**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

 

**Washington, D. C. 20549**

 

**FORM 10-KSB**

 

**(Mark One)**

 

**ý****ANNUAL REPORT UNDER SECTION 13OR 15(D) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**For the fiscal year ended December 31, 2003**

 

**OR**

 

**o****TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIESEXCHANGE ACT OF 1934**

 

**Commission File Number 000-28883**

 

**VUBOTICS,INC.**

(Name of small business issuer in its charter)

 
| **Nevada**                                                      | ** ** | **58-2212465**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (I.R.S. Employer Identification  No.) |

 

**1108 Oglethorpe Drive, Atlanta, GA 30319**

(Address of Principal Executive Offices) (Zip Code)

 

**(404) 816-6100**

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Exchange Act: **None**

 

Securities registered under Section 12(g) of the Exchange Act:

 

**Common Stock, $0.001 par value**

(Title of class)

 

Check whether the issuer (1)filed all reports required to be filed by Section 13 or 15(d) of the ExchangeAct during the past 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes oNo ý

 

Check if there is no disclosureof delinquent filers in response to Item 405 of Regulation S-B contained inthis form, and no disclosure will be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB o.

 

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct.   Yes ý   No o

 

Registrant’s revenues for thetwelve month period ended December 31, 2003: $0.

 

The shares of Common Stock ofthe Company are not currently traded, therefore the shares held bynon-affiliates of the Registrant, as of October 12, 2005 has no market value.

 

As of September 27, 2005, theRegistrant had outstanding 33,437,274 shares of Common Stock, $0.001 par value.

 

Transitional Small BusinessDisclosure Format.   Yes o  No ý

 

 

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**EXPLANATORYNOTE**

 

In November,2004, the Company changed its name to Vubotics, Inc.

 

This form10KSB is being filed simultaneously with the following current reports:

 

Form 10-KSB for the fiscal year ended December31, 2002;

Form 10-KSB for the fiscal year endedDecember 31, 2004;

Form 10-QSB for the quarter ended March 31,2003;

Form 10-QSB for the quarter ended June 30,2003;

Form 10-QSB for the quarter ended September30, 2003;

Form 10-QSB for the quarter ended March 31,2004;

Form 10-QSB for the quarter ended June 30,2004;

Form 10-QSB for the quarter ended September30, 2004;

Form 10-QSB for the quarter ended March 31,2005: and

Form 10-QSB forthe quarter ended June 30, 2005.

 

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**PART I**

 

**ITEM 1.DESCRIPTION OF BUSINESS**

 

**Forward LookingStatements**

 

This annual report on Form10-KSB includes forward looking statements within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended (“Forward Looking Statements”). All statementsother than statements of historical fact included in this report are ForwardLooking Statements. In the normal course of its business, the Company, in aneffort to help keep its shareholders and the public informed about the Company’soperations, may from time-to-time issue certain statements, either in writingor orally, that contain or may contain Forward Looking Statements. Although theCompany believes that the expectations reflected in such Forward LookingStatements are reasonable, it can give no assurance that such expectations willprove to have been correct. Generally, these statements relate to businessplans or strategies, projected or anticipated benefits or other consequences ofsuch plans or strategies, past and possible future, of acquisitions andprojected or anticipated benefits from acquisitions made by or to be made bythe Company, or projections involving anticipated revenues, earnings, levels ofcapital expenditures or other aspects of operating results. All phases of theCompany operations are subject to a number of uncertainties, risks and otherinfluences, many of which are outside the control of the Company and any one ofwhich, or a combination of which, could materially affect the results of theCompany’s proposed operations and whether Forward Looking Statements made bythe Company ultimately prove to be accurate. Such important factors (“ImportantFactors”) and other factors could cause actual results to differ materiallyfrom the Company’s expectations as disclosed in this report. All prior andsubsequent written and oral Forward Looking Statements attributable to theCompany or persons acting on its behalf are expressly qualified in theirentirety by the Important Factors described below that could cause actualresults to differ materially from the Company’s expectations as set forth inany Forward Looking Statement made by or on behalf of the Company.

 

**GeneralBackground**

 

The Company was originally incorporated onFebruary 27, 1996 in the state of Nevada as Silver Strike Mining Company, Inc.On February 12, 1999, Silver Strike changed its name to Halifax International,Inc. On February 26, 1999, Halifax acquired Christopher Partners, Inc., aGeorgia corporation, as a wholly-owned subsidiary (“Christopher”).  At the time of acquisition, ChristopherPartners had a wholly owned subsidiary, Palau Engineering & ConstructionCo., Ltd., a Bermuda corporation (“Palau”). In November 2000 the Company discontinued the business operations ofboth Christopher and Palau.  On June 14,2000, Halifax formed a wholly-owned subsidiary, Truscom, Inc., a Japanesecorporation (“Truscom”).  The Companydiscontinued the business operations of Truscom in 2002. On June 20, 2001,Halifax incorporated a wholly owned subsidiary, Annapolis Valley Ventures, Inc.in the state of Delaware (“Annapolis”). The Company

 

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discontinued the business operations ofAnnapolis in 2002. On December 13, 2002, Halifax formed a wholly ownedsubsidiary, X-VU, LLC, a limited liability company under the laws of thestate of Georgia (“X-VU”). The Company has phased out the business operationsof X-VU.

 

**BusinessOperations**

 

The Company isa holding company with three dormant subsidiaries, Truscom, Annapolis andX-VU.  The Company conducted no businessoperations in 2003.

 

The Companyincurred expenses in creating and developing a business plan and long-termstrategy.

 

**Risk Factors**

 

**Material Risks Related To The Company’sBusiness**

 

***The Company hasincurred significant operating losses since inception and the Company cannotassure you that the Company will ever achieve profitability.***

 

Since theCompany’s inception, the Company has incurred losses every quarter. The extentof the Company’s future operating losses and the timing of profitability arehighly uncertain, and the Company may never achieve or sustain profitability.The Company has incurred significant net losses since inception, including netlosses of approximately $391,309 in 2003 and $1,518,486 in 2002. AtDecember 31, 2003, the Company has an accumulated deficit of $8,732,282.The Company anticipates that the Company will continue to incur operatinglosses for the foreseeable future and it is possible that the Company willnever generate substantial revenues from product sales.

 

***The Company is adevelopment stage company with a limited operating history that makes itimpossible to reliably predict future growth and operating results.***

 

The Companyhas not demonstrated that the Company can:

 

•                  Establishmany of the business functions necessary to operate, including sales,marketing, administrative and financial functions, and establish appropriatefinancial controls;

 

•                  Make,use, and sell future products without infringing upon third party intellectualproperty rights; or

 

•                  Respondeffectively to competitive pressures.

 

***If the Company failsto develop products, the Company will not achieve significant revenues and theCompany would be unlikely to be able to continue its current level ofoperations and would be unable to meet its long-term growth plans.***

 

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The Company’sfuture business and financial success will depend on its ability to introducenew products and upgrade existing products into the marketplace. Developing newproducts and upgrades to existing and future products imposes burdens on theCompany’s management. This process is costly, and the Company cannot assure anyinvestor that the Company will be able to successfully develop any products orenhance any future products. If the Company’s product development efforts areunsuccessful, the Company will have incurred significant costs withoutrecognizing the expected benefits and business prospects will suffer.

 

***The Company’s futurecapital needs are uncertain. The Company will need to raise additional funds inthe future and these funds may not be available on acceptable terms or at all.***

 

The Companybelieves that the Company’s current cash and cash equivalents are notsufficient to meet projected operating requirements through December 2004.Therefore, the Company may seek additional funds from public and private stockor debt offerings, borrowings or other sources prior to such time. The Company’scapital requirements will depend on many factors, including:

 

•                  Therevenues generated by sales of products that the Company develops;

 

•                  Thecosts required to develop new products;

 

•                  Thecosts of obtaining and defending patents, trademarks and copyrights of theCompany’s products;

 

•                  Thecosts associated with expanding the Company’s sales and marketing efforts;

 

•                  Theexpenses the Company incurs in selling its products;

 

•                  Thecosts associated with any expansion of operations;

 

•                  Thecosts associated with capital expenditures; and

 

•                  Thenumber and timing of any business acquisitions or other strategic transactions.

 

As a result ofthese factors, the Company will need to raise additional funds, and these fundsmay not be available on favorable terms, or at all. Furthermore, if the Companyissues equity or debt securities to raise additional funds, the Company’sexisting stockholders may experience dilution, and the new equity or debtsecurities may have rights, preferences and privileges senior to those of theCompany’s existing stockholders. In addition, if the Company raises additionalfunds through collaboration, licensing or other similar arrangements, it may benecessary to relinquish valuable rights to the Company’s potential products orproprietary technologies, or grant licenses on terms that

 

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are notfavorable to the Company. If the Company cannot raise funds on acceptableterms, the Company may not be able to develop or enhance the Company’sproducts, execute the Company’s business plan, take advantage of futureopportunities, or respond to competitive pressures or unanticipated customerrequirements.

 

***The Company’ssuccess will depend on the Company’s ability to attract and retain keypersonnel, programming and engineering staff. If the Company fails to attractand retain key personnel and programming staff, the Company may be unable tosucceed in its market.***

 

The Companybelieves future success will depend on the Company’s ability to manage itsgrowth successfully, including attracting and retaining programmers, engineersand other highly skilled personnel. The Company’s key employees may terminatetheir employment with the Company at any time. Hiring qualified management and technical personnel is difficult due tothe limited number of qualified professionals. If the Company fails to attract and retain personnel, particularlymanagement and technical personnel, the Company may not be able to succeed.

 

***If the Company failsto protect its intellectual property rights, others may take advantage of theCompany’s ideas and compete directly against the Company.***

 

The Companyrelies in part on patents, trade secrets and other proprietary technologies toprotect the Company’s products. The Company may not be able to obtain ormaintain adequate U.S. patent protection for new products or ideas, orprevent the unauthorized disclosure of the Company’s technical knowledge orother trade secrets by the Company’s employees. Additionally, the laws of foreigncountries may not protect the Company’s intellectual property rights to thesame extent as the laws of the U.S. Even if the Company’s intellectualproperty rights are adequately protected, litigation may be necessary toenforce them, which could result in substantial costs to the Company andsubstantial diversion of the attention of the Company’s management and keytechnical employees. If the Company is unable to adequately protect the Company’sintellectual property, the Company’s competitors could use the Company’sintellectual property to develop new products or enhance their existingproducts. This could harm the Company’s competitive position, decrease itsmarket share or otherwise harm its business.

 

**Risks Related To Capital Structure**

 

***There is noassurance of an established public trading market, which would adversely affectthe ability of investors in the Company to sell their securities in the publicmarkets.***

 

As of December31, 2003, the Company’s common stock is no longer actively trading on the OTCBulletin Board or the Pink Sheets as a result of the Company’s failure to filereports with the Securities and Exchange Commission.  The Company’s management intends to cause itscommon stock to begin trading after the Company becomes current on thesereports but there can be no guarantee of this. However, a regular tradingmarket

 

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for thesecurities may not be sustained in the future. The OTC Bulletin Board is an inter-dealer, over-the-counter market thatprovides significantly less liquidity than the NASD’s automated quotationsystem (the “NASDAQ Stock Market”). Quotes for stocks included on the OTCBulletin Board are not listed in the financial sections of newspapers asare those for the NASDAQ Stock Market. Therefore, prices for securities tradedsolely on the OTC Bulletin Board may be difficult to obtain and holders ofcommon stock may be unable to resell their securities at or near their originaloffering price or at any price. If listed on any exchange, the market price forthe Company’s common stock will be influenced by a number of factors,including:

 

•                  The issuance ofnew equity securities in a future offering;

 

•                  Issued andoutstanding shares of the Company’s common stock becoming eligible for resalepursuant to contractual registration requirements or pursuant to exemptionsfrom registration becoming available following the passage of time;

 

•                  Competitivedevelopments, including announcements by competitors of new products orservices or significant contracts, acquisitions, strategic partnerships, jointventures or capital commitments;

 

•                  Variations inquarterly operating results;

 

•                  Changes infinancial estimates by securities analysts;

 

•                  The depth andliquidity of the market for the Company’s common stock;

 

•                  General economicand other national conditions; and

 

•                  Changesin interest rates.

 

***The limited prior public marketand trading market may cause volatility in the market price of the Company’s commonstock in the event it becomes listed.***

 

Currently, the Company’s stockis not actively traded on any market.  Inthe absence of an active trading market:

 

•                  Investorsmay have difficulty buying and selling or obtaining market quotations;

 

•                  Marketvisibility for the Company’s common stock may be limited; and

 

•                  Alack of visibility for the Company’s common stock may have a depressive effecton the market for the Company’s common stock.

 

***If******the Company’s common stock becomes listed on an exchange thestock may be considered a “penny stock” and may be difficult to sell.***

 

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To beconsidered to be a “penny stock,” securities must meet one or more of thedefinitions in Rules 15g-2 through 15g-6 promulgated underSection 15(g) of the Securities Exchange Act of 1934, as amended. Theseinclude but are not limited to the following: (i) the stock trades at aprice less than $5.00 per share; (ii) it is NOT traded on a “recognized”national exchange; (iii) it is NOT quoted on the NASDAQ Stock Market, oreven if so, has a price less than $5.00 per share; or (iv) is issuedby a company with net tangible assets less than $2.0 million, if inbusiness more than a continuous three years, or with average revenues of lessthan $6.0 million for the past three years. The principal result or effectof being designated a “penny stock” is that securities broker-dealers cannotrecommend the stock but must trade in it on an unsolicited basis.Section 15(g) of the Securities Exchange Act of 1934, as amended, andRule 15g-2 promulgated thereunder by the SEC require broker-dealersdealing in penny stocks to provide potential investors with a documentdisclosing the risks of penny stocks and to obtain a manually signed and datedwritten receipt of the document before effecting any transaction in a pennystock for the investor’s account.

 

Potentialinvestors in the Company’s common stock are urged to obtain and read suchdisclosure carefully before purchasing any shares that are deemed to be “pennystock.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks toapprove the account of any investor for transactions in such stocks beforeselling any penny stock to that investor. This procedure requires thebroker-dealer to (i) obtain from the investor information concerning hisor her financial situation, investment experience and investment objectives;(ii) reasonably determine, based on that information, that transactions inpenny stocks are suitable for the investor and that the investor has sufficientknowledge and experience as to be reasonably capable of evaluating the risks ofpenny stock transactions; (iii) provide the investor with a writtenstatement setting forth the basis on which the broker-dealer made thedetermination in (ii) above; and (iv) receive a signed and dated copyof such statement from the investor, confirming that it accurately reflects theinvestor’s financial situation, investment experience and investmentobjectives. Compliance with these requirements may make it more difficult forholders of the Company’s common stock to resell their shares to third partiesor to otherwise dispose of them in the market or otherwise.

 

***Upon such time as******the Company’s stock is actively traded, shares eligible forfuture sale may adversely affect the market price of the Company’s common stock, asthe future sale of a substantial amount of the Company’s stock in the publicmarketplace could reduce the price of the Company’s common stock.***

 

From time totime, certain of the Company’s stockholders may be eligible to sell all or someof their shares of common stock by means of ordinary brokerage transactions inthe open market pursuant to Rule 144, promulgated under the Securities Act(“Rule 144”), subject to certain limitations. In general, pursuant toRule 144, a stockholder (or stockholders whose shares are aggregated) whohas satisfied a one-year holding period may, under certain circumstances, sellwithin any three-month period a number of securities which does not exceed thegreater of 1% of the then outstanding shares of common stock or the averageweekly trading volume of the class during the four calendar

 

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weeks prior tosuch sale. Rule 144 also permits, under certain circumstances, the sale ofsecurities, without any limitations, by a non-affiliate of the Company that hassatisfied a two-year holding period.

 

***Upon such time as******the Company’s stock is actively traded, if the Company failsto maintain effective internal controls over financial reporting, the price ofthe Company’s******common stock may be adversely affected.***

 

The Company’sinternal controls over financial reporting may have weaknesses and conditionsthat need to be addressed, the disclosure of which may have an adverse impacton the price of the Company’s common stock. The Company is required toestablish and maintain appropriate internal controls over financial reporting.Failure to establish those controls, or any failure of those controls onceestablished, could adversely impact the Company’s public disclosures regardingthe Company’s business, financial condition or results of operations. Inaddition, management’s assessment of internal controls over financial reportingmay identify weaknesses and conditions that need to be addressed in the Company’sinternal controls over financial reporting or other matters that may raiseconcerns for investors. Any actual or perceived weaknesses and conditions thatneed to be addressed in the Company’s internal controls over financialreporting, disclosure of management’s assessment of the Company’s internalcontrols over financial reporting or disclosure of the Company’s publicaccounting firm’s attestation to or report on management’s assessment of theCompany’s internal controls over financial reporting may have an adverse impacton the price of the Company’s common stock.

 

***Upon such time asthe Company’s stock is actively traded, standards for compliance withSection 404 of the Sarbanes-Oxley Act of 2002 are uncertain, and if theCompany fails to comply in a timely manner, the Company’s business could beharmed and the Company’s stock price could decline.***

 

Rules adoptedby the Securities and Exchange Commission pursuant to Section 404 of theSarbanes-Oxley Act of 2002 require annual assessment of the Company’s internalcontrol over financial reporting, and attestation of the assessment by theCompany’s independent registered public accountants. This requirement willfirst apply to the Company’s annual report for fiscal 2006. The standards thatmust be met for management to assess the internal control over financialreporting as effective are new and complex, and require significantdocumentation, testing and possible remediation to meet the detailed standards.The Company may encounter problems or delays in completing activities necessaryto make an assessment of the Company’s internal control over financialreporting. In addition, the attestation process by the Company’s independentregistered public accountants is new and the Company may encounter problems ordelays in completing the implementation of any requested improvements andreceiving an attestation of the assessment by the Company’s independentregistered public accountants. If the Company cannot assess the Company’sinternal control over financial reporting as effective, or the Company’sindependent registered public accountants are unable to provide an unqualifiedattestation report on such assessment, investor confidence and share value maybe negatively impacted.

 

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***The Company does notforesee paying cash dividends in the foreseeable future.***

 

The Companyhas not paid cash dividends on its stock and it does not plan to pay cashdividends on its stock in the foreseeable future.

 

**ITEM 2.DESCRIPTION OF PROPERTY**

 

The Company requires minimalspace.  Currently, the Company’s Chairmanand CEO provides an office within his home at no charge to the Company untilthe office space needs increase.  TheCompany does not own or lease any property.

 

**ITEM 3.LEGAL PROCEEDINGS**

 

On July 16, 2002, Larry Rodammer (“Rodammer”)filed a complaint against the Company, Mr. Phillip Lundquist and Christopher,in the Circuit Court of the 15th Judicial Circuit, Broward County, Floridaseeking damages in excess of $210,000 and other unspecified relief. Thelitigation arose out of the alleged failure to pay two promissory notes made byChristopher to Rodammer and one promissory note made by the Company to Rodammerand includes claims against Mr. Lundquist for alleged misrepresentations madeto Rodammer. On September 10, 2002, the Defendants filed an answer seekingdismissal of this case. Defendants intend to vigorously defend against theclaims in the complaint.

 

On March 14, 2002, Cellcards of Illinois,L.L.C. (“Cellcards”) filed a complaint against Annapolis in the State ofIllinois seeking actual damages of approximately $100,000, and otherunspecified relief. The litigation arose out of orders placed by Annapolis withCellcards for prepaid cellular products. In July 2002, judgment was entered againstAnnapolis.  The Company discontinued theoperations of Annapolis in 2002. Annapolis has no assets.

 

In November 2001, Cellmart Wireless, Inc. (“Cellmart”)filed a complaint against the Company, Annapolis and Messrs. Lundquist andBrisker in the State of Texas seeking actual damages of approximately $40,000and unspecified exemplary damages. The litigation arose out of a Non-ExclusiveDistributor Agreement dated July 6, 2001 by and between Cellmart and theCompany, and the conduct of the parties thereunder. On August 13, 2002,judgment was entered in favor of the plaintiff against the defendants. TheCompany discontinued the operations of Annapolis in 2002.  Annapolis has no assets.

 

**ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

 

We have notsubmitted a matter to a vote of our shareholders during the fourth quarter of2003.

 

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**PART II**

 

**ITEM 5.MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS**

 

There has notbeen any, and currently is no, public trading of the Company’s common stock atthis time.

 

We have not declared dividendson our common stock and do not anticipate paying dividends on our common stockin the foreseeable future.

 

The followingshares were sold without registration by the Company during the year 2003.

 

We sold 74,000shares of our common stock for prices ranging from ten cents per share to twenty-fivecents per share.

 

All of the shares were issuedin reliance on the exemption from registration provided by the Securities Actof 1933, as amended and applicable state laws.

 

**ITEM 6.MANAGEMENT’S DISCUSSION AND ANALYSIS**

 

**Resultsof Operations**

 

General.The following discussion and analysis explains trends in the Company’sfinancial condition and results of operations for the years ended December 31,2003 and 2002. The consolidated financial statements and notes theretoincluded, as part of the financial statements should be read in conjunctionwith these discussions.

 

The Companyincurred a net loss for the twelve months ended December 31, 2003 of $391,309.This compares to a loss of $1,518,486 for the same period in 2002, a decreaseof $1,127,177 or 74.2%. The decrease is primarily due to a write-down ofinvestments of $1,008,466 in 2002 versus no write-down in 2003 and an increasein professional fees of $11,705 in 2003 from 2002.

 

The Company hadno revenue for the year ended December 31, 2003 compared to $88,564 for theyear ended December 31, 2002.

 

In 2002 thecompany generated sales of $88,564 through the sale of its POS terminals andprepaid products. Due to a lack of funding, the Company discontinued sales andmarketing of these products in early 2002.

 

**Liquidityand Sources of Capital**

 

As of December31, 2003, the Company had a cash balance of $29,108, and $29,108 in totalassets. The Company’s current liabilities increased from $1,960,244 to $2,162,039.

 

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Net cash usedby operations was $229,402 related to the costs and expense of generatingbusiness, which primarily consisted of fees to consultants. Net cash providedby financing activities was $252,390 for the year ended December 31, 2003 resultingfrom the sale of common stock and loans from a related party.  Notes payable on demand of $935,000 bear aninterest rate of 12% per annum with twelve month maturity and notes payable ondemand of $200,000 bear an interest rate of 13% per annum with twelve monthmaturity.

 

The Company has financed its operationsprimarily through the sale of its common stock.

 

The Company believes that its cash needs forthe next twelve months will be met by debt financings, loans from itsdirectors, officers and shareholders and private placements of Companysecurities. However, there can be no assurances that the Company will besuccessful in obtaining sufficient funds needed for the development of itsbusiness.  If the Company issues moreshares of its common stock its shareholders may experience dilution in thevalue per share of their common stock. See “Risk Factors.”

 

The Company continues to investigate theavailability, source and terms for external financing, but has not entered into any agreements at this time for such financing. The Company cannot assurethat funds will be available from any source, or, if available, that the Companywill be able to obtain the funds on terms agreeable to it. Any additional debtthe Company incurs could result in a substantial portion of its cash flows fromoperating activities, if any, being used for the payment of principal andinterest on the indebtedness, and could render the Company more vulnerable tocompetitive challenges and economic downturns.

 

**ITEM 7.FINANCIAL STATEMENTS.**

 

The financial statementsrequired by Item 310 of Regulation S-B are attached hereto as Exhibit A.

 

**ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE**

 

None.

 

**ITEM 8A.CONTROLS AND PROCEDURES**

 

Based on theirmost recent evaluation, which was completed in consultation with managementwithin 90 days of the filing of this Form 10-KSB, the Company’s Chief ExecutiveOfficer and Chief Financial Officer believe the design and operation of theCompany’s disclosure controls and procedures (as defined in Rules 13a-14 and15d-14 promulgated under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”)) were effective as of the date of such evaluation in timely alerting theCompany’s management to material information required to be included in thisForm 10-KSB and other Exchange Act filings. There were no significant changes(including corrective

 

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actions withregard to significant deficiencies or material weaknesses) in the Company’sinternal controls or other factors that could significantly affect thesecontrols subsequent to the date of the evaluation described above.

 

**ITEM 8B.OTHER INFORMATION**

 

None.

 

**PART III**

 

**ITEM 9.DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCEWITH SECTIONS 16(A) OF THE EXCHANGE ACT**

 

The following table sets forthcertain information concerning directors, executive officers and key employeesof the Company:

 
| **Name**             | ** ** | **Age** | ** ** | **Position**                                                 |
|----------------------|------------|---------|------------|--------------------------------------------------------------|
|                 |       |    |       |                                                         |
| Philip E.  Lundquist |       | 68      |       | Chairman,  CEO, President, Secretary, Treasurer and Director |
|                 |       |    |       |                                                         |
| Ronan A.  Harris     |       | 32      |       | Director                                                     |
|                 |       |    |       |                                                         |
| Stephen E.  Brisker  |       | 52      |       | Director                                                     |

 

The term of office of eachdirector of the Company ends at the next annual meeting of the Company’sstockholders or when such director’s successor is elected and qualifies. Nodate for the annual meeting of stockholders is specified in the Company’sbylaws or has been fixed by the Board of Directors. Pursuant to the Company’sbylaws, the date of the annual meeting is to be determined by the current Boardof Directors.

 

The following information setsforth the backgrounds and business experience of the directors, executiveofficers and key employees:

 

PHILIP E.LUNDQUIST - Mr. Lundquist has served as Secretary/Treasurer and a Chairman ofthe Board for the Company since  January,1999. On May 1, 2003 Mr. Lundquist was elected President and Chief ExecutiveOfficer of the Company. From 1988 to the present he has served as President ofLundquist Advisory Company, a company which provides corporate finance advisoryservices. He has held management positions at Reynolds Securities, MontgomerySecurities, Inc. and Alex Brown & Sons in Miami, San Francisco andBaltimore, He was Director of Corporate Finance of Deloitte & Touche,Atlanta, Georgia. Mr. Lundquist graduated from Williams College with abachelors degree in political science and economics in 1957. During 1962 to1964, he attended the Institute of Investment Banking at the Wharton School ofBusiness, University of Pennsylvania.

 

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RONAN A. HARRIS - In January 1999, Mr. Harrisfounded Aubyn Management Ltd. which specializes in developing new markets andbusiness opportunities in Japan. From 1996 to January 1999 he was employed as aconsultant for JJ International, a financial consulting business. FromDecember, 1993 to February, 1996 he was employed as an engineer at MitsubishiCorporation. He graduated with honors from The University of Dublin with adegree in Electrical Engineering

 

STEPHEN E.BRISKER - Mr. Brisker is the President and CEO of DVS Communications, ExecutiveVice-President of Business Affairs for Smash Media and is Vice-President andChief Operating Officer of Skgrilla Entertainment. From September 1999 throughSeptember 2000 he was employed as Executive Vice President of Urban RadioBroadcasting, LLC. He founded Sheridan Gospel Network in September of 1996 andremained with that company until May 1999. From July 1995 through July 1997 hewas President and CEO of Hartcom, Inc. WKND Radio. He received a bachelorsdegree from Yale University, a masters degree from Wesleyan University andattended New York University of School of Law.

 

At this time, the board has no committees,including an audit, nominating or compensation committee.

 

There are no familyrelationships among any of the officers or directors of the Company.

 

**Compliancewith Section 16**

 

Section 16(a)of the Securities Exchange Act of 1934 requires our directors, executiveofficers and persons who own more than ten percent of a registered class of ourequity securities, to file with the Securities and Exchange Commission (“SEC”)initial reports of ownership and reports of changes in ownership of commonstock and our other equity securities. Officers, directors and greater thanten-percent beneficial owners are required by SEC regulations to furnish uswith copies of all Section 16(a) reports they file. During the year endedDecember 31, 2003, Form 4s for Mr. Lundquist and Mr. Harris were not timelyfiled.   In addition, no personaffiliated with the Company who is or has been required to file reports withthe SEC has filed any reports to date.

 

The Companyhas adopted a code of ethics which is included in the exhibits.

 

**ITEM 10.EXECUTIVE COMPENSATION**

 

The following table sets forththe compensation earned by the Company’s executive officers during the lastthree fiscal years and other officers who received compensation in excess of$100,000 during any of the last three fiscal years. In accordance with Item402(a)(5), the Company has omitted certain columns from the table required byItem 402(b).

 

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**SummaryCompensation Table**

 
| ** **                                       | ** ** | **Annual Compensation** | ** ** | ** **     | ** ** | **Long Term Compensation**     |
|--------------------------------------------------|------------|-------------------------|------------|----------------|------------|--------------------------------|
| **Name and Principal  Position**                 | ** ** | **Year**                | ** ** | **Salary ($)** | ** ** | **Other Annual  Compensation** | ** ** | **Securities Underlying  Options/SARs (#)** |
|                                             |       |                    |       |           |       |                           |   |   |
| Stephen E.  Brisker                              |       | 2003                    |       |           |       | $                              | 6,450 | (1) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| President  and CEO Director (resigned 5/1/03)    |       | 2002                    |       | $              | 97,00      |                           | $ | 43,000 | (2)(3) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Victor A.  Hinojosa  President  Resigned 7/20/01 |       | 2001                    |       |           |       | $                              | 44,100 | (2) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Philip E.  Lundquist                             |       | 2003                    |       |           |       | $                              | 6,500 | (4) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Chairman,  Secretary                             |       | 2002                    |       |           |       | $                              | 93,553 | (4) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Director,  Treasurer                             |       | 2001                    |       |           |       | $                              | 65,380 | (4) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Ronan A.  Harris  Director                       |       | 2001                    |       |           |       | $                              | 8,800 | (5) |   |
|                                             |       |                    |       |           |       |                           |   |   |
| Yoshio  Komatsubara  Director  Resigned 6/29/01  |       | 2001                    |       |           |       | $                              | 10,000 | (5) |   |
|                                                  |            |                         |            |                |            |                                |  |  |  |  |

 

----

(1) Includes$6,500 for consulting services and expense reimbursement.

 

(2) Includes$15,000 for consulting services and expense reimbursement and 2,500,000 sharesof common stock valued at $125,000.

 

(3) 2,500,000shares of common stock issued to Brisker and valued at $125,000.

 

(4) Paid forconsulting services and expense reimbursement for business development.

 

(5) Includes86,000 shares of common stock valued at $26,000.

 

15

----

 

**Compensationof Directors**

 

The Companyhas no standard arrangement for compensation of its directors for any servicesprovided as director, including services for committee participation or forspecial assignments.

 

**ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS**

 

The followingtable sets forth the beneficial ownership of our outstanding common stock of;(i) each of our executive officers, (ii) each of our directors and (iii) allexecutive officers and directors as a group. There is not any other person orgroup known by us to own beneficially more than 5% of our outstanding commonstock. Beneficial ownership is determined in accordance with the rules of theSEC and generally includes voting or investment power with respect tosecurities. Except as indicated by footnote, the persons named in the tablebelow have sole voting power and investment power with respect to all shares ofcommon stock shown as beneficially owned by them. The percentage of beneficialownership is based on 32,759,274 shares of common stock outstanding as of July11, 2005.

 
| **Name and Address of Beneficial  Owner**                               | ** ** | **Amount and Nature of  Beneficial Ownership** | ** ** | **Percent of  Class** | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------------------------|------------|-----------------------|------------|
|                                                                    |       |                                           |       |                  |       |
| Philip E.  Lundquist, 1108 Oglethorpe Drive, Atlanta, GA 30319          |       | 5,647,619                                      |       | 17.2                  | %          |
|                                                                    |       |                                           |       |                  |       |
| Ronan A.  Harris, 98 The Drive Castleton Celbridge Co. Kildare, Ireland |       | 489,323                                        |       | 1.5                   | %          |
|                                                                    |       |                                           |       |                  |       |
| All Officers  and Directors as a Group                                  |       | 6,136,942                                      |       | 18.7                  | %          |

 

**ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**

 

The followinginformation summarizes certain transactions the Company has engaged in the lasttwo years or proposed to engage in involving the Company’s executive officers,directors, more than 5% stockholders, or immediate family members of suchpersons.

 

16

----

 

During the year2003, the Company paid Stephen Brisker, our President and Chief ExecutiveOfficer $6,450.

 

During fiscalyear 2003, the Company paid Philip E. Lundquist $6,500 for expensereimbursement for business development.

 

During fiscalyear 2002 the Company paid Philip Lundquist, our Secretary/Treasurer, $93,553for consulting services and business development. Philip Lundquist purchased465,419 shares for ten cents a share from the Company in October, 2002.

 

Currently, theCompany’s Chairman and CEO provides an office within his home at no charge tothe Company until the office space needs increase.

 

**ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K.**

 

•                  Exhibits.

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                     |
|-----------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |       |                                                                                                                                                                                                                |
| 2.1             |       | Agreement  and Plan of Reorganization between Silver Strike Nevada and Christopher  Partners, Inc., dated January 29, 1999. (Incorporated by reference to Exhibit  No. 8.1, to Form 10-SB, filed January 13, 2000.) |
|            |       |                                                                                                                                                                                                                |
| 3.1             |       | Articles of  Incorporation of Silver Strike Mining Company, Inc. (Incorporated by  reference to Exhibit No. 2.1, to Form 10-SB, filed January 13, 2000.)                                                            |
|            |       |                                                                                                                                                                                                                |
| 3.2             |       | Certificate  of Amendment to the Articles of Incorporation filed July 8, 1996.  (Incorporated by reference to Exhibit No. 2.2, to Form 10-SB, filed January  13, 2000.)                                             |
|            |       |                                                                                                                                                                                                                |
| 3.3             |       | Articles of  Merger filed July 18, 1996. (Incorporated by reference to Exhibit No. 2.3, to  Form 10-SB, filed January 13, 2000.)                                                                                    |
|            |       |                                                                                                                                                                                                                |
| 3.4             |       | Certificate  of Amendment to Articles of Incorporation filed July 23, 1998. (Incorporated  by reference to Exhibit No. 2.4, to Form 10-SB, filed January 13, 2000.)                                                 |
|            |       |                                                                                                                                                                                                                |
| 3.5             |       | Certificate  of Amendment to Articles of Incorporation filed February 12, 1999.  (Incorporated by reference to Exhibit No. 2.5, to Form 10-SB, filed January  13, 2000.)                                            |
|            |       |                                                                                                                                                                                                                |
| 3.6             |       | Articles of  Share Exchange filed February 26, 1999. (Incorporated by reference to Exhibit  No. 2.6, to Form 10-SB, filed January 13, 2000.)                                                                        |

 

17

----

 
| 3.7    |   | Amended and  Restated Bylaws of Vubotics, Inc. (Incorporated by reference to Exhibit No.  2.7, to Form 10-SB, filed January 13, 2000.)                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                       |
| 4.1    |   | Preferred  Stock Document. (Incorporated by reference to Exhibit No. 4.1 to Form 10-QSB,  filed November 13, 2000.)                                                                        |
|   |   |                                                                                                                                                                                       |
| 10.1   |   | Exclusive  Sales Representative Agreement between Truscom and XTec, dated October 11,  2000. (Incorporated by reference to Exhibit No. 10.1 to the Form 10-QSB,  filed November 13, 2000.) |
|   |   |                                                                                                                                                                                       |
| 10.2   |   | Consultant  Agreement between Halifax and Columbia Financial Group, Inc., dated January  2, 2001. (Incorporated by reference to Exhibit 10.2 to the Form 10-KSB, filed  March 29, 2001).   |
|   |   |                                                                                                                                                                                       |
| 10.3   |   | Employment  Agreement between Stephen E. Brisker and Halifax International, Inc., dated  June 1, 2001. (Incorporated by reference to Exhibit 10.3 to Form 10-KSB filed  April 15, 2002)    |
|   |   |                                                                                                                                                                                       |
| 14.0   |   | Code of  Ethics.                                                                                                                                                                           |
|   |   |                                                                                                                                                                                       |
| 31.    |   | Rule 13a – 14(a)/15d-14(a) Certification of Chief Executive Officer.                                                                                                                  |
|   |   |                                                                                                                                                                                       |
| 31.1   |   | Rule 130a-14(a)/15d-14(a) Certification of Chief Financial Officer.                                                                                                                        |
|   |   |                                                                                                                                                                                       |
| 32.    |   | Statement of  Chief Executive Officer pursuant to Section 1350 of Title 18 of the United  States Code                                                                                      |
|   |   |                                                                                                                                                                                       |
| 32.    |   | Statement of  Chief Financial Officer pursuant to Section 1350 of Title 18 of the United  States Code.                                                                                     |

 

**ITEM 14. PRINCIPALACCOUNTANT FEES AND SERVICES**

 

Audit fees

 

Fees billedfor professional services rendered for the audit of our annual financial statementsfor the fiscal year ended December 31, 2003 and the reviews of the financialstatements included in Forms 10-QSB for this fiscal year are $7,500.

 

FinancialInformation Systems Design and Implementation Fees.

 

None.

 

All Other Fees

 

None.

 

18

----

 

**SIGNATURES**

 

In accordance with Section 13 or15(d) of the Exchange Act, the registrant caused this report to be signed onits behalf by the undersigned, hereunto duly authorized.

 
|                     | VUBOTICS,  INC.                       |
|--------------------------|---------------------------------------|
|                     |                                  |
| Dated:  October 14, 2005 | /s/ Philip  E. Lundquist              |   |
|                     |                                  |
|                     | Philip E.  Lundquist, CEO/President   |
|                     |                                  |
|                     | Director and  Chief Financial Officer |

 

In accordance with the ExchangeAct, this report has been signed below by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated.

 
| Dated:  October 14, 2005 | /s/ Philip  E. Lundquist              |   |
|--------------------------|---------------------------------------|--------|
|                     |                                  |
|                     | Philip E.  Lundquist, CEO/President   |
|                     |                                  |
|                     | Director and  Chief Financial Officer |
|                     |                                  |
| Dated:  October 14, 2005 | /s/ Ronan A.  Harris                  |   |
|                     |                                  |
|                     | Ronan A.  Harris, Director            |
|                     |                                  |
|                     | /s/ Roy  Dantzman                     |   |
|                     |                                  |
|                     | Roy  Dantzman, Director               |
|                          |                                       |        |  |  |

 

19

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**EXHIBIT A**

 

 

**VUBOTICS, INC. AND SUBSIDIARIES**

 

**(FKA HALIFAX INTERNATIONAL, INC.)**

 

**CONSOLIDATED FINANCIAL STATEMENTS**

 

**DECEMBER 31, 2003**

 

20

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**TABLE OF CONTENTS**

 
| Independent  Registered Public Accounting Firm’s Report |   |
|--------------------------------------------------------------|--------|
|                                                         |   |
| Consolidated  Balance Sheet                                  |   |
|                                                         |   |
| Consolidated  Statements of Operations                       |   |
|                                                         |   |
| Consolidated  Statements of Stockholders’ Deficit       |   |
|                                                         |   |
| Consolidated  Statements of Cash Flows                       |   |
|                                                         |   |
| Notes to  Consolidated Financial Statements                  |   |

 

21

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**INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT**

 

 

To the Board of Directors and ShareholdersVubotics, Inc. (FKA Halifax International, Inc.)

Atlanta, Georgia

 

We have audited theaccompanying consolidated balance sheet of Vubotics, Inc. (a Nevada corporation)and subsidiaries as of December 31, 2003, and the related consolidatedstatements of operations, stockholders’ deficit and cash flows for the yearthen ended. These consolidated financial statements are the responsibility ofthe Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audit.

 

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statementsare free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the consolidatedfinancial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall consolidated financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Vubotics, Inc. and subsidiaries asof December 31, 2004, and the results of its operations and cash flows for theyear then ended, in conformity with U.S. generally accepted accountingprinciples.

 

The accompanying consolidatedfinancial statements have been prepared assuming that the Company will continueas a going concern. As discussed in Note 7 to the financial statements, theCompany has suffered recurring losses and has a net capital deficiency. Theseconditions raise substantial doubt about its ability to continue as a goingconcern. Management’s plans in regard to these matters are also described inNote 7. The financial statements do not include any adjustments relating to therecoverability and classification of asset carrying amounts or the amount andclassification of liabilities that might result should the Company be unable tocontinue as a going concern.

 

Bongiovanni and Associates, CPA’s, PA

Cornelius, North Carolina

 

July 19, 2005

 

22

----

 

**INDEPENDENT AUDITORS’ REPORT**

 

 

To the Boardof Directors and Shareholders Vubotics, Inc.

Atlanta,Georgia

 

We haveaudited the accompanying balance sheets of Vubotics, Inc. as of December 31,2002 and the related statements of income, retained earnings and cash flows forthe twelve months then ended. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion onthese statements based on our audits.

 

We haveconducted our audits in accordance with generally accepted auditing standards.These standards require that we plan and perform the audit to obtain reasonableassurance that the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the consolidated financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement as well as evaluating the overall consolidated financial statementpresentation. We believe that our audit provide a reasonable basis for ouropinion.

 

In ouropinion, the financial statements referred to above present fairly in allmaterial respects the financial position of Vubotics, Inc. as of December 31,2002 and the results of their operations and their cash flows for the twelvemonths then ended in conformity with generally accepted accounting principlesconsistently applied.

 

The accompanying consolidatedfinancial statements have been prepared assuming that the Company will continueas a going concern. As discussed in Note 2 to the financial statements, theCompany has suffered recurring losses and has a net capital deficiency. Theseconditions raise substantial doubt about its ability to continue as a goingconcern. Management’s plans in regard to these matters are also described inNote 1. The financial statements do not include any adjustments relating to therecoverability and classification of asset carrying amounts or the amount andclassification of liabilities that might result should the Company be unable tocontinue as a going concern.

 

**THEJEFFRIES GROUP**

 

CertifiedPublic Accountants

Atlanta,Georgia

July 11, 2005

 

23

----

 

**VUBOTICS, INC. AND SUBSIDIARIES**

**(FKA HALIFAX INTERNATIONAL, INC.)**

**CONSOLIDATED BALANCE SHEET**

**DECEMBER 31, 2003**

 
| **ASSETS**                                                                                              |   |       |      |
|---------------------------------------------------------------------------------------------------------|--------|------------|-----------|
|                                                                                                    |   |       |      |
| **Current  Assets**                                                                                     |   |       |      |
| Cash                                                                                                    |   | $          | 29,108    |   |
| **Total current assets**                                                                                |   | 29,108     |      |
|                                                                                                    |   |       |      |
| **Total Assets**                                                                                        |   | $          | 29,108    |   |
|                                                                                                    |   |       |      |
| **LIABILITIES  AND STOCKHOLDERS’ DEFICIT**                                                         |   |       |      |
|                                                                                                    |   |       |      |
| **Current  Liabilities**                                                                                |   |       |      |
| Notes payable                                                                                           |   | $          | 1,135,000 |   |
| Accrued interest                                                                                        |   | 807,348    |      |
| Accrued expenses                                                                                        |   | 140,000    |      |
| Due to related party                                                                                    |   | 50,888     |      |
| Accounts payable                                                                                        |   | 28,803     |      |
| **Total current liabilities**                                                                           |   | 2,162,039  |      |
|                                                                                                    |   |       |      |
| **Commitments  and Contingencies – Note 6**                                                        |   |       |      |
|                                                                                                    |   |       |      |
| **Stockholders’  (Deficit)**                                                                       |   |       |      |
| Common stock, $0.001 par value, 50,000,000  shares authorized, 18,972,486 shares issued and outstanding |   | 18,972     |      |
| Common stock to be issued                                                                               |   | 1,777      |      |
| Additional paid-in capital                                                                              |   | 6,578,602  |      |
| Accumulated deficit                                                                                     |   | (8,732,282 | )         |
|                                                                                                    |   | (2,132,931 | )         |
|                                                                                                    |   |       |      |
| **Total Liabilities and Stockholders’ Deficit**                                                    |   | $          | 29,108    |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

24

----

 

**VUBOTICS, INC. AND SUBSIDIARIES**

**(FKA HALIFAX INTERNATIONAL, INC.)**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002**

 
| ** **                                            | ** ** | **2003**   | ** ** | **2002**   | ** ** |
|-------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenue                                               |       | $          | —     |       | $          | 88,564 |   |
|                                                  |       |       |       |       |       |
| Cost of  sales                                        |       | —     |       | 11,415     |       |
|                                                  |       |       |       |       |       |
| Gross profit                                          |       | —     |       | 77,149     |       |
|                                                  |       |       |       |       |       |
| Consulting  and professional fees                     |       | 211,737    |       | 200,032    |       |
| Selling,  general and administrative expenses         |       | 41,438     |       | 248,937    |       |
|                                                  |       | 253,175    |       | 448,969    |       |
|                                                  |       |       |       |       |       |
| Loss from  operations                                 |       | (253,175   | )          | (371,820   | )          |
|                                                  |       |       |       |       |       |
| Other than temporary decline in value of  investment  |       | —     |       | (1,008,466 | )          |
| Interest expense                                      |       | (138,200   | )          | (138,200   | )          |
| Interest income                                       |       | 66         |       | —     |       |
|                                                  |       | (138,134   | )          | (1,146,666 | )          |
|                                                  |       |       |       |       |       |
| Net loss                                              |       | $          | (391,309   | )          | $          | (1,518,486 | ) |
|                                                  |       |       |       |       |       |
| Net loss per  common share - basic and fully diluted  |       | $          | (0.02      | )          | $          | (0.09 | ) |
|                                                  |       |       |       |       |       |
| Weighted  average number of common shares outstanding |       | 18,933,195 |       | 17,291,399 |       |

 

The accompanying notes are anintegral part of these consolidated financial statements.

 

25

----

 

**VUBOTICS, INC. AND SUBSIDIARIES**

**(FKA HALIFAX INTERNATIONAL, INC.)**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002**

 
| ** **                            | ** ** | ** **       | ** ** | ** **      | ** ** | **Common**     | ** ** | ** **          | ** ** | ** **             | ** ** | **Total**   | ** ** |
|---------------------------------------|------------|------------------|------------|-----------------|------------|----------------|------------|---------------------|------------|------------------------|------------|-------------|------------|
| ** **                            | ** ** | **Common Stock** | ** ** | **Stock to be** | ** ** | **Additional** | ** ** | **Accumulated**     | ** ** | **Stockholders’** | ** ** |
| ** **                            | ** ** | **Shares**       | ** ** | **Amount**      | ** ** | **Issued**     | ** ** | **Paid-In Capital** | ** ** | **Deficit**            | ** ** | **Deficit** | ** ** |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Balance, December 31, 2001            |       | 16,345,554       |       | $               | 16,345     |           | $          | —              |       | $                      | 6,158,353  |        | $          | (6,822,487 | ) | $ | (647,789 | ) |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Issuance of common stock for cash     |       | 1,607,800        |       | 1,608           |       | —         |       | 209,693             |       | —                 |       | 211,301     |       |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Issuance of common stock for services |       | 850,132          |       | 850             |       | —         |       | —              |       | —                 |       | 850         |       |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Net loss                              |       | —           |       | —          |       | —         |       | —              |       | (1,518,486             | )          | (1,518,486  | )          |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Balance, December 31, 2002            |       | 18,803,486       |       | $               | 18,803     |           | $          | —              |       | $                      | 6,368,046  |        | $          | (8,340,973 | ) | $ | (1,954,124 | ) |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Issuance of common stock for cash     |       | 74,000           |       | 74              |       | —         |       | 14,826              |       | —                 |       | 14,900      |       |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Issuance of common stock for services |       | 95,000           |       | 95              |       | —         |       | 10,905              |       | —                 |       | 11,000      |       |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Common Stock to be issued             |       |             |       |            |       | 1,777          |       | 184,825             |       |                   |       | 186,602     |       |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Net loss                              |       | —           |       | —          |       | —         |       | —              |       | (391,309               | )          | (391,309    | )          |
|                                  |       |             |       |            |       |           |       |                |       |                   |       |        |       |
| Balance, December 31, 2003            |       | 18,972,486       |       | $               | 18,972     |           | $          | 1,777               |       | $                      | 6,578,602  |        | $          | (8,732,282 | ) | $ | (2,132,931 | ) |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

26

----

 

**VUBOTICS, INC. AND SUBSIDIARIES**

**(FKA HALIFAX INTERNATIONAL, INC.)**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002**

 
| ** **                                                                   | ** ** | **2003**   | ** ** | **2002**   | ** ** |
|------------------------------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Cash  Flows From Operating Activities**                                    |       |       |       |       |       |
| Net loss                                                                     |       | $          | (391,309   | )          | $          | (1,518,486 | ) |
| Adjustments  to reconcile net loss to net cash used in operating activities: |       |       |       |       |       |
| Issuance of common stock for services                                        |       | 11,000     |       | 850        |       |
| Other than temporary decline in value of  investment                         |       | —     |       | 1,008,466  |       |
| Increase  (decrease) in operating liabilities:                               |       |       |       |       |       |
| Accounts payable                                                             |       | 12,707     |       | 39,500     |       |
| Accrued expenses                                                             |       | —     |       | 140,000    |       |
| Accrued interest                                                             |       | 138,200    |       | 138,200    |       |
| Net cash  used in operating activities                                       |       | (229,402   | )          | (191,470   | )          |
|                                                                         |       |       |       |       |       |
| **Cash  Flows From Investing Activities**                                    |       |       |       |       |       |
| Investment in Related Companies                                              |       | —     |       | 1,000      |       |
| Net cash  provided by investing activities                                   |       | —     |       | 1,000      |       |
|                                                                         |       |       |       |       |       |
| **Cash  Flows From Financing Activities**                                    |       |       |       |       |       |
| Proceeds from issuance of common stock                                       |       | 14,900     |       | 211,300    |       |
| Proceeds from common stock to be issued                                      |       | 186,602    |       | —     |       |
| Loans from related party                                                     |       | 50,888     |       | —     |       |
| Net cash  provided by financing activities                                   |       | 252,390    |       | 211,300    |       |
|                                                                         |       |       |       |       |       |
| Net increase  in cash                                                        |       | 22,988     |       | 20,830     |       |
| Cash –  beginning of year                                               |       | 6,120      |       | (14,710    | )          |
| Cash – end  of year                                                     |       | 29,108     |       | 6,120      |       |
|                                                                         |       |       |       |       |       |
| Supplemental  disclosures of cash flow information                           |       |       |       |       |       |
| Cash paid for interest                                                       |       | $          | —     |       | $          | — |   |
| Cash paid for income taxes                                                   |       |       |       |       |       |
|                                                                         |       | $          | —     |       | $          | — |   |

 

The accompanying notes are an integral partof these consolidated financial statements.

 

27

----

 

**VUBOTICS, INC. AND SUBSIDIARIES**

 

**(FKA HALIFAX INTERNATIONAL, INC.)**

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

**DECEMBER 31, 2003 AND 2002**

 

**NOTE1 - ORGANIZATION AND DESCRIPTION OF BUSINESS**

 

***Business Operations***

 

In 2004, Halifax International, Inc. changedits name to Vubotics, Inc. (the “Company”).

 

The Company isa holding company with two subsidiaries, X-VU, LLC and Christopher Partners,Inc.  The Company conducted no businessoperations in 2003.

 

**NOTE2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

***Principles of Consolidation***

 

The consolidated financialstatements include the books of Vubotics, Inc. (formerly Silver Strike MiningCompany) and its wholly owned subsidiaries X-VU, LLC and Christopher Partners,Inc. All inter-company transactions and accounts have been eliminated

 

***Revenue Recognition***

 

The Company recognizes revenuewhen persuasive evidence of an arrangement exists, fees are fixed ordeterminable, delivery has occurred and collection is reasonably assured.  Revenue is not recognized until title haspassed and risk of loss has transferred to the customer, which occurs at timeof shipment. Services to be performed and revenue thus recognized have occurredand acknowledged by the customer in a manner that readily suggests in form andin substance that resources have been consumed and utilized and have met thosecustomer expectations, terms and conditions of which are usually set incontractual format.

 

***Stock Based Compensation***

 

The Company has issued and mayissue stock in lieu of cash for certain transactions. The fair value of thestock, which is based on comparable cash purchases, third party

 

28

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quotations, or the value ofservices, whichever is more readily determinable, is used to value thetransaction

 

***Use of Estimates***

 

The preparation of financialstatements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenue andexpenses during the reporting period. Actual results could differ from thoseestimates.  It is possible that the significantestimates used will change within the next year.

 

***Impairment of Long-Lived Assets***

 

The Company reviews long-livedassets for possible impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. If suchassets are considered to be impaired, the impairment to be recognized ismeasured by the amount by which the carrying value exceeds the fair value ofthe assets, as measured by discounted cash flows over the remaining life of theassets.

 

***Basic and Diluted Per Common Share***

 

Under Statement of FinancialAccounting Standards (“SFAS”) No. 128, “Earnings Per Share,” basic  earnings per common  share is computed bydividing income available to common stockholders by the weighted average numberof common shares assumed to be outstanding during the period ofcomputation.  Diluted earnings per shareis computed similar to basic earnings per share except that the denominator isincreased to include the number of additional common shares that would havebeen outstanding if the potential common shares had been issued and if theadditional common shares were dilutive. Because the Company has incurred net losses, basic and diluted loss pershare are the same since additional potential common shares would beanti-dilutive.

 

***Income Taxes***

 

Deferred income tax assets andliabilities are recognized for the estimated tax effects of temporarydifferences between the financial reporting and tax reporting bases of assetsand liabilities and for loss carryforwards based on enacted tax laws and rates.A valuation allowance is used to eliminate deferred income tax assets to theamount that is more likely than not to be utilized.

 

***Significant Recent Accounting Pronouncements***

 

In January 2003, the FinancialAccounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, “Consolidationof Variable Interest Entities, an Interpretation of ARB No. 51.”  The primary objectives of FIN No. 46 are toprovide guidance on the identification of entities for which control isachieved through means

 

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other than voting rights(variable interest entities, or (“VIEs”) and how to determine when and whichbusiness enterprise should consolidate the VIE. This new model for consolidation applies to an entity for which either:(1) the equity investors don’t have a controlling financial interest; or (2)the equity investment at risk is insufficient to finance that entity’sactivities without receiving additional subordinated financial support fromother parties.  In addition, FIN No. 46requires that both the primary beneficiary and all other enterprises with asignificant variable interest in a VIE make additional disclosures.  As amended in December 2003, the effectivedates of FIN No. 46 for public entities that are small business issuers, asdefined (“SBIs”), are as follows: (a) For interests in special-purpose entities(“SPEs”): periods ended after December 15, 2004.  The December 2003 amendment of FIN No. 46also includes transition provisions that govern how an SBI which previouslyadopted the pronouncement (as it was originally issued) must account forconsolidated VIEs.  Management hasconcluded that the Company does not have any VIEs and does not believe FIN No.46 will have any significant effect on the Company’s future financialstatements.

 

In May 2003, the FASB issuedSFAS No. 150, “Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity.”  SFAS No. 150 establishes standards for how acompany classifies and measures certain financial instruments withcharacteristics of both liabilities and equity, and is effective for publiccompanies as follows: (i) in November 2003, the FASB issued FASB Staff Position(“FSP”) No. 150-3, which defers indefinitely (a) the measurement andclassification guidance of SFAS No. 150 for all mandatory redeemablenon-controlling interests in (and issued by) limited-life consolidatedsubsidiaries, and (b) SFAS No. 150’s measurement guidance for other types ofmandatory redeemable non-controlling interests, provided they were createdbefore November 5, 2003; (ii) for financial instruments entered into ormodified after May 31, 2003 that are outside the scope of FSP No. 150-3; and(iii) otherwise, at the beginning of the first interim period beginning afterJune 15, 2003.  The Company adopted SFASNo. 150 (as amended) on the aforementioned effective dates.  The adoption of this pronouncement did nothave a material impact on the Company’s results of operations or financialcondition.

 

In November 2004, the FASBissued SFAS No. 151, “Inventory Costs – an amendment of ARB No. 43, Chapter 4,”which clarifies the accounting for abnormal amounts of idle facility expense,freight, handling costs and wasted material. In Chapter 4 of Accounting Research Bulletin (“ARB”) No. 43, paragraph 5previously stated that “.under some circumstances, items such as idle facilityexpense, excessive spoilage, double freight, and re-handling costs may be soabnormal as to require treatment as current period charges..”  SFAS No. 151 requires that such items berecognized as current-period charges, regardless of whether they meet thecriterion of so abnormal (an undefined term). This pronouncement also requires that allocation of fixed productionoverhead to the costs of conversion be based on the normal capacity of theproduction facilities.  SFAS No. 151 is effectivefor inventory costs incurred in years beginning after June 15, 2005.  Management does not believe thispronouncement will have a significant impact on its future financialstatements.

 

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In December 2004, the FASBissued SFAS No. 123-R, “Share-Based Payment,” which requires that thecompensation cost relating to share- based payment transactions (including thecost of all employee stock options) be recognized in the financialstatements.  That cost will be measuredbased on the estimated fair value of the equity or liability instrumentsissued.  SFAS No. 123-R covers a widerange of share-based compensation arrangements including share options,restricted share plans, performance-based awards, share appreciation rights,and employee share purchase plans.  SFASNo. 123-R replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” andsupersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.”  As originally issued, SFAS No. 123established as preferable a fair-value-based method of accounting forshare-based payment transactions with employees.  However, that pronouncement permittedentities to continue applying the intrinsic-value model of APB Opinion No. 25,provided that the financial statements disclosed the pro forma net income orloss based on the preferable fair-value method. Small Business Issuers are required to apply SFAS No. 123-R in the firstinterim or annual reporting period that begins after December 15, 2005.  Thus, the Company’s financial statements willreflect an expense for (a) all share-based compensation arrangements grantedafter December 31, 2005 and for any such arrangements that are modified,cancelled, or repurchased after that date, and (b) the portion of previousshare-based awards for which the requisite service has not been rendered as ofthat date, based on the grant-date estimated fair value. Management has notdetermined the future effect of this pronouncement on its future financialstatements.

 

The FASB issued SFAS No. 153, “Exchangesof Nonmonetary Assets, anamendment of APB Opinion  No. 29, Accounting for Nonmonetary Transactions.”  The amendments made by SFAS No. 153 are basedon the principle that exchanges of nonmonetary assets should be measured usingthe estimated fair value of the assets exchanged.  SFAS No. 153 eliminates the narrow exceptionfor nonmonetary exchanges of similar productive assets, and replaces it with abroader exception for exchanges of nonmonetary assets that do not havecommercial substance. A nonmonetary exchange has “commercial substance” if thefuture cash flows of the entity are expected to change significantly as aresult of the transaction.  Thispronouncement is effective for nonmonetary exchanges in fiscal periodsbeginning after June 15, 2005. Management does not believe that this pronouncement will have asignificant effect on its future financial statements.

 

Other recent accountingpronouncements issued by the FASB (including its Emerging Issues Task Force),the American Institute of Certified Public Accountants, and the SEC did not orare not believed by management to have a material impact on the Company’spresent or future consolidated financial statements.

 

**NOTE3 - NOTES PAYABLE**

 

The Company’s notes payable atDecember 31, 2003 are summarized as follows:

 

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| 12% notes payable to a related party. The  notes are unsecured.  At the option of  the holder, the notes are convertible into common stock at $1 per share. |   | $       | 725,000   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|-----------|--------|
|                                                                                                                                                             |   |    |      |
| 13% notes  payable to a related party. The notes are unsecured.                                                                                                  |   | 200,000 |      |
|                                                                                                                                                             |   |    |      |
| 12% notes  payable to a Stockholder. The notes are unsecured.                                                                                                    |   | 210,000 |      |
|                                                                                                                                                             |   |    |      |
| Total notes  payable                                                                                                                                             |   | $       | 1,135,000 |   |

 

The aggregate principal amountsof the notes payable above maturing in subsequent years as of December 31, 2003are as follows:

 
| Amount currently outstanding: |   | $ | 1,135,000 |   |
|-------------------------------|--------|---|-----------|--------|
| Currently  Due:               |   | $ | 1,135,000 |   |

 

**NOTE4 - INCOME TAXES**

 

The effective tax rate variesfrom the maximum federal statutory rate as a result of the following items forthe twelve months ended December 31, 2003 and 2002:

 
| ** **                                                  | ** ** | **December 31,  2003** | ** ** | **December 31,  2002** | ** ** |
|-------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
|                                                        |       |                   |       |                   |       |
| Tax benefit  computed at the maximum federal statutory rate |       | (34.0                  | )%         | (34.0                  | )%         |
|                                                        |       |                   |       |                   |       |
| State tax  rate, net of federal tax benefit                 |       | (4.5                   | )          | (4.5                   | )          |
|                                                        |       |                   |       |                   |       |
| Increase in  valuation allowance                            |       | 38.5                   |       | 38.5                   |       |
|                                                        |       |                   |       |                   |       |
| Effective  income tax rate                                  |       | 0.0                    | %          | 0.0                    | %          |

 

Deferred income tax assets andthe related valuation allowances result principally from the potential taxbenefits of net operating loss carryforwards.

 

The Company has recorded avaluation allowance to reflect the uncertainty of the ultimate utilization ofthe deferred tax assets as follows:

 

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| ** **                | ** ** | **December 31,  2003** | ** ** | **December 31,  2002** | ** ** |
|---------------------------|------------|------------------------|------------|------------------------|------------|
|                      |       |                   |       |                   |       |
| Deferred tax  assets      |       | $                      | 3,360,000  |                   | $          | 3,211,275 |   |
|                      |       |                   |       |                   |       |
| Less  valuation allowance |       | (3,360,000             | )          | (3,211,275             | )          |
|                      |       |                   |       |                   |       |
| Net deferred  tax assets  |       | $                      | —     |                   | $          | — |   |

 

For financial statementpurposes, no tax benefit has been reported as the Company has had significantlosses in recent years and realization of the tax benefits is uncertain.Accordingly, a valuation allowance has been established in the full amount ofthe deferred tax asset.

 

At December 31, 2003, theCompany had net operating loss carryforwards of approximately $8,732,000, whichwill be available to offset future taxable income. These net operating losscarryforwards expire at various dates through 2023. The utilization of the netoperating loss carryforwards is dependent upon the Company’s ability togenerate sufficient taxable income during the carryforward period

 

**NOTE5 - RELATED PARTY TRANSACTIONS**

 

Operating feesand expenses of $6,500 were paid to Philip E. Lundquist, an officer andshareholder, during the year ended December 31, 2003.

 

**NOTE6 - COMMITMENTS AND CONTINGENCIES**

 

***Litigation***

 

On July 16,2002, Larry Rodammer (“Rodammer”) filed a complaint against the Company, Mr.Phillip Lundquist and Christopher Partners, Inc., a wholly owned subsidiary ofthe Company, in the Circuit Court of the 15th Judicial Circuit In and ForBroward County, Florida seeking damages in excess of $210,000 and otherunspecified relief. The litigation arose out of failure to pay two promissorynotes made by Christopher Partners, Inc. to Rodammer and one promissory notemade by the Company to Rodammer and includes claims against Mr. Lundquist foralleged misrepresentations made to Rodammer. On September 10, 2002, theDefendants filed an answer seeking dismissal of this case. Defendants intend tovigorously defend against the claims in the complaint.

 

On March 14, 2002, Cellcards of Illinois,L.L.C. (“Cellcards”) filed a complaint against Annapolis Valley Ventures, Inc.,a wholly owned subsidiary of the Company (“Annapolis”) in the State of Illinoisseeking actual damages of approximately $100,000, and other unspecified relief.The litigation arose out of orders placed by Annapolis with Cellcards forprepaid cellular products. In July 2002, judgment was entered against

 

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Annapolis. This amount is included in accrued expenses in the accompanying balancesheet at December 31, 2003.

 

In November 2001, Cellmart Wireless, Inc. (“Cellmart”)filed a complaint against the Company, Annapolis Valley Ventures, Inc. andMessrs. Lundquist and Brisker in the State of Texas seeking actual damages ofapproximately $40,000 and unspecified exemplary damages. The litigation aroseout of a NonExclusive Distributor Agreement dated July 6, 2001 by and betweenCellmart and the Company, and the conduct of the parties thereunder. On August13, 2002, judgment was entered in favor of the plaintiff against thedefendants.  This amount is included inaccrued expenses in the accompanying balance sheet at December 31, 2003.

 

**NOTE7 – GOING CONCERN**

 

These consolidated financialstatements have been prepared in accordance with generally accepted accountingprinciples applicable to a going concern, which contemplates the realization ofassets and the satisfaction of liabilities and commitments in the normal courseof business. However, the Company has incurred net losses of $391,309 and$1,518,486 for the years ended December 31, 2003 and 2002, respectively. TheCompany also had a working capital deficiency of $2,132,931 and an equitydeficiency of $2,132,931 at December 31, 2003 and has significant currentlymaturing debt and related accrued interest thereto. The Company has raisedcapital to fund the operating activities primarily through private equityinfusions from stockholders, loans through stockholders and other demand loans.The Company intends on financing its future development activities and itsworking capital needs largely from the sale of public equity securities withsome additional funding from other traditional financing sources, includingterm notes, until such time that funds provided by operations are sufficient tofund working capital requirements.

 

These factors, among others,raise substantial doubt about the Company’s ability to continue as a goingconcern for a reasonable period of time.

 

The consolidated financialstatements do not include any adjustments relating to the recoverability andclassification of recorded asset amounts.

 

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