**UNITED STATES**

 

**SECURITIES AND EXCHANGECOMMISSION**

 

**Washington,D. C. 20549**

 

**FORM 10-KSB/A**

 

**AmendmentNo. 2**

 

**(Mark One)**

 

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

 

**For thefiscal year ended December 31, 2002**

 

**OR**

 

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

 

**CommissionFile Number 000-28883**

 

**VUBOTICS, INC.**

(Name of smallbusiness issuer in its charter)

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

 

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

(Address ofPrincipal Executive Offices) (Zip Code)

 

**(404) 816-6100**

(Registrant’stelephone number, including area code)

 

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

 

Securitiesregistered under Section 12(g) of the Exchange Act:

 

**CommonStock, $0.001 par value**

(Title ofclass)

 

Check whether the issuer (1) filed allreports 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 suchfiling requirements for the past 90 days. Yes oNo ý

 

Check if there is no disclosure of delinquentfilers in response to Item 405 of Regulation S-B contained in this form, and nodisclosure will be contained, to the best of registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in Part IIIof this Form 10-KSB or any amendment to this Form 10-KSB o.

 

Indicate by check mark whether the registrantis a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o  No ý

 

Registrant’s revenues for the twelve monthperiod ended December 31, 2002: $88,564.

 

The aggregate market value of the shares ofCommon Stock held by non-affiliates of the Registrant, as of March 15,2003 was $1,800,000 as reported by the trading and market services of theNASDAQ OTC Bulletin Board.

 

As of September 27, 2005, the Registranthad 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**

 

This AmendmentNo. 2 to our Annual Report on Form 10-KSB/A amends our Annual Reporton Form 10-KSB for the fiscal year ended December 31, 2002 that wasoriginally filed on May 8, 2003 in order to correctly account forinvestments in subsidiaries under the equity method.  Further, we evaluated the goodwill of Truscom, Inc.and have determined that additional impairment existed.  We have written down the asset to zero.  Except as set forth herein, there are nofurther changes to the Company’s original filing of Form 10-KSB for thetwelve months ended December 31, 2002. The Company does not undertake toupdate any item on its original filing of Form 10-KSB other than items setforth herein.

 

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

 

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

 

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Form 10-KSB  for the fiscal year ended December 31,2003;

Form 10-KSB  for the fiscal year ended December 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 September 30,2003;

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 September 30,2004;

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

Form 10-QSB  for the quarter ended June 30, 2005.

 

**PART I**

 

**ITEM 1. DESCRIPTION OF BUSINESS**

 

**Forward LookingStatements**

 

This annual report on Form 10-KSBincludes 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.

 

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**GeneralBackground**

 

The Companywas originally incorporated on February 27, 1996 in the state of Nevada asSilver Strike Mining Company, Inc. On February 12, 1999, SilverStrike changed its name to Halifax International, Inc. On February 26,1999, Halifax acquired Christopher Partners, Inc., a Georgia corporation,as a wholly-owned subsidiary (“Christopher”). At the time of acquisition, Christopher Partners had a wholly ownedsubsidiary, Palau Engineering & Construction Co., Ltd., a Bermudacorporation (“Palau”).  In November 2000the Company discontinued the business operations of both Christopher andPalau.  On June 14, 2000, Halifaxformed a wholly-owned subsidiary, Truscom, Inc., a Japanese corporation (“Truscom”).  The Company discontinued the businessoperations of Truscom in 2002. On June 20, 2001, Halifax incorporated awholly owned subsidiary, Annapolis Valley Ventures, Inc. in the state ofDelaware (“Annapolis”). The Company 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 the stateof Georgia (“X-VU”).

 

**BusinessOperations**

 

The Company isa holding company with one operating subsidiary; X-VU, LLC.

 

X-VU, LLC wasformed to market specialty consumer electronic products and services acrossNorth America and via the Internet. The Company is negotiating an exclusivemaster distribution agreement with a Chinese manufacturer to begin selling aunique virtual reality headgear that enhances the viewing experience of gamesand other types of video entertainment. Other follow-on products may includeportable DVD players and accessories. X-VU will seek to add products thatrepresent innovation at a compelling value. The Company’s immediate objectiveis to quickly build sales of the headgear which has features not otherwiseavailable in the marketplace, primarily a light-emitting diode (LED)manufactured by Kopin Corporation (Nasdaq: KOPN), a leading semi-conductorcompany. X-VU intends to market its products through a combination of directsales from a website, TV, print and Internet advertising and indirect salesfrom video rental and retail electronics chain stores. Whenever possible, X-VUwill outsource business functions to minimize fixed costs and to enhance itsoperational flexibility in pursuit of maximizing short-term cash flows.

 

The Company hadan investment in Truscom, a company specializing in secure internet technologyfor financial transactions and governmental applications. Through contractsentered into with X-Tec, a Florida based company holding the exclusive patenton “Mediametrics”‘ the latest in secure “net” technology, Truscom had acquiredthe nonexclusive rights to distribute this technology, in its variousapplications, throughout Asia and parts of Europe.

 

Mediametrics(TM)is a non-finite state based, security solution that enables business andorganizations in the public and private sectors to securely process, store, andmanage proprietary information. Key areas of focus include secure solutions forelectric commerce, embedded systems, transaction and data processing, accesscontrol,

 

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communications,and Internet banking. As of December 31, 2002 the Company wrote down itsinvestment in Truscom, and ceased operations in Truscom.

 

ThroughAnnapolis the Company had offered prepaid products and services, specializingin wireless technology, long distance telephone services and local dial tone. Lackof capital has restricted sales. Due to this lack of capital, the Company hasdiscontinued the operations of Annapolis.

 

**Risk Factors**

 

**Material RisksRelated To The Company’s Business**

 

***TheCompany has incurred significant operating losses since inception and theCompany cannot assure you that the Company will ever achieve profitability.***

 

Since the Company’s inception, the Companyhas incurred losses every quarter. The extent of the Company’s future operatinglosses and the timing of profitability are highly uncertain, and the Companymay never achieve or sustain profitability. The Company has incurredsignificant net losses since inception, including net losses of approximately$1,518,486 in 2002 and $932,758 in 2001. At December 31, 2002, the Companyhas an accumulated deficit of $8,340,973. The Company anticipates that theCompany will continue to incur operating losses for the foreseeable future andit is possible that the Company will never generate substantial revenues fromproduct sales.

 

***TheCompany is a development stage company with a limited operating history thatmakes it impossible to reliably predict future growth and operating results.***

 

The Company has not demonstrated that theCompany 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.

 

***Ifthe Company fails to develop products, the Company will not achieve significantrevenues and the Company would be unlikely to be able to continue its currentlevel of operations and would be unable to meet its long-term growth plans.***

 

The Company’s future business and financialsuccess will depend on its ability to introduce new products and upgradeexisting products into the marketplace. Developing new products and upgrades toexisting and future products imposes burdens on the Company’s management. Thisprocess is costly, and the Company cannot assure any

 

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investor that the Company will be able tosuccessfully develop any products or enhance any future products. If the Company’sproduct development efforts are unsuccessful, the Company will have incurredsignificant costs without recognizing the expected benefits and businessprospects will suffer.

 

***TheCompany’s future capital needs are uncertain. The Company will need to raiseadditional funds in the future and these funds may not be available onacceptable terms or at all.***

 

The Company believes that the Company’scurrent cash and cash equivalents are not sufficient to meet projectedoperating requirements through December 2003. Therefore, the Company mayseek additional funds from public and private stock or debt offerings,borrowings or other sources prior to such time. The Company’s capitalrequirements 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 of these factors, the Companywill need to raise additional funds, and these funds may not be available onfavorable terms, or at all. Furthermore, if the Company issues equity or debtsecurities to raise additional funds, the Company’s existing stockholders mayexperience dilution, and the new equity or debt securities may have rights,preferences and privileges senior to those of the Company’s existingstockholders. In addition, if the Company raises additional funds throughcollaboration, licensing or other similar arrangements, it may be necessary torelinquish valuable rights to the Company’s potential products or proprietarytechnologies, or grant licenses on terms that are not favorable to the Company.If the Company cannot raise funds on acceptable terms, the Company may not beable to develop or enhance the Company’s products, execute the Company’sbusiness plan, take advantage of future opportunities, or respond tocompetitive pressures or unanticipated customer requirements.

 

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***TheCompany’s success will depend on the Company’s ability to attract and retainkey personnel, programming and engineering staff. If the Company fails toattract and retain key personnel and programming staff, the Company may beunable to succeed in its market.***

 

The Company believes future success willdepend on the Company’s ability to manage its growth successfully, includingattracting and retaining programmers, engineers and other highly skilledpersonnel. The Company’s key employees may terminate their employment with theCompany at any time.  Hiring qualifiedmanagement and technical personnel is difficult due to the limited number ofqualified professionals.  If the Companyfails to attract and retain personnel, particularly management and technicalpersonnel, the Company may not be able to succeed.

 

***Ifthe Company fails to protect its intellectual property rights, others may takeadvantage of the Company’s ideas and compete directly against the Company.***

 

The Company relies in part on patents, tradesecrets and other proprietary technologies to protect the Company’s products.The Company may not be able to obtain or maintain adequate U.S. patentprotection for new products or ideas, or prevent the unauthorized disclosure ofthe Company’s technical knowledge or other trade secrets by the Company’semployees. Additionally, the laws of foreign countries may not protect theCompany’s intellectual property rights to the same extent as the laws of theU.S. Even if the Company’s intellectual property rights are adequatelyprotected, litigation may be necessary to enforce them, which could result insubstantial costs to the Company and substantial diversion of the attention ofthe Company’s management and key technical employees. If the Company is unableto adequately protect the Company’s intellectual property, the Company’scompetitors could use the Company’s intellectual property to develop newproducts or enhance their existing products. This could harm the Company’scompetitive position, decrease its market share or otherwise harm its business.

 

**Risks Related ToCapital Structure**

 

***Thereis no assurance of an established public trading market, which would adverselyaffect the ability of investors in the Company to sell their securities in thepublic markets.***

 

•                  Asof December 31, 2002, the Company’s common stock is not actively traded inany market.

 

***Thelimited prior public market and trading market may cause volatility in themarket price of******theCompany’s common stock in the event it becomes listed.***

 

Currently, the Company’s stock is not tradedon any market.  In the absence of anactive trading market:

 

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

 

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•                  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.***

 

To be considered to be a “penny stock,”securities must meet one or more of the definitions in Rules 15g-2 through15g-6 promulgated under Section 15(g) of the Securities Exchange Actof 1934, as amended. These include but are not limited to the following: (i) thestock trades at a price less than $5.00 per share; (ii) it is NOTtraded on a “recognized” national exchange; (iii) it is NOT quoted on theNASDAQ Stock Market, or even if so, has a price less than $5.00 per share;or (iv) is issued by a company with net tangible assets less than$2.0 million, if in business more than a continuous three years, or withaverage revenues of less than $6.0 million for the past three years. Theprincipal result or effect of being designated a “penny stock” is thatsecurities broker-dealers cannot recommend the stock but must trade in it on anunsolicited basis. Section 15(g) of the Securities Exchange Act of1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC requirebroker-dealers dealing in penny stocks to provide potential investors with adocument disclosing the risks of penny stocks and to obtain a manually signedand dated written receipt of the document before effecting any transaction in apenny stock for the investor’s account.

 

Potential investors in the Company’s commonstock are urged to obtain and read such disclosure carefully before purchasingany shares that are deemed to be “penny stock.” Moreover, Rule 15g-9requires broker-dealers in penny stocks to approve the account of any investorfor transactions in such stocks before selling any penny stock to thatinvestor. This procedure requires the broker-dealer to (i) obtain from theinvestor information concerning his or her financial situation, investmentexperience and investment objectives; (ii) reasonably determine, based onthat information, that transactions in penny stocks are suitable for theinvestor and that the investor has sufficient knowledge and experience as to bereasonably capable of evaluating the risks of penny stock transactions; (iii) providethe investor with a written statement setting forth the basis on which thebroker-dealer made the determination in (ii) above; and (iv) receivea signed and dated copy of such statement from the investor, confirming that itaccurately reflects the investor’s financial situation, investment experienceand investment objectives. Compliance with these requirements may make it moredifficult for holders of the Company’s common stock to resell their shares tothird parties or to otherwise dispose of them in the market or otherwise.

 

***Uponsuch time as******the Company’s stock is activelytraded, shares eligible for future sale may adversely affect the market priceof the Company’s common stock, as the***

 

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***futuresale of a substantial amount of the Company’s stock in the public marketplacecould reduce the price of******theCompany’s common stock.***

 

From time to time, certain of the Company’sstockholders may be eligible to sell all or some of their shares of commonstock by means of ordinary brokerage transactions in the open market pursuantto Rule 144, promulgated under the Securities Act (“Rule 144”),subject to certain limitations. In general, pursuant to Rule 144, astockholder (or stockholders whose shares are aggregated) who has satisfied aone-year holding period may, under certain circumstances, sell within anythree-month period a number of securities which does not exceed the greater of1% of the then outstanding shares of common stock or the average weekly tradingvolume of the class during the four calendar weeks prior to such sale. Rule 144also permits, under certain circumstances, the sale of securities, without anylimitations, by a non-affiliate of the Company that has satisfied a two-yearholding period.

 

***Uponsuch time as******the Company’s stock is activelytraded, if the Company fails to maintain effective internal controls overfinancial reporting, the price of the Company’s******common stock may be adverselyaffected.***

 

The Company’s internal controls overfinancial reporting may have weaknesses and conditions that need to beaddressed, the disclosure of which may have an adverse impact on the price ofthe Company’s common stock. The Company is required to establish and maintainappropriate internal controls over financial reporting. Failure to establishthose controls, or any failure of those controls once established, could adverselyimpact the Company’s public disclosures regarding the Company’s business,financial condition or results of operations. In addition, management’sassessment of internal controls over financial reporting may identifyweaknesses and conditions that need to be addressed in the Company’s internalcontrols over financial reporting or other matters that may raise concerns forinvestors. Any actual or perceived weaknesses and conditions that need to beaddressed in the Company’s internal controls over financial reporting,disclosure of management’s assessment of the Company’s internal controls overfinancial reporting or disclosure of the Company’s public accounting firm’sattestation to or report on management’s assessment of the Company’s internalcontrols over financial reporting may have an adverse impact on the price ofthe Company’s common stock.

 

***TheCompany does not foresee paying cash dividends in the foreseeable future.***

 

The Company has not paid cash dividends on its stock and it does notplan to pay cash dividends on its stock in the foreseeable future.

 

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**ITEM 2. DESCRIPTION OF PROPERTY**

 

The Company requires minimal space.  Currently, the Company’s Chairman and CEOprovides an office within his home at no charge to the Company until the officespace needs increase.  The Company doesnot own or lease any property.

 

**ITEM 3. LEGAL PROCEEDINGS**

 

On July 16,2002, Larry Rodammer (“Rodammer”) filed a complaint against the Company, Mr. PhillipLundquist and Christopher Partners, Inc., a wholly owned subsidiary of theCompany, in the Circuit Court of the 15th Judicial Circuit In and For BrowardCounty, Florida seeking damages in excess of $210,000 and other unspecifiedrelief. The litigation arose out of failure to pay two promissory notes made byChristopher Partners, Inc. to Rodammer and one promissory note made by theCompany to Rodammer and includes claims against Mr. Lundquist for allegedmisrepresentations made to Rodammer. On September 10, 2002, the Defendantsfiled an answer seeking dismissal of this case. Defendants intend to vigorouslydefend against the claims in the complaint.

 

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

 

In November 2001,Cellmart Wireless, Inc. (“Cellmart”) filed a complaint against theCompany, Annapolis Valley Ventures, Inc. 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 NonExclusiveDistributor 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 against Annapolis.

 

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

 

We have notsubmitted a matter to a vote of our shareholders during the fourth quarter of 2002.

 

**PART II**

 

**ITEM 5. MARKET FOR COMMON STOCK AND RELATEDSTOCKHOLDER MATTERS**

 

There is noactive public trading of the Company’s common stock as of December 31,2002.

 

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We have not declared dividends on our common stock and do notanticipate paying dividends on our common stock in the foreseeable future.

 

The followingshares were sold without registration by the Company during the fourth quarter2002.

 

On October 17,2002 we sold 50,000 shares to one investor for ten cents a share.

 

On November 12,2002 we sold 100,000 shares to one investor for ten cents a share.

 

On November 29,2002 we sold 15,000 shares to one investor for ten cents a share

 

On December 12, 2002 wesold 40,000 shares to one investor for twenty-five cents a share

 

On December 17, 2002 wesold 200,000 to one investor for twenty-five cents a share.

 

All of the shares were issued in relianceexemptions from registration provided by of the Securities Act of 1933, asamended and applicable state laws.

 

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

 

**Results of Operations**

 

General.The following discussion and analysis explains trends in the Company’sfinancial condition and results of operations for the years ended December 31,2002 and 2001. The consolidated financial statements and notes thereto shouldbe read in conjunction with these discussions.

 

The Companyincurred a net loss for the twelve months ended December 31, 2002 of $1,518,486which included a write down of investments of $1,008,466. This compares to aloss of $932,758 for the same period in 2001, an increase of $585,728 or 62.8%.

 

The Companyrecorded revenues of $88,564 for the year ended December 31, 2002 comparedto $446,529 for the year ended December 31, 2001.

 

The sales of$88,564 were through the sale of its POS terminals and prepaid products.  As a result of insufficient funding, theCompany discontinued sales resulting in a decline of $357,965 from the year2001.

 

The increasein net loss is the result of a write down of investment of $1,008,466 comparedto a write down of $233,520 for the twelve month ended December 31, 2001.Other factors included an increase in consulting fees of $50,399.

 

•                  Decrease inprofessional fees of $159,800 as the result of our undertaking no acquisitionactivities during the year.

 

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•                  Decrease ininterest expenses of $900 for the year ended December 31, 2002 over thesame period ending November 31, 2001.

 

•                  Decrease intravel expenses of $95,669 for the year ended December 31, 2002 over thesame period ending December 31, 2001 as the result of no internationalactivities.

 

•                  Decrease inentertainment and promotion expenses of $16,047 as the result of fewer clients.

 

•                  Decrease insalaries and wages of $48,900 as a result of a reduction in employees.

 

•                  Decrease in rentexpenses of $84,524 as a result of eliminating office space.

 

**Liquidity and Sourcesof Capital**

 

As of December 31,2002, the Company had a cash balance of $6,120, and $6,120 in total assets. Currentliabilities increased from $1,642,544 to $1,960,244. Net cash used byoperations was $191,470 related to the costs and expense of generating business,which consisted of primarily fees to consultants . Net cash provided byfinancing activities was $211,300 for the year ended December 31, 2002 resultingfrom the sale of common stock. Net cash provided by investment activities was$1,000.  Notes payable on demand of $935,000bear an interest rate of 12% per annum with twelve month maturity and notespayable on demand of $200,000 bear an interest rate of 13% per annum withtwelve month maturity.

 

The Companyhas financed its operations primarily through the sale of its common stock.

 

The Companybelieves that its cash needs for the next twelve months will be met by debtfinancings, loans from its directors, officers and shareholders and privateplacements of Company securities. However, there can be no assurances that theCompany will be successful in obtaining sufficient funds needed for thedevelopment of its business.  If theCompany issues more shares of its common stock its shareholders may experiencedilution in the value per share of their common stock.  See “Risk Factors.”

 

The Companycontinues to investigate the availability, source and terms for externalfinancing, but has not entered in to any agreements at this time for suchfinancing. The Company cannot assure that funds will be available from anysource, or, if available, that the Company will be able to obtain the funds onterms agreeable to it. Any additional debt the Company incurs could result in asubstantial portion of its cash flows from operating activities, if any, beingused for the payment of principal and interest on the indebtedness, and couldrender the Company more vulnerable to competitive challenges and economicdownturns.

 

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**ITEM 7. FINANCIAL STATEMENTS.**

 

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

 

**ITEM 8. CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

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 ChiefExecutive Officer and Chief Financial Officer believe the design and operationof the Company’s disclosure controls and procedures (as defined in Rules 13a-14and 15d-14 promulgated under the Securities Exchange Act of 1934, as amended(the “Exchange Act”)) were effective as of the date of such evaluation intimely alerting the Company’s management to material information required to beincluded in this Form 10-KSB and other Exchange Act filings. There were nosignificant changes (including corrective actions with regard to significantdeficiencies or material weaknesses) in the Company’s internal controls orother factors that could significantly affect these controls subsequent to thedate of the evaluation described above.

 

**ITEM 8B. OTHER INFORMATION**

 

None.

 

**PART III**

 

**ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS,PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTIONS 16(A) OF THEEXCHANGE ACT**

 

The following table sets forth certaininformation concerning directors, executive officers and key employees of theCompany:

 
| **Name**            | ** ** | **Age** | ** ** | **Position**                                                 |
|---------------------|------------|---------|------------|--------------------------------------------------------------|
|                |       |    |       |                                                         |
| Philip E. Lundquist |       | 67      |       | Chairman, CEO, President, Secretary,  Treasurer and Director |
| Ronan A. Harris     |       | 31      |       | Director                                                     |
| Stephen E. Brisker  |       | 51      |       | Director                                                     |

 

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The term of office of each director of theCompany ends at the next annual meeting of the Company’s stockholders or whensuch director’s successor is elected and qualifies. No date for the annualmeeting of stockholders is specified in the Company’s bylaws or has been fixedby the Board of Directors. Pursuant to the Company’s bylaws, the date of theannual meeting is to be determined by the current Board of Directors.

 

The following information sets forth thebackgrounds and business experience of the directors, executive officers andkey employees:

 

PHILIP E. LUNDQUIST- Mr. Lundquist has served as Secretary/Treasurer and a Chairman of theBoard for the Company since  January,1999. From 1988 to the present he has served as President of Lundquist AdvisoryCompany, a company which provides corporate finance advisory services. He hasheld management positions at Reynolds Securities, Montgomery Securities, Inc.and Alex Brown & Sons in Miami, San Francisco and Baltimore, He wasDirector of Corporate Finance of Deloitte & Touche, Atlanta, Georgia. Mr. Lundquistgraduated from Williams College with a bachelors degree in political scienceand economics in 1957. During 1962 to 1964, he attended the Institute ofInvestment Banking at the Wharton School of Business, University ofPennsylvania.

 

RONAN A.HARRIS - In January 1999, Mr. Harris founded Aubyn Management Ltd.which specializes in developing new markets and business opportunities inJapan. From 1996 to January 1999 he was employed as a consultant for JJInternational, a financial consulting business. From December, 1993 toFebruary, 1996 he was employed as an engineer at Mitsubishi Corporation. Hegraduated with honors from The University of Dublin with a degree in ElectricalEngineering.

 

STEPHEN E.BRISKER - Mr. Brisker is the President and CEO of DVS Communications,Executive Vice-President of Business Affairs for Smash Media and isVice-President and Chief Operating Officer of Skgrilla Entertainment. From September 1999through September 2000 he was employed as Executive Vice President ofUrban Radio Broadcasting, LLC. He founded Sheridan Gospel Network in September of1996 and remained with that company until May 1999. From July 1995through July 1997 he was President and CEO of Hartcom, Inc. WKNDRadio. He received a bachelors degree from Yale University, a masters degreefrom Wesleyan University and attended New York University of School of Law.

 

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

 

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There are no family relationships among anyof the officers or directors of the Company.

 

**Compliance with Section 16**

 

Section 16(a) ofthe Securities Exchange Act of 1934 requires our directors, executive officersand persons who own more than ten percent of a registered class of our equitysecurities, to file with the Securities and Exchange Commission (“SEC”) initialreports of ownership and reports of changes in ownership of common stock andour other equity securities. Officers, directors and greater than ten-percentbeneficial owners are required by SEC regulations to furnish us with copies ofall Section 16(a) reports they file. During the year ended December 31,2002, Form 4s for Mr. Lundquist and Mr. Harris were not timelyfiled.   In addition, no person affiliatedwith the Company who is or has been required to file reports with the SEC hasfiled 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 forth the compensationearned by the Company’s executive officers during the last three fiscal yearsand other officers who received compensation in excess of $100,000 during anyof the last three fiscal years. In accordance with Item 402(a)(5), the Companyhas omitted certain columns from the table required by Item 402(b).

 

**Summary CompensationTable**

 
| ** **                                    | ** ** | ** **              | ** ** | ** **                     | ** ** | **Long Term Compensation**                  |
|-----------------------------------------------|------------|-------------------------|------------|--------------------------------|------------|---------------------------------------------|
| **Name and Principal  Position**              | ** ** | **Annual Compensation** | ** ** | **Other Annual  Compensation** | ** ** | **Securities Underlying  Options/SARs (#)** |
| **Year**                                      | ** ** | **Salary ($)**          |
|                                          |       |                    |       |                           |       |                                        |   |   |
| Stephen E. Brisker                            |       | 2002                    |       | $                              | 97,000     |                                        | $ | 43,000 | (1)(2) |   |
| President and CEO Director (resigned  5/1/03) |       |                    |       |                           |       |                                        |   |   |
|                                          |       |                    |       |                           |       |                                        |   |   |
| Victor A. Hinojosa                            |       | 2001                    |       |                           |       | $                                           | 44,100 | (2) |   |
| President                                     |       | 2000                    |       |                           |       | $                                           | 311,276 | (4) |   |
| Resigned 7/20/01                              |       | 1999                    |       |                           |       | $                                           | 198,376 | (3) |   |
|                                          |       |                    |       |                           |       |                                        |   |   |
| Philip E. Lundquist                           |       | 2002                    |       |                           |       | $                                           | 93,553 | (3) |   |
|                                               |            |                         |            |                                |            |                                             |  |  |  |  |

 

15

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| Chairman, Secretary |   | 2001   |   |   |   | $      | 65,380  | (3)    |   |
|---------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Director, Treasurer |   | 2000   |   |   |   | $      | 289,818 | (3)    |   |
|                |   |   |   |   |   |   |    |   |
| Ronan A. Harris     |   | 2001   |   |   |   | $      | 8,800   | (6)    |   |
| Director            |   | 2000   |   |   |   | $      | 26,000  | (5)    |   |
|                |   | 1999   |   |   |   |   |    |   |
|                |   |   |   |   |   |   |    |   |
| Yoshio Komatsubara  |   | 2001   |   |   |   | $      | 10,000  | (6)    |   |
| Director            |   | 2000   |   |   |   | $      | 10,000  | (7)(8) |   |
| Resigned 6/29/01    |   |   |   |   |   |   |    |   |

 

----

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

 

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

 

(3) Paidfor consulting services and expense reimbursement for business development.

 

(4) Includes$111,507 paid for consulting services and expense reimbursement and 100,000shares of common stock valued at $50,000.

 

(5) Includes44,000 shares of common stock valued at $8,800.

 

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

 

(7) Includes100,000 shares of common stock valued at $10,000.

 

(8) Includes50,000 shares of common stock valued at $10,000.

 

(9) Thisrepresents the portion of Mr. Brisker’s stock option that vested duringthe year ended December 31, 2002

 

**Employment Agreements**

 

On June 1,2001, we entered into a 4-year Employment Agreement with Mr. Brisker. Mr. Brisker’semployment term is automatically extended for an additional year after theinitial term unless we or Mr. Brisker terminate the Employment Agreementat least 180 days prior to the expiration of the initial term for any reason.We may terminate the Employment Agreement at any time “for cause” as defined inthat Agreement. The

 

16

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EmploymentAgreement provides for an annual salary of $180,000 and an annual bonus of upto $60,000 as determined by the Board of Directors. Pursuant to the terms ofthe Employment Agreement, we issued 500,000 shares of our common stock to Mr. Briskeron July 1, 2001 and we issued 2,000,000 shares of our common stock to Mr. Briskeron October 1, 2001. The Employment Agreement provides for the payment byus of premiums on a $1,000,000 ten (10) year term life insurance policy onMr. Brisker’s life. Such policy is to be owned by Mr. Brisker or hisdesignee. The Employment Agreement contains non-solicitation of our employees,non-solicitation of our customers and non-competition provisions.

 

In the eventwe have a “change of control” as defined in the Employment Agreement, Mr. Briskermay treat the Employment Agreement as terminated, and upon such termination Mr. Briskerwill be entitled to one year’s salary and all non-vested stock grants willimmediately vest.

 

Pursuant tothe terms of the Employment Agreement, we agreed to issue to Mr. Brisker500,000 shares of our common stock according to a schedule based on thenumber of our POS terminals installed.

 

Mr. Briskerwill be granted stock options to purchase 500,000 shares of our common stock.The stock options are to be incentive stock options and will be granted uponthe adoption of a stock option plan and its approval by our stockholders. Thesewere the only stock options which were provided for during 2001. The stockoptions vest at the rate of 166,666 shares each July 1, commencing July 1,2002.

 

**Option/SAR Grants inLast Fiscal Year**

 
| **Name**            | ** ** | **Number of  Securities  Underlying  Options/SARs  Granted (#)** | ** ** | **% of Total  Options/SARs  Granted to  Employees in  Fiscal Year (1)** | ** ** | **Exercise Price or  Base Price ($/Sh)** | ** ** | **Expiration Date** | ** ** |
|---------------------|------------|------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|------------------------------------------|------------|---------------------|------------|
|                |       |                                                             |       |                                                                    |       |                                     |       |                |       |   |
| Stephen E.  Brisker |       | 166,667                                                          | (1)        | 100                                                                     | %          | $                                        | 0.25       |                | 10/2004    |   |

 

----

(1) Thisrepresents the portion of Mr. Brisker’s stock option that vested duringthe year ended December 31, 2002.

 

**Compensation ofDirectors**

 

We do not haveany standard arrangement for compensation of our directors for any servicesprovided as director, including services for committee participation or forspecial assignments.

 

17

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**ITEM 11. SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

The followingtable sets forth the beneficial ownership of our outstanding common stock, asof March 15, 2003, of; (i) each of our executive officers, (ii) eachof our directors and (iii) all executive officers and directors as agroup. There is not any other person or group known by us to own beneficiallymore than 5% of our outstanding common stock. Beneficial ownership isdetermined in accordance with the rules of the SEC and generally includesvoting or investment power with respect to securities. Except as indicated byfootnote, the persons named in the table below have sole voting power andinvestment power with respect to all shares of common stock shown asbeneficially owned by them. The percentage of beneficial ownership is based on 32,759,274shares of common stock outstanding as of July 11, 2005.

 
| **Name and Address of Beneficial  Owner**                                         | ** ** | **Amount and Nature of  Beneficial Ownership** | ** ** | **Percent of  Class** | ** ** |
|-----------------------------------------------------------------------------------|------------|------------------------------------------------|------------|-----------------------|------------|
|                                                                              |       |                                           |       |                  |       |
| Victor A. Hinojosa, 515 East Las Olas  Blvd., #1150 Ft. Lauderdale, Florida 30319 |       | 887,334                                        |       | 2.7                   | %          |
|                                                                              |       |                                           |       |                  |       |
| 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                                             |       | 7,024,276                                      |       | 21.4                  | %          |

 

**ITEM 12. CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS.**

 

The followinginformation summarizes certain transactions we have either engaged in the lasttwo years or propose to engage in involving our executive officers, directors,more than 5% stockholders, or immediate family members of such persons.

 

During fiscalyear 2002, we paid Stephen Brisker, our President and Chief Executive Officer$97,000.

 

18

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During fiscalyear 2001, we paid Philip E. Lundquist $65,380 for salary and expense reimbursementfor business development.

 

During fiscalyear 2002 we paid Philip Lundquist, our Secretary/Treasurer, $93,553 forconsulting 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 10-KSB.**

 

•                  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.) |
|                 |       |            |   |
| 3                    | .7         |            | Amended and Restated  Bylaws of the Company (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 |

 

19

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|   |   |   | 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     |   |   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |
|   |   |   |                                                                                                                                                                                                              |
| 31     | .1     |   | Certification pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |
|   |   |   |                                                                                                                                                                                                              |
| 32     |   |   | Certification pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                    |

 

**ITEM 14. PRINCIPAL ACCOUNTANT FEES ANDSERVICES**

 

Audit fees

 

Fees billedfor professional services rendered for the audit of our annual financialstatements for the fiscal year and the reviews of the financial statementsincluded in Forms 10-QSB for this fiscal year are $5,000.

 

FinancialInformation Systems Design and Implementation Fees

 

None.

 

All Other Fees

 

None.

 

20

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**SIGNATURES**

 

In accordance with Section 13 or 15(d) ofthe Exchange Act, the registrant caused this report to be signed on its behalfby the undersigned, hereunto duly authorized.

 

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

 

In accordance with the Exchange Act, thisreport has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.

 

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

 

21

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**EXHIBIT A**

 

 

**VUBOTICS,INC. AND SUBSIDIARIES**

 

**CONSOLIDATEDFINANCIAL STATEMENTS**

 

**DECEMBER 31,2002**

 

22

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**TABLEOF CONTENTS**

 
| Independent Auditors’ Report                      |   |
|--------------------------------------------------------|--------|
|                                                   |   |
| Consolidated  Balance Sheet                            |   |
|                                                   |   |
| Consolidated Statements of Operations                  |   |
|                                                   |   |
| Consolidated  Statements of Stockholders’ Deficit |   |
|                                                   |   |
| Consolidated  Statements of Cash Flows                 |   |
|                                                   |   |
| Notes  to Consolidated Financial Statements            |   |

 

23

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

 

**THEJEFFRIES GROUP**

 

CertifiedPublic Accountants

Atlanta,Georgia

July 11,2005

 

24

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**VUBOTICS,INC. AND SUBSIDIARIES**

## **CONSOLIDATEDBALANCE SHEET**

**DECEMBER 31, 2002**

 
| **ASSETS**                                                                                              |   |       |      |
|---------------------------------------------------------------------------------------------------------|--------|------------|-----------|
|                                                                                                    |   |       |      |
| **Current  Assets**                                                                                     |   |       |      |
| Cash                                                                                                    |   | $          | 6,120     |   |
| **Total current assets**                                                                                |   | 6,120      |      |
|                                                                                                    |   |       |      |
| **Total Assets**                                                                                        |   | $          | 6,120     |   |
|                                                                                                    |   |       |      |
| **LIABILITIES  AND STOCKHOLDERS’ DEFICIT**                                                         |   |       |      |
|                                                                                                    |   |       |      |
| **Current  Liabilities**                                                                                |   |       |      |
| Notes payable                                                                                           |   | $          | 1,135,000 |   |
| Accrued interest                                                                                        |   | 669,148    |      |
| Accrued expenses                                                                                        |   | 140,000    |      |
| Accounts payable                                                                                        |   | 16,096     |      |
| **Total liabilities (all current)**                                                                     |   | 1,960,244  |      |
|                                                                                                    |   |       |      |
| **Stockholders’  (Deficit)**                                                                       |   |       |      |
| Common stock, $0.001 par value, 30,000,000  shares authorized, 18,803,486 shares issued and outstanding |   | 18,803     |      |
| Additional paid-in capital                                                                              |   | 6,368,046  |      |
| Accumulated deficit                                                                                     |   | (8,340,973 | )         |
|                                                                                                    |   | (1,954,124 | )         |
|                                                                                                    |   |       |      |
| **Total Liabilities and Stockholders’ Deficit**                                                    |   | $          | 6,120     |   |

 

Theaccompanying notes are an integral part of these consolidated financialstatements.

 

25

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**VUBOTICS,INC. AND SUBSIDIARIES**

## **CONSOLIDATED STATEMENTS OF OPERATIONS**

**FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001**

 
| ** **                                            | ** ** | **2002**   | ** ** | **2001**   | ** ** |
|-------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                            | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenue                                               |       | $          | 88,564     |       | $          | 446,529 |   |
|                                                  |       |       |       |       |       |
| Cost of  sales                                        |       | 11,415     |       | 334,022    |       |
|                                                  |       |       |       |       |       |
| Gross profit                                          |       | 77,149     |       | 112,507    |       |
|                                                  |       |       |       |       |       |
| Consulting  and professional fees                     |       | 200,032    |       | 309,427    |       |
| Selling,  general and administrative expenses         |       | 248,937    |       | 371,968    |       |
|                                                  |       | 448,969    |       | 681,395    |       |
|                                                  |       |       |       |       |       |
| Loss from  operations                                 |       | (371,820   | )          | (568,888   | )          |
|                                                  |       |       |       |       |       |
| Other than temporary decline in value of  investment  |       | (1,008,466 | )          | (233,520   | )          |
| Interest expense                                      |       | (138,200   | )          | (130,359   | )          |
| Interest income                                       |       | —     |       | 9          |       |
|                                                  |       | (1,146,666 | )          | (363,870   | )          |
|                                                  |       |       |       |       |       |
| Net loss                                              |       | $          | (1,518,486 | )          | $          | (932,758 | ) |
|                                                  |       |       |       |       |       |
| Net loss per  common share - basic and fully diluted  |       | $          | (0.09      | )          | $          | (0.08 | ) |
|                                                  |       |       |       |       |       |
| Weighted  average number of common shares outstanding |       | 17,291,399 |       | 12,082,267 |       |

 

Theaccompanying notes are an integral part of these consolidated financialstatements.

 

26

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**VUBOTICS,INC. AND SUBSIDIARIES**

## **CONSOLIDATED STATEMENTSOF STOCKHOLDER’S DEFICIT**

**FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001**

 
| ** **                            | ** ** | ** ** | ** ** | **Additional  Paid-In  Capital** | ** ** | **Accumulated  Deficit** | ** ** | **Total  Stockholders’  Deficit** | ** ** |
|---------------------------------------|------------|------------|------------|----------------------------------|------------|--------------------------|------------|----------------------------------------|------------|
| **Common Stock**                      |
| **Shares**                            | ** ** | **Amount** |
|                                  |       |       |       |                             |       |                     |       |                                   |       |   |   |
| Balance, December 31, 2000       |       | 8,385,221  |       | 8,385                            |       | 5,114,711                |       | (5,889,729                             | )          | (766,633 | ) |
| Issuance of common stock              |       | 3,008,583  |       | 3,008                            |       | 1,043,642                |       | —                                 |       | 1,046,650 |   |
| Issuance of common stock for services |       | 4,951,750  |       | 4,952                            |       | —                   |       | —                                 |       | 4,952 |   |
| Net loss                              |       | —     |       | —                           |       | —                   |       | (932,758                               | )          | (932,758 | ) |
| Balance, December 31, 2001       |       | 16,345,554 |       | $                                | 16,345     |                     | $          | 6,158,353                              |       | $ | (6,822,487 | ) | $ | (647,788 | ) |
| Issuance of common stock              |       | 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 | ) |

 

Theaccompanying notes are an integral part of these consolidated financialstatements.

 

27

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**VUBOTICS,INC. AND SUBSIDIARIES**

## **CONSOLIDATED STATEMENTSOF CASH FLOWS**

**FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001**

 
| ** **                                           | ** ** | **2002**   | ** ** | **2001**   | ** ** |
|------------------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Cash  Flows From Operating Activities**            |       |       |       |       |       |
| Net loss                                             |       | $          | (1,518,486 | )          | $          | (932,758 | ) |
| Adjustments:                                         |       |       |       |       |       |
| Issuance of common stock for services                |       | 850        |       | 4,952      |       |
| Other than temporary decline in value of  investment |       | 1,008,466  |       | 233,520    |       |
| Changes in:                                          |       |       |       |       |       |
| Accounts payable                                     |       | 39,500     |       | 222,000    |       |
| Accrued expenses                                     |       | 140,000    |       | —     |       |
| Accrued interest                                     |       | 138,200    |       | 137,079    |       |
| Net cash  used in operating activities               |       | (191,470   | )          | (335,207   | )          |
|                                                 |       |       |       |       |       |
| **Cash  Flows From Investing Activities**            |       |       |       |       |       |
| Investment in Related Companies                      |       | 1,000      |       | (608,466   | )          |
| Net cash  provided by (used in) investing activities |       | 1,000      |       | (608,466   | )          |
| ** **                                           |       |       |       |       |       |
| **Cash  Flows From Financing Activities**            |       |       |       |       |       |
| Proceeds from issuance of common stock               |       | 211,300    |       | 1,046,650  |       |
| Net cash  provided by financing activities           |       | 211,300    |       | 1,046,650  |       |
|                                                 |       |       |       |       |       |
| Net  (decrease) increase in cash                     |       | 20,830     |       | 102,977    |       |
| Cash –  beginning of period                     |       | (14,710    | )          | (117,687   | )          |
| Cash – end  of period                           |       | 6,120      |       | $          | (14,710    | ) |
|                                                 |       |       |       |       |       |
| Supplemental  disclosures of cash flow information   |       |       |       |       |       |
| Cash paid for interest                               |       | $          | —     |       | $          | — |   |

 

Theaccompanying notes are an integral part of these consolidated financialstatements.

 

SUPPLEMENTAL DISCLOSURES OF NON-CASHINVESTING AND FINANCING ACTIVITIES

 

During the twelve months ended December 31, 2002:

 

The Company issued 1,607,800 shares of commonstock for $211,301 cash.

 

The Company issued 850,132 shares of commonstock for services valued at $850.

 

28

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**VUBOTICS,INC. AND SUBSIDIARIES**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS**

 

**DECEMBER 31,2002 AND 2001**

 

**NOTE 1 - NATURE OFBUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

***Planof Reorganization and Acquisition***

 

On February 26,1999, Halifax International, Inc. (formerly Silver Strike Mining Company, “theCompany”) acquired Christopher Partners, Inc. through the issuance of5,414,111 shares of common stock. Shareholders of Silver Striker Mining Companyreceived a total of 1,022,500 shares of Halifax International, Inc. commonstock and $125,000. The Company also authorized a name change to HalifaxInternational, Inc. upon the effective date of the merger. This merger istreated as a reverse acquisition and, therefore, all historical information isthat of the accounting survivor Christopher Partners, Inc.

 

In November,2004, Halifax International, Inc. changed its name to Vubotics, Inc.

 

***Principlesof Consolidation***

 

The consolidated financial statements include the books of Vubotics, Inc.(formerly Silver Strike Mining Company) and its wholly owned subsidiariesChristopher Partners, Inc. and Truscom, Inc. All inter-companytransactions and accounts have been eliminated

 

***Propertyand Equipment***

 

Property and equipment are carried at cost.Depreciation is computed principally using the straight-line method over theestimated useful lives of the assets, generally three to seven years.

 

***RevenueRecognition***

 

Revenue is generally recognized whenpersuasive evidence of an arrangement exists, delivery occurs, the sales priceis fixed or determinable, and collectibility is reasonably assured.

 

***Useof Estimates***

 

The preparation of financial statements inconformity with generally accepted accounting principles requires management tomake estimates and assumptions that affect the

 

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reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenue and expenses duringthe reporting period. Actual results could differ from those estimates.Significant estimates used in preparing these financial statements includethose used in computing profit percentages under the percentage-of-completionrevenue recognition method. It is at least reasonable possible that thesignificant estimates used will change within the next year.

 

***Impairmentof Long-Lived Assets***

 

The Company reviews long-lived assets forpossible impairment whenever events or changes in circumstances indicate thatthe carrying amount of an asset may not be recoverable. If such assets areconsidered to be impaired, the impairment to be recognized is measured by theamount by which the carrying value exceeds the fair value of the assets, asmeasured by discounted cash flows over the remaining life of the assets.

 

***NetLoss Per Share***

 

Basic loss per common share is computed bydividing net loss available to common shareholders by the weighted averagenumber of common shares outstanding for the period.

 

***IncomeTaxes***

 

Deferred income tax assets and liabilitiesare recognized for the estimated tax effects of temporary differences betweenthe financial reporting and tax reporting bases of assets and liabilities andfor loss carryforwards based on enacted tax laws and rates. A valuation allowanceis used to eliminate deferred income tax assets to the amount that is morelikely than not to be utilized.

 

**NOTE 2 - GOINGCONCERN**

 

These consolidated financial statements havebeen prepared in accordance with generally accepted accounting principlesapplicable to a going concern, which contemplates the realization of assets andthe satisfaction of liabilities and commitments in the normal course ofbusiness. However, the Company has incurred net losses of $1,518,486 and $932,758for the twelve months ended December 31, 2002 and 2001. The Company alsohad a working capital deficiency of $1,954,124 and an equity deficiency of $1,954,124at December 31, 2002 and has significant currently maturing debt. TheCompany’s ability to continue as a going concern is contingent upon thesuccessful completion of additional financing arrangements and its ability toachieve and maintain profitable operations. Management has raised capital tofinance its day-to-day operations, and plans to raise more equity capital tofinance the operating and capital requirements of the Company. Amounts raisedwill be used to further develop the Company’s products, to provide financingfor marketing and promotion, to secure additional property and equipment, andfor other working capital purposes. While the Company is expending its bestefforts to

 

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achieve the above plans, there is noassurance that any such activity will generate the necessary funds foroperations. These financial statements do not include any adjustments thatmight result from this uncertainty.

 

**NOTE 3 - NOTESPAYABLE**

 

The Company’s notes payable at December 31,2002 are summarized as follows: 

 

| 12% notes payable to a related party. The  note is unsecured. |   | $       | 725,000   |   |
|---------------------------------------------------------------|--------|---------|-----------|--------|
|                                                          |   |    |      |
| 13% notes  payable to related party. The note is unsecured.   |   | 200,000 |      |
|                                                          |   |    |      |
| 12% notes  payable to a Stockholder. The note is unsecured.   |   | 210,000 |      |
|                                                          |   |    |      |
| Total notes  payable                                          |   | $       | 1,135,000 |   |

 

The aggregate principal maturing in subsequent years as of December 31, 2002 are as follows:

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

 

The terms of the above notes payable to a stockholder and a related party are not necessarily indicative of the terms that would have been incurred had comparable agreements been made with independent parties.

 

**NOTE 4 - INCOME TAXES**

 

The effective tax rate varies from themaximum federal statutory rate as a result of the following items for the twelvemonths ended December 31, 2002 and 2001:

 
| ** **                                                  | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                  | ** ** | **2002**              | ** ** | **2001**              | ** ** |
| 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                   | %          |

 

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

 

The Company has recorded a valuationallowance to reflect the uncertainty of the ultimate utilization of thedeferred tax assets as follows:

 
| ** **                | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|---------------------------|------------|------------------|------------|------------------|------------|
| ** **                | ** ** | **2002**         | ** ** | **2001**         | ** ** |
| Deferred tax  assets      |       | $                | 3,211,275  |             | $          | 2,626,658 |   |
| Less  valuation allowance |       | (3,211,275       | )          | (2,626,658       | )          |
| Net deferred  tax assets  |       | $                | —     |             | $          | — |   |

 

For financial statement purposes, no taxbenefit has been reported as the Company has had significant losses in recentyears and realization of the tax benefits is uncertain. Accordingly, avaluation allowance has been established in the full amount of the deferred taxasset.

 

At December 31, 2002, the Company hadnet operating loss carryforwards of approximately $8,340,973, which will beavailable to offset future taxable income. These net operating loss carryforwardsexpire in 2022. The utilization of the net operating loss carryforwards isdependent upon the Company’s ability to generate sufficient taxable incomeduring the carryforward period. At June 30, 2005, the Company had notfiled its federal and state income tax returns for the year ended December 31,2002.

 

**NOTE 5 - RELATEDPARTY TRANSACTIONS**

 

Fees andexpenses of $93,553 were paid to Philip E. Lundquist, an officer andshareholder, during the twelve months ended December 31, 2002

 

**NOTE 6 - COMMITMENTS ANDCONTINGENCIES**

 

***Litigation***

 

On July 16,2002, Larry Rodammer (“Rodammer”) filed a complaint against the Company, Mr. PhillipLundquist and Christopher Partners, Inc. in the Circuit Court of the 15thJudicial Circuit In and For Broward County, Florida seeking damages in excessof $210,000 and other unspecified relief. The litigation arose out of failureto pay two

 

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promissorynotes made by Christopher Partners, Inc. to Rodammer and one promissorynote made by the Company to Rodammer and includes claims against Mr. Lundquistfor alleged misrepresentations made to Rodammer. On September 10, 2002,the Defendants filed an answer seeking dismissal of this case. Defendantsintend to vigorously defend against the claims in the complaint.

 

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

 

In November 2001,Cellmart Wireless, Inc. (“Cellmart”) filed a complaint against theCompany, Annapolis Valley Ventures, Inc. 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 NonExclusiveDistributor 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.

 

On October 7,2002 in the Circuit Court of the 17th judicial circuit Broward County, Florida,the law suit Victor A. Hinojosa, third party plaintiff in Vubotics and PhilipE. Lundquist was settled in a confidential stipulation.

 

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