will bring on board sales/technical
specialists for each of its solutions to work with the
industry specialists and the channels in their sales and ongoing
support
of the client base.
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The
new
funding and resources will facilitate these objectives, and provide the
capability to accelerate market access and sales growth.
Regional
managers have now been put in place for Australia, USA and UK.
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Avnet
Partner Solutions and
visionGATEWAY
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VGWA
appointed Avnet Partner Solutions (“APS”) as a distributor. The key component of
the Avnet Partner Solutions arrangement is to take INTERScepter ™
on
board
in an “appliance” model variation where INTERScepter™
is
linked
to IBM brand servers and taken to Avnet’s resellers’ major clients. Through this
link with IBM there are opportunities to leverage that company’s resources and
client base. IBM has also provided specialist hardware to visionGATEWAY’s
R&D team to facilitate the porting of the INTERScepter solution to these
systems.
The
initial program was targeted at North American customers; but has since
been
expanded to Australia/New Zealand, and then to the UK.
The
partnership with APS provides INTERScepter on IBM hardware as a preconfigured
appliance model for sales through their many reseller partner
channels.
Avnet
in
UK is now also providing distribution and support of the new appliances,
from
other vendors, used for the initial rollout of INTERScepter version
3.
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Australian
Market Place - early v3
implementations
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INTERScepter
v3 is being installed at Moreton TAFE with continued customer load testing
being
completed. The product has also successfully integrated with the TAFE’s student
database systems. Completion of client side testing is underway to enable
roll
out of INTERScepter across the whole of Moreton TAFE and other soon to
be merged
Queensland based TAFEs.
Expanding
TAFE opportunities with Unisys in QLD and NSW. Unisys’ project managers and
visionGATEWAY met in February in order to complete the robust testing evaluation
and student database integration that is applicable across all Queensland
based
TAFEs. VGWA is also developing a closer relationship with Unisys’ Brisbane
office to gain an entry to Unisys’ NSW customer base and to replicate the
INTERScepter implementation across NSW based TAFEs.
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v
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United
Kingdom Opportunities
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In
the
United Kingdom pilot installations have been arranged with four local government
councils as an entrée to that whole market sector.
Avnet
Partner Solutions in UK also have aligned five of their major partner accounts
who have pilot customers ready to move forward. Of major interest is one
company
that is part of the largest global technology supplier of South Africa.
They are
ready to take the new INTERScepter version 3 appliance to their massive
client
base.
Item
3. Controls
and Procedures
Under
the supervision and with the participation of our management, including
our
principal executive officer and principal financial officer, we conducted
an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”). Based on this evaluation, our principal executive
officer and our principal financial officer concluded that our disclosure
controls and procedures were effective as of the end of the period covered
by
this quarterly report.
Part
II—OTHER INFORMATION
Item
1. Legal
Proceedings
At
July
31, 2007 there were no material legal proceedings pending against the Company
and to the knowledge of management, no federal, state or local governmental
agency is presently contemplating any such proceedings against the Company
or
any of its affiliates.
No
director, executive officer or affiliates of the Company or any owner of five
percent (5%) or more of the Company’s common stock is an adverse party to any
action against the Company or its affiliates or otherwise has a material
interest adverse to the Company or any of its affiliates.
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults
Upon Senior Securities
None.
Item
4. Submission
of Matters to a Vote of Security Holders
None.
Item
5. Other
Information
None.
Item
6.
Exhibits and Reports on Form 8-K
(a).
Exhibits
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2.1(1)
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Agreement
and Plan
of Reorganization,
dated February 27, 2004, by and among Chiropractic, Vision Nv, and
the
stockholders of Vision Nv.
|
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2.2(1)
|
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Addendum
to the Agreement and Plan of Reorganization, dated February 27,
2004.
|
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3.1(2)
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Articles
of Incorporation
|
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3.2(2)
|
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Bylaws
of Chiropractic 21 International, Inc.
|
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3.3(2)
|
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Certificate
of Amendment to Articles of Incorporation dated September 23,
1970.
|
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3.4(2)
|
|
Certificate
of Amendment to Articles of Incorporation dated October 29,
1970.
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