UNITED
STATES


SECURITIES AND EXCHANGE
COMMISSION


WASHINGTON,
DC 20549




FORM
10-K




 ̈
            ANNUAL REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
fiscal year ended: December 31,
2008




 ̈
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
  1934




For the
transition period from _________ to _________





Commission
File Number:   000-52074





4C Controls
Inc.


(Exact
Name of Registrant as Specified in its Charter)





Nevada
              
              98-0446287(State
      of other jurisdiction of
              
              (IRS
      Employer Identificationincorporation
      or organization)
              
              Number)




100
Wall Street, 21st
Floor


New York, NY
10005


(Address
of principal executive offices)




866-515-7069


(Registrant’s
telephone number)




Securities
registered pursuant to Section 12(b) of the Exchange Act: None




Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par
value $0.00001 per share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈ No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes  ̈ No x





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No
 ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K:  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      Accelerated Filer
             ̈
            Accelerated
      Filer
             ̈Non-Accelerated
      Filer
             ̈
            Smaller
      Reporting Company
            x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes xNo  ̈





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: $56,553,625 at June 30, 2008.





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: The Issuer
had 44,179,540 shares of Common Stock, par value $.00001, outstanding
as of April 6 2009.







TABLE
OF CONTENTS





ITEM
      1: BUSINESS
                4ITEM
      1A: RISK FACTORS
                22ITEM
      2: PROPERTIES
                40ITEM
      3: LEGAL PROCEEDINGS
                40ITEM
      4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                40ITEM
      5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES
                41ITEM
      6: SELECTED FINANCIAL DATA
                42ITEM
      7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
                43ITEM
      7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
                55ITEM
      8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                55ITEM
      9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE
                55ITEM
      9A: CONTROLS AND PROCEDURES
                55ITEM
      9B: OTHER INFORMATION
                56ITEM
      10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                57ITEM
      11: EXECUTIVE COMPENSATION
                63ITEM
      12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS
                68ITEM
      13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                70ITEM
      14: PRINCIPAL ACCOUNTING FEES AND SERVICES
                73ITEM
      15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
                74SIGNATURES
                77




2




SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS




The
following cautionary statements identify important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements made in this Annual Report on Form 10-K (this “Report”) and in other
reports and documents published by us from time to time.  Any
statements about our beliefs, plans, objectives, expectations, assumptions,
future events or performance are not historical facts and may be
forward-looking.  These statements are often, but not always, made
through the use of words or phrases such as “believes,” “will likely result,”
“are expected to,” “will continue,” “is anticipated,” “estimated,” “intend,”
“plan,” “projection,” “outlook”  and the like, constitute
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).  However, as we issue “penny stock,”
as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we
are ineligible to rely on these safe harbor provisions.  Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
our Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.  Given these uncertainties, readers are cautioned to
carefully read all “Risk Factors” set forth under Item 1A and not to place undue
reliance on any forward-looking statements.  We disclaim any
obligation to update any such factors or to announce publicly the results of any
revisions of the forward-looking statements contained or incorporated by
reference herein to reflect future events or developments, except as required by
the Exchange Act.  New factors emerge from time to time, and it is not
possible for us to predict which will arise or to assess with any precision the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.





Unless
otherwise provided in this Report, references to the “Company,” the
“Registrant,” the “Issuer,” “we,” “us,” and “our” refer to 4C Controls Inc.
..




3




PART
I





ITEM 1:
            BUSINESS





Introduction





Our
business plan focuses on offering cutting edge satellites, Synthetic Aperture
Radar (SAR) and high resolution optical satellite images, and integrated high
technology security, surveillance and access control solutions.  We
have structured our business into three operating segments:





·
            Satellites & Satellite
      Images:High resolution low equatorial optical and synthetic
      aperture radar (SAR) satellites for earth observation, high resolution
      optical and SAR satellite images and satellite image ground direct
      receiving stations with advanced image processing and analysis
      centers.





·
            Security, Surveillance and
      Access Controls:Cutting edge risk assessment, security,
      surveillance and access controls systems, deploying innovative
      applications and offering diverse and integrated scalable
      solutions.





·
            Specialized & Proprietary
      Security Products:Proprietary Security Technologies, including
      ground high performance radars for intrusion detection,electromagnetic
      security systems, real time positioning systems (RTPS), radio frequency
      identification (RFID), and real time locating systems
    (RTLS).





During
the year ended December 31, 2008 and through the date of this Report, we have
been refining our business plan, recruiting our management team, establishing
strategic alliances and achieving the following milestones:





·
            We
      have entered into a Strategic Alliance and Distribution Agreement with
      e-GEOS S.p.A .(a joint-venture between the Italian Space Agency (ASI) and
      Telespazio S.p.A, a Finmeccanica/Thales company).  The Strategic
      Alliance and Distribution Agreement grants exclusive satellite image
      distribution rights to us for certain countries in the Middle East and
      North Africa (MENA) and South East Asia.  The distribution
      agreement also provides the Company with the right to distribute
      Cosmo-SkyMed products on a non-exclusive basis in substantially all other
      African countries.  The exclusive distribution rights will
      include worldwide sales of substantially all satellite images taken over
      the exclusive territory countries as well as substantially all worldwide
      e-GEOS satellite images and products which are sold within the exclusive
      territory countries. The distribution agreement also contains preferred
      partner provisions to facilitate mutually beneficial joint ventures and
      operations with e-GEOS during the foreseeable
  future..





·
            We
      have commenced our plans to build a high resolution satellite space center
      in Abu Dhabi to be known as the 4C Gulf Earth Observation
      Center (4C GEOC).  We expect the 10,000 square meter
      facility to be built in a strategic alliance with Hydra Trading and other
      strategic investors from the United Arab Emirates.  We are
      planning for this facility to host an earth observation satellite data
      Direct Receiving Station (DRS) and offer university level courses in space
      engineering held in cooperation with Politecnico Di Torino, one of the
      leading scientific research institutions in
  Europe.





·
            We
      are creating with Hydra Trading LLC (Abu Dhabi) a strategic alliance
      agreement to be known as 4C Hydra Systems Engineering
      & Technologies whose mission will be to provide infrastructure
      projects with a comprehensive systems approach for integrated solutions
      delivery, spanning from traditional projects (commercial buildings) to
      large infrastructure projects (new cities, ports, airports, highways,
      etc).  Our strategic alliance partner Hydra Trading is a
      subsidiary of the PAL Group and a part of the Royal Group of Companies,
      one of the largest investment companies in the Middle East and
      Africa.  Hydra Trading is primarily focused on supplying
      security and armaments’ equipment to both civilian and military
      sectors.  Hydra Trading has a strong engineering team from over
      15 different countries, with a significant focus and commitment to
      research and development.  The strategic partnerships and
      distribution rights with various world-class defence contractors promote
      Hydra Trading as one of the leading developers of high technology
      solutions and service providers in the
region.


4





·
            We
      have created three strategic operating units which will further support
      the Company’s growth strategy and expansion plans to become a full
      spectrum provider of turnkey integrated scalable solutions for
      sophisticated high-technology systems, including but not limited to, civil
      and homeland security and defense. Each of the new operating units are
      majority owned subsidiaries of 4C Controls.  The operating units
      are: (i) 4C Global Security Consulting Ltd., a joint venture with ISDS
      Hellas S.A., which will engage in threat analysis, assessment and design
      of security solutions; (ii) 4C Systems Engineering Ltd., a joint venture
      with Hellenic Technologies One-Partner EPE, which will engage in the
      design, integration, planning, procurement, implementation, operation,
      management & maintenance of systems; and (iii) 4C Homeland Security
      and Defence Systems Ltd., a joint venture with Theron S.A. to provide
      turnkey scalable solutions for high technology projects in homeland
      security, defense, & offset benefits
  programs.





·
            We
      have selected Thales Alenia Space Italia S.P.A. (“TASI”) as the prime
      contractor for the in-orbit delivery of our first two satellites and the
      related ground segment of our planned 4C Controls’ constellation of
      satellites.  This selection was the result of intensive
      technical due diligence and analysis with TASI for more than six months
      and signals long term technical and commercial cooperation between our
      Company and TASI.  We expect the two Satellites to be equipped
      with very high-resolution (1 meter) synthetic aperture radar
      (SAR).  We are planning for the first satellite to be in orbit
      by end of 2011.  We are in the final stages of negotiation with
      TASI regarding definitive agreement for their contractor services and we
      expect the definitive agreement to be signed very
  shortly.





·
            We
      have entered into a License Agreement with Dr. Maggiora, our Chief
      Technology Officer and member of our Board of Directors, under which we
      have acquired exclusive rights to proprietary high technology intellectual
      properties invented and/or developed by Dr. Maggiora, that we will further
      develop and offer to our customers.  These proprietary solutions
      include Electromagnetic Security (EMSEC) systems, Real Time Positioning
      System (RTPS), RADAR and GUIDAR Systems and Real Time Locating Systems
      (RTLS).





·
            We
      have created a strategic alliance with 4C Security Solutions Limited, an
      Australian company, formerly known as BQT Solutions Limited (“4C Security
      Solutions”) and its Australian subsidiary 4C Satellites Limited, formerly
      known as BQT Satellites PTY Ltd (“4C Satellites”).  4C Security
      Solutions specializes in access control systems, biometric and smart card
      readers, CCTV, cameras and customized security solutions.  While
      4C Satellites is only at a nascent stage of development, we intend to use
      it as our platform for developing our satellites program.  4C
      Satellites has established a joint venture with 4C Polito Space
      Technologies S.p.A., an Italian private company, in cooperation with
      Politechnico di Torino.  We expect to work closely with the
      Politechnico di Torino on all of our projects through Dr. Riccardo
      Maggiora, who is our Chief Technology Officer and an Associate Professor
      at the Politechnico di Torino.





4C Controls
– Vision, Mission, Strategy





Mission





In the
wake of increasing security threats and global terrorism, safety and security
are more crucial than ever to governments, individuals, commercial and
residential sectors.





We intend
to position ourselves as a leading international security and surveillance group
serving security markets worldwide. Our aim is to achieve global superiority
through cutting edge technology and innovative applications, offering diverse
and integrated scalable security and surveillance solutions.


5




Strategy





Our
strategy focuses on our belief that technology will be the key driver of growth
in the security industry as the market shifts towards more integrated security
solutions.  Key aspects of our strategy include the
following:





§
            We
      intend to offer high technology integrated security solutions providing
      real-time early warning and reduction of time scales from threat-detection
      to termination in the field.





§
            Our
      satellite program focuses on the design, construction and operation of
      synthetic aperture radar (SAR) satellites dedicated for Earth observation
      and surveillance.  Through our Chief Technology Officer, Dr.
      Riccardo Maggiora, we have a cooperative relationship with Politechnico di
      Torino.  Dr. Maggiora also serves as an Associate Professor at
      the Politechnico di Torino.





§
            We
      expect to commence our satellite images business with the construction of
      three satellite ground stations at strategic locations in the Middle East,
      Africa and Asia.  These satellite ground stations will be used
      for receiving, processing and analyzing SAR and high resolution optical
      satellite images.  We plan to enter into strategic alliances and
      establish offices in each of the countries to effectively commercialize
      our enhanced analysis SAR and high resolution optical satellite image
      products.





§
            We
      plan to grow through organic development as well as through
      commercialization of our proprietary technologies invented and/or
      developed by Dr. Riccardo Maggiora, our Chief Technology Officer and
      member of our Board of Directors.





§
            We
      are also pursuing strategic alliances as well as mergers and acquisitions
      in the global security industry in order to strengthen our ability to
      design, market, sell, manage and integrate cutting edge, scalable security
      and surveillance solutions and
services.





§
            We
      also intend to commercialize access control systems and support sales of
      biometrics, smart card readers, closed-circuit television cameras and
      customized solutions for selected key
clients.





§
            We
      have acquired exclusive licenses for the development and commercialization
      of cutting edge technologies in the field of intrusion detection systems,
      radar systems for border and pipeline surveillance, radio frequency
      identification and real time locating systems for monitoring and
      surveillance.  Key features of the ground security materials
      include cost effective use of operations-proven commercially available
      component items, scalability, expandability, and high performing
      architecture in terms of response time, image quality, data volume and
      throughput, and service availability. We intend to apply for patents on
      these technologies in Europe and the United
  States.





The
Satellites & Satellite Images Segment





Our
strategic goal is to become a leading producer of Synthetic Aperture Radar (SAR)
high-resolution satellites for commercial use in Earth
observation.  We intend to focus on various business segments to
present integrated total solutions for customers to enable them to both reduce
their operating costs and measurably improve their security.  We also
intend to provide Synthetic Aperture Radar and high resolution optical satellite
images from third party satellite operators with our own value-added image
enhancement services.





We are
among the world’s first movers in commercialization of synthetic aperture radar
technology. The worldwide demand for increasing security levels has advanced the
commercialization of this technology which was previously only available for
military use.





Our
strategy for our satellite business is to cover the entire Earth observation
value-chain from manufacturing to value-added services.  In order to
achieve this strategy we intend to undertake the following:


6





·
            Design,
      develop, produce and sell high-resolution, low equatorial orbit optical
      and synthetic aperture radar (“SAR”)
satellites;





·
            Provide
      high resolution optical and synthetic aperture radar satellite images and
      value-added image enhancement
services;





·
            Lease
      satellite imaging capacity from commercial and government operators, and
      act as a service provider to satellite image
  end-users;





·
            Establish
      satellite ground stations at commercially attractive locations that have
      the potential to maximize contact with satellites on their orbital paths
      for receiving, processing and analyzing high resolution satellite
      images;





·
            Enter
      into strategic alliance arrangements to build, establish and operate
      satellite ground stations and establish networks of satellite images sales
      offices in the Middle East and
Africa;





·
            Build
      one dual-band ground station and main user center located in the Middle
      East during 2009, with future ground stations planned for Africa and
      Asia.





Synthetic
Aperture Radar (SAR) Satellites





Synthetic
aperture radar (SAR) systems are active radar systems which provide their own
illumination through radar pulses and thus operate independently of visible
light. SAR systems are able to observe substantially any location, at any time
of day or night, in any weather, from any distance. A SAR antenna transmits
microwave pulses towards the Earth’s surface. The microwave energy scattered
back to the spacecraft produces high precision data. Proprietary post-processing
systems synthesize the data to form precision images with highly sophisticated
definitions.





Synthetic
aperture radar satellites have the ability to provide all-weather, day-and-night
imaging, which is a mission-critical capability for a variety of end-user
applications. With synthetic aperture radar technology, it is possible, for
example, to search for water springs in deserts, detect oil in the sea, analyze
remote forests and measure the height of waves in an ocean.





Characteristics
of Synthetic Aperture Radar Satellites:





Synthetic
aperture radar satellites can image the Earth at three types of
resolutions:


·
            low
      (>10 meters);


·
            medium
      (3–5 meters); and


·
            high
      (one meter).





In
addition, these satellites can be operational day or night in all weather
conditions.  We intend to conduct our business only in the high
resolution category.





Synthetic
aperture radar satellites are expected to maintain orbits that are much closer
to the Earth than other satellites, requiring the satellites to travel at a very
high speed in order to avoid being pulled out of orbit by Earth’s gravity.
Satellites at a low equatorial orbit can travel at about 27,400 km/h (8 km/s),
making one complete revolution around the Earth in about 90
minutes.





Since it
requires less energy to place a satellite into a low equatorial orbit and the
low equatorial orbit satellite needs less powerful amplifiers for successful
transmission, many communication and observation applications use low equatorial
orbits.


7





The
Satellites Imaging Industry





High
resolution satellites house sensors which have the capability of imaging,
measuring and recording events or objects from a significant
distance.  The satellite market includes not only the development,
assembly and use of the satellites but also imagery sales, enhancement services
and related products.





Historically,
the only of major players in the satellite market were government entities,
including military services and large civil space agencies.  Imaging
satellites were mainly used for meteorological and environmental purposes
including monitoring changes on the Earth’s surface.  Commercial
satellite operators tended to only use low-resolution surveillance systems and
the majority of these operators were quasi-government
organizations.  The market for satellites has been fragmented,
immature and complex, and is not developing as a mass market.  Hence
there has not been much pressure for satellite companies to develop efficient
processes and lean cost structures.





Currently,
there are only a limited number of commercial providers of satellite imaging
services.  Collectively, these competitors address only a portion of
the market opportunities in the satellite imaging industry.  Our focus
is on the commercial use of high-resolution and high-performing synthetic
aperture radar satellites.  We believe that this niche represents the
high potential growth segment of the satellite market. We expect our synthetic
aperture radar satellite system to effectively outperform the competition in
this market segment.





We
believe that the market for Earth observation is growing for several reasons,
including the “Google Earth” effect of more people and enterprises being
introduced to the value of satellite imaging.  We expect public
awareness of satellite Earth observation technology and the range of uses to
grow significantly during the coming decade.  As a result, we also
believe that demand for commercial use satellites will also
increase.





Global
Security Concerns





The
aftermath of the terrorist attacks on the U.S. of September 11, 2001
and the conflicts in Afghanistan, Iraq and the Middle East have significantly
contributed to the increase in demand for satellite imagery to address security
and intelligence gathering concerns for government and commercial
users.  Many national governments and major corporate enterprises for
surveillance and related security programs are increasingly relying on
commercial satellite imagery providers.





We
believe that the satellite industry is expected to benefit increasingly from the
growing concerns of states for defense and security with the delivery of
dedicated military satellites and dual-use satellites through traditional
procurement schemes and public-private finance.





Growing
Market





We
believe that the high resolution synthetic aperture radar market is at an early
stage of development with the potential for profitable commercialization due to
the increasing global need for security, surveillance and aerial photography.
Currently, only one synthetic aperture radar satellite out of 14 (approximately
8%) in the market is registered for commercial use, compared with 72% commercial
use in the entire satellite market.





There has
been increased satellite capacity in the Earth observation
market.  From 2007–2016, industry sources estimate that 151 satellites
will be launched for Earth observation, compared with 69 for the period
1996–2006.  In most satellite market segments, such as communication,
navigation and astrometry, competition is very intense.  However, the
Earth observation/imaging market for synthetic aperture radar satellites is in
early stage of development with little competition.





Higher
awareness





Companies
providing satellite images over the Internet have increased the awareness of
both the accessibility and possibilities of satellites by allowing average users
to view satellite images of the Earth.  Industry sources estimate that
one such program has had over 300 million downloaded usage.  We
believe that this increased awareness will not only help broaden the market but
also aid in our marketing efforts.


8





Near
real-time global satellite imagery is expected to provide capability for
commercial customers to map remote areas of the world efficiently and
cost-effectively where no maps exist or where existing maps are obsolete. In
addition, synthetic aperture radar satellite imagery will facilitate near
real-time monitoring of agricultural, forestry and fishing areas to provide
frequent and timely information to enhance business and government
effectiveness.





General
Opportunities and Company Plans





We
believe the following attributes of the satellite industry offer us significant
potential value and attractive opportunities:





·
            Satellites
      are expected to be able to image areas which are not accessible by
      airplanes because of restrictions on air space or because the areas are
      too remote.





·
            The
      satellite business generally has very high barriers to entry and typically
      requires critical quickly evolving expertise which is not widely
      available.





·
            Demand
      is apparently shrinking for larger satellites and industry sources
      indicate increasing demand for smaller satellites by governments and
      enterprises which previously could not reasonably access satellite
      technology.





·
            Demand
      is expected to increase for satellite image products from new client
      groups who previously had no access to satellite technology, such as
      regional governments, scientists, tourism departments, logistics companies
      and image providers such as Google as well as private clients who wish to
      use satellite imagery for customized business
  purposes.





Our
satellite plan focuses on the design, construction and operation of small
synthetic aperture radar satellites dedicated for Earth observation and
surveillance in cooperation with the Politechnico di Torino and other scientific
research institutes. The Politechnico di Torino has established 4C Polito Space
Technologies S.p.A. (“4C Polito Space”), an Italian private stock company in a
joint venture with 4C Satellites.  We are working in cooperation with
Politechnico di Torino and 4C Polito Space through Dr. Riccardo Maggiora, our
Chief Technology Officer and a director on our Board, who also serves as an
officer and director of 4C Polito Space and as an Associate Professor at
Politechnico di Torino.





We
anticipate setting up high resolution synthetic aperture radar satellite
production facilities within the Politechnico di Torino Campus in Verres,
Italy.  Areas of operation are expected to include avionics (digital
hardware design, radio frequency and antenna design), telecommunications
systems, firmware/ software design, aerospace (mechanical and thermal design,
propulsion and mission specialists) assembly, integration and acceptance
tests.





Initially,
anticipated sales of synthetic aperture radar satellites are expected to be a
key source of our revenue.  We expect it will take a 24 to 30 month
production cycle to develop, manufacture and launch each synthetic aperture
radar satellite. We plan to sell each satellite at commercially competitive
prices.  Out prices will take into account cost associated with
mission control and variations due to custom attributes. We anticipate that the
purchase price to be paid by each customer will be paid in incrementally in
advance installments.





We have
appointed Thales Alenia Space Italia S.p.A. (TASI) as the prime contractor for
the in-orbit delivery of the first two satellites with related ground segment of
our planned satellites constellation. We expect to equip the two satellites with
very high-resolution (1 meter) synthetic aperture radar. We plan to arrange to
have the first satellite in orbit by end of 2011.  We expect to
execute prime contractor agreements with TASI during the foreseeable
future.


9





Satellite
Images, Ground Stations and Value-Added Services Segment





Our
business plan focuses on commercialization of high resolution optical and SAR
satellite images and satellite image direct receiving ground stations with
advanced image processing and analysis centers.  We currently intend
to have one dual-band ground station and main user center located in Abu Dhabi
with future ground stations planned for Africa and Asia. We expect to
strategically place each ground station center as to maximize contact with
satellites on their orbital paths. The image processing facility at each center
is expected to house the hardware and software systems and personnel required to
operate and control the satellites as well as process, store and distribute
imagery.





Cosmo-SkyMed
Satellite Constellation Images Distribution





We have
executed a strategic alliance and distribution agreement with e-GEOS S.p.A, an
Italian company which is a joint-venture between Telespazio S.p.A (a
Finmeccanica/Thales company) and the Italian Space Agency.  The
Italian Space Agency has developed in cooperation with the Italian Ministry of
Defense a constellation of  four satellites that will serve for both
civil and military purposes (“Cosmo-SkyMed”).  The COSMO-SkyMed system
involves a constellation of four satellites equipped with RADAR sensors designed
to operate under any weather conditions in any type of visibility and with very
short revisiting time.  As of the date of this report, three of the Cosmo
satellites have been launched, two of them are in operations and the third one
is expected to enter into operations in the first half of 2009.  The
Strategic Alliance and Distribution Agreement grants exclusive distribution
rights to us for the Cosmo Sky-Med satellite images for certain countries in the
Middle East and North Africa (MENA) and South East Asia.  The
distribution agreement also provides the Company with the right to distribute
Cosmo-SkyMed products on a non-exclusive basis in substantially all other
African countries.  The exclusive distribution rights will include
worldwide sales of substantially all satellite images taken over the exclusive
territory countries as well as substantially all worldwide e-GEOS satellite
images and products which are sold within the exclusive territory
countries.





4C
Gulf Earth Observation Center (4C GEOC)





We are
planning to build a high resolution satellite space center in Abu Dhabi to be
known as the 4C Gulf Earth Observation Center (4C GEOC).  We expect
this 10,000 square meter facility to be built in a strategic alliance with Hydra
Trading and other strategic investors from the United Arab
Emirates.  This facility plans to host an earth observation satellite
data Direct Receiving Station (DRS) and offer university level courses in space
engineering held in cooperation with Politecnico Di Torino.  In
addition, the 4C GEOC designs include a facility for training regional customers
on the latest high resolution earth observation applications, with a special
focus on SAR.  The plans for the facilities include classrooms,
laboratories for hands-on experience in software (especially image processing),
telecommunications and electronics with educational programs offered under the
auspices of the Politecnico Di Torino.  The 4C GEOC expects to open a
new era of innovative programming in high resolution earth observation satellite
data acquisition, processing, analysis and distribution in the Middle-East and
North Africa.  The 4C GEOC also expects to create a new generation of
skilled space engineers and technicians specialized in one of the world’s most
advanced satellite technologies.  The 4C GEOC DRS plans to receive and
distribute in real-time the COSMO-SkyMed satellite SAR data acquired in its
visibility range.  The DRS also plans to receive high resolution
optical satellite data from selected satellite constellations in cooperation
with other leading global operators.  Integrating radar and
high-resolution optical data is expected to extend the range of innovative
applications for unprecedented cutting-edge operational monitoring
services.  The 4C GEOC plans include a conference center for hosting
special events and annual conventions related to Earth Observation technologies.
Our strategic alliance partner Hydra Trading is a subsidiary of the PAL Group
and a part of the Royal Group of Companies, one of the largest investment
companies in the Middle East and Africa.  Hydra Trading is primarily
focused on supplying security and armaments’ equipment to both civilian and
military sectors.  Hydra Trading has a strong engineering team from
over 15 different countries, with a significant focus and commitment to
research and development.  The strategic partnerships and distribution
rights with various world-class defence contractors promote Hydra Trading as one
of the leading developers of high technology solutions and service providers in
the region.


10





Electronic
Security, Surveillance and Access Controls Segment





We intend to offer and integrate a
variety of Specialized & Proprietary Security Products as stand-alone
systems and as part of comprehensive security and surveillance solutions,
including:





·
            smart
      card readers,


·
            closed-circuit
      television cameras


·
            high-end
      customized security solutions, and


·
            integrated
      security systems,





We intend
to commercialize access control systems and support sales of biometrics, smart
card readers, closed-circuit television (CCTV) cameras and customized solutions
for selected key clients. Access control management systems are sophisticated,
intelligent and cost effective security applications that provide movement and
access controls within a facility.





Through
our strategic alliance with 4C Security Solutions, an Australian company which
has a global reputation in access control technologies, we intend plan to
integrate into our systems their components for security, surveillance and
access control solutions, including the following technologies:





·
              Biometric
      Access Control


·
              Data
      Encryption


·
              Closed-circuit
      television (CCTV)


·
              Personal
      Identification Technology for Physical & Network Security
      Applications





The
products we offer as integrated solutions using components provided through 4C
Security Solutions will facilitate high levels of security.  We expect
to offer all hardware and software for the security and access control
systems.  The access control readers and smart cards can be
retrofitted to an existing security system which is highly advantageous when
upgrading to a state-of-the-art security system.





Our
offerings of biometric technologies utilizing the 4C Security Solutions’
components include fingerprint authentication, iris and 3D facial recognition,
face in the crowd identification and one of the world’s most advanced
closed-circuit television technologies. We plan to deliver comprehensive
electronic security solutions to protect buildings and infrastructure, as well
as systems to protect computer networks.  Our offerings will include a
broad range of access control systems and security authentication
products.  Our systems are flexible, enabling us to tailor our
solutions to each customer’s specific needs.





Specialized
& Proprietary Security Products Segment





Dr. Riccardo Maggiora,our Chief
Technology Officer and as a member of our Board of Directors, hasdeveloped our specialized &
proprietary security technologies.  Dr. Maggiora also serves as
anAssociate Professor and
member of Antenna and Electromagnetic Compatibility Laboratory at the
Politecnico di Torino, Italy.  Our specialized & proprietary security
technologies include:





·
            Ground
      High Performance Radars for Intrusion
Detection


·
            Electromagnetic
      Security Systems;


·
            Real
      Time Positioning System;


·
            Radio
      Frequency Identification; and


·
            Real
      Time Locating Systems.





Ground
High Performance Radars for Intrusion Detection





We intend to offer cutting edge ground
radar intrusion detection technology.  We expect to offer two
different types of perimeter intrusion detection radars which detect moving
targets: Guided radar (“GUIDAR”) and conventional radar.  Our GUIDAR
will use ultra wide band radio signals while our radar technology will utilize
mono-static ultra wide band electronic scanning
radar.


11





GUIDAR exploits the features of ultra
wide band radar signals which are processed, detected, and classified by means
of a complete and innovative digital signal processing. This technology is
generally classified as active, volumetric, terrain following, all-weather, and
resistant to vegetation and blowing debris.





Radar is a mono-static Ultra Wide Band
electronic scanning radar using a new antenna design and an advanced digital
signal processing system realizing a protection barrier.  The
processing unit is being developed implementing a signal processing scheme able
to precisely recognize the intruder radar cross section and two dimensional
position at varying distances from the antenna. This technology is classified as
active, volumetric, all-weather, ideal for low profile targets, and resistant to
vegetation and blowing debris.





We are planning the systems utilizing
these perimeter intrusion detection radars to have significant commercial
applications for military and manufacturing facilities, airports, borders, and
especially pipeline systems.  The technology is also applicable to
remote, unmanned technology locations owned by mobile phone companies, oil
industry storage and distribution centers and other industrial
assets.  We expect to deploy ground radar technology that has cutting
edge efficiencies, including systems which can detect potential breach of
pipeline security within a 360 degree field of vision over one
kilometer.  We believe that the economics of the ground radar systems
present us with a substantial business development opportunity for our
Company.





Electromagnetic
Security (EMSEC)





We intend to offer anti eavesdropping
technology for video display and other ancillary electrical emissions based on
innovative digital signal processing techniques, image processing and real time
positioning systems.  The technology has a significantly higher
capability of protecting ancillary and ambient signals from unauthorized remote
capture.  We plan to offer the technology to major banks, companies
and other application users who have critical needs to protect screen display
data and other ancillary and ambient signals generated from communication and
display devices.





We intend to have two sophisticated
systems in the area of electromagnetic security.The first
electromagnetic security
system is a single active protection system based on the emission of correlated
signals emitting a composite correlated protection signal.  We believe
that this product has competitive advantages because it is low power, works on a
narrow band, has so far proven effective and easy to install.  The
second electromagnetic
security system is a high performance (long distance and wall penetrable)
on video display unit based on state-of-the- art digital signal
processing.





Real
Time Positioning System (RTPS)





We intend to offer a real time
positioning system consisting of a fixed infrastructure of base stations and
associated hardware and software to enable accurate real-time tracking of small
battery powered (active) tags.  These tags can be attached to people
or objects, within the area covered by the base station infrastructure. Compared
to global positioning systems (GPS), real time positioning systems have several
advantages including:





·
            greater accuracy, typically to a
      resolution of a few inches;


·
            the ability to work in situations
      where GPS does not work, such as inside buildings;
    and


·
            very small devices (active tags)
      with very small batteries.





Real time positioning systems track
objects continuously by means of a fixed infrastructure. Utilizing innovative
signal processing techniques, the system can be used to track people or objects,
determine their positioning, as well as determining the proximity between
objects. The communications function allows the system to dynamically manage the
tags, vary update rates, send paging commands, report battery status information
and button press actions.  In particular, the systems could not only
detect unauthorized opening of shipping containers, but also speed up handling
processes, for example in customs clearance.  We believe that total
logistics chains using real time positioning systems could therefore be
protected without interruption from place of origin to destination at
significant cost savings for prospective customers.


12





Radio
Frequency Identification (RFID)





Radio
frequency identification is a technology which has the ability to identify
tagged objects remotely using radio waves.  Radio frequency
identification systems are generally classified into two categories, passive
radio frequency identification and active radio frequency
identification.  We are focusing on active radio frequency
identification, where a battery drives the tag, which we believe will be
responsible for an increasing percentage of commercial expenditures in the radio
frequency identification market.





Radio
frequency identification is not actually a new technology, but it is being
applied in new ways due to technological advances and decreased costs. Radio
frequency identification was used during World War II to identify friendly
aircraft and is now being used in a variety of public and private sector
settings, from hospitals to highways.  In radio frequency
identification systems, an item is tagged with a tiny silicon chip and an
antenna, the chip plus antenna (typically referred to together as a “tag”),
which can then be scanned by mobile or stationary readers, using radio waves.
The user can then encode the chip with a unique identifier, allowing tagged
items to be individually identified by a reader.  This technology
permits each tagged item to be individually and uniquely identifiable, such as
each article of clothing in a store or each prescription in a pharmacy
confirming the authenticity of its contents.  Radio frequency
identification tags on car windshields can facilitate movement through highway
tollbooths, saving time and reducing traffic congestion. At home, pets can be
implanted with chips so that lost animals can be identified and returned to
their owners more readily. In each case, the tag information is saved to a
database. The tag, reader, and database are the key components of a radio
frequency identification system.





The
breadth and depth of radio frequency identification applications include a
multitude of potential uses, including the following:





·
            Tracking
      assets and improving asset
utilization


·
            Improving
      recycling to become more environmentally responsible and reduce human
      impact on the environment


·
            Using
      radio frequency identification as a tool for preventing product
      theft


·
            Improving
      inventory management and warehouse
operations


·
            Improving
      operational efficiencies


·
            Facilitating
      fast, secure payments and engendering customer
  loyalty


·
            Using
      radio frequency identification to control access to buildings and
      networks


·
            Protecting
      products from counterfeiting


·
            Using
      radio frequency identification to improve supply chain operations and
      efficiently work with supply chain
partners.





We
believe that radio frequency identification smart labels hold the potential to
revolutionize supply chain management and logistics operations across a range of
industries and could ultimately replace the ubiquitous bar code on trillions of
fast moving consumer goods.





We expect to offer our proprietary RFID
technologies for complete supply chain management, includingelectronic
article surveillance, anti-shoplifting labels and other manufacture, wholesale
and retail inventory and distribution applications.





Real
Time Locating Systems (RTLS)





Real time
locating systems are radio frequency identification systems which have been
upgraded to provide instant location information. Items tagged with normal radio
frequency identification are read when a reader is brought near a tag or a
tagged item is passed near a reader. Real time locating systems allow a reader
unit to "see" the actual location of a tagged item, without the tagged item
being near the reader. Using special readers placed around a property or
strategic locations, real time locating systems tags are located using a
triangulation system.  The real time locating systems tag itself can
be the size of a postage stamp.  Tagged items may be as small as a
mobile phone or as large as a shipping container.


13


Real time
locating systems readers are usually deployed as a network of triangulation
readers which can be spaced anywhere from 50 to 1,000 feet from each other. The
system continually updates the database with current tag locations at programmed
time intervals or event triggers.  The frequency of tag location
updates may have implications for the number of tags that can be deployed and
the battery life of each tag.  A typical applications system can track
thousands of tags simultaneously and the average tag battery life can be three
to four years.





Examples
of the use of real time locating systems readers includes hospital staff who
have traditionally had difficulty summoning assistance when faced with an
emergency situation: alarm pendants can send alerts in emergencies but do not
give a position. Supply chains traditionally tracked by radio frequency
identification and barcodes lack precision at various points in their
movement.





We
believe that real time locating systems will over time become a very attractive
commercial solution for current and prospective users of radio frequency
identification as costs reduce.  The main applications of real time
locating systems in the immediate future are expected to be in manufacturing,
healthcare, postal/ courier, research and development, and military sectors,
with increased interest from many other sectors including retail and
agricultural.





Strategic
Alliances





As a core
component of our development and growth strategy, we intend to enter into
strategic alliances to achieve the following benefits:





·
            Obtain
      access to some of the most innovative and cutting edge solutions within
      the scope of our business model;


·
            Leverage
      our global marketing and branding
strategy;


·
            Enhance
      time to market and obtain commercial sales
  efficiencies;


·
            Unlock
      value inherent in synergistic alignment of mutually beneficial core
      competencies;


·
            Achieve
      competitive advantages; and


·
            Obtain
      the benefit of our alliance partners’ respective local and global network
      strengths





Strategic
Alliance and Distribution Agreement with e-GEOS S.p.A.





We have
entered into a Strategic Alliance and Distribution Agreement with e-GEOS S.p.A.
(Italy) as the exclusive distributor of Cosmo-SkyMed satellite images, as
discussed in detail above under the caption Satellite Images, Ground Stations
and Value-Added Services.





4C
Gulf Earth Observation Center (4C GEOC)





We are
creating a strategic alliance with Hydra Trading LLC (Abu Dhabi) build a high
resolution satellite space center in Abu Dhabi to be known as the 4C Gulf Earth
Observation Center (4C GEOC), as discussed in detail above under the caption
Satellite Images, Ground Stations and Value-Added Services.





4C
High Resolution "GulfSatellites" Satellite Program





We plan
to offer an innovative solution to improve the Earth observation applications
with our "GulfSatellites" program.  GulfSatellites is an Earth
Observation System (EOS) expected to consist of four high resolution SAR
satellites ("GulfSAR 1, 2, 3 & 4") which will be devoted to security
applications, maritime management, risk management, environmental protection,
geology, cartography and planning.  The Area of Interest (AOI) has
been defined as the region with latitude ranging from 43° S to 43° N. The
program is expected to include two high resolution optical satellites as well as
the four SAR satellites.  For purposes of capitalizing the
GulfSatellites program, we expect several institutions and organizations from
the Gulf Cooperation Counsel region (GCC) to participate as equity investors in
the GulfSatellites program.  We have entered into a services agreement
with the General Khalid Abdulla Mabarak Al Buainain who is the Company’s Vice
President for Middle East Military and Defense Projects, which includes his
assistance in respect to commercialization of the GulfSatellites
program.


14





4C
Hydra Systems Engineering & Technologies





We are
creating a strategic alliance agreement with Hydra Trading LLC (Abu Dhabi) to be
known as 4C Hydra Systems Engineering & Technologies, whose mission will be
to provide infrastructure projects with a comprehensive systems approach for
integrated solutions delivery, spanning from traditional projects (commercial
buildings) to large infrastructure projects (new cities, ports, airports,
highways, etc).





4C
Global Security Consulting Ltd. - Threat Analysis, Assessment and Design of
Security Solutions





The
Company has created 4C Global Security Consulting Ltd. with ISDS Hellas S.A., an
internationally renowned, multinational consultancy company which provides
high-end security threat assessment services. ISDS Hellas S.A. is registered
with the Greek Ministry of Public Order and served as the official Athens 2004
Olympic Games main (prime) security consultant. ISDS Hellas S.A. is also
certified by the Greek Ministry of Mercantile Marine to carry out Port Facility
Security Assessments (PFSA) and Port Facility Security Plans (PFSP) for seaports
and port facilities within the European Union. 4C Controls will through this
operating unit provide Critical Security Threat and Assessment Services in
Europe, the Middle East, Africa and Asia as part of the total integrated
security, surveillance and access controls solutions.  ISDS Hellas
S.A., through its subsidiary Earth Solutions, also brings additional specialized
expertise which directly complements the Company’s satellite observation
business, providing 4C Controls with the ability to deliver integrated satellite
observation solutions, using high resolution digital orthophoto thematic and
geospatial data of Google. Earth Solutions maintains and hosts the complete
installed latest version Google Earth Enterprise Server for the support of
international clients. The system provides specialized applications that can
support Maritime security, Airports security, refinery security and military
bases. The company plans to add “Photogrammetric digital camera DIMAC” to its
system to enhance the capabilities and applications for the Google Earth
Enterprise Server.





4C
Systems Engineering Ltd. – Design, Integration, Planning, Procurement,
Implementation, Operation, Management & Maintenance of Systems





The
Company has created 4C Systems Engineering Limited with Hellenic Technologies
One-Partner EPE, a company which has a 20 year track record as a systems
integration and engineering house which provides creative, cost-efficient, time
sensitive and complete end-to-end technology systems design, development and
delivery solutions. 4C Controls will through this operating unit provide system
integration solutions for all 4C Controls international projects, including
system design, development, prototyping, production, coordination of rollout,
testing, handover training and ongoing support services for the full life cycle
of the systems and products. Hardware & software can also be in-house
designed, developed and produced to facilitate custom project requirements not
satisfied by off-the-shelf solutions.





4C
Homeland Security and Defence Systems Ltd. - Turnkey Solutions for High
Technology Projects in Homeland Security, Defense, & Offset Benefits
Programs





The
Company has created 4C Homeland Security and Defence Systems Ltd. with Theron
S.A., a highly specialized European based company in Greece which provides
turnkey development, consulting and specialized advisory services in defense,
homeland security and offset management. 4C will through this operating unit
undertake homeland security, defense and offset benefit projects for
Governmental Agencies.  This strategic operating unit will have access
to commercial representation of highly specialized defense and homeland security
products and applications for niche markets. The focus of this operating unit
will be related to defense and homeland security markets, including projects
implementing secure information and communications technologies such as TETRA of
Motorola, which is the market leader for secure voice, video, and data
communications of emergency services (police, fire, etc) worldwide, and secure
wireless broadband applications.


15





4C
Security SolutionsLtd.





We have
created a strategic alliance with 4C Security Solutions and its subsidiary 4C
Satellites Limited.  4C Security Solutions specializes in access
control systems, biometric and smart card readers, CCTV, cameras and customized
security solutions.  The
purpose of our strategic alliance with4C Security Solutionsis to obtain joint marketing synergies,
international branding and leveraging theintegrated value of our respective
products and service offerings.  This strategic alliance will
facilitate the Company’s ability to offer comprehensive and
fully integrated security and access control solutions to prospective clients on
a global basis.





4C Security Solutions has sold security
access control products throughout the world, including to both large
multinational corporations and government agencies.  With its
partnership with the Company, 4C Security Solutions intends expand its business
model and broaden its
undertakings to include engaging in integrated security access
projects.





As of the date of this Report we have
invested AUD$4 million (approximately US$3.5 million) and we own approximately
19.8% of the issued and outstanding equity interests in4C Security
Solutions.  We account
for our ownership of the shares as held for investment
purposes.  Under our agreement with4C Security Solutions, we have also been issued options under
which we may purchase of 9.5 million shares of4C Security Solutionsat a purchase price of AUD$0.10 per
share, which may be exercised in whole or in part at any time prior to December
31, 2013.  All payments to date in respect of our investments in4C Security Solutions have been made on our behalf by Rudana Investment
Group AG which have been treated as shareholder loans.





4C
Satellites Ltd.





In connection with our strategic
alliance4C Security Solutions, we have also agreed to acquire a 40%
interest in 4C Satellites Ltd.  4C Satellites is in a nascent
stage of development and
does not yet have any assets or operations.We intend to use
it as our platform for developing our satellites program.  4C
Satellites has established a joint venture with 4C Polito Space Technologies
S.p.A., an Italian private company, in cooperation with Politechnico di
Torino.  We expect to work closely with the Politechnico di Torino on
all of our projects through Dr. Riccardo Maggiora, who is our Chief Technology
Officer and an AssociateProfessor at the Politechnico di Torino.  4C Satellites is an
Australian corporation which is 20% owned by 4C Security Solutions
and 40% owned by Prime Asset Finance.  The remaining 40% is
subject to issuance to 4C Controls pursuant to completion of an equity financing
commitment for AUD $14 million.  We expect 4C Satellites to serve as
the satellite production and sales business unit of the Company.  4C
Satellites expects to establish high resolution synthetic aperture radar (SAR)
satellites production facilities in Italy.





In consideration for the 40% interest in 4C Satellites, we have
agreed to capitalize 4C Satellites with AUD$14 million for commencement of the
satellites production program.  The 4C Satellites program is part of
our strategic plan to cover the entire value chain of high resolution Earth observation satellite-based
businesses, from satellite manufacturing and operation to images processing and
sales to end users.





4C Polito Space Technologies
S.p.A.





4C Satellites owns 75% of 4C Polito
Space Technologies S.p.A. (“4C Polito Space”), an Italian private stock
company.The Politecnico di Torino also owns 17% of 4C Polito
Space.  The remaining 8%
of 4C Polito Space is owned by other parties, including Dr. Riccardo Maggiora,
our Chief Technology Officer and member of our Board of Directors, who owns 2%
of 4C Polito Space.  We plan to design and build our high resolution
optical and SAR satellites dedicated for Earth observation and surveillance
through 4C Polito Space and 4C Satellites.  Dr. Maggiora also serves
as CEO of 4C Polito Space and he is an AssociateProfessorat the Politechnico di
Torino.  We intend to work in close cooperation with the Politechnico
di Torino through Dr. Maggiora in regard to research, development and
realization of our satellite program.


16





Future
Strategic Alliances, Joint Ventures, Mergers and Acquisitions





We intend to pursue a business model
that relates to international security and surveillance technology. We intend to
acquire and create strategic affiliations with leading international security
and surveillance enterprises serving security markets worldwide and establish an
ability to design, manage and integrate state-of-the-art high technology
security solutions with comprehensive and fully integrated service offerings. We
anticipate acquiring technologies and large global distribution networks
primarily in the market sectors of electronic surveillance/ global access
control markets; and low-orbit high resolution satellites technologies and
satellite images.





We also plan to acquire technologies
with large footprint distribution networks in the market sectors of electronic
surveillance/global access control markets and remote sensing technologies. We
plan to acquire strategic interests in companies with these attributes in order
to access the international security industry and strengthen our ability to
design, manage and integrate cutting edge technological security solutions and
achieve comprehensive service offerings to become a global
leader.





Sales
& Marketing





Our sales
and marketing activities are primarily focused outside of the United
States.  Our officers and directors assist us with our sales and
marketing efforts.  We expect to enter into representation and
distribution agreements during the near future with regional sales
representatives who specialize in particular industry sectors.  We
also expect to employ and hire independent contractors as direct sales
representatives worldwide.  Our sales representatives will be paid
primarily through commissions.  We intend mainly to sell our products
and services for use in large scale government and commercial
projects.  We do not intend to pursue a retail level of marketing
during the foreseeable future; however, we may enter into reseller agreements to
permit the retail sale of our products and services.  As of the date
of this Report, we have not yet had any sales in any of our business
segments.




We intend
to market our products and services and develop our global brand awareness
primarily utilizing a highly qualified network of persons with direct access to
material decision-makers.





Management
Services





We have a
management services agreement with Prime Asset Finance Ltd., a UK company which
is a wholly owned subsidiary of Rudana Investment Group AG, our majority
stockholder.  Under the terms of the agreement, Prime Asset Finance
will assist and advise us on developing strategic plans for inception of
operations, preparing acquisition growth plans, identifying potential
acquisition candidates, initiating discussion with potential acquisition
candidates and strategic alliance partners, analyzing the financial implications
of potential acquisitions and strategic alliances; negotiating terms and
conditions of transactions and strategic alliances; outlining and managing the
due diligence process; developing strategies to maximize revenue and corporate
value including growth through sales, utilizing alternative distribution
channels and enhancing marketing programs and providing support for investor
relations programs.  We agreed to pay an initial services fee of
$250,000 to Prime Asset Finance Ltd. as of August 2008 and committed to pay
management services fees of $25,000 per month in respect of the management
services.  All of the fees have accrued to date and have not yet been
paid.  Prime Asset Finance Ltd. will be compensated in the amount of
5% of the total transaction value of any company acquired by us by merger or
acquisition which has been introduced by Prime Asset Finance.  We
believe that the services of Prime Asset Finance have been valuable to us with
respect to inception of our operations and activities, particularly in regard to
establishing our initial strategic alliances and recruiting our highly qualified
senior management team and introducing us to prospective
customers.  We believe the services of Prime Asset Finance will
continue to be beneficial to our business and our shareholders.





Competitive
Position





We intend to do business in highly
competitive markets. There are many competitors, some of which are significantly
larger, have access to much more important resources or capital than us, or have
established reputations among potential customers. Large industry participants
make up the most significant share of the market in the sectors in which we
intend to operate. There is increasing competition in the industry and the usage
of cooperation agreements, alliances and partnerships have also increased. We
may not be able to compete effectively against other industry
participants.


17





In
our Satellites and Satellite Images segment we expect to directly and indirectly
compete in target market of Synthetic Aperture Radar (SAR) and high resolution
optical images against various private companies as well various foreign
government providers.  Our competitors include satellite operators
plus numerous aggregators of imagery and imagery-related products and services,
including Google and Microsoft.  In addition, we expect to compete
against aerial providers of high resolution imagery, whose offerings provide
certain benefits over satellite-based imagery, including possible enhanced
resolution.  The value of our imagery may also be diluted by certain
earth imagery that is available free of  charge.  We expect
to compete both directly and indirectly against certain systems operated by
certain foreign governments and foreign corporations, including the German
TerraSar-X, which offers 1 meter SAR data.  We believe that our SAR
imaging capability and our exclusive distribution rights in the Middle East and
North Africa utilizing the Cosmo-SkyMed satellite constellation will provide us
with significant competitive advantages over our direct and indirect
competitors, but if our competitors are able to deliver superior products or are
able to reduce pricing below levels that we can profitably compete with, it
could have a material adverse effect on our satellite images business. We do not
foresee our satellite images segment to be affected by seasonality.





In our
Security, Surveillance and Access Controls business segments there are many
competitor companies engaged in the business of designing, manufacturing,
integrating, installing and maintaining competing systems.  In this
business segment, competition is often based on price, product quality,
installation and ability to provide after-sales service.  Two of the
larger competitors in this segment are General Electric and
Honeywell.  Many of our international competitors are larger than we
are and possess greater name recognition, assets, personnel, sales, and
financial resources.  We believe we can effectively compete against
our competitors  in our target markets of the Middle East, Africa and
Asia by utilizing the strengths of our strategic alliance partners and
distribution networks.





Compliance
with Government Regulations





The part of our business related to
satellites is a highly regulated industry both in the United States and
internationally. We plan to have a satellite business located abroad. It is our
intention to have the satellites constructed and launched outside of the United
States. We will need to comply with the applicable satellite regulation of the
United States and other countries. Furthermore, in order to operate
internationally, remote imaging satellites may require International
Telecommunications Union (“ITU”) coordination and registration and licenses from
the United States and governments of foreign countries relating to imagery may
be directly downlinked. Applicable regulations may include:





·
            International
      Telecommunication Union regulations, which define for each service the
      technical operating parameters, including maximum transmitter power,
      maximum interference to other services and users, and the minimum
      interference the user must operate under for that
  service;


·
            the
      Intelsat and Inmarsat agreements, which require that operators of
      international satellite systems demonstrate that they will not cause
      technical harm to Intelsat and Inmarsat;
and


·
            regulations
      of the United States and foreign countries that may require satellite
      operators to secure appropriate licenses and operational authority to use
      the required spectrum in each
country.





We currently intend to construct our
satellites through strategic alliance joint ventures located outside of the
United States.  We do not intend to build the satellites in the U.S.
or use U.S. airspace, or use technologies which originate from the United States
or technologies developed by U.S. persons, which in each case would implicate
higher levels of regulatory limitations and export
restrictions.  However, we may still become subject to U.S. regulatory
restrictions and limitations including various forms of regulation under
different U.S. laws and regulations that govern the collection and transmission
of satellite imagery, satellite tracking, telemetry and control, as well as
restrictions on export of technologies which have defense applications. These
compliance regimes include the International Traffic in Arms Regulations
administered by the U.S. Department of State, the Export Administration
Regulations administered by the Department of Commerce, and various
Federal Communications Commission regulations. The Department of Commerce, pursuant to
the LandSat Act, has the primary regulatory authority over our satellites
segment. The Department of Commerce delegated responsibility for satellite
remote sensing operations to National Oceanic and Atmospheric Administration
(“NOAA”).  Our satellites will be required to be individually licensed
for operation by NOAA. Our NOAA licenses will require us to obtain prior
approval from NOAA for any significant and substantial agreements, and generally
require us to operate our satellite system in a manner that is consistent with
U.S. national security and foreign policy objectives. The NOAA licenses
will allow the U.S. government to suspend our imaging activities for
national security reasons.  So long as we comply with the NOAA
licenses we expect the NOAA licenses to be valid for the operational life of
each satellite.


18





The
launch of our satellites and the communication links, both uplink and downlink,
may be subject to regulation by the United States Federal Communications
Commission (the “FCC”) and analogous regulatory authorities of foreign
governments depending on where we ultimately launch and operate the
satellites.  The FCC licenses must be obtained for each individual
satellite.  The FCC is the governmental agency with primary authority
in the United States over the commercial use of satellite frequency
spectrum.  The FCC’s rules and regulations and terms of our licenses
require that we comply with various operating conditions and requirements,
including the timely filing of compliance certifications. Failure to comply with
compliance conditions or requirements could lead to sanctions, up to and
including revocation, cancellation or non-renewal of our
licenses.  Our satellites will also be required to execute frequency
coordination and registration with the International Telecommunications
Union.





U.S. and foreign regulators may subject
us in the future to new laws, policies or regulations, or changes in the
interpretation or application of existing laws, policies and regulations that
modify these regimes. Regulators could decide to impose limitations on companies
that are currently applicable only to other countries, or other regulatory
limitations that affect satellite remote imaging operations.  Any
limitations of this nature could materially and adversely harm our business,
financial condition and results of operations.





Our
subsidiary 4C SatImage and e-GEOS have entered into a Strategic Alliance and
Cosmo SkyMed Distribution Agreement.  e-GEOS has been authorized by
Italian Space Agency to distribute the Cosmo data and products as agreed upon
between ASI and the Italian Ministry of Defense (the “Data
Policy”).  4C SatImage will be subject to the Data Policy which
establishes the Italian national policy for the utilization of the Cosmo SkyMed
system, including the distribution and dissemination of satellite imagery and
sets forth certain requirements and limitations with respect to the use and
distribution of satellite imagery that are applicable to e-GEOS and 4C
SatImage.  Under the Data Policy, the Italian government or ASI has
reserved the right to the right directly or through any of the Italian security
agencies, to (i) restrict or limit imaging by Cosmo-SkyMed satellites, (ii)
restrict or limit the collection and distribution of Cosmo-SkyMed data and
products to any specific customer or to all customers, including e-GEOS and 4C
SatImage and any other parties, and (iii) restrict or limit the delivery and/or
operations of any commercial user terminal utilized by us or our affiliates in
conjunction with the Cosmo-SkyMed satellite constellation.





During each applicable stage of our
development, we must comply with all the necessary government regulations. At
the appropriate points during its development, we plan to obtain all United
States, ITU and other internationally required licenses, authorizations and
registrations necessary to operate legally. Although we believe that we should
be able to receive these licenses, approvals and registrations, there is no
assurance that will be successful in doing so.





Research
and Development





We have not yet determined our
anticipated spending on research and development activities for the year ending
December 31, 2008.  Our research and development efforts are expected
to be conducted by Dr. Riccardo Maggiora, our Chief Technology Officer who also
serves asAssociate Professor and member of the Antenna and
Electromagnetic Compatibility Laboratory at the Politecnico di Torino, Italy.





We expect to conduct our research and
development efforts in cooperation withthe Politecnico di Torino. Since
the early nineteen-eighties, the Politecnico di Torino has adopted a policy for
international cooperation and the network of international relations in its
various aspects has expanded greatly.  The Politechnico di Torino
international programs include a range of different activities such as bilateral
and multilateral partnerships with universities and research institutions of
both European and extra-European countries, as well as agreements with the
European Union on research, training, cooperation and structural projects, plus
the organization of student, professor and staff exchanges.


19





Compliance
with Environmental Laws





The costs and effects of compliance with
federal, state and local environmental laws have not been material to our
business from inception through the date of this Report.





Intellectual
Property





Our
success and ability to compete are dependent, in part, upon our ability to
establish and adequately protect our intellectual property rights.  We
intend to rely on a combination of patent, copyright, trademark and trade secret
laws, as well as confidentiality agreements to establish and protect our
proprietary rights.  We expect to license certain proprietary rights
from third parties to enable us to operate our satellites, ground station
centers, collection systems and other various components of our
systems.  We also expect to enter into licenses with our strategic
alliance partners to integrate their components into our comprehensive security,
surveillance and access controls solutions.  We intend to utilize
patents to protect our proprietary technologies which we believe will become,
individually and in the aggregate, material to our business.  We also
intend to protect our proprietary rights, in part, through the terms of license
agreements and by confidentiality agreements with our employees, consultants,
customers and others.





We have acquired exclusive rights
to technologies in the field of intrusion detection systems, radar systems for
border and pipeline surveillance, and technologies for monitoring and
surveillance systems through our license agreement with Dr. Riccardo
Maggiora.  Under the agreement, we have been granted to the right to
file patents on these technologies, and all improvements and related
know-how.  We have not yet commenced filing patents in regard to any
of the licensed proprietary technologies although we intend to do so during the
foreseeable future.





We
believe that our success will depend on the intellectual skills of our employees
and their ability to continue to innovate. We intend to file and prosecute
patent applications. We intend to vigorously protect our rights in our
proprietary technologies.





There is
no assurance that our current patents, or patents that we may later acquire, may
successfully withstand any challenge. Patents issued to us may not provide us
with any competitive advantages. Patents held by others may prohibit us from
utilizing certain technologies and commercializing certain
products.  Despite efforts to protect our proprietary rights, third
parties may infringe on our proprietary rights. We may have to resort to
litigation to enforce our intellectual property rights or to determine the
validity and extent of the proprietary rights of others, or to defend ourselves
against claims of invalidity of our rights and claims of infringement on third
party rights.





During
the year ended December 31, 2008 we registered the internet domain name
4CControls.com and related domain names. The information contained in our
website is not part of this Report. We do not currently have any patents in
regards to any proprietary technology.





Employees





As of the
date of this Report all of our employee serve on a part time
basis.  Our CEO devotes
approximately 80% of his time to our Company and 20% of his time to our
strategic alliance partner 4C Security Solutions Ltd.  Our CFO devotes
approximately 35% of his time to our Company, with the balance of his time spent
on matters pertaining to two other public companies which are majority-owned
portfolio companies of Rudana Investment Group AG.  CFO Our Chief
Technology Officer devotes approximately 70% of his time to our Company and
allocates the balance of his professional time as an AssociateProfessoratPolitechnico di Torino and as CEO of 4C Polito Space.  Our other officers and employees serve
the Company on a part time basis devoting between 25%-50% of their professional
time to our Company.  We have no collective bargaining agreements with
our employees.The Company has not yet determined its
anticipated staff needs for the fiscal year ending December 31,
2009.


20





As of the
date of this Report, the following persons serve as our officers, directors and
other significant employees:


1.
              Jean-Robert
      Martin, Chairman of the Board


2.
              Anastasios
      Angeloglou, Chief Executive
Officer


3.
              Dr.
      Riccardo Maggiora, Chief Technology
Officer


4.
              Mathias
      Kaiser, Chief Financial
Officer


5.
              Olivier
      de Vergnies, Director


6.
              Philippe
      Aubay, Member of the Business Controls
Committee


7.
              Anne-Marie
      Pérus,  Member of the Business Controls
  Committee


8.
              Jean-Louis
      Recordon, Member of the Business Controls
  Committee


9.
              Peter
      Panayotou, Vice President for Business
Strategy


10.
              Major
      General Khalid Abdulla Mabarak Al Buainain, Vice President for Middle East
      Military and Defense Projects


11.
              Barbara
      Salz, Corporate Secretary





Our
current Chief Executive Officer, Mr. Anastasios Angeloglou was appointed as of
February 5, 2009 following the resignation of Mr. Olivier de Vergnies as CEO who
had previously served the Company from July 1, 2008.  Mr. de Vergnies
has remained with the Company as a member of the Board of Directors and he
continues to serve on the Executive Committee.  On January 7, 2009 Mr.
Mathias Kaiser was appointed as Chief Financial Officer following the
resignation of Mr. Gerald Sullivan.




21


ITEM
1A.    RISK FACTORS





An
investment in our Company involves a substantial risk of loss. You should
carefully consider the risks described below, before you make any investment
decision regarding our Company. Additional risks and uncertainties, including
those generally affecting the market in which we operate or that we currently
deem immaterial, may also impair our business. If any such risks actually
materialize, our business, financial condition and operating results could be
adversely affected. In such case, the trading price of our common stock could
decline.





The
following risk factors are not exhaustive and the risks discussed herein do not
purport to be inclusive of all possible risks but are intended only as examples
of possible investment risks.





Risks
Related to Our Business





We
are a new business without significant resources. We have only recently
commenced operations and we have no past performance which can serve as an
indictor of our future potential.





We have
initiated a new business model and we have only recently commenced operations.
We have no history upon which an evaluation of our future success or failure can
be made.  We commenced active operations in June 2008 and we have been
growing our team since that date, but as of the date of this Report we have no
revenues.  Our most recent financial statements will therefore not
provide sufficient information to assess our future prospects.  Our
likelihood of success must be considered in light of all of the risks, expenses
and delays inherent in establishing a new business, including, but not limited
to unforeseen expenses, complications and delays, established competitors and
other factors. We currently have limited operating capital. Our ability to
achieve and maintain profitability and positive cash flow is dependent upon
raising funds and our ability to generate revenues.  We do not expect
to generate material revenues during the foreseeable future.  Because
of the numerous risks and uncertainties associated with our new business model,
we are unable to predict with any certainty when or if we will achieve
profitability. If we do not generate revenues or if our expenses increase at a
greater rate than our revenues, we will not become profitable. Even if we do
become profitable, we may not be able to sustain or increase our profitability
on a quarterly or annual basis.





We
only have losses to date and our auditors have issued an opinion expressing the
uncertainty of our company to continue as a going concern which may deter
potential investors and lenders from providing financing.





Our
auditors issued an opinion in their audit report expressing uncertainty about
the ability of our Company to continue as a going concern.  This means
that there is substantial doubt that we can continue as an ongoing business
without additional financing and/or generating profits from our operations. The
going concern uncertainty expressed in their audit opinion could make it more
difficult for us to secure additional financing on terms acceptable to us, if at
all, and may materially and adversely affect the terms of any financing that we
may obtain. If our losses continue and we are unable to secure additional
financing, we may ultimately cease doing business or seek protection from
creditors under applicable bankruptcy laws.





We
need to raise additional capital which may not be available to us or might not
be available on favorable terms.





We will
need additional funds to implement our business plans as our business model
requires significant capital expenditures. We will need substantially more
capital to execute our business plan.  If we cannot raise capital, we
may have to suspend or cease operations.  Our acquisition strategy
also requires substantial capital investment. Capital will be needed not only
for the acquisition of additional companies, but also for the effective
integration, operation and expansion of these businesses.  Our future
capital requirements will depend on a number of factors, including our ability
to grow our revenues and manage our business. Our growth will depend upon our
ability to raise additional capital, possibly through the issuance of long-term
or short-term indebtedness or the issuance of our equity securities in private
or public transactions. If we are successful in raising equity capital, because
of the number and variability of factors that will determine our use of the
capital, our ultimate use of the proceeds may vary substantially from our
current plans.  We expect that our management will have considerable
discretion over the use of equity proceeds.  Our shareholders may not
agree with such uses, and the proceeds may be used in a manner that does not
increase our operating results or market value.  Particularly in
respect of the recent global economic recession, credit could be extremely
difficult to obtain on terms acceptable to us, if available at all, and may
materially and adversely affect the terms of any financing that we may be able
to obtain.


22





Indebtedness
may burden us with high interest payments and highly restrictive terms which
could adversely affect our business.





Should we
borrow money to implement our business plans, we would be burdened with interest
payments.  A significant amount of indebtedness could increase the
possibility that we may be unable to generate sufficient revenues to service the
payments on indebtedness, when due, including principal, interest and other
amounts.  Agreements made in connection with any borrowings may
contain significant restrictions and covenants that, among other things, could
limit our ability to make investments, pay dividends or make distributions to
our shareholders, repurchase or redeem indebtedness, grant liens on our assets,
enter into transactions with our affiliates, merge or consolidate with other
entities or transfer all or substantially all of our assets, and restrict the
ability of our subsidiaries to pay dividends or to make other payments to
us.




Our
ability to comply with any restrictions and covenants related to indebtedness in
the future is uncertain and would be affected by the levels of cash flow from
our operations and events or circumstances beyond our control.  Our
failure to comply with any of the restrictions and covenants under indebtedness
financing could result in a default under those facilities, and could cause all
of our existing indebtedness to be immediately due and payable. If any of our
indebtedness were to be accelerated, we may not be able to repay our
indebtedness or borrow sufficient funds to refinance it. Even if we were able to
obtain new financing, it may not be on commercially reasonable terms or on terms
that are acceptable to us.  If any of our indebtedness is in default
for any reason, our business, financial condition and results of operations
could be materially and adversely affected. In addition, complying with any
restrictions and covenants may also cause us to take actions that are not
favorable to our shareholders and may make it more difficult for us to
successfully execute our business plan and compete against companies that are
not subject to such restrictions and covenants.





Disruptions
in world financial markets and the resulting governmental action of the United
States and other countries could have a material adverse impact on our ability
to obtain financing, our results of operations, financial condition and cash
flows and could cause the market price of our common shares to
decline.




The
current deep and potentially prolonged global recession that officially began in
the United States in December 2007 may have a material adverse effect on demand
for our products and consequently the results of our operations, financial
condition and cash flows. In mid-February 2009, the Federal Reserve warned that
the United States economy faces an “unusually gradual and prolonged” period of
recovery from this deep and recessionary period.





The
credit markets worldwide and in the United States have experienced significant
contraction, de-leveraging and reduced liquidity, and the United States
government and foreign governments have either implemented or are considering a
broad variety of governmental action and/or new regulation of the financial
markets. Securities and futures markets and the credit markets are subject to
comprehensive statutes, regulations and other requirements.





The
uncertainty surrounding the future of the global credit markets has resulted in
reduced access to credit worldwide. Major market disruptions and the current
adverse changes in global market conditions, and the regulatory climate in the
United States and worldwide, may adversely affect our business or impair our
ability to borrow funds as needed. The current market conditions may last longer
than we anticipate. These recent and developing economic and governmental
factors may have a material adverse effect on our results of operations,
financial condition or cash flows and could cause the price of our common stock
to decline significantly.


23


We
face competition in an evolving market with no assurance of participation in any
market share and which may cause us to price our products and services at low
margins.





We
anticipate marketing our products and services to both governmental and
commercial customers. These markets and the types of products and services sold
in these markets are in an emerging stage of development. Our ability to grow
will depend in part on the rate at which markets for our products develop, and
on our ability to adapt to emerging demands in these markets.  We must
comply with the Foreign Corrupt Practices Act which prohibits us from certain
types of marketing and sales approaches and activities but such prohibitions may
not constrain some of our foreign competitors.  As such, we may not be
able to compete as effectively with competitors even if they offer inferior
products or services.  If we are not able to compete effectively in
our target markets in compliance with all applicable laws, rules and
regulations, our business may fail.





Our
success or failure is dependent on demand for our products and in responding to
market changes will impact our overall results.





Factors
that will affect our operating results will include demand in the markets that
we serve and our ability to design and release new products that meet customer
needs and to do so quickly and cost effectively. The demands of our customers
will be influenced by general economic conditions in the countries where we
intend to operate and where our products are eventually marketed, as well as
changes in accounting principles or practices, exchange rates, interest rates,
tax rates and tax withholding.





Furthermore,
many of our products are expensive and require significant capital expenditures
by our clients, therefore the demand for our products will be dependent on the
financial status of our clients and their ability to have or obtain adequate
financing to purchase our products and services.





In
addition, the demand for our products and services is due to many factors
including: geopolitical developments, terrorist attacks and government
mandates.A
decline in security-related spending, or a shift away from solutions that we
market, could hurt our prospective sales, put pressure on our prices and reduce
our revenues and margins.





If there
is not a demand for our products or if we are not adequately able to adapt to
the demand preferences of the market there could be a material adverse effect on
our business, financial condition and results of operation.





The
lengthy sales cycles of our products may cause our revenues to fluctuate
substantially.





The
customers who will be evaluating our products will often be making complex and
long range choices to implement or enhance substantial security
projects.  Prospective customers may require long periods of time to
evaluate our products and place orders. As a result, our products may have long
sales cycles. Sales may from time to time be delayed or cancelled for reasons
beyond our control. Such delays and cancellations could be materially adverse to
our business and be detrimental to our results of operations.





We
will depend on our suppliers, our joint venture partners and our strategic
alliance partners.





We
anticipate purchasing component parts used in the manufacture of our products
from third-party suppliers and providing and services through our strategic
alliance partners.  We will depend on these suppliers and strategic
alliance partners and the quality of their products.  However, we may
have limited control over such products and services. From time to time in the
future, our suppliers and strategic alliance partners may experience shortages,
delays or transportation problems in obtaining components for delivery to
us.  As a result, we may not be able to supply products or services in
a timely manner or with the quality required by our
customers.  Consequently, our revenues and customer relationships
could be harmed by the failures of our suppliers.


24


Products
and Services provided through our strategic alliances raises significant risks
that could materially and adversely affect our business plans.





We will
enter into strategic alliance arrangements with providers of complementary
products and services related to satellites, satellite images, security,
surveillance and access controls.  We cannot be certain that the
products and services provided by our strategic alliance partners will be
attractive to the market.  We cannot be certain that the products and
services provided by our strategic alliance partners will operate or perform as
anticipated.  We cannot be certain that the strategic alliance
products and services will integrate with our own systems as we have planned or
that we will be able to maintain the integrated systems after any sales to
customers.  The market may be adverse to accepting our integrated
products and services if there is uncertainty regarding viability of warranties
and post-sale servicing with respect to components which are not manufactured or
provided by us.  Customers may also prefer to integrate new products
and services with existing assets directly with the manufacturers of such
products and services rather than have our Company undertake the
integration.  We also anticipate that some of our strategic alliances
will be established as marketing and sales channels.  We may have
disputes with our strategic alliance partners which could disrupt relationships
with our customers, as well as cause certain products and services which we have
relied upon to become unavailable.  Although we intend to enter into
strategic alliances which are exclusive, the alliances might terminate and the
former alliance partners might compete against us or align themselves with our
other competitors.  If our strategic alliances do not perform as
anticipated our business, financial condition and results of operations could be
materially and adversely affected.





We
cannot assure you that the market will accept our products and
services.





Our
future success will depend on existing markets accepting our products and
services and on the emergence of new markets.  We are offering our own
proprietary products and services as well as integration with the products and
services of strategic alliance partners with a goal to provide comprehensive
security, surveillance, and access control solutions.  These products
and services may not be attractive to prospective customers.





Part of
our business plan is based upon the assumption that we will generate significant
future revenues from sales of high-resolution satellite imagery in new
markets.  The market for the commercial sale of high resolution and
synthetic aperture radar satellite imagery is still developing. It is difficult
to accurately predict the size of the market and the market acceptance of our
products and services.  Our business concept is based on a number of
assumptions which might be erroneous.  We cannot accurately predict
whether our products and services will achieve acceptance in existing markets or
whether new markets will emerge.





Market
acceptance of high performance, low equatorial orbit synthetic aperture radar
relies on various factors, like quality, timelines, scope, sophistication,
price, services and the existence of substitute products and
services.  Lack of sizable market acceptance of our products and
services that apply our offerings, delays in acceptance, failure of particular
markets to develop as well as our need to make material investments to gain
acceptance of the market would affect our business, financial condition and
results of operations negatively.





Our
satellite imaging business will depend on third party satellite operators and
cessation of delivery of their products and services would materially and
adversely affect our business.





Until we
are able to construct and successfully launch our own satellites into orbit, we
will be dependent on third party satellite operators, such as
e-GEOS.  We have no control over the third party providers other than
through contractual agreements which include provisions for cessation and
termination of delivery of satellite images under certain force majeur and other
conditions.  We are required to make substantial minimum annual
payments to e-GEOS in respect of our access to the satellite imaging capacity
provided to us under the Strategic Alliance and Distribution Agreement with
e-GEOS.  If we are unable to make payments for such satellite imaging
capacity and e-GEOS terminates our rights to access the satellite image capacity
to sell to customers, our business could fail. If for any reason e-GEOS or other
third party satellite operators are unable or do not deliver satellite images to
us in a timely manner, our business could be materially and adversely
affected.





Our
satellite imaging business will depend on our ground stations which may be
vulnerable to disruption.





Our
planned ground stations will have operators responsible for controlling the
satellites as well as the responsibility of receiving, processing and analyzing
all the data and images.  These planned ground station centers will be
vulnerable to damage or interruption caused by human error, international
conflict, power failure, accidents or natural disaster.  The
occurrence of such events could disrupt the delivery of our services and
therefore have a material adverse affect on our business, financial condition
and results of operation.


25





Any
failure or inability to protect and maintain our Earth observation images could
have material adverse effects on our business, financial condition and results
of operations.




We expect
to become highly dependent upon our ability to maintain and protect our Earth
observation images against damage that may be caused by transmission failures,
digital storage deficiencies as well as fires, natural disasters, power
failures, telecommunications failures, terrorist attacks, unauthorized
intrusion, computer viruses, equipment malfunction or inadequacy, firewall
breaches or other events.  Until we have our own ground stations, the
satellite imagery content we expect to collect will be downloaded or transmitted
to the facilities of our satellite image providers and then transmitted to our
satellite images repositoryfor
sale to customers or made available directly to our customers. We intend to back
up our Earth observation imagery and permanently store it with redundancy at a
third party data storage provider.  Events beyond our control may
result in significant interruptions in our ability to provide access to our
satellite images repository for our clients. The temporary or permanent loss or
disruption of access to our satellite images repository could damage our
reputation and ability to supply prospective customers with imagery content
which could adversely affect our ability to generate revenues.  Such
circumstances would be detrimental to our ability to retain or attract customers
with consequential material adverse effects on our business, financial condition
and results of operations.





Our
agreement with e-GEOS is subject to Italian government data policy conditions
and our rights to such images may terminate or become restricted which could
materially and adversely affect our business.





Our
subsidiary 4C SatImage and e-GEOS have entered into a Strategic Alliance and
Cosmo SkyMed Distribution Agreement.  e-GEOS has been authorized by
Italian Space Agency (ASI) to distribute the Cosmo data and products, subject to
the data policy agreed upon between ASI and the Italian Ministry of Defense (the
“Data Policy”).  4C SatImage is subject to the Data Policy which
establishes the Italian national policy for the utilization of the Cosmo SkyMed
system, including the distribution and dissemination of satellite imagery and
sets forth certain requirements and limitations with respect to the use and
distribution of satellite imagery that are applicable to e-GEOS and 4C
SatImage.  Under the Data Policy, the Italian government or ASI has
reserved the right to the right directly or through any of the Italian security
agencies, to (i) restrict or limit imaging by Cosmo-SkyMed satellites, (ii)
restrict or limit the collection and distribution of Cosmo-SkyMed data and
products to any specific customer or to all customers, including e-GEOS and 4C
SatImage and any other parties, and (iii) restrict or limit the delivery and/or
operations of any commercial user terminal utilized by us or our affiliates in
conjunction with the Cosmo-SkyMed satellite constellation.  If our
rights to the satellite images provided by e-GEOS under the data policy
terminates or becomes restricted, our business could be materially and adversely
affected.





We
may encounter program delays in connection with the construction and launch of
our satellites.




We may be
unable to launch our satellites in a timely fashion. The construction of our
satellites that and their related ground systems will require a large amount of
technical and engineering work. Various elements of our plan to build and launch
satellites are interconnected with other areas of our strategy, and delays in
one area of our program could cause delays in other areas.  Currently,
we anticipate launching our first satellite in 2011 and then launch an
additional satellite each year thereafter for the following three
years.  However, there are no assurances that we will be able to
construct our satellites and have successful launches during our anticipated
timeframe. Should we contract to build and launch a satellite within a
particular time frame, and then fail to achieve this goal, we will receive less
in revenues than expected or may face litigation, either of which could cause a
material adverse effect on our business, financial condition and results of
operations.





We
cannot assure you that our satellites will operate as designed.




Our
satellites will employ advanced technology designs which may be fragile and not
operate or cease operation.  Some of these technologies may operate in
a different fashion than anticipated, either because of problems with satellite
itself or human operators.  Even if a satellite is operated properly,
minor technical flaws could significantly degrade their performance, which could
materially affect our ability to market our products
successfully.  Our business model depends on our ability to build and
launch satellites; and sell imagery from the satellites of
others.  Should either our satellites or those of third parties we
depend on fail to meet expectations, the loss of a satellite could materially
affect our operations and financial condition.


26





Satellites
may fail, have limited operation lives and are difficult to
replace.  Failure, damage or loss of a satellite may be very expensive
and the cost of replacement may be prohibitive.





Satellites
have a finite expected operational life which is calculated using a variety of
factors including those dealing with its construction, the environment and
useful life expectancy of its various components. The satellites we will depend
upon in the course of our business will be exposed to extreme environmental
conditions and may periodically experience complete or partial failure and
therefore not meet our expected life expectations.  Furthermore, we
cannot guarantee how well a satellite will function toward the end of its
operational life and may not be able to perform to its expected
capacity.





In the
event of such failures or deterioration, we might not be able to be of adequate
service to our clients until we replace the satellite and replacing that
satellite may be challenging and time as well as expensive.  We not
may have the available funds for such an endeavor and we may be required us to
pursue outside financing which may or may not be available and may be on
unfavorable terms.





We
anticipate facing substantial competition from mature and established
companies.





We will
be competing against companies with longer operating histories, more established
products, significant industry credibility, superior name recognition, greater
financial resources and longer standing customer relationships than us. We face
substantial competition from companies worldwide.  Many companies are
actively developing and marketing detection, surveillance products as well as
satellite image delivery systems and software products that compete against us,
or may soon do so. Our competitors include very large and experienced
enterprises. Our larger competitors may be able to better manage large or
complex contracts, maintain a broader geographic presence, compete more
effectively on price, or provide a greater level of customer
support.





We
may have to price our products and services at low margins which could adversely
affect our business.





Our
products and services will compete with satellite imaging and related products
and services offered by private and government providers.  These
competitors have greater financial, personnel and other resources than we have.
Some of our major existing and potential competitors for high-resolution
satellite imagery include: DigitalGlobe Inc., GeoEye Inc., the National Remote
Sensing Agency, Department of Space, Government of India, RADARSAT International
(Canada), ImageSat International N.V. (Israel) and Spot Image SA
(France).





Governments
of countries desiring to have access to the type of products and services we
intend to offer may also develop, construct, launch and operate their own remote
imaging satellites that generate imagery competitive with our products and
services.  The various governments could also reduce their purchases
from commercial satellite imagery providers or decrease the number of companies
with whom they contract.





Our
competitors or potential competitors with greater resources than ours could in
the future offer satellite-based imagery or other products having more advanced
and more attractive features than our products.  These features could
include higher resolutions and materially greater daily data collection
capacity, which will likely strengthen their respective competitive positions in
this business sector.  The emergence of new remote imaging
technologies could negatively affect our marketing efforts. If competitors
continue to develop and launch satellites with proprietary capabilities and
technologies which are commercially more competitive than ours, our business and
results of operations could be harmed.





Even if
we are able to compete with our competitors, we may have to price our products
and services at low gross margins in order to gain market share. Competitive
pricing pressures together with new or improved competing product introductions
by our competitors may adversely affect the average selling price of our
products and services and force us to make downward adjustments.  If
we are unable to offset price decreases by increasing our sales volumes or by
adjusting our product offerings, our revenues and gross margins would
decline.  To grow our business we generate revenues as soon as
possible and thereafter continue to develop and introduce new products, services
and improvements. If we cannot maintain reasonable gross margins, our financial
position may be harmed, our stock price may decline and we may
fail.


27




We
could have substantial difficulty addressing the challenges of rapid
growth.





If demand
for our products increases rapidly, we will need to either increase our internal
production capacity or implement additional outsourcing. Success in developing,
manufacturing and supporting a limited volume of products does not guarantee
that we will experience comparable success in operations conducted on a larger
scale. Modifying our procedures and facilities to adjust to increased may delay
delivery of our products. Manufacturing efficiencies, yields and product quality
may decline as our Company expands over time. If we are unable to meet the
demand of our customers and deliver products quickly and cost effectively,
customers may turn to our competitors. The costs and risks associated with
implementing new technologies, methods and processes, including the purchase of
new equipment, and any resulting delays, inefficiencies and loss of sales, could
harm our results of operations.





Any
failure to manage growth will create risks.  If we fail to manage our
growth effectively, the future expansion of our operations may lead to
losses.





The
growth and expansion of our operations could place a significant strain on our
limited personnel, management and other resources. We must attract, train,
motivate and manage new employees to develop operational, management and
information systems and controls. There can be no assurance that our systems,
procedures or controls will be adequate to support future operations or that our
management will be able to achieve the rapid execution necessary to exploit the
market for our business model. The failure to effectively manage growth could
have a material adverse effect on our business, financial condition, results of
operation and prospects.





Our
ability to compete depends on our ability to innovate successfully and
quickly.





We may
not be able to obtain a competitive position in the market if we fail to
innovate and develop new products quickly. Advanced technologies are evolving
rapidly, product life cycles are short and technologies can quickly become
obsolete. Our ability to compete will depend on our ability to design, develop,
manufacture, assemble, test, market, sell and support new products and
enhancements quickly and cost effectively. The success of our business will
depend on our ability to respond to evolving government and industry standards
and changing customer needs. If we develop new technologies which fail to gain
acceptance in the market, we will not recoup the costs of such development, and
we will have to attempt to develop new technologies and products, at an
additional expense.





We
will face challenges and uncertainties associated with selling our products
internationally.





We
anticipate that a high percentage of our sales will be conducted outside of the
United States, which will subject us to particular risks of doing business
internationally. We will face a number of challenges, including the increased
complexity and costs of managing and staffing international operations,
compliance with foreign technical standards, compliance with foreign laws and
regulations, longer and possibly more difficult collection of receivables,
limited protection of our intellectual property, limited ability to enforce
legal rights and remedies and foreign currency exchange fluctuations relating to
our international operating activities.





Currency
conversion and exchange rate volatility could adversely affect our financial
condition.





To the
extent that we need to convert United States dollars into foreign currencies for
our operations, appreciation of the foreign currency against the United States
dollar could have a material adverse effect on our business, financial condition
and results of operations.  Conversely, if we decide to convert
foreign currencies into United States dollars for other business purposes and
the United States dollar appreciates against the foreign currency, the United
States dollar equivalent we convert to would be reduced.  There can be
no assurance that future movements in the exchange rate of foreign currencies
will not have an adverse effect on our financial condition. There can be no
assurance that we will be able to obtain sufficient foreign exchange on currency
transactions to pay dividends or satisfy other foreign exchange requirements in
the future.


28





Our
success will depend heavily on our management, and should we fail to hire and
retain qualified management and other personnel, we will be adversely
affected.





Our
ability to operate and grow our business effectively will depend on hiring and
retaining key employees and management.  Our success will depend on
the skills, experience, relationships and technical knowledge of our personnel.
If we lose the services of any of our key personnel or are unable to hire
competent personnel, our business could be harmed. The loss of key employees
could reduce the sales of our products, slow our growth and otherwise harm our
business. We will face intense competition for the services of highly skilled
scientists, engineers and other technical personnel we will
require.





As of the
date of this Report, we have only entered into employment agreements with our
Chief Executive Officer, our Chief Technology Officer and our Vice President for
Middle East Military and Defense Projects.  We are currently
negotiating terms and conditions for agreements with our other officers and key
employees.  If we are not able to negotiate mutually acceptable terms
and conditions for agreements and continued services to our Company by the other
officers and key employees, loss of the services of these persons could
materially and adversely harm our business, financial condition and results of
operations.





Many
of our officers and directors have other professional responsibilities which
could conflict with the interests of our shareholders.





Many of
our officers have divided responsibilities which could divert management time
and create potential conflicts of interest.  Our CEO devotes
approximately 80% of his time to our Company and 20% of his time to our
strategic alliance partner 4C Security Solutions Ltd.  The other
officers of our Company dedicate their respective time to services for our
Company on a limited part time basis.Some of our officers and
directors serve in outside capacities and on other boards from time to time, as
well.  These divided responsibilities may divert management time from
our business and could create potential conflicts of interest which could
materially and adversely harm our business, financial condition and results of
operations.





Our
dependence on management creates risks. The loss of our experienced officers and
key employees could adversely affect our business.





Our plan
for success is dependent, in large part, on the active participation of our
executive officers. The loss of their services would materially and adversely
affect our business and future success.  We do not have key-man life
insurance in effect at the present time.  Should any of our key
employees die or become incapacitated, we may not be able to replace them in a
timely or cost effective manner which could materially and adversely harm our
business, financial condition and results of operations.





Our
strategy for growth includes, joint ventures, strategic alliances and mergers
and acquisitions, which may be costly to implement and difficult to
manage.





The
successful execution of the our growth strategy will depend on many factors,
including identifying suitable strategic alliance partners, prospective
acquisition companies, negotiating acceptable terms, successfully consummating
the corporate relationships and obtaining the required financing on acceptable
terms. We will be exposed to risks that we may incorrectly assess new businesses
and technologies alliances and acquisitions.





We could
face difficulties and unexpected costs during and after the establishment of
corporate relationships. The areas where we could encounter risk includes,
without limitation, the following:





·
            failure
      or inability to discover in the course of performing due diligence
      investigations all costs and
liabilities;


·
            acquisition
      purchase prices, liabilities and transaction costs exceeding our estimates
      and which may force us  to raise more capital by incurring debt
      or issuing more common shares, which may significantly reduce the equity
      interests of our shareholders;


·
            diversion
      of our management’s attention and our resources from other business
      matters;


29


·
            integration
      difficulties including retaining the qualified personnel of acquired
      businesses, managing relationships with customers and integrating newly
      acquired businesses and operations into our existing infrastructure;
      and


·
            failure
      to realize benefits from these acquisitions or fail to exploit anticipated
      opportunities including the potential of acquired technologies, complete
      product development, or properly obtain or secure appropriate protection
      of intellectual property rights.





In
addition, since we anticipate that our alliances and acquisitions will generally
be foreign-based we will be subject to additional risks including political,
regulatory and economic risks related to specific countries as well as currency
risks.





As part
of our growth strategy, we intend to evaluate establishing corporate
relationships that are large in relation to our current size. One or more such
transactions, should it occur, may entail risks that are currently unforeseen. A
large transaction could entail fundamental changes to the nature of our business
and assets, and could result in changes in our strategic direction that may
ultimately prove unsuccessful.





We are
initially conducting our new business operations through strategic alliances in
which we are making significant capital investments. We have limited operating
capital and may not have sufficient funds to fully deploy our growth plans which
could materially and adversely affect our business.





We
will face significant challenges relating to the integration of acquired
businesses.





We may
have difficulty integrating those businesses we acquire into the Company. Our
Company may acquire a number of geographically and technologically diverse
businesses and we will continue to seek to selectively acquire companies or
assets that we believe will complement or extend our existing businesses. We
expect that integrating our acquisitions will be a difficult, complex,
time-consuming and expensive process that could place significant demands on our
management and financial resources. In the future, we may encounter risks
associated with the integration of our acquired businesses, such as the
difficulty of coordinating geographically dispersed operations, workforces and
corporate cultures, the difficulty of integrating our operational, financial and
management information systems, internal controls and reporting systems as we
seek to establish uniform standards, controls, procedures and policies across
our company, increased operating expenses resulting from management, transaction
and other costs associated with our acquisition and integration
activities.  Part of our business strategy is to allow each strategic
alliance company to maintain a high degree of operational autonomy while
integrating certain management, administrative and sales functions. Accordingly,
we may have difficulty integrating businesses that operate independently from
one another into our corporate structure.





In
addition, with the newly acquired business we might be unable to maintain an
accurate system of internal controls for SEC reporting purposes, we may not be
able to accurately report our financial results, which could adversely affect
our stock price.





If we
fail to successfully integrate our businesses, we may not be able to achieve
operating economies or synergies that help reduce expenses or increase revenues,
and we may not be able to broaden our product offering in a timely manner to
remain competitive.





We
may be required to divest underperforming assets.





We may in
the future determine that it is advisable to divest ourselves of certain assets
or businesses to reflect changes in our strategy, or to eliminate non-performing
assets. Such divestitures, should they occur, may result in
losses.  There may also be costs and liabilities that we incur or
retain in connection with these divestitures. We may be unable to successfully
divest non-strategic assets.


30


We
may suffer losses caused by legal liability.





We may
face legal liability for damages caused by the actual or alleged failure of the
technologies or services that we will supply. Our products may be utilized to
detect or respond to emergencies, which may increase our legal liability. Many
of our technologies are new and may not perform as desired, and we may face
liabilities related to these products.  We may be liable for actions
on the part of our strategic alliance partners, including, but not limited to,
deficiencies of products and services provided through us by our strategic
alliance partners. The fees, costs,
expenses and disbursements needed to defend any lawsuits may be significant and
may not be covered by any insurance.  An adverse determination in any
legal action against us could be seriously detrimental to our business and its
results of operations.





We
may be unable to secure appropriate insurance.





There is
no certainty we can secure adequate insurance coverage at an appropriate cost,
and even if we do obtain such insurance, it is impossible to insure against all
the risks that we will face.  Insurance prices have significantly
fluctuated in the industries that we operate in and especially in the satellite
industry. We cannot accurately anticipate the insurance market conditions at the
time we are in the market for insurance and factors such as failure of a
satellite using similar technology could cause insurance premiums to be higher
than our current estimates. Higher premiums on insurance policies will increase
our costs. Should the future terms of launch and on-orbit insurance policies
become less favorable than those currently available, this may result in limits
on amounts of coverage that we can obtain or may prevent us from obtaining
insurance at all.





Our
insurance policies may also contain deductibles, limitations and exclusions
which increase our costs in the event of a claim. Furthermore insurance will not
cover all costs, for instance, launch insurance often does not cover losses in
revenues associated with launch failures and delays.  Claims which are
in excess of or otherwise not covered by indemnity or insurance could harm our
financial condition and operating results.





Securing
and maintaining international property rights on our proprietary technologies
will be critical to our success.  If we do not secure intellectual
property protection our business may fail.





Our
success and competitive position will depend on our ability to obtain and
protect intellectual property. Should we fail to protect our intellectual
property rights, our ability to compete effectively would be
reduced.  A failure to protect our intellectual property could
adversely impact our ability to secure additional contracts and preserve market
advantages. In addition, such failure would undermine our ability to defend
ourselves from any third party claims that we are infringing others’
intellectual property rights. We expect to rely upon a combination of patents,
copyrights, trademarks, service marks, trade secrets, confidentiality provisions
and licensing arrangements to establish and protect our intellectual property.
However, we anticipate that we may not be able to protect all of our processes
or technologies. Others may attempt to copy or otherwise obtain and use our
proprietary technologies without our consent.  Our efforts to protect
our intellectual property rights may not prevent challenges to our intellectual
property rights, prevent our competitors from independently developing similar
products, or otherwise provide adequate protection for our intellectual property
rights.





Preventing
unauthorized use of our intellectual property will be require significant
resources and our business may be impaired if we do not vigorously defend our
rights.





Monitoring
the unauthorized use of our technologies throughout the world will be a
difficult task requiring significant resources.  There is a
substantial risk that our customers or their affiliates, partners and end-user
customers may attempt to copy or otherwise obtain and use our intellectual
property without our consent. We may find it necessary to litigate to protect
our intellectual property. Legal disputes with customers could substantially
harm our relationships and sales. Litigation is inherently uncertain, and an
adverse outcome could subject us to significant liability for damages or
invalidate our proprietary rights. The complexity of the technology involved and
inherent uncertainty and cost of intellectual property litigation increases our
risks.  The costs of defending our intellectual property could be
substantial and adversely affect our results of operations.


31


We
may be sued for infringing on the intellectual property rights of
others.





Third
parties may claim that we are infringing on their intellectual property
rights.  We may violate the rights of others without our knowledge. We
may expose ourselves to additional liability if we agree to indemnify our
customers against third party infringement claims. If a litigant establishes
that we are infringing its intellectual property rights, or that our
intellectual property rights are invalid, we may be forced to change our
products, services, or manufacturing processes, and such changes may be
expensive or impractical. We may then be forced to seek royalty or license
agreements from such litigant. If we are unable to agree on acceptable terms, we
may be required to discontinue the sale of key products or halt other aspects of
our operations. In addition, we may also be liable for significant financial
damages for a violation of intellectual property rights.  Any adverse
result related to violation of third party intellectual property rights could
materially and adversely harm our business, financial condition and results of
operations.  Even if intellectual property claims brought against us
are without merit, they may result in litigation which could be costly and time
consuming, and may divert our management and key personnel from operating our
business.





Defending
our intellectual property may be complicated by the international nature of our
business.





Our
efforts to protect our intellectual property may be less effective in some
foreign countries where intellectual property rights are not as well protected
as in the United States. The laws of some foreign countries, including certain
countries in which we intend to sell our products, protect intellectual property
rights less broadly than do the laws of the United States. Many companies have
encountered substantial problems in protecting their proprietary rights in such
countries, and there is a risk that we will encounter similar problems. If our
competitors in these countries copy and utilize our technology without our
permission, our sales and operations may be undermined.





We
may incur significant costs and expenses related to compliance with
environmental regulations or remediation.





Our
business will be subject to environmental regulations that may require
significant expenditures on costs and expenses for compliance.  In
addition, we may be required to incur significant additional costs to comply
with environmental laws and regulations which may be enacted in the
future.  Any violations or liability under environmental laws could
materially harm our business. We will be subject to environmental and safety
laws which could impose liability if we do not remain in compliance. We cannot
completely eliminate the risk of contamination or injury, and, in the event of
such an incident, we could be held liable for any damages that
result.  Penalties and fines, in addition to the costs of remediation,
could materially and adversely harm our business, financial condition and
results of operations.





If
we do business with government agencies, we will be required with to comply with
additional regulatory requirements which could have an adversely affect our
business.





In the
event we do business with the U.S. Government or foreign governments, we will be
subject to particular laws and regulations relating to the formation,
administration and performance of government contracts and subcontracts there
under.  These laws and regulations will impact how we can do business
as a contractor or subcontractor to such government customers and may our
business to additional risks and expenses.  We may be required to
obtain governmental authorizations and approvals to conduct our
business.  Laws and regulations may require the certification and
disclosure of cost and pricing data in connection with certain contract
negotiations, impose rules that define allowable and unallowable costs and
otherwise govern our right to reimbursement under certain cost-based government
contracts, restrict the use and dissemination of information classified for
national security purposes and the export of certain products and technical data
and may impose requirements relating to ethics and business practices, which may
carry criminal penalties for noncompliance ranging from monetary fines and
damages to loss of the ability to do business with the
government.


32


Doing
business with governments may expose us to the risk of contract
cancellation.





There are
inherent risks in contracting with governments. Governments can typically
terminate, reduce orders or otherwise modify any of its contracts for its
convenience (i.e., without cause) whether or not we have failed to perform under
the terms of the applicable contract. Government contracts may also be
terminated if the country’s legislative body fails to allocate and provide funds
for payment of the contract.  In such case, the government would not
be required to pay us for the lost profits for the unperformed
work.





Governments
may develop and operate their own systems, which replace or compete with our
systems.





Governments
may develop, construct and operate satellites whose services replace the need of
those governments to purchase our services.  In addition, governments,
or companies owned or otherwise controlled by governments, may sell services
which compete with our services.





Government
contracts may contain highly punitive clauses.





Government
contracts and related regulations may contain provisions that allow the
government to unilaterally suspend us from receiving new contracts pending
resolution of any alleged violations of procurement laws or regulations, reduce
the value of existing contracts, issue modifications to a contract and control
and potentially prohibit the export of our services and associated
materials.





We
may be audited or investigated by a government agency.





Government
agencies, in the United States and elsewhere, frequently have the authority to
conduct routine audits and investigations of government contractors to monitor
their performance, cost allocations, cost accounting and compliance with
applicable laws, regulations and standards. Such government agencies may have
the right to audit our Company’s costs even after the completion of work for a
government customer and after we have booked the corresponding revenue.
Government agencies also may review the adequacy of, and a contractor’s
compliance with, its internal control systems and policies, including the
contractor’s purchasing, property, estimating, compensation and management
information systems. Any costs found to be improperly allowed or improperly
allocated to a specific contract may not be reimbursed, and any such costs that
have already been reimbursed may have to be refunded. Notwithstanding on-going
compliance, we may be responsible for any past compliance failures by the
companies we may acquire in the future. Responding to governmental audits,
inquiries, or investigations may involve significant expense and divert the
attention of our management. If a government review or investigation uncovers
improper or illegal activities, our Company and our management may be subject to
civil and criminal penalties and administrative sanctions, including termination
of contracts, forfeiture of profits, suspension of payments, damages, fines and
suspension or debarment from doing business with government agencies. In
addition, our reputation could be seriously harmed by allegations of
impropriety, even if unfounded.





Our
business will involve national security issues and governments may accordingly
require us to acquire operating licenses and require our employees to obtain
certain permits and security clearances.





Our
business may depend upon obtaining and maintaining required government security
licenses and clearances in a number of different countries. Obtaining and
maintaining licenses and security clearances is expected to be a lengthy
process.  We expect it to be difficult to identify, recruit and retain
employees who already hold security clearances in the various countries in which
we intend to do business. If our employees are unable to obtain or retain
security clearances, or if our employees who hold security clearances end their
employment with us, we may face delays in fulfilling contracts in certain
countries, or be unable to fulfill or secure new contracts, for customers
involved in certain classified work.  Any breach of our local
operating licenses or security by our Company or for which our employees are
responsible could seriously harm our business, damage our reputation and could
materially and adversely impair our business.


33


We
may be exposed to tax audits.





Our U.S.
federal and state tax returns may be audited by the U.S. Internal Revenue
Service (the “IRS”). An audit may result in the challenge and disallowance of
deductions claimed by us. Further, an audit could lead to an audit of one or
more of our investors and ultimately result in attempts to adjust investors’ tax
returns with respect to items unrelated to us.   We are unable to
guarantee the deductibility of any item that we acquire.  We will
claim all deductions for federal and state income tax purposes which we
reasonably believe that we are entitled to claim. In particular, we will elect
to treat as an expense for tax purposes all interest, management fees, taxes and
insurance. The IRS may disallow any of the various elements used in calculating
our expenses, thereby reducing federal income tax benefits of an investment. To
the extent that any challenge or disallowance is raised in connection with a tax
return filed by an individual shareholder, the cost of any audit and/or
litigation resulting there from would be born solely by the affected
shareholder. In the event the IRS should disallow any of our deductions, the
directors, in their sole discretion, will decide whether to contest such
disallowance. No assurance can be given that in the event of such a contest the
deductions would be sustained by the courts. If the disallowance of any
deductions results in an underpayment of tax, investors could also be
responsible for interest on the underpayments.





We
will be required to comply with U.S. export control regulations, and this may
limit our ability to sell certain types of products and services.





We may
not be able to receive or retain the necessary licenses or authorizations
required for us to export our products and we may incur regulatory penalties for
past compliance failings of our acquired companies. We must obtain a license
from the U.S. government before we may export certain products or technologies
from the United States. We cannot be certain that we will obtain any licenses
required to export our products to foreign customers or receive authorization
from the U.S. government for sales to foreign governments. Export control
regulations have recently precluded the delivery of radar products from the
Unites States. Any seizure or delay in shipment of our products for failure to
obtain a required export license could materially and adversely harm our
business, financial condition and results of operations.





The U.S.
government may limit our ability to distribute satellite images to certain
parties in order to address national security or foreign policy concerns. Actual
or threatened interruptions or limitations on our service could adversely affect
our ability to market our products abroad. In addition, the U.S. Government may
in certain circumstances have the right to review and approve our agreements
with international customers for high- resolution optical imagery. Such reviews
could delay or prohibit us from executing new international distributor
agreements.  In addition, companies considered for prospective merger
and acquisition by us will have to adopt formal export compliance programs prior
to being acquired by us.





In
connection with planned strategic alliances and operator agreements, we may in
the future supply our international customers with Earth stations that enable
customers to downlink data directly from our satellites. Exporting these Earth
stations and technical information relating to these stations may require us to
obtain export licenses from the U.S. Government.  If the U.S.
Government does not issue these export licenses in connection with future
exports, or if these licenses are significantly delayed or contain restrictions,
or if the U.S. Government revokes, suspends or denies a request for renewal of
existing licenses, our financial condition and results of operations could be
materially adversely affected.





Export
control laws may inhibit the free interchange of technical discussions among our
employees.





Absent
license authorization from the appropriate agency, any of our U.S. technologies
related to military or dual-use products cannot be discussed with our foreign
national employees, or with our foreign subsidiaries. U.S. and any applicable
foreign licensing requirements may delay product development and other
engineering or sales activities.





We
may face fines and other penalties for breaches of export laws.





Export
control agencies are authorized to impose monetary penalties or even to suspend
export privileges in the event of breaches of applicable laws and regulations.
We cannot entirely eliminate the possibility that such agency action may
occur.


34


Because
of the nature of our business and the areas in which we operate, our customers
and distributors may need approval from foreign governments.





Our
customers or distributors will be responsible for obtaining local regulatory
approval from the governments in the countries in which they operate to receive
imagery from satellites to Earth stations within such countries. If these
regional distributors are not successful in obtaining the necessary approvals,
we will not be able to distribute real time imagery in those regions. Our
inability to offer real time service in a significant number of foreign
countries could negatively affect our business. In addition, regulatory
provisions in countries where we wish to operate may impose unduly burdensome
restrictions on our operations.





Because
we will operate in many foreign jurisdictions, if foreign governments take
actions harmful to U.S. Companies it might have a material adverse effect on our
business and financial condition.





We intend
to have operations in many jurisdictions including having one dual-band ground
station and main user center located in the Middle East with three future ground
stations planned for Africa and Asia. Therefore we may be adversely affected if
the national authorities where we plan to operate adopt treaties, regulations or
legislation unfavorable to foreign companies.





Our
foreign joint venture partners and our strategic alliance partners may not grow
our business.





We intend
to establish international joint ventures and strategic alliances to market and
sell our products and services. We may also rely on foreign regional
distributors in international markets.  The establishment of these
relationships may require significant time on the part of management and
expenditures which may not result in growth of revenues or enhancement of our
business.  Our joint venture partners and our strategic alliance
partners may not have the skill or experience to develop regional commercial
markets for our products and services. If we fail to enter into agreements on a
timely basis or if our foreign joint venture partners and our strategic alliance
partners fail to market and sell our products and services successfully, these
failures would materially and adversely harm our business, financial condition
and results of operations.  We may also rely on our international
joint venture partners and our strategic alliance partners as marketing
channels. If we fail to develop, market and sell our products and services
successfully through our strategic alliance partner relationships, our business,
financial condition and results of operations could be materially and adversely
affected.





Our
international business exposes us to risks relating to increased regulation as
well as political or economic instability in foreign markets.





We expect
to derive substantially all of our revenues from international sales of our
products and services. International operations are subject to certain risks,
such as: (i) changes in domestic and foreign governmental regulations and
licensing requirements; (ii) deterioration of relations between the United
States and a particular foreign country; (iii) increases in tariffs and taxes
and other trade barriers; (iv) changes in political and economic stability,
including fluctuations in the value of foreign currencies, which may make
payment in U.S. dollars, as provided for under our existing contracts, more
expensive for foreign customers; (v) actual or potential political upheaval in
the countries in which we intend to sell our products and services; (vi) the
nationalization of certain industries; (vii) the introduction of payment
restrictions by central banks; (viii) changes in the laws and policies of the
governments in such countries regarding the convertibility of currencies; and
(ix)  difficulties in obtaining or enforcing judgments in foreign
jurisdictions.  These risks are beyond our control and any of these
adverse events could materially and adversely harm our business, financial
condition and results of operations.


35


Securities
compliance may be expensive and time consuming for our management.





Compliance
with the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated there under, including, the Sarbanes-Oxley Act of 2002
and related requirements will be costly and will place a significant burden on
our management. At the present time, the Company has only a limited history of
operating with the internal controls and procedures required of a public
company. We expect to commence documenting, reviewing, and where appropriate,
improving our internal controls and procedures in anticipation of being a NASDAQ
listed company and eventually being subject to Section 404 of the
Sarbanes-Oxley Act of 2002, which will require management assessments of the
effectiveness of our internal control over financial reporting. Management will
be required to conduct an annual evaluation of our internal control over
financial reporting and include a management report on our internal control over
financial reporting, along with a report by our independent registered public
accounting firm addressing these assessments, beginning with this Report. We
cannot assure you that measures we have taken, or future measures we may take,
will enable us to provide accurate and timely financial reports, particularly if
we are unable to hire additional personnel in our accounting and financial
department, or if we lose personnel in this area. Any failure to maintain an
effective system of internal controls, or any other problems with our financial
systems or internal controls, could result in delays or inaccuracies in
reporting financial information or failure to comply with SEC reporting and
other regulatory requirements.  Any of these situations could
adversely affect our business and stock price.





Estimates
must be made in connection with the preparation of our financial reports. If
changes must be made to financial reports, we could be adversely
affected.





We follow
accounting principles generally accepted in the United States in preparing our
financial statements. As part of this work, we must make many estimates and
judgments which affect the value of the assets and liabilities, contingent
assets and liabilities, and revenue and expenses reported in our financial
statements. We believe that our estimates and judgments are reasonable and we
make them in accordance with our accounting policies based on information
available at the time. However, actual results could differ from our estimates
and this could require us to record adjustments to expenses or revenues that
could be adversely material to our financial position and results of
operations.





A
Majority of our Common Stock is Owned by a Single Investor.





Rudana
Investment Group AG owns approximately 66.3% of our issued and outstanding
shares. This concentration of ownership could discourage a potential acquirer
from making a tender offer or otherwise attempting to obtain control of us, or
could otherwise delay or prevent a change in control transaction or other
business combination, which could in turn have an adverse effect on the market
price of our common shares. As long as this concentration of ownership persists,
it is unlikely that any other holder or group of holders of our common shares
will be able to affect the way we are managed or the direction of our business.
The interests of the control group of shareholders could conflict with the
interests of other shareholders. In addition, we may adopt amendments to our
organizational documents and applicable state law which have anti-takeover
provisions that could delay or prevent a change in control of our
company.





Our
Management Services Agreement with Prime Asset Finance Ltd. has significant
costs and may not be aligned with the interests of all
Shareholders.





We have a
management services agreement with Prime Asset Finance Ltd., a UK company which
is a wholly owned subsidiary of Rudana Investment Group AG, our majority
shareholder.  Under the terms of the agreement, we have agreed to pay
an initial services fee of $250,000 to Prime Asset Finance Ltd. and will
continue to pay management services fees of $25,000 per month in respect of
assisting and advising us on developing strategic plans for inception of
operations, preparing acquisition growth plans, identifying potential
acquisition candidates, initiating discussion with potential acquisition
candidates and strategic alliance partners, analyzing the financial implications
of potential acquisitions and strategic alliances; negotiating terms and
conditions of transactions and strategic alliances; outlining and managing the
due diligence process; developing strategies to maximize revenue and corporate
value including growth through sales, utilizing alternative distribution
channels and enhancing marketing programs and providing support for investor
relations programs. All of the fees have accrued to date and have not yet been
paid. In addition, Prime Asset Finance Ltd. would be compensated in the amount
of 5% of the total transaction value of any company acquired by us by merger or
acquisition.  These payments and compensation may have a significant
cost to us and could materially and adversely harm our business, financial
condition and results of operations.  Prime Asset Finance holds a 40%
interest in 4C Satellites and may have conflicts of interest in respect of
certain of our activities.  In addition, because of the relationship
between Prime Asset Finance and Rudana as our majority shareholder, the advice
and assistance rendered by Prime Asset Finance to us may not be aligned with the
interests of all shareholders.


36


We
will indemnify our officers and directors which could cause our capital
resources to be used to defend and settle claims or legal actions against
them.





The
Articles of Incorporation, By-Laws and the Nevada Revised Statutes, as amended
contain provisions that limit the liability of directors for monetary damages
and provide for indemnification of officers and directors under certain
circumstances. Such provisions may discourage shareholders from bringing a
lawsuit against directors for breaches of fiduciary duty, even though such
action, if successful, might otherwise have benefited our shareholders.
According to such provisions, we are responsible for payment of costs of
settlement and damage awards against our officers or directors.





The
Nevada Revised Statutes provides that our directors and officers are generally
not personally liable to us or our shareholders or creditors for monetary
damages for acts and omissions in his or her capacity as an officer or director
unless it is proven that such act or omission constituted a breach of fiduciary
duty as a director or officer and such breach involved intentional misconduct,
fraud or a knowing violation of law.





The
Articles of Incorporation provide that we will indemnify our directors and
officers against all costs, expenses and liabilities, including the amounts of
judgments, amounts paid in compromise settlements and amounts paid for services
of counsel and other related expenses, which may be incurred by or imposed on
him or her in connection with any claim, action, suit, proceeding, investigation
or inquiry hereafter made, instituted or threatened in which he or she may be
involved as a party or otherwise by reason of any past or future action taken or
authorized and approved by him or her or any omission to act as such officer or
director, at the time of the incurring or imposition of such costs, expenses, or
liabilities, except such costs, expenses or liabilities as shall relate to
matters as to which he or she shall in such action, suit or proceeding, be
finally adjudged to be liable by reason of his or her negligence or willful
misconduct toward the corporation or such other corporation in the performance
of his or her duties as such officer or director.





In
addition to the indemnification provided for in its Articles of Incorporation
and By-Laws, we may enter into agreements to indemnify our directors and
officers. Under these agreements, we will be obligated to indemnify our
directors and officers for expenses, attorneys’ fees, judgments, fines and
settlement amounts incurred by any director or officer in any action or
proceeding arising out of the director’s or officer’s services as a director or
officer of us, any of our subsidiaries or any other company or enterprise to
which the person provides services at our request. We believe that these
provisions and agreements are necessary to attract and retain qualified
individuals to serve as directors and officers.





Certain
of our officers and directors are citizens and residents of countries other than
the United States.  In the event our shareholders seek legal remedies
against such directors and officers, the citizenship and residence of these
individuals may adversely affect the ability of shareholders to seek
recourse.





Service
of process and the collection of a judgment against an individual who is not a
resident of the United States may take a greater length of time, and may involve
a greater level of complexity and expense than against a person who is located
in the United States.  This may adversely affect the ability of
shareholders to if they were to seek recourse against officers and directors and
to recover any judgments.





Risks
Related To Investing In Our Common Shares





We
do not anticipate paying cash dividends. This may deter certain investors and
adversely affect our stock price.





We have
never paid any cash dividends on our common stock and we do not anticipate
paying cash dividends in the foreseeable future. We intend to retain any cash
flow we generate for investment in our business. Accordingly, our common stock
may not be suitable for investors who are seeking current income from
dividends.  Any determination to pay dividends on our common stock in
the future will be at the discretion of our board of directors.


37


Because
the market for our common shares is limited, investors may not be able to resell
their common shares.  Investors should therefore assume that any
investment in our company will be illiquid for the foreseeable
future.





Our
common shares trade on the Over-the-Counter-Bulletin-Board quotation system.
Trading in our shares has historically been subject to very low volumes and wide
disparity in pricing. Investors may not be able to sell or trade their common
shares because of thin volume and volatile pricing with the consequence that
they may have to hold your shares for an indefinite period of time.




There
are legal restrictions on the resale of the common shares offered, including
penny stock regulations under the U.S. Federal Securities Laws.  These
restrictions may adversely affect your ability to resell your
stock.





We
anticipate that our common stock will continue to be subject to the penny stock
rules under the Securities Exchange Act of 1934, as amended. These rules
regulate broker/dealer practices for transactions in "penny stocks." Penny
stocks are generally equity securities with a price of less than $5.00. The
penny stock rules require broker/dealers to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker/dealer must also
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker/dealer and its salesperson and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations and the broker/dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction, the broker and/or dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number
of broker-dealers who may be willing to engage in the trading of our shares.
These additional penny stock disclosure requirements are burdensome and may
reduce all of the trading activity in the market for our common stock. As long
as the common stock is subject to the penny stock rules, our shareholders may
find it more difficult to sell their shares.




Our
future sales of our common shares could cause our stock price to
decline.




There is
no contractual restriction on our ability to issue additional shares. We cannot
predict the effect, if any, that market sales of our common shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales by us of our common shares in the public market, or the
perception that our sales may occur, could cause the trading price of our stock
to decrease or to be lower than it might be in the absence of those sales or
perceptions.





If
we raise additional funds through the issuance of equity or convertible debt
securities, your ownership will be diluted.





If we
raise additional funds through the issuance of equity or convertible debt
securities, the percentage ownership held by existing shareholders will be
reduced and those shareholders may experience significant dilution. In addition,
new securities may contain certain rights, preferences or privileges that are
senior to those of our common shares.  Furthermore, any additional
equity financing may be dilutive to shareholders, and debt financing, if
available, may involve restrictive covenants, which may limit our operating
flexibility with respect to certain business matters.  If additional
funds are raised through the issuance of equity securities, the percentage
ownership of our shareholders will be reduced, shareholders may experience
additional dilution in net book value per share and such equity securities may
have rights, preferences or privileges senior to those of our
shareholders.


38


The
capital structure of our strategic alliances, joint ventures and
non-wholly-owned subsidiaries will dilute our earnings and reduce the effects of
any profits in our stock.





Our
business model includes establishment of strategic alliances, joint ventures and
inclusion of strategic partners and strategic investors in non-wholly-owned
subsidiaries.  While we believe the reasons for establishing the
strategic alliances, joint ventures and including strategic partners and
strategic investors in non-wholly-owned subsidiaries will enhance shareholder
value, the effects of third party equity participation at the operating level of
our businesses will dilute the effects of our revenues in respect of your stock
ownership in our Company.  In addition, some of the strategic alliance
partners, joint venture partners and other strategic partners and strategic
investors in non-wholly-owned subsidiaries constitute related party transactions
with the Company. The terms and conditions of our agreement will be reviewed and
assessed by the independent members of our Board of Directors to ascertain that
such agreements are fair and reasonable to our Company and its
shareholders.  However, notwithstanding the general benefits to the
Company, the net effect of such agreements will be to reduce the equity
participatory interests of our shareholders in the net revenues in the Company
by dilution of gross revenues at the operating levels of the strategic
alliances, joint ventures and non-wholly-owned subsidiaries.





Grants
of stock options and other rights to our employees may dilute your stock
ownership.





We
plan to attract and retain employees in part by offering stock options and other
purchase rights for a significant number of common shares. We have granted stock
options to certain officers and directors.  The issuance of common
shares pursuant to these options, and options issued in the future, will have
the effect of reducing the percentage of ownership in us of our then existing
shareholders.




Our
stock price may be volatile and market movements may adversely affect your
investment.





The
market price of our stock may fluctuate substantially due to a variety of
factors, many of which are beyond our control, including, political, military
and security developments in the United States and worldwide, the development of
fundamentally new detection, surveillance, active denial systems and software
technologies, general and industry-specific economic conditions, changes in
financial estimates or recommendations by securities analysts, sales of our
common shares or other actions by shareholders with significant holdings, and
general market conditions. The stock markets in general have experienced
substantial volatility that has often been unrelated to the operating
performance of particular companies. These broad market fluctuations may
adversely affect the market price of our stock. Future sales of our common
shares by our shareholders could depress the price of our stock.





Absence
of equity research reports or unfavorable reports could adversely affect the
price of our stock.




The
trading market for our common shares will rely in part on the research and
reports that equity research analysts publish about us and the industry segments
in which we operate. The public price of our publicly traded common shares could
decline if one or more securities analysts downgrades investment in our common
shares or if those analysts issue other unfavorable commentary about our
industry or other major participants in our industry, or if they cease
publishing reports about us.


39


Ministerial
Matters





We were
incorporated in the State of Nevada on December 28, 2004 as Amecs
Inc.  Initially, the intention of the original founders of the Company
in 2004 was to provide Internet-based business to business
services.  The original founders subsequently decided that the Company
should pursue another type of business.  A change of control of the
Company occurred on December 18, 2007 and Rudana Investment Group AG, a Swiss
investment company, became the owner of a majority of our issued and outstanding
shares.  In connection with the change of control, on February 12,
2008 we changed our name from “Amecs Inc.” to “4C Controls Inc.” and our trading
symbol on the over-the-counter bulletin board changed to FOUR.  On
March 3, 2008, we announced a change in our business model as described
above.





Our
principal business address is 100 Wall Street, 21st Floor,
New York, NY 10005 and our telephone number is 866-515-7069.





Where
You Can Find More Information





The
Company is a “reporting company.” We expect to continue to file annual,
quarterly and other requisite filings with the U.S. Securities and Exchange
Commission (the “SEC”).  Members of the public may read and copy any
materials which we file with the SEC at the SEC’s Public Reference Room at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549. Members of the public may
obtain additional information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that
contains reports, proxy and information statements, as well as other information
regarding issuers that file electronically with the SEC. This site is located at
http://www.sec.gov.





We
maintain an Internet website at www.4Ccontrols.com.In
addition to news and other information about our company, we make available on
our website our annual report on Form 10-K, our quarterly reports on
Form 10-Q, our current reports on Form 8-K and all amendments to those
reports as soon as reasonably practicable after we electronically file this
material with, or furnish it to, the Securities and Exchange Commission and
copies of our 4C Controls’ Code of Ethics. The information available on our
website is provided for convenience only and is not incorporated into this
Report.





You may
also request a copy of our filings at no cost, by writing or telephoning us at
the address set forth above.





ITEM
2:      PROPERTIES





The
Company does not own any real estate or other property.  The Company
does not plan on investing directly or indirectly in real estate in the near
future.  As of the date of this Report, the Company is currently
utilizing office space at 100 Wall Street, New York, NY 10005.  There
is no rent charged for this space, which is being temporarily provided to the
Company by its counsel.  We intend to move to new offices for our
corporate headquarters in the foreseeable future.





ITEM
3:      LEGAL PROCEEDINGS




The
Company is not, and has not been during the period covered by this Report, a
party to any legal proceedings.





ITEM
4:      SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS




There
have been no meetings of security holders during the period covered by this
Report.




No
matters were submitted to the vote of the Company’s security holders during the
period covered by this Report.


40




PART
II





ITEM 5:
            MARKET FOR REGISTRANT’S COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES





(a)
Market Information.





Our
shares are traded on the over-the-counter bulletin board operated by the
National Association of Securities Dealers, Inc. under the symbol “FOUR”. Prior
to February 26, 2008 our common stock traded on the over-the-counter bulletin
board under the symbol “AMEC”. The following table sets forth for the periods
indicated the high and low prices for the Company’s common stock in U.S.
Dollars. These quotations reflect only inter dealer prices, without retail mark
up, mark down or commissions and may not represent actual transactions. 
The following prices reflect the effects of the Company’s 6 for 1 stock
dividend declared on December 18, 2007 and paid on January 4,
2008.




Common StockHigh
                
                
                LowQuarter
      Ended December 31, 2008
                
                
                4.00
                
                
                
                1.10Quarter
      Ended September 30, 2008
                
                
                10.69
                
                
                
                1.35Quarter
      Ended June 30, 2008
                
                
                7.35
                
                
                
                3.53Quarter
      Ended March 31, 2008
                
                
                6.00
                
                
                
                0.25Quarter
      Ended December 31, 2007
                
                
                5.90
                
                
                
                1.02Quarter
      Ended September 30, 2007
                
                
                2.50
                
                
                
                2.00Quarter
      Ended June 30, 2007
                
                
                2.40
                
                
                
                1.85Quarter
      Ended March 31, 2007
                
                
                2.90
                
                
                
                0.65





(1) No
stock price information is available regarding the Company prior to December 18,
2006.





(b)
Holders.





At March
12, 2009, there were 77 stockholders of record of the Company’s common
stock.





(c)
Dividends.





On
December 18, 2007, the Board of Directors declared the payment of a stock
dividend, approving the payment of such dividend to all of the shareholders of
record of the Company as of the record date of January 2, 2008.  The
stock dividend was paid on January 4, 2008 and the ex-dividend date was January
7, 2008. Each shareholder received six additional shares of the Company’s common
stock for each one share of the Company’s common stock which they held on the
record date.  Following payment of the stock dividend, the issued and
outstanding share ownership of the Company increased from 6,007,650 shares of
Company common stock to 42,053,550 shares of common stock.





During
the period covered by this Report, we have not declared or paid cash
dividends.  The Company does not intend to pay cash dividends on its
common stock in the foreseeable future.  We anticipate retaining any
earning for use in our continued development.  We are not subject to
any restrictions respecting the payment of dividends, except that they may not
be paid to render us insolvent.





(d)
Securities authorized for issuance under equity compensation plans.





The
Company does not currently have an equity compensation plan.  The
Company expects to adopt an equity incentive plan for its officers, directors
and key employees during 2009 and make grants under such plan in accordance with
comparable industry standards.





41




Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities





The
following sets forth information pertaining to all securities of the Company
sold within the past three years which were not registered under the Securities
Act of 1933, as amended.  In the two years ended December 31, 2006 and
2007 no unregistered securities were sold or issued by the Company.





In the
year ended December 31, 2008, the Company entered into all of the following
transactions in reliance upon the exemption from Securities Act registration
provided by Section 4(2) of the U.S. Securities Act of 1933, as amended (the
“Securities Act”), and the rules and regulations promulgated thereunder,
including Rule 903 of Regulation S.  All of the sales of the Company’s
securities were made only to the class of persons who are non-U.S. persons (as
such term is defined in Rule 902(k) of Regulation S) outside of the United
States pursuant to securities purchase agreements which each contained
representations and warranties from each purchaser providing the factual basis
for the Company to reasonably rely upon Regulation S.  Each of the
certificates issued in respect of the sales of unregistered securities contain
restricted transfer legends prohibiting sale or transfer except (a) in an
offshore transaction complying with Rule 903 or Rule 904 of Regulation S; (b)
pursuant to an available exemption under the Securities Act and state securities
laws; (c) in a transaction that does not require registration under the
Securities Act or any applicable state laws, or (d) pursuant to a registration
statement which has been declared effective by the U.S. Securities and Exchange
Commission and which continues to be effective at the time of transfer of such
securities.





During
August 2008: (a) four subscribers purchased an aggregate of 766,000 shares at
$3.00 a share for total proceeds of $2,298,000; (b) one subscriber purchased
80,000 shares at $3.50 a share for total proceeds of $280,000; and (c) four
subscribers purchased an aggregate of 279,990 shares at $5.00 a share for total
proceeds of $1,399,950.  The purchasers as a class are accredited investors
who are non-U.S. persons.  The total of these sales of securities in the
year ended December 31, 2008 amounted to 1,125,990 shares.





On March
7, 2008, Rudana Investment Group AG, our majority stockholder, purchased 470,450
of our common shares at a purchase price of $2.00 per share, and received
117,613 Warrants exercisable for the purchase of one share of our Company common
stock at a purchase price of $0.25 per share, which shares and warrants were
acquired in consideration for the payment of $1 million Australian dollars
(approximately US $940,900) paid on behalf of our Company to 4C Security
Solutions as the first installment in respect of the establishment of our
Company’s strategic alliance with 4C Security Solutions.  On August
26, 2008, our Company and Rudana mutually agreed to rescind the March 2008 stock
purchase and cancel the March 2008 warrants and converted the rescinded purchase
price to a shareholder loan.





ITEM 6:SELECTED FINANCIAL
DATA





Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted Selected
Financial Data.


42


ITEM 7:
            MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF
      OPERATIONS





This
Annual Report on Form 10-K contains forward-looking statements within the
meaning of the U.S. federal securities laws. Actual results and the timing of
events could differ materially from those projected in forward-looking
statements due to a number of factors, including those described under “Item 1A
— Risk Factors” and elsewhere in this Annual Report. See “Special Note Regarding
Forward-Looking Statements.”





Plan
of Operations





Our
business plan focuses on offering cutting edge high resolution Synthetic
Aperture Radar (SAR) satellites and high resolution optical satellites, SAR and
high resolution optical satellite images, and integrated high technology
security, surveillance and access control solutions.  We have
structured our business into three operating segments:





·
            Satellites & Satellite
      Images:High resolution low equatorial optical SAR and optical
      satellites for earth observation, high resolution optical and SAR
      satellite images and satellite image ground direct receiving stations with
      advanced image processing and analysis
centers.





·
            Security, Surveillance and
      Access Controls:Cutting edge risk assessment, security,
      surveillance and access controls systems, deploying innovative
      applications and offering diverse and integrated scalable
      solutions.





·
            Specialized & Proprietary
      Security Products:Proprietary Security Technologies, including
      Ground High Performance Radars for Intrusion Detection,Electromagnetic
      Security Systems, Real Time Positioning Systems (RTPS), Radio Frequency
      Identification (RFID), and Real Time Locating Systems
    (RTLS).





During
the year ended December 31, 2008 and through the date of this Report, we have
been refining our business plan, recruiting our management team, establishing
strategic alliances and achieving several important milestones as discussed in
the Part I of this Report.





We
believe the Company is well situated to commence generating revenues during 2009
through sales of SAR satellite images under our Strategic Alliance and
Distribution Agreement with e-GEOS.  Under the terms of our agreement
with e-GEOS, we may commence sales and distribution of SAR satellite images
through the existing e-GEOS delivery infrastructure.  During the first
quarter 2009 we have initiated establishing a strategic alliance network of
sales offices throughout the Middle East and Africa to commence our marketing
and sales program to governments and commercial end-users of the SAR
images.  We have also established several key strategic alliance and
joint ventures for sales of products and services for high technology security,
surveillance and access control integrated solutions in broad scale projects in
the Middle East and Africa.  We believe that our strategic alliance
approach to marketing our products and services will facilitate access to
regional key decision makers and advisers of prospective customers to create a
strong foundation for generating revenues commencing in 2009.





Strategic
Alliance and Distribution Agreement with e-GEOS





Subsequent
to the period covered by this Report, in January of 2009, we executed our
Strategic Alliance and Distribution Agreement with e-GEOS.  The
Strategic Alliance and Distribution Agreement grants exclusive rights to us for
distribution of Cosmo Sky-Med satellite constellation images in certain
countries of the Middle East and North Africa (MENA) and South East
Asia.  The e-GEOS agreement also provides the Company with the right
to distribute Cosmo-SkyMed products on a non-exclusive basis in substantially
all other African countries.  The exclusive distribution rights
include worldwide sales of substantially all satellite images taken over the
exclusive territory countries as well as substantially all worldwide e-GEOS
satellite images and products which are sold within the exclusive territory
countries.  We expect to commence construction of our satellite-data
direct receiving station in Abu Dhabi (UAE) and have the satellite direct
receiving station commence operations during 2009.  Prior to the
operation of our direct receiving station, we may use the existing
infrastructure of e-GEOS for worldwide sales and distribution of SAR satellite
images.  Our rights under the e-GEOS Agreement for sales and
distribution of satellite images requires substantial minimum annual payments to
e-GEOS.  In addition, we must pay for the significant costs of
building and maintaining the satellite direct receiving ground
station.  We believe that our strategic alliance sales and marketing
program will facilitate sufficient sales of satellite images for coverage of the
minimum annual payments to e-GEOS and cover the costs of building and
maintaining the direct receiving station.  We expect to commence
generating revenues under our Strategic Alliance and Distribution Agreement with
e-GEOS during the course of 2009.  We will deploy our operations under
the e-GEOS Agreement through 4C Satimage Ltd., a 51% majority-owned operating
subsidiary.  The minority partners in 4C Satimage Ltd. are strategic
alliance partners and strategic investors.


43


4C
Gulf Earth Observation Center (4C GEOC)





Subsequent
to the period covered by this Report, in January of 2009 we announced our plans
to build a 10,000 square meter high resolution satellite space center in Abu
Dhabi to be known as the 4C Gulf Earth Observation Center (4C
GEOC).  We are planning for the facility to host an earth observation
satellite data direct receiving station (DRS) and offer university level courses
in space engineering held in cooperation with Politecnico di Torino, one of the
leading scientific research institutions in Europe.  We expect to
finance the 4C GEOC together with equity investments of Hydra Trading and other
strategic investors from the United Arab Emirates.  Our strategic
alliance partner Hydra Trading is a subsidiary of the PAL Group and a part of
the Royal Group of Companies, one of the largest investment companies in the
Middle East and Africa.  Hydra Trading is primarily focused on
supplying security and armaments equipment to both civilian and military
sectors.  We expect to own approximately 50% of the equity interests
in the 4C GEOC.  While we have agreed in principal to proceed with
Hydra Trading on the development of 4C GEOC, we have not finalized the amounts
which the Company and its partners will be committing to this
project.  We will need to raise significant capital to proceed with
the development of the 4C GEOC, however, we expect the strategic alliance shared
costs and partnering structure to facilitate commencement of the realization of
the 4C GEOC during 2009.  We expect the 4C GEOC to serve as a
significant marketing and distribution platform for sales of our satellite
images in the Middle East and North Africa (MENA) region.  Our
strategic alliance interests in 4C GEOC will be held through our majority-owned
subsidiary 4C Satimage Ltd.





4C
Hydra Systems Engineering & Technologies





Subsequent
to the period covered by this Report, in January of 2009 we announced together
with Hydra Trading LLC (Abu Dhabi) the formation our strategic alliance to be
known as 4C Hydra Systems Engineering & Technologies, whose mission will be
to provide infrastructure projects with a comprehensive systems approach for
integrated solutions delivery, spanning from traditional projects (commercial
buildings) to large infrastructure projects (new cities, ports, airports,
highways, etc).  We expect to own approximately 50% of the equity
interests in the 4C Hydra Systems Engineering & Technologies strategic
alliance.  We expect to commence working on 4C Hydra Systems
Engineering & Technologies projects during the course of 2009 with a view to
generate revenues in this operating unit during the course of
2009.





4C
Global Security Consulting Ltd. - 4C Systems Engineering Ltd. – 4C Homeland
Security and Defence Systems Ltd.





We have
also created three strategic operating units which will further support the
Company’s growth strategy and expansion plans to become a full spectrum provider
of turnkey integrated scalable solutions for sophisticated high-technology
systems, including but not limited to, civil and homeland security and
defense.  Each of the new operating units are majority owned
subsidiaries of the Company.  The operating units are: (i)4C Global Security Consulting
Ltd., a joint venture with ISDS Hellas S.A., which will engage in threat
analysis, assessment and design of security solutions; (ii) 4C Systems Engineering Ltd., a
joint venture with Hellenic Technologies One-Partner EPE, which will engage in
the design, integration, planning, procurement, implementation, operation,
management & maintenance of systems; and (iii) 4C Homeland Security and Defence
Systems Ltd., a joint venture with Theron S.A. to provide turnkey
scalable solutions for high technology projects in homeland security, defense,
& offset benefits programs.





44




4C
Security Solutions Limited and 4C Satellites Limited





We have
created a strategic alliance with 4C Security Solutions Limited (formerly known
as BQT Solutions Limited) and its subsidiary 4C Satellites Limited (formerly
known as BQT Satellites Limited).  4C Security Solutions specializes
in access control systems, biometric and smart card readers, CCTV, cameras and
customized security solutions.  The purpose of our strategic alliance
with 4C Security Solutions is to obtain joint marketing synergies, international
branding and leveraging the integrated value of our respective products and
service offerings.  We expect this strategic alliance to facilitate
our ability to offer comprehensive and fully integrated security and access
control solutions to prospective clients on a global basis.  4C
Security Solutions has sold security access control products throughout the
world, including to both large multinational corporations and government
agencies.  4C Security Solutions intends expand its business model and
broaden its undertakings to include engaging in integrated security access
projects.  As of the date of this Report we have invested AUD $4
million (approximately US $3.5 million) and we own approximately 19.8% of the
issued and outstanding equity interests in 4C Security Solutions.  We
account for our ownership of the shares as held for investment
purposes.  Under our agreement with 4C Security Solutions, we have
also been issued options under which we may purchase of 9.5 million shares of 4C
Security Solutions at a purchase price of AUD $0.10 per share, which may be
exercised in whole or in part at any time prior to December 31,
2013.  Substantially all of the payments to date in respect of our
investments in 4C Security Solutions have been made on our behalf by Rudana
Investment Group AG which have been treated as shareholder loans.





Subsequent
to the period covered by this Report, we entered into two additional agreements
with 4C Security Solutions as of February 1, 2009.  Our Provision of
Services Agreement with 4C Security Solutions provides for us to pay 4C Security
Solutions for the use of certain 4C Security Solutions’ staff.  This
agreement terminates on June 30, 2011.  In addition we entered into a
second Provision of Services Agreement with 4C Security Solutions, pursuant to
which 4C Security Solutions has agreed to pay us for the shared part-time
allocation of services by our Chief Executive Officer, Anastasios
Angeloglou.  Under the second Provision of Services Agreement, Mr.
Angeloglou will serve as the Chief Executive Officer of 4C Security Solutions as
well as our Company and he will allocate approximately twenty eight hours per
month to the business of 4C Security Solutions.  The second Provision
of Services Agreement also terminates on June 30, 2011.





In
connection with our strategic alliance 4C Security Solutions, we agreed to
acquire a 40% interest in 4C Satellites Ltd.  4C Satellites is in a
nascent stage of development and does not yet have any assets or
operations.  We intend to use 4C Satellites as our platform for
developing our SAR and high resolution optical satellites program.  4C
Satellites has established a joint venture with 4C Polito Space S.p.A., an
Italian private company, in cooperation with Politecnico di
Torino.  We expect to work closely with the Politecnico di Torino on
all of our projects through Dr. Riccardo Maggiora, who is our Chief Technology
Officer and an Associate Professor at the Politecnico di Torino.  4C
Satellites is an Australian corporation which is 20% owned by 4C
Security Solutions and 40% owned by Prime Asset Finance Ltd.  The
remaining 40% is subject to issuance to 4C Controls upon completion of an equity
financing commitment.  In consideration for the 40% interest in 4C
Satellites, we have agreed to capitalize 4C Satellites with AUD $14 million for
commencement of the satellites production program.  We are planning
for 4C Satellites to serve as the satellite production and sales business unit
of our Company.  The 4C Satellites program is part of our strategic
plan to cover the entire value chain of high resolution Earth observation
satellite-based businesses, from satellite manufacturing and operation to images
processing and sales to end users.  We are planning to invest in 4C
Satellites as soon as we have sufficient capital to do so.  Due to the
effects of the international financial crisis, we have not yet been able to
commence payment of our AUD $14 million equity infusion into 4C Satellites and
we may not be able to complete this investment during the foreseeable
future.  However, we still plan to move forward with the 4C Satellites
project as soon as reasonably feasible.





45




4C
Polito Space S.p.A.





4C
Satellites owns 75% of 4C Polito Space Technologies S.p.A. (“4C Polito Space”),
an Italian private stock company.  The Politecnico di Torino owns 17%
of 4C Polito Space.  The remaining 8% of 4C Polito Space is owned by
other parties, including Dr. Riccardo Maggiora, our Chief Technology Officer and
member of our Board of Directors, who owns 2% of 4C Polito Space.  We
plan to design and build our high resolution optical and SAR satellites
dedicated for Earth observation and surveillance through 4C Polito Space and 4C
Satellites.  Dr. Maggiora also serves as CEO of 4C Polito Space and he
is an Associate Professor at the Politechnico di Torino.  We intend to
work in close cooperation with the Politechnico di Torino through Dr. Maggiora
in regard to research, development and realization of our satellite program. In
consideration of the benefits which we expect to derive from our affiliation
with 4C Polito Space, we have agreed to cover certain fees, costs, expenses and
disbursements of 4C Polito Space in connection with preparations for prospective
production of SAR and high resolution optical satellites.  We believe
covering these costs is reasonable and necessary in order for us to obtain the
benefit of technical support from 4C Polito Space so that we may commence our
own satellite production program.





“GulfSatellites”
High Resolution Satellite Program





We plan
to offer an innovative solution to improve the Earth observation applications
with our “GulfSatellites” program.  GulfSatellites is an Earth
Observation System (EOS) expected to consist of four high resolution SAR
satellites (GulfSARs 1, 2, 3 & 4) which we intend to devote to security
applications, maritime management, risk management, environmental protection,
geology, cartography and planning.  The area of interest has been
defined as the region with latitude ranging from 43° S to 43° N. The program is
expected to include two high resolution optical satellites as well as the four
SAR satellites.




The
following technologies are being designed into the GulfSatellites
program:





·
            a
      high revisit time, even with only one
satellite;


·
            the
      capability to acquire high resolution images of the
  target;


·
            night/day
      and all weather imaging capability;


·
            very
      short interval between the user request and the release of the imaging
      product;


·
            a
      fast downlink and successive processing
  capability;


·
            the
      possibility to take a large number of images per
  day;


·
            the
      payload capability to acquire images at a minimum distance from one
      another, so as to minimize the programming conflicts;
  and


·
            the
      possibility to cover wide areas, to maximize the opportunity to sense
      distributed targets.





The
satellites are expected to be equipped with a multi mode high resolution
Synthetic Aperture Radar (SAR) payload and positioned in an inclined Low Earth
Orbit, optimizing the revisit time over the area of interest at the expense of
global accessibility.  A network of ground stations is planned to
collect the imagery data from the satellites and provide the proper telemetry,
tracking and control.





The SAR
payload, operating in the X-band, is designed for pointing to the right or left
of the satellites ground path to grant access to a region of 600 Km on each
side.  State of the art technology is expected to provide
exceptionally high resolution, large swath and excellent quality in all the
imaging SAR measurement modes.





The first
2 satellites to form the GulfSatellites constellation, GulfSAR-1 and GulfSAR-2,
are expected to be fabricated by the end of 2011 and positioned into their orbit
by the first half of 2012.  We are in advanced stages of discussions
regarding the capital structure of GulfSatellites with global industrial
aerospace enterprises and major regional UAE based investors.  We
expect to finance the GulfSatellites program through direct third party equity
and strategic alliance participation in the GulfSatellites corporate
vehicle.  We believe that the capital requirements of the program will
necessitate significant dilution of our equity interests and we expect to retain
only a minority interest in the program,.  We believe, however, the
overall economic benefits of the program will be of significant value to our
Company and our shareholders.





Future
Alliances and Acquisitions





We intend
to continue to pursue our business model that relates to international risk
assessment, security, surveillance, access controls and integrated
solutions.  We intend to acquire and create strategic affiliations
with leading international security and surveillance enterprises serving
security markets worldwide and establish comprehensive capability to design,
manage and integrate state-of-the-art high technology security solutions with
fully integrated service offerings.





46




Results
of Operations





Revenues





During
the fiscal year ended December 31, 2008, the Company had no revenues from
operations.  We expect to commence generating revenues during the
course of 2009 and into the foreseeable future.





Expenses





Our total
expenses for the year ended December 31, 2008 of $5,679,588 consisted primarily
of general and administrative expenses of $2,474,983 and professional fees of
$2,284,499. The general and administrative expenses included $1,081,991 of non
cash amortization of deferred compensation to our Chief Technology Officer for
expertise in our technology development, $309,225 for officers and personnel
salaries and expenses, $175,654 for rent in the United States and France and
$698,115 for travel to key industry events, such as the Farnborough Air Show.
The professional fees included $91,806 for accounting, $814,448 for consulting
in target acquisitions and $1,249,129 for legal fees to negotiate prospective
target acquisitions and subsidiary developments. We also had director fees and
expenses of $320,882, marketing and public relations expenses of $510,430,
interest on related party transactions of $52,621 and equity in loss of
unconsolidated subsidiary of $36,173.





Liquidity
and Capital Resources





During
the twelve months ended December 31, 2008 and through the date of this Report,
our primary source of capital has been loans from Rudana Investment Group AG,
the majority shareholder of our Company.  Our operations to date have
consumed substantial amounts of cash.  Our negative cash flow from
operations is expected to continue and to accelerate in the foreseeable future
as we make capital expenditures in joint ventures, strategic alliances and
production facilities.





Since
inception of the Company, we have incurred aggregate total expenses of
$5,870,934, including total expenses of $5,679,588 during the twelve months
ended December 31, 2008.  Our consolidated cash balance at December
31, 2008 was $104,708.  As of December 31, 2008, our total assets
(consisting of cash and nominal investment in 4C Security Solutions) were
$3,468,749 and our total liabilities were $3,142,325.





We
believe that the current deep and potentially prolonged global recession that
officially began in the United States in December 2007 is having a significant
impact on our ability to raise the funds necessary to implement our business
plans.  Credit markets throughout the world have experienced
significant contraction, de-leveraging and reduced liquidity.  The
uncertainty surrounding the future of global credit markets has resulted in
reduced access to credit worldwide. These current market conditions may last for
a considerable length of time. In mid-February 2009, the Federal Reserve warned
that the United States economy faces an “unusually gradual and prolonged” period
of recovery from this recessionary period. These developing economic factors
have had a material adverse effect on our ability to raise funds and grow the
Company.  We obtained several commitments for equity capitalization of
the Company however, due to the effects of the global financial crisis the
parties were not able to close their prospective investments in the
Company.  In addition, in Dubai, UAE, one of our key target markets
for providing integrated security, surveillance and access controls solutions,
has also suffered a recession and as a result we were not able to commence
deployment of operations with one of our strategic alliance partners as
previously anticipated which adversely affected our ability to commence
generating cash flows and develop internal capital resources.





47


We will
need to raise additional capital to implement our new business plan and continue
operations. We are continuing to seek sources of financing through private
placements of securities and loans in order for us to fully deploy our business
plan.  We have also commenced a capital sourcing plan to accept
investments of strategic equity partners directly into our operating
subsidiaries.  We expect such operating level investments to provide
us with necessary means to commence our business plans as well as beneficially
leverage the regional marketing and sales strengths of our strategic alliance
partners.  We will endeavor to maintain majority ownership of our
operating subsidiaries, however, due to certain legal regional requirements, we
may in some circumstances be obliged to be a minority partner in certain
operating subsidiaries.  Our capital resources as of the date of this
Report are dependent on  shareholder loans, third party investments by
strategic alliance partners and other strategic investors investing directly
into our operating subsidiaries.  Although we expect some of the
operating subsidiaries to generate sufficient cash for internal working capital
purposes, we will be dependent on shareholder loans and third party investment
capital at the subsidiary level in order to implement and sustain our overall
Company business plans during the foreseeable future.  We believe the
overall benefits expected to be derived from accepting investments directly into
our operating subsidiaries and benefitting from the strengths of our strategic
equity partners will overcome the effects of diluting our prospective revenues
in our operating subsidiaries.





We expect
our costs of revenue to be substantial, including minimum annual commitment
payments for capacity access to the Cosmo-SkyMed constellation of satellites,
building and maintaining our satellite image direct receiving ground stations,
processing the data retrieved, costs of personnel, as well as the cost of
operations expected to be incurred in connection with our prospective satellite
construction program.  We expect our selling, general and
administrative expenses for all of our business activities to consist primarily
of labor, benefits, travel, rent and related overhead costs, third-party
consultant payments, sales commissions and marketing expenses.  We
expect these expenses to be substantial and increase as we expand our sales and
administrative resources to accommodate anticipated revenue growth and increases
in capacity for product sales and distribution.  We will also incur
substantial expenses as a result of the costs related to being a public company,
including remedying material weaknesses in our internal controls.  As
we expand our worldwide presence, we expect an increase in travel, selling and
administrative expenses.  Depreciation and amortization expenses may
become material.  We anticipate financing a significant portion of our
construction requirements through loans and we will therefore incur material
interest expenses which could adversely affect our earnings.  Although
we expect to share some of our capital requirements costs with our strategic
alliance partners, our expenses may cause us to incur operating
losses.  Taxable income in the future may be offset by utilization of
net operating loss carry-forwards, however, we cannot provide any assurance in
such regard.





Sales
& Marketing





Our sales
and marketing activities are primarily focused outside of the United
States.  We intend to sell our products and services mainly for use by
foreign governmental and commercial end-users.  We intend to market
our products and services and develop global brand awareness primarily utilizing
strategic alliances and a highly qualified network of persons with direct access
to key decision-makers and advisers of prospective customers.  We also
expect to enter into representation and distribution-sales agreements during the
near future with regional sales representatives who specialize in particular
regional sectors.  We expect to engage independent contractors as
sales representatives in certain countries and regions.  Our strategic
alliance partners and our sales representatives will be paid primarily through
commissions.  We do not intend to pursue a retail level of marketing
during the foreseeable future; however, we may enter into reseller agreements to
permit the retail sale of our products and services.  As of the date
of this Report, we have not yet had any sales in any of our business
segments.





Management
Services





We have a
management services agreement with Prime Asset Finance Ltd., a UK company which
is a wholly owned subsidiary of Rudana Investment Group AG, our majority
stockholder.  Under the terms of the agreement, Prime Asset Finance
will assist and advise us on developing strategic plans for inception of
operations, preparing acquisition growth plans, identifying potential
acquisition candidates, initiating discussion with potential acquisition
candidates and strategic alliance partners, analyzing the financial implications
of potential acquisitions and strategic alliances; negotiating terms and
conditions of transactions and strategic alliances; outlining and managing the
due diligence process; developing strategies to maximize revenue and corporate
value including growth through sales, utilizing alternative distribution
channels and enhancing marketing programs and providing support for investor
relations programs.  We agreed to pay an initial services fee of
$250,000 to Prime Asset Finance Ltd. as of August 2008 and committed to pay
management services fees of $25,000 per month in respect of the management
services.  All of the fees have accrued to date and have not yet been
paid.  Prime Asset Finance Ltd. will be compensated in the amount of
5% of the total transaction value of any company acquired by us by merger or
acquisition which has been introduced by Prime Asset Finance.  We
believe that the services of Prime Asset Finance have been valuable to us with
respect to inception of our operations and activities, particularly in regard to
establishing our initial strategic alliances and recruiting our highly qualified
senior management team and introducing us to prospective
customers.  We believe the services of Prime Asset Finance will
continue to be beneficial to our business and our shareholders.





48




Competitive
Position





We intend
to do business under our new business model in highly competitive markets. There
are many competitors, some of which are significantly larger, have access to
much more important resources or capital than us, or have established
reputations among potential customers. Large industry participants make up the
most significant share of the market in the sectors in which we intend to
operate. There is increasing competition in the industry and the usage of
cooperation agreements, alliances and partnerships have also
increased.  In addition, we will compete against both private
companies and state sponsored entities that will provide satellite images and
related services to the market. We may not be able to compete effectively
against other industry participants.  In addition, the satellite
images that we will sell may have to compete against aerial providers of high
resolution imagery.  The sale of aerial images has low barriers to
entry, and we may face established local competition in markets in which we wish
to compete.





Results
of Operations





We
commenced activities related to our new business model during the second quarter
2008.  As of December 31, 2007 and 2008, our Company had no revenue
generating operations, no revenues and no material assets.  As such,
comparative information for such periods would not assist the reader understand
our business model and we have therefore omitted such information from this
discussion.





Revenue
Recognition





We expect
to enter into additional contracts during the foreseeable future.  We
expect to report our results of operations in the future by reference to our
three business segments: (1) Satellites & Satellite Images Segment, (2)
Security, Surveillance and Access Controls Segment, and (3) Specialized
Proprietary Security Products Segment.  Some of our contracts,
particularly those involving multi-year construction and delivery schedules,
will result in payments to our Company which we cannot recognize until future
periods because of applicable revenue recognition accounting
rules.  We expect that our cash-flows, revenues and earnings in the
future with respect to performance of our segments may therefore be volatile and
subject to disparity, particularly during the next three years of our Company’s
operations.





Costs
of Compliance with Government Regulations Applicable to Satellites





The part
of our business related to satellites is a highly regulated industry both in the
United States and internationally. It is our intention to have the satellites
constructed and launched outside of the United States. We will need to comply
with the applicable satellite regulation of the United States and other
countries. Furthermore, in order to operate internationally, remote imaging
satellites may require International Telecommunications Union (“ITU”)
coordination and registration and licenses from the United States and
governments of foreign countries relating to imagery may be directly
downlinked.





We
currently intend to construct our satellites through strategic alliance joint
ventures located outside of the United States.  We do not intend to
build the satellites in the U.S. or use U.S. airspace, or use technologies which
originate from the United States or technologies developed by U.S. persons,
which in each case would implicate higher levels of regulatory limitations and
export restrictions.  However, we may still become subject to U.S.
regulatory restrictions and limitations including various forms of regulation
under different U.S. laws and regulations that govern the collection and
transmission of satellite imagery, satellite tracking, telemetry and control, as
well as restrictions on export of technologies which have defense
applications.





49




We expect
our operations in foreign countries to add significant costs and expenses to our
expenditures on legal and regulatory compliance. Each of the countries has
separate legal regimes and local legal counsel must be engaged in each
jurisdiction to assure compliance with all applicable laws, rules and
regulations.  In addition, we will need to implement and maintain
local controls and procedures in each country of our operations for accurate
financial reporting and audits to comply with our public company reporting
requirements.  These costs and expenses are expected to be material
and significant during 2009 and 2010.  In addition, compliance with
the various regimes may require us to incur significant travel and other
consulting fees.  This complex compliance program will also require a
significant portion of the time and attention of management.





Sales of
satellite imagery do not require a U.S. export license in order to be sold
internationally.  The ability to sell our imagery products and
services may, however, be subject to any sanctions or embargoes imposed by the
U.S. government against particular entities or individuals, or against
other countries.




Sales of
direct access to our satellites in the future may require separate
U.S. government approvals from NOAA and the U.S. Department of
State.  NOAA must approve the agreement with the customer for us to
provide the direct uplink and downlink, and we must obtain an export license
from the Department of State for the export of the equipment and related
technology necessary to enable the access.  The ground station
equipment and related technology necessary to allow access to the satellites are
controlled under the International Traffic in Arms Regulations.  The
approval process for these sales takes approximately six months, and there is no
obligation on the part of either NOAA or the Department of State to approve any
requests for sales or transfers.  All of our business activities may
require approvals from the government of the country in which the materials are
located and operations occur.





Any
change in ownership involving a transfer of our assets to foreign persons may
increase U.S. government scrutiny and lead to increased requirements in
connection with our compliance with U.S. export controls and security clearances
for our products and services.  We may also be required to monitor and
report foreign ownership and may be required to obtain or amend special licenses
if the foreign ownership exceeds certain levels.  Foreign ownership
could require filings with, and review by, the Committee on Foreign Investment
in the United States. Depending on the country of origin and identity of foreign
owners, other restrictions and requirements could arise.





Research
and Development





We have
not yet determined our anticipated spending on research and development
activities for the year ending December 31, 2008.  Our research and
development efforts are expected to be conducted by Dr. Riccardo Maggiora, our
Chief Technology Officer who also serves as Associate Professor and member of
the Antenna and Electromagnetic Compatibility Laboratory at the Politecnico di
Torino, Italy.





We expect
to conduct our research and development efforts in cooperation with the
Politecnico di Torino. Since the early nineteen-eighties, the Politecnico di
Torino has adopted a policy for international cooperation and the network of
international relations in its various aspects has expanded
greatly.  The Politecnico di Torino international programs include a
range of different activities such as bilateral and multilateral partnerships
with universities and research institutions of both European and extra-European
countries, as well as agreements with the European Union on research, training,
cooperation and structural projects, plus the organization of student, professor
and staff exchanges.





Costs
of Compliance with Environmental Laws





The costs
and effects of compliance with federal, state and local environmental laws have
not been material to our business
from inception through the date of this Report.


50




Costs
of Acquiring and Protecting Intellectual Property





Our
success and ability to compete are dependent, in part, upon our ability to
establish and adequately protect our intellectual property rights.  We
intend to rely on a combination of patent, copyright, trademark and trade secret
laws, as well as confidentiality agreements to establish and protect our
proprietary rights.  We intend to utilize patents to protect our
proprietary technologies which we believe will become, individually and in the
aggregate, material to our business.  We also intend to protect our
proprietary rights, in part, through the terms of license agreements and by
confidentiality agreements with our employees, consultants, customers and
others.  As a result of these efforts, the Company will incur legal
fees and government registration fees.





We expect
to license certain proprietary rights from third parties to enable us to operate
our satellites, ground station centers, collection systems and other various
components of our systems.  We also expect to enter into licenses with
our strategic alliance partners to integrate their components into our
comprehensive security, surveillance and access controls
solutions.  We may compensate third parties with cash or with the
Company’s securities or a combination of both types of payment.





We have
acquired exclusive rights to technologies in the field of intrusion
detection systems, radar systems for border and pipeline surveillance, and
technologies for monitoring and surveillance systems through our license
agreement with Dr. Riccardo Maggiora.  Under the agreement, we have
been granted to the right to file patents on these technologies, and all
improvements and related know-how.  We have not yet commenced filing
patents in regard to any of the licensed proprietary technologies although we
intend to do so during the foreseeable future.  We have also agreed to
pay a minimum royalty of 250,000 Euros per year commencing in the second year of
the Agreement notwithstanding the gross sales made by the Company.  We
have the right to terminate the License Agreement at the first anniversary date
of the agreement if we determine that the licensed intellectual properties are
not commercially viable.  In addition, we have entered into a Services
Agreement with Dr. Maggiora in consideration for his services as Chief
Technology Officer of the Company.  In consideration for his services
to the Company under the Services Agreement, we have granted Dr. Maggiora one
million shares of the Company’s common stock.  Dr. Maggiora may not
sell or trade the restricted shares of common stock issued to him unless the
shares are registered or unless an exemption from registration is
available.  We may terminate the service agreement at anytime for
“cause”.  Dr. Maggiora may terminate the agreement at anytime for any
reason.  We believe Dr. Maggiora is economically incentivized to
continue his services to the Company in order to realize the benefits of his
share ownership.  Dr. Maggiora does not currently receive cash
consideration for his services to the Company.





We
believe that our success will depend on the intellectual skills of our employees
and their ability to continue to innovate. We intend to file and prosecute
patent applications. We intend to vigorously protect our rights in our
proprietary technologies.  We do not currently have any patents in
regards to any proprietary technology.  There is no assurance that
patents which we may acquire may successfully withstand any challenge. Patents
issued to us may not provide us with any competitive advantages. Patents held by
others may prohibit us from utilizing certain technologies and commercializing
certain products.  Despite efforts to protect our proprietary rights,
third parties may infringe on our proprietary rights. We may have to resort to
litigation to enforce our intellectual property rights or to determine the
validity and extent of the proprietary rights of others, or to defend ourselves
against claims of invalidity of our rights and claims of infringement on third
party rights.  The costs of such litigation may be
substantial.





During
the year ended December 31, 2008 we registered the internet domain name
4Ccontrols.com and related domains which are linked to our website. The
information contained in our websites and linked websites are not part of this
Report.





Employees





As of the
date of this Report all of our employees serve on a part time
basis.  Our Chief Executive Officer devotes approximately 80% of his
time to our Company and 20% of his time to our strategic alliance partner 4C
Security Solutions Ltd.  Our Chief Financial Officer devotes
approximately 35% of his time to our Company, with the balance of his time spent
on matters pertaining to two other public companies which are majority-owned
portfolio companies of Rudana Investment Group AG.  Our Chief
Technology Officer devotes approximately 70% of his time to our Company and
allocates the balance of his professional time as an Associate Professor at
Politecnico di Torino and as CEO of 4C Polito Space.  Our other
officers and employees serve the Company on a part time basis devoting between
25%-50% of their professional time to our Company.  We have no
collective bargaining agreements with our employees.  The Company has
not yet determined its anticipated staff needs for the fiscal year ending
December 31, 2009.  The Company’s new CEO expects to determine
staffing requirements during the course of the 2009-2010 budget
process.




51




Synergy
Investments & Finance Holding Limited





We have
entered into an agreement with Synergy Investments & Finance Holding Limited
(“Synergy”) formerly known as Arimathea Limited, to assist us to raise
capital.  In consideration for assisting us to raise equity and debt
capital, we have issued a warrant to Synergy which, as amended, will have an
exercise term of 3 years and will become exercisable for the purchase of a
number of our shares of common stock equal to (i) 5% of the amount of capital
raised by the Company from introductions made by Synergy, divided by (ii) the
exercise price of $3.45 per share, which was the closing publicly traded market
price of the Company’s common stock on March 25, 2008, the date immediately
preceding the date of grant of the original warrant.  The maximum
number of shares that may be purchased under the Warrant is approximately one
million shares of Company restricted common stock at a purchase price of $3.45
per share, assuming we raise $70 million attributable to introductions made by
Synergy. Under the terms of its warrant, Synergy will not be permitted to
exercise and own more than 4.9% of the Company’s Common Stock at any given time.
The Synergy Warrant does not contain any call provisions and there is no
obligation on the part of Synergy to exercise its warrant at any time. As a
result of the contingent nature of the vesting of the Synergy warrant,
no expense has been recognized.  We cannot guarantee that Synergy will be
successful in assisting us to raise capital for our operations.  As of
the date of this Report, no warrants have been issued to Synergy and no firm
commitments have been made by Synergy.





Short
Swing Profit Credits





Rudana
Investment Group concluded that it had short-swing profit liability Section 16
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the
rules and regulations promulgated thereunder, of $1,522,164.00 due to our
Company under Section 16 of the Exchange Act.  We have agreed to
accept payment from Rudana for the Section 16 short-swing profit liability by
reduction of our Company’s obligations to repay shareholder loans due to Rudana
in the amount of such liability.





Off
Balance Sheet Arrangements





Other
than as set forth above, as of December 31, 2008, we did not have any off
balance sheet arrangements that have or are reasonably likely to have a current
or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources.





Recent
Accounting Pronouncements





In June
2008, the FASB issued EITF No. 07-5, “Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock” effective for
financial statements issued for fiscal years and interim periods beginning after
December 15, 2008. EITF No. 07-5 provides guidance for determining whether an
equity-linked financial instrument (or embedded feature) is indexed to an
entity’s own stock. The adoption of EITF No. 07-5 is not expected to have a
material effect on our consolidated financial statements.





In May
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
162, “The Hierarchy of
Generally Accepted Accounting Principles” (SFAS No. 162). SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements. SFAS No. 162 is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles”. We do not
expect that this standard will have a material impact on its results of
operations, financial position or cash flows.





52





In April
2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, “Determination of Useful Life of
Intangible Assets”("FSP 142-3"). FSP 142-3 amends the factors that
should be considered in developing the renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS 142, “Goodwill and Other Intangible
Assets” (“SFAS 142”). The intent of this FSP is to improve the
consistency between the useful life of an intangible asset determined under SFAS
142 and the period of expected cash flows used to measure the fair value of the
asset under SFAS 141R. FSP 142-3 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. We are
currently evaluating the impact of adopting FSP 142-3 on our consolidated
financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133” (“SFAS 161”) effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. SFAS 161 requires
an entity to provide enhanced disclosures about derivative instruments and
hedging activities. The Company does not currently hold any or engage in
derivative instruments or hedging activities. Therefore, we do not expect that
this standard will have a material impact on our consolidated financial
statements.





In
December 2007, the FASB issued Statement of Financial Accounting Standard No.
141 (R), “Business
Combinations” (“SFAS 141 (R)”), which becomes effective for fiscal
periods beginning after December 15, 2008 (January 1, 2009 for the Company).
SFAS No. 141 (R) requires all business combinations completed after the
effective date to be accounted for by applying the acquisition method
(previously referred to as the purchase method). Companies applying this method
will have to identify the acquirer, determine the acquisition date and purchase
price and recognize at their acquisition date fair values of the identifiable
assets acquired, liabilities assumed, and any non-controlling interests in the
acquiree. In the case of a bargain purchase the acquirer is required to
reevaluate the measurements of the recognized assets and liabilities at the
acquisition date and recognize a gain on that date if an excess remains. We are
currently assessing the impact of this statement, and believe that it may have a
material impact on the accounting for business combinations completed subsequent
to December 31, 2008.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an Amendment of ARB 51” (“SFAS 160”)
which becomes effective for fiscal periods beginning after December 15, 2008
(January 1, 2009 for the Company). This statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. The statement requires
ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated statement of
financial position within equity, but separate from the parent’s equity. The
statement also requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the non-controlling
interest with disclosure on the face of the consolidated statement of income, of
the amounts of consolidated net income attributable to the parent and to the
non-controlling interest. In addition this statement establishes a single method
of accounting for changes in a parent’s ownership interest in a subsidiary that
do not result in deconsolidation and requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated. We do not expect the
adoption of this statement to have a material impact on our consolidated
financial statements.





In
September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value
measurements. The statement clarifies that the exchange price is the price in an
orderly transaction between market participants to sell the asset or transfer
the liability in the market in which the reporting entity would transact for the
asset or liability, that is, the principal or most advantageous market for the
asset or liability. It also emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and that market participant
assumptions include assumptions about risk and effect of a restriction on the
sale or use of an asset.  This statement was effective for us on
January 1, 2008. The adoption of SFAS 157 did not have an impact on our 2008
consolidated financial statements





In
February 2008, the FASB issued Staff Position FAS 157-2, which delays the
effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). The delay is intended to
allow the FASB and constituents additional time to consider the effect of
various implementation issues that have arisen, or that may arise, from the
application of SFAS 157. Examples of items to which the deferral applies include
the following:




53




(i)        
Nonfinancial assets and nonfinancial liabilities initially measured at fair
value in a business combination or other new basis event, but not measured at
fair value in subsequent periods (nonrecurring fair value
measurements).




(ii)        
Reporting units measured at fair value in the first step of a goodwill
impairment test (measured at fair value on a recurring basis, but not
necessarily recognized or disclosed in the financial statements at fair
value).




(iii)        
Nonfinancial assets and nonfinancial liabilities measured at fair value in the
second step of a goodwill impairment test (measured at fair value on a
nonrecurring basis to determine the amount of goodwill impairment, but not
necessarily recognized or disclosed in the financial statements at fair
value).




(iv)        
Nonfinancial long-lived assets (asset groups) measured at fair value for an
impairment assessment (nonrecurring fair value measurements).




(v)        
Nonfinancial liabilities for exit or disposal activities initially measured at
fair value (nonrecurring fair value measurements).




We have
elected to delay the adoption of SFAS 157 related to its nonfinancial assets and
nonfinancial liabilities disclosed herein.




In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities” (“SFAS 159). SFAS 159 allows entities
to voluntarily choose to measure certain financial assets and liabilities at
fair value (fair value option). The fair value option may be elected on an
instrument-by-instrument basis and is irrevocable, unless a new election date
occurs. If the fair value option is elected for an instrument, SFAS 159
specifies that unrealized gains and losses for that instrument be reported in
earnings at each subsequent reporting date. This statement is effective for us
on January 1, 2008.  We did not elect to apply the fair value option
to any outstanding instruments and, therefore, SFAS 159 did not have an impact
on the 2008 consolidation financial statements.




54





ITEM 7A:
            QUANITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET
RISK





We did
not have any operations which implicated market risk as of the end of the latest
fiscal year.  We expect that our planned operations will engender
market risk, particularly with respect to interest rate risk, foreign currency
exchange rate risk, commodity price risk (in regard to our prospective customer
base), and other relevant market risks, such as equity price risk.  We
intend to implement an analysis and assessment program which will on a regular
basis determine exposures of our Company to such risks.  We expect to
report the results of all such quantitative and qualitative risk assessments
prior to entering into any material agreements, and on a regular monthly and
annual basis to our Audit Committee so that responsive risk management measures
can be discussed and actions taken to the extent reasonably
feasible.  Inflationary factors in the future, such as increases in
the cost of our product and overhead costs, may adversely affect our operating
results. A high rate of inflation in the future may have an adverse effect on
our ability to maintain current levels of gross margin and selling, general and
administrative expenses as a percentage of net revenues if the selling prices of
our products do not increase with these increased costs.





ITEM 8:
              FINANCIAL
      STATEMENTS AND SUPPLEMENTARY
      DATA





See Index
to Consolidated Financial Statements contained in Item 15
herein.





ITEM 9:
            CHANGES IN AND DISAGREEMENTS
      WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL  DISCLOSURE





On March
6, 2008, the Company dismissed its independent auditor, Manning Elliott
LLP.  Effective as of March 6, 2008, the Company has retained Paritz
& Company, P.A., as its independent auditor. The decision to change auditors
was approved by the Audit Committee of the Company's Board of
Directors.





During
the Company's two most recent fiscal years the opinion of Manning Elliott LLP on
the Company's financial statements did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles, except as follows. The independent auditor's
report of Manning Elliott LLP dated February 23, 2007 (for the year ended
December 31, 2006) contained “going concern” qualifications. This qualification
in each report indicated that Company has not generated any revenue and has
accumulated losses since inception and will need additional equity financing to
begin realizing its business plan and stressed the absence of any resulting
adjustments in the financial statements; thus raising substantial doubts
regarding the Company's ability to continue as a going concern. During the
Company's two most recent fiscal years, and through the date of their dismissal,
there were no disagreements with Manning Elliott LLP, whether or not resolved,
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to Manning Elliott LLP’s satisfaction, would have caused it to make reference to
the subject matter of the disagreement(s) in connection with its
report.





ITEM 9A:
            CONTROLS AND
      PROCEDURES





As of the
end of the period covered by this Report, an evaluation was carried out under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated
under the Securities and Exchange Act of 1934 (the “Exchange Act”). In carrying
out that evaluation, management identified a material weakness (as defined in
Public Company Accounting Oversight Board Standard No. 2) in our internal
control over financial reporting regarding a lack of adequate segregation of
duties.  Based on their evaluation of our disclosure controls and
procedures as of December 31, 2008, the Company’s Chief Executive Officer and
Chief Financial Officer have concluded that, as of that date, the Company’s
controls and procedures were not effective for the purposes described
above.





Management’s
Annual Report on Internal Control Over Financial Reporting




Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.




55




The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





As of the
end of the period covered by this Report, the Company carried out, under the
supervision and with the participation of the Company’s management, including
its Chief Executive Officer and Chief Financial Officer, an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) in ensuring that information required to be disclosed by
the Company in its reports is recorded, processed, summarized and reported
within the required time periods. In carrying out that evaluation, management
identified a material weakness (as defined in Public Company Accounting
Oversight Board Standard No. 2) in our internal control over financial
reporting.




The
material weakness identified by Management consisted of inadequate staffing and
supervision within the bookkeeping and accounting operations of the Company. The
relatively small number of employees who have bookkeeping and accounting
functions prevents us from segregating duties within the Company’s internal
control system. The inadequate segregation of duties is a weakness because it
could lead to the untimely identification and resolution of accounting and
disclosure matters or could lead to a failure to perform timely and effective
reviews. Accordingly, based on their evaluation of the Company’s disclosure
controls and procedures as of December 31, 2008, the Company’s Chief Executive
Officer and its Chief Financial Officer have concluded that, as of that date,
the Company’s controls and procedures were not effective for the purposes
described above. The Company intends to take steps to remediate such procedures
as soon as reasonably possible.




This
Report does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management’s report in this Report on Form 10-K.





Changes
in Internal Control Over Financial Reporting





There was
no change in the Company’s internal control over financial reporting (as defined
in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
during the quarter ended December 31, 2008 that has materially affected or is
reasonably likely to materially affect the Company’s internal control over
financial reporting.





ITEM 9B:
            OTHER
      INFORMATION





None.





56





PART
III





ITEM 10:
            DIRECTORS, EXECUTIVE OFFICERS,
      PROMOTERS AND CORPORATE GOVERNANCE





The
following table presents information with respect to our officers, directors and
significant employees as of March 31, 2009:





Name
              
              Age
              
              PositionJean-Robert
      Martin
              
              
              69
              
              President
      and Chairman of the Board of DirectorsAnastasios
      Angeloglou
              
              
              49
              
              Chief
      Executive OfficerOlivier
      de Vergnies
              
              
              43
              
              DirectorDr.
      Riccardo Maggiora
              
              
              38
              
              Chief
      Technology Officer and DirectorPhilippe
      Aubay
              
              
              69
              
              Business
      Control CommitteeAnne-Marie
      Pérus
              
              
              55
              
              Business
      Control CommitteeDr.
      Augustine Fou
              
              
              36
              
              DirectorMathias
      Kaiser
              
              
              35
              
              Chief
      Financial OfficerJean-Louis
      Recordon
              
              
              67
              
              Business
      Control CommitteePeter
      Panayotou
              
              
              41
              
              Vice
      President Business Strategy, Business Control CommitteeMajor
      General Khalid Abdulla Mabarak Al Buainain
              
              
              53
              
              Vice
      President for Middle East Military and Defense ProjectsBarbara
      S. Salz
              
              
              58
              
              Corporate
      Secretary





Each
director serves until the next annual meeting of shareholders and until his/her
successor shall have been elected and qualified.





Set forth
below is biographical information regarding the current officers, directors and
significant employees of the Company as of the date of this Report.





Mr. Jean-Robert
Martin.  Mr. Jean-Robert Martin serves as President of the
Company and Chairman of the Company’s Board of Directors.  Mr. Martin
was appointed as a Director of the Company effective as of April 29, 2008 and
appointed as President of the Company on August 26, 2008.  Mr. Martin
is a recognized authority with a distinguished 46 year career in defense and
security related technology initiatives. A French citizen, Mr. Martin previously
served as general manager of Thales SA defense activities - including airborne
and space systems, land and joint systems as well as naval systems and air
defense - where he managed 33,000 employees in France, the United Kingdom, the
Netherlands, Australia, Korea, South Africa, Greece, the U.A.E. and Saudi
Arabia.  Mr. Martin also served as a director of Thales Airborne
Systems (a subsidiary of Thales SA), Qioptiq which is involved with optical
components primarily sold in the United Kingdom, Germany and Singapore, SIRA, a
private French company involved with machining aerospace high technology
mechanical assemblies, and X-PM, a Paris-headquartered, private interim
management company with primary operations in France and the People’s Republic
of China.





Anastasios
Angeloglou.Mr. Angeloglou serves as Group CEO of the Company
and all of its operating units, subsidiaries and joint ventures.  Mr.
Angeloglou was appointed as CEO on February 5, 2009.  Mr. Angeloglou
has served during the past 12 months as the Chief Executive Officer and
Executive Director of 4C Security Solutions Limited (formerly known as BQT
Solutions Limited) and Chief Executive Officer of its Australian subsidiary 4C
Satellites Limited, formerly known as BQT Satellites PTY Ltd.  Mr.
Angeloglou has more than 20 years of international business
experience.  Prior to his appointment as CEO of 4C Security Solutions,
Mr. Angeloglou served as the CEO of OTE International Solutions Ltd., a
wholly-owned subsidiary of Hellenic Telecommunications Organization S.A. (OTE)
doing business as OTEGlobe. From 2000 to 2006 he served as Chief Officer of
Wholesale Services for Hellenic Telecommunications Organization S.A., a New York
Stock Exchange listed company (OTE) from 2002 to 2005.  From 1996 to
2000, Mr. Angeloglou served as the CEO of Global One Communications Hellas S.A.,
a joint venture of France Telecom, Deutsche Telekom & US Sprint. From 1991
to 1996, he held senior positions with Infonet Services Corporation Ltd,
responsible for that company’s sales in European, Middle East & Africa, and
global business development.  From 1985 to 1991, he held
telecommunications engineering positions with Exxon Chemical International Ltd,
S.I.T.A., and Phillips International B.V.  Mr. Angeloglou was born in
1959 in Greece and he is a graduate of London University, with postgraduate
studies in Wales and Belgium, in the fields of Computer Science &
Mathematics, and Network Systems Engineering.





57





Mr. Olivier de
Vergnies.Mr. de Vergnies serves as a Director of the
Company.  Mr. de Vergnies served as Chief Executive Officer of the
Company from July 1, 2008 until February 1, 2009.  He was appointed as
a Director on August 22, 2008.  Mr. de Vergnies has previously served
as Vice President, Head of the Middle East Division of Dexia Private Bank
(Switzerland), Geneva from 2004 -2008 where he was responsible for Middle
Eastern high net worth individuals, business acquisition and retention process,
as well as the development of new financial structured products ideas and
innovative private asset allocation.  From 2000-2004 Mr. de Vergnies
served Dexia Bank, Luxembourg as Vice President, Head of Strategy &
Alliances where he was responsible for the marketing strategy and product
development for Middle East clients segments across Luxembourg, Switzerland,
France, Jersey and the United Kingdom.  Mr. de Vergnies served as
Global Strategic Coordinator for the Dexia Private Banking Group Executive
Committee and managed the joint ventures optimization process with Banco Popular
in Spain, multi-channel distribution, market watch process, international and
internal communication.  Mr. de Vergnies also serves as a director of
U.S. public companies Prime Sun Power Inc. and Laureate Resources & Steel
Industries, Inc.





Dr. Riccardo
Maggiora.Dr. Maggiora is a Director of the Company and serves
as Chief Technology Officer.   Dr. Maggiora is an Associate
Professor and member of Antenna and Electromagnetic Compatibility Laboratory
(LACE) at the Politecnico di Torino, Italy. Dr. Maggiora is an active
collaborator on several research projects with the Massachusetts Institute of
Technology with whom he has been working for almost 20 years, as well as with
the Oak Ridge National Laboratory.  He is also an active participant
in the U.S. Department of Energy's Scientific Discovery through Advanced
Computing (SciDAC) program which brings together the world's top researchers to
address challenging scientific problems.  Professor Maggiora has more
than ten years of experience in researching, designing and accomplishing the
realization of a variety of radar and image processing systems, including space
borne synthetic aperture radars. Professor Maggiora is the inventor of patented
technologies in the area of ground intrusion detection radar. Dr. Maggiora also
serves as a Director and as CEO of 4C Polito Space, a joint venture company
established between 4C Satellites and the Politecnico di Torino.  Dr.
Maggiora obtained his Laurea di Dottore in Ingegneria delle Telecomunicazioni
(Communications Engineering) from the Politecnico di Torino and his Dottorato di
Ricerca (Ph.D.) in Ingegneria Elettronica e delle Comunicazioni (Communications
and Electronics Engineering) at the Politecnico di Torino.  Since 2001
he has been teaching and supervising laboratory training courses at the
Politecnico di Torino including space borne synthetic aperture
radars.  Dr. Maggiora was appointed as a director of the Company on
December 18, 2007 and as Chief Technology Officer on July 11, 2008.





Mr. Philippe
Aubay.Mr. Aubay serves as a member of the Company’s Business
Control Committee.  Mr. Aubay served as a Director of the Company and
as Chairman of 4C Satellite Images & Technologies S.A., a wholly owned
subsidiary of the Company, from July 1, 2008 until November 19,
2008.  Mr. Aubay has 45 years of aerospace and defense industry
experience.  He joined MATRA Space, a subsidiary of the Lagardere
Groupe, in 1964 when he was in charge of the electrical system for Asterix, the
first French satellite launched by the French launcher, Diamant A in
1965.  Through 1977, he was involved in several projects, including
the Space Tug (cooperation between NASA and the European Space Agency) and
French ballistic missile programs.  In 1978, he was appointed SPOT
program manager, the first French Earth observation satellite, and he managed
the complete project until the successful launch in 1986. This satellite was the
first of a program of five satellites and is still in operation. In 1987, he was
appointed HELIOS Program director which included the development of two
satellites and a ground segment for three countries, France, Italy and Spain.
The first satellite was successfully launched in 1995 and the system is still in
operation.  From 1994 through 2002, he served as Vice President of
Space Defense Programs responsible for marketing as well as developments of
programs in the field of secured communications, reconnaissance, electronic
intelligence and early warning.  Since 2004, Mr. Aubay has been a
Senior Consultant for space business and involved in planning future defense
programs in Europe and in France. Philippe Aubay is member of the International
Academy of Aeronautic and Astronautic, eminent member of the Association
Aeronautic and Astronautic of France.  In 1986, he received the award
“Chevalier de la Legion d’Honneur” from the French President after the success
of the SPOT program.





58





Ms. Anne-Marie
Pérus.Ms. Pérus serves as a member of the Company’s Business
Control Committee.  Ms. Pérus served as a Director of the Company and
as Chief Executive Officer of 4C Advanced Security Surveillance &
Technologies S.A., a wholly owned subsidiary of the Company, from July 1, 2008
until November 19, 2008.  Ms. Pérus has over thirty years executive
experience in the aerospace and defense industries. She has recently served from
2007–January 2008 as CEO of Global Security for European Aeronautic Defence and
Space Company (EADS) where she managed a budget of over 1 billion Euros with
activities in the field of homeland security, coastal surveillance and border
security offerings throughout Europe, North Africa, the Middle East and
Asia.  She has also served from 2005-2007 as Chairman and CEO of EADS
SOGERMA SERVICES, managing a budget of 600 million Euros and managing over 4,000
employees in a turnaround assignment which has resulted in profitable operations
since 2007.  From 1996–2005, Ms. Pérus served as Chairman and CEO of
ALKAN.  Prior to that, Ms. Pérus had undertaken numerous other
successful executive assignments.  Ms. Pérus holds degrees from Ecole
Nationale Supérieure de l’Aéronautique et de l’Espace – Toulouse, the HEC
Management Paris, the Institut des Hautes Etudes de la Défense Nationale, and
the Institut National des Hautes Etudes de Sécurité.  Ms. Pérus has
been awarded the Chevalier de la Légion d’Honneur.





Dr. Augustine
Fou.Dr. Fou serves as an independent director of the
Company.  Dr. Fou has served as a Director of the Company since
February 6, 2008.  Dr. Fou earned his doctorate at the Massachusetts
Institute of Technology Department of Materials Science and Engineering, with a
minor in the Management of Technology from MIT's Sloan School of Management. Dr.
Fou earned his BS summa cum laude in Chemistry from the University of Dallas.
Dr. Fou has served as a consultant with McKinsey & Company. Dr. Fou is a
founder of go-Digital Internet Consulting Group, Inc. and the Marketing Science
Consulting Group, Inc.   Dr. Fou is Senior Vice President, Digital Lead of
MRM Worldwide, a McCann WorldGroup company.





Mr. Mathias
Kaiser.  Mr. Kaiser has served as the Chief Financial Officer
of the Company since January 7, 2009.  Mr. Kaiser has served as Chief
Financial Officer of Rudana Investment Group AG (“Rudana”), a Swiss investment
holding company which is the Company’s majority shareholder, since October of
2008.  From March until October of 2008, Mr. Kaiser was the Finance
& Reporting Manager of Compass-Group AG, a company engaged in the provision
of large-scale institutional catering management and services and the provision
of planning and consultancy services for restaurant and catering
enterprises.  From February of 2006 until July of 2007, he was the
Operating Effectiveness Manager for Adecco & Management Consulting AG, a
human resources company.  From February of 2003 until February of
2005, he served as business controller for Daniel Swarovski Corporation AG, a
large international retail business.  Mr. Kaiser is compensated for
his services by Rudana, and he is not separately compensated by the
Company.





Mr. Jean-Louis
Recordon.Mr. Recordon serves as a member of the Company’s
Business Control Committee.  Mr. Recordon has 35 years of professional
experience in the fields of public safety and the operational use of
communications, command & control, intelligence management and border
protection systems.  Since 1998 he served as Advisor to MATRA
Communication Company which became the European Aeronautic Defence and Space
Company (EADS), one of the world’s largest aerospace and defense
consortiums.  From 1994-1998, as Colonel of the French Gendarmerie,
Mr. Recordon served as its representative at the French Ministry of Interior,
Police General Directorate, Central Judicial Police Directorate.  In
such capacity he was the Gendarmerie’s liaison to Interpol and
Europol.  From 1985-1993 he served as Head of the Paris Gendarmerie
CID, specializing in the fight against organized crime, he led various criminal
investigations in European countries, in Asia and the United States providing
him with substantive knowledge of various police systems.  From 1963
to 1998, Mr. Recordon served as an officer of the French Gendarmerie Nationale
which included postings in a special unit dealing with security of the French
President, in Germany as part of the French unit in charge of criminal
investigations, and various command positions at regional and national levels as
Commander of large police districts and regional units dealing with public
safety, traffic police, public order, border security, delinquency prevention
and judicial inquiries. Mr. Recordon is a graduate of the French National
Institute of Advanced Studies for Security.





Mr. Peter
Panayotou.  Mr. Panayotou serves as Vice President, Business
Strategy and as Chairman of the Company’s Business Control
Committee.  Mr. Panayotou is currently the CEO of Cassidy &
Associates Southeast Europe, part of Cassidy & Associates one of the leading
lobbying firms in the USA.  Mr Panayotou is responsible for the 15
countries that make up the Southeast Europe and Balkan region.  Prior
to his role with Cassidy & Associates, he held senior management positions
in the telecommunications industry and was a pioneer in building PC-based
telecommunication software and switches launching the first call back operation
between North America and Europe. He has been heavily involved in the satellite,
security and defense industry in Europe during the past decade.




59




Major General Khalid Abdulla Mabarak
Al Buainain. Major General Khalid serves as Vice President for Middle
East Military and Defense Projects.  Major General Khalid served for
thirty two years with the United Arab Emirates Air Force and Air Defense,
ultimately rising to the rank of Major General, Commander & Chief of UAE Air
Force and Air Defense.  Major General Khalid has also served as a
member and team leader for bilateral senior government discussions between the
UAE and many foreign countries. During his tenure as Commander & Chief of
UAE Air Force and Air Defense, Major General Khalid managed and led multibillion
dollar programs for the UAE Government, including satellites and satellite
images programs; aircraft and systems acquisition programs with France, the
U.S., and Russia; system integration and system engineering projects; airborne
and land based secured network systems; advanced information technologies and IT
security programs; remote sensing / space programs command and control; as well
as creation and development of the first research and development facilities in
the UAE.





Barbara Salz.Ms.
Salz has served as Corporate Secretary of the Company since February 6,
2008.  Ms. Salz is the Principal of Corporate Secretarial Services
LLC, an international provider of corporate and regulatory secretarial solutions
since 2004.





Conflicts
of Interest





The
officers and directors of our Company are subject to restrictions regarding
opportunities which may compete with the Company's business plan.  New
opportunities which are brought to the attention of the officers and directors
of the Company must be presented to the Board of Directors and made available to
the Company for consideration and review under principals of state law corporate
opportunity doctrines.  A breach of this requirement could be
construed as a breach of the fiduciary duties of the officer or
director.  Section 8 of our Ethics Policy requires each employee to
avoid any activity, investment or association that conflicts or interferes with
the independent exercise of his or her judgment or actions adverse to the
Company's best interests.  A copy of our Ethics Policy is posted to
our website www.4Ccontrols.com on our Investors page.  Under the
Ethics Policy, no employee, or any member of employee's immediate family, is
permitted to accept money, gifts of other than nominal value, unusual
entertainment, loans, or any other preferential treatment from any customer or
supplier of the Company where any obligation may be incurred or implied on the
giver or the receiver or where the intent is to prejudice the recipient in favor
of the provider. Likewise, no employee is permitted to give money, gifts of
other than nominal value, unusual entertainment or preferential treatment to any
customer or supplier of the Company, or any employee or family members thereof,
where any obligation might be incurred or implied, or where the intent is to
prejudice the recipient in favor of the Company.  No directors,
officers or employees are permitted to solicit or accept kickbacks, whether in
the form of money, goods, services or otherwise, as a means of influencing or
rewarding any decision or action taken by a foreign or domestic vendor,
customer, business partner, government employee or other person whose position
may affect the Company's business.  No employee is permitted to use
Company property, services, equipment or business for personal gain or
benefit.  Employees may not act on behalf of, or own a substantial
interest in, any company or firm that does business, or competes, with the
Company, or conduct business on behalf of the Company with any company or firm
in which the employee or a family member has a substantial interest or
affiliation.  Exceptions require advance written approval from the
Chief Financial Officer.  Employees must not personally benefit from
outside endeavor as a result of their employment by the
Company.   Other than the provisions of our Ethics Policy
governing conflicts of interest, we have not adopted a specific conflicts of
interest policy.





60


Involvement
in Certain Legal Proceedings





To our
knowledge, during the past five years, no director, person nominated to become a
director, executive officer, promoter or control person of the company: (1) had
any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) was convicted in a criminal
proceeding or subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (3) was the subject of any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type or business,
securities or banking activities; or (4) was found by a court of competent
jurisdiction in a civil action or by the U.S. Securities and Exchange Commission
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed, suspended
or vacated.





Section
16 (a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act requires our executive officers and directors, and
persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on our review of the copies of such forms we received,
we believe that during the year ended December 31, 2007, all such filing
requirements applicable to our officers and directors were complied with, except
that reports were filed late by the following persons:




Name
                
                Number of
                  Late Reports
                
                
                Transactions
                  Not Timely Reported
                
                
                Known Failures to
                  File a Required
                  FormAugustine
      Fou
                
                
                2
                
                
                
                2
                
                
                
                0Riccardo
      Maggiora
                
                
                1
                
                
                
                1
                
                
                
                0Jean-Robert
      Martin
                
                
                2
                
                
                
                2
                
                
                
                0Anne-Marie
      Pérus
                
                
                1
                
                
                
                1
                
                
                
                0Rudana
      Investment Group AG
                
                
                14
                
                
                
                21
                
                
                
                0Gerald
      Sullivan
                
                
                1
                
                
                
                1
                
                
                
                0





Code
of Ethics





We
adopted a new Code of Ethics on March 27, 2008. We believe our code of ethics is
reasonably designed to deter wrongdoing and promote honest and ethical conduct;
provide full, fair, accurate, timely and understandable disclosure in public
reports; comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.





We have
posted a copy of our Code of Ethics on our website, www.4Ccontrols.com. We had
not granted any waivers to the prior version of the Code of Ethics. The purpose
of the adoption of the new Code of Ethics was to conform it to our new business
model announced on March 4, 2008 and have it be responsive to our new management
structure. To the knowledge of the Company, there were no reported violations
under the prior version of the Code of Ethics. No persons have benefitted from
the adoption of the new Code of Ethics. In the event of any future amendments
to, or waivers from, the provisions of the new Code of Ethics, we intend to
describe on our Internet website, within four business days following the date
of a waiver or a substantive amendment, the date of the waiver or amendment, the
nature of the amendment or waiver, and the name of the person to whom the waiver
was granted.


61


Board
Committees





Audit
Committee and Charter





Our audit
committee functions are performed by our entire board of directors in accordance
with the Company’s audit committee charter.  Dr. Fou is the sole
director who may be deemed independent.  Our audit committee is
responsible for: (1) selection and oversight of our independent accountant; (2)
establishing procedures for the receipt, retention and treatment of complaints
regarding accounting, internal controls and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our employees of
concerns regarding accounting and auditing matters; (4) engaging outside
advisors; and (5) funding for the outside audit and any outside advisors
engagement by the audit committee.





Audit
Committee Financial Expert





None of
our directors or officers have the qualifications or experience to be considered
a financial expert. We believe the cost related to retaining a financial expert
at this time is prohibitive. Further, because of our limited operations, we
believe the services of a financial expert are not yet warranted. We intend to
appoint an audit committee financial expert during the foreseeable
future.





Disclosure
Committee





We have a
designated disclosure committee consisting of the entire board. Disclosure
committee functions are performed by our entire board of directors in accordance
with the Company’s disclosure committee charter.


62


ITEM 11:
            EXECUTIVE
      COMPENSATION





Summary
Compensation Table (1)





Name
      and Principal
                                                                                                                                                                                                      Position
                                                                                                                                                                                                    
                                                                                                                                                                                                    Year
                                                                                                                                                                                                    
                                                                                                                                                                                                    Salary
      Paid
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    Option
      Awards
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    Total
      PaymentsOlivier
      de Vergnies,
                                                                                                                                                                                                      CEO
                                                                                                                                                                                                    
                                                                                                                                                                                                    July
      1, 2008- February
                                                                                                                                                                                                      1,
      2009
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    145,420
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    0
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    145,420Gerald
      Sullivan,
                                                                                                                                                                                                      CFO,
      (Interim CEO February 6, 2008 to June 30, 2008)
                                                                                                                                                                                                    
                                                                                                                                                                                                    February
      6, 2008-
                                                                                                                                                                                                      January
      7, 2009
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    141,449
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    31,527
                                                                                                                                                                                                    *
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    172,976Sharif
      Rehuman, CEO
                                                                                                                                                                                                    
                                                                                                                                                                                                    December
      18, 2007 to
                                                                                                                                                                                                      February
      4, 2008
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    0
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    0
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    0Alexei
      Gavriline,
                                                                                                                                                                                                      CEO
      & CFO
                                                                                                                                                                                                      (Resigned
      December 18, 2007)
                                                                                                                                                                                                    
                                                                                                                                                                                                    2007
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    0
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    0
                                                                                                                                                                                                    
                                                                                                                                                                                                    
                                                                                                                                                                                                    $
                                                                                                                                                                                                    0





* Mr.
Sullivan was granted options to purchase 10,000 shares of the Company’s common
stock.  All options terminated January 7, 2009.





(1) The
table reflects each of the Company’s last two completed fiscal years and current
compensation information as of the date of this Report.  Pursuant to
permissive authority under S-K Rule 402(a)(5) we have omitted tables and columns
where there has been no compensation awarded to, earned by, or paid to any of
the named executive officers or directors required to be reported in that table
or column in any fiscal year covered by that table or column.





No
persons have been entitled to compensation in excess of $100,000 per year prior
to 2008.


63


Outstanding
Equity Awards at Fiscal Year-End





Name and Principal Position
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options
                  Exercisable
                
                
                Number of
                  Securities
                  Underlying
                  Unexercised
                  Options
                  Unexercisable
                
                
                Equity
                  Incentive
                  Plan
                  Awards:
                  Number of
                  Securities
                  Underlying
                  Unexercised
                  Unearned
                  Options
                
                
                Option
                  Exercise
                  Price
                
                
                Option
                  Expiration
                  DateOlivier
      de Vergnies, Chief Executive Officer (1)
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                0Gerald
      Sullivan
                  Chief
      Financial Officer and Interim President and Chief Executive Officer
      (2)
                
                
                0
                
                
                
                10,000
                
                
                
                0
                
                
                $
                5.10
                
                
                June
      11, 2013





(1) Mr.
de Vergnies served as the Chief Executive Officer of the Company from July 1,
2008 until February 1, 2009 and has served as a Director since August 22,
2008.





(2) Mr.
Sullivan served as our Chief Financial Officer from February 6, 2008 until
January 7, 2009.  From February 6, 2008 until June 30, 2008, Mr.
Sullivan served as our Interim President and Chief Executive
Officer.  All of Mr. Sullivan’s options terminated in connection with
his resignation as an officer of the Company on January 7, 2009.





Director
Compensation (1)





Name
                    
                    Fees earned or paid in cash
    ($)
                    
                    
                    Total ($)Philippe
      Aubay
                    
                    $
                    59,766
                    
                    
                    $
                    59,766Augustine
      Fou
                    
                    $
                    23,750
                    
                    
                    $
                    17,750Jean-Robert
      Martin
                    
                    $
                    67,834
                    
                    
                    $
                    67,834Anne-Marie
      Perus
                    
                    $
                    59,766
                    
                    
                    $
                    59,766Jean-Louis
      Recordon
                    
                    $
                    59,766
                    
                    
                    $
                    59,766





(1) Mr.
De Vergnies is included in the “Summary Compensation Table” above.





No
director of the Company received any compensation during the 2006 or 2007 fiscal
year.


64


The
following table sets forth the Company’s current scheduled payments for members
of the Board of Directors:





Cash Compensation
                  
                  All Non-Executive
                    Directors
                  
                  Chairman
                  
                  Fees for Non-
                    Executive Committee
                    Chairs (Audit
                    Committee)
                  
                  
                  Fees for Non-
                    Executive Committee
                    Chairs
                    (Compensation
                    Committee and
                    Nominating and
                    Corporate
                    Governance
                    Committee)Retainer
      (1)
                  
                  $
                  24,000
                  
                  160,000 Euros
                  
                  $
                  12,000
                  
                  
                  
                  N/A





(1) Paid
incrementally each month.





Directors
receive reimbursement for reasonable out of pocket costs incurred in connection
their service as Directors.








Employment
Contracts





As of the
date of this Report, we have employment contracts with four of our officers: Mr.
Anastasios Angeloglou, Chief Executive Officer, Mr. Olivier de Vergnies,
Director (former Chief Executive Officer), Dr. Riccardo Maggiora, Chief
Technology Officer, and Major General Khalid Abdulla Mabarak Al Buainain, Vice
President for Middle East Military and Defense Projects, as summarized
below.  We are currently negotiating agreements with certain of our
other officers and key employees. We expect to complete the negotiations and
enter into agreements with all of our other executive officers in the immediate
future.





Anastasios
Angeloglou Employment Agreement





Subsequent
to the period covered by this Report, on March 12, 2009, 4C Controls Inc.
entered into an Employment Agreement (the “Employment Agreement”) with Mr.
Anastasios Angeloglou regarding his services as the Company’s Chief Executive
Officer.  The Employment Agreement is retroactively effective to the
date of his appointment on February 5, 2009.  Mr. Angeloglou serves as
Group CEO of 4C Controls and all of its operating units, subsidiaries, joint
ventures and strategic alliances.  The Employment Agreement has a term
of three years.  Under the Employment Agreement, Mr. Angeloglou will
receive (i) a base salary of 400,000 Euros (approximately U.S. $520,000)per
year; (ii) contributions to a pension fund in the amount of 108,000 Euros
(approximately U.S. $140,000) for the first year of service and 35,000 Euros
(approximately U.S. $46,000) for each of the second and third years of service;
(iii) eligibility for annual bonus of cash and/or stock options to be granted on
the basis of obtaining certain performance benchmarks to be determined by the
Board of Directors; (iv) family education allowance; (v) health insurance
coverage; (vi) travel insurance, disability insurance and life insurance; (vii)
reimbursement of reasonable relocation expenses; (viii) a housing allowance; and
(ix) automobile expense account.  Mr. Angeloglou shall serve from
offices in Dubai in the United Arab Emirates.  The Company has also
entered into two related agreements with its strategic alliance partner 4C
Security Solutions. The Company entered into a Provision of Services Agreement
with 4C Security Solutions dated as of February 5, 2009, pursuant to which 4C
Security Solutions agreed to pay a monthly fee of $15,600 Australian Dollars
(approximately $10,900 U.S. Dollars) to the Company for the shared, part-time
allocation of services by the Company’s Chief Executive Officer, Anastasios
Angeloglou.  Pursuant to this agreement, Mr. Angeloglou serves as the
Chief Executive Officer of 4C Security Solutions as well as the
Company.  Mr. Angeloglou allocates approximately twenty eight hours
per month to the business of 4C Security Solutions.  This agreement
terminates on June 30, 2011.


65


Olivier
de Vergnies Employment Agreement





We
entered into an employment agreement with Mr. Olivier de Vergnies on June 20,
2008, who commenced service as our Chief Executive Officer on July 1, 2008 and
was appointed to our Board of Directors on August 22, 2008.  Under the
Agreement, we pay Mr. de Vergnies a base salary of 200,000 Euros (approximately
US $350,000) per annum. Our agreement with Mr. de Vergnies has an initial term
of one year and is renewable for one year periods thereafter.  Under
the initial terms of agreement, Mr. de Vergnies agreed to allocate 75% of his
professional time to the Company. We may terminate the agreement at anytime for
“cause”.  Mr. de Vergnies may terminate the agreement at anytime for
any reason.  Our agreement with Mr. de Vergnies contains provisions
for the protection of our intellectual property and other customary terms and
conditions.  Mr. de Vergnies resigned as our Chief Executive Officer
on February 1, 2009, but continues to serve the Company as a
Director.





Dr. Riccardo
Maggiora Chief Technology Officer Services
Agreement





On July
11, 2008, we entered into an agreement with Dr. Riccardo Maggiora for his
services as Chief Technology Officer of our Company (the “CTO
Agreement”).  Under the CTO Agreement, Dr. Maggiora has agreed to
allocate approximately 70% of his professional working time to our Company for
an initial period of three years renewable for one year periods thereafter by
either party.  In consideration for the initial period commitment to
our Company, we issued to Dr. Maggiora one million restricted shares of our
common stock.  Dr. Maggiora may not sell or trade the restricted
shares of common stock issued to him unless the shares are registered or unless
an exemption from registration is available.  We may terminate the CTO
Agreement for “cause”.  Dr. Maggiora may terminate the CTO Agreement
at anytime for any reason.  The shares issued to Dr. Maggiora under
the CTO Agreement may not be sold or traded until after the first anniversary of
the date of the CTO Agreement.  The CTO Agreement with Dr. Maggiora
contains provisions for the protection of our intellectual property and other
customary terms and conditions.





Dr.
Maggiora is also compensated at a rate of 10,000 Euros (approximately USD
$13,000) per month by 4C Polito Space. The payments to Dr. Maggiora are payable
with funds to be paid principally by 4C Controls to 4C Polito
Space.  The payments to Dr. Maggiora have been accruing since June
2008 and will be paid as and when 4C Controls makes sufficient payments to 4C
Polito Space. Subsequent to the period covered by this Report, the 4C Controls
subsidiary 4C SatImage entered into a management services agreement with 4C
Polito Space which includes provisions for payments to be made by 4C SatImage to
4C Polito Space in consideration for performance of satellite development and
management services.





Major
General Khalid Abdulla Mabarak Al Buainain Services Agreement





On
February 24, 2009, the Company entered into an Executive Services Agreement with
General Khalid Abdulla Mabarak Al Buainain regarding his service as the
Company’s Vice President for Middle East Military and Defense
Projects.  The Executive Services Agreement has a term of two
years.  Pursuant to the Executive Services Agreement, General Khalid
will receive (i) a salary of 220,000 Eurosper
year; (ii) a stock grant equal of 750,000 shares of the Company’s common stock
(the “4C Controls Shares”); (iii) ten percent (10%) of the equity shares of the
Company’s partially-owned subsidiary 4C Gulf Earth Observation Center (the “4C
GEOC Shares”); and (iv) ten percent (10%) of the equity shares of the 4C
GulfSatellites program (the “GulfSatellites Shares”).  General
Khalid’s interest in the 4C GEOC Shares and the GulfSatellites Shares are
non-dilutable.  The 4C Controls Shares, the 4C GEOC Shares and the
GulfSatellites Shares shall be issued in the name of General Khalid and placed
into Company escrow for release to General Khalid after two years from the date
of the Executive Services Agreement.  In the case of the 4C GEOC
Shares, release from escrow shall also require the condition precedent that
there be revenues received by the Company from sales of ten (10) satellite
images per day by 4C GEOC attributable to introductions to customers made by
General Khalid.  In the case of the GulfSatellites Shares, release
from escrow shall also require the provision of a financial asset and/or
technological participation (direct or indirectly through a third party), or
investment or viable economic off-take agreement equivalent to the value of ten
percent equity interest in GulfSatellites.  If General Khalid achieves
his performance commitments before the two year escrow period has lapsed, all of
the shares shall be released immediately to General Khalid.  The
Executive Services Agreement supersedes all prior agreements with General
Khalid.  The Executive Services Agreement also contains provisions
concerning the reimbursement of expenses, confidentiality of Company information
and other standard terms and conditions.


66


Compensation
Arrangements with Other Officers and Key Employees





Mr.
Jean-Robert Martin (“Martin”), serving as President and Chairman of our Company
has a service agreement with our Company which provides for compensation in the
amount of 240,000 Euros per annum.





Mr.
Philippe Aubay (“Aubay”), Ms. Anne-Marie Pérus (“Pérus”) and Mr. Jean-Louis
Recordon (“Recordon”) each serve as members of the Company’s Business Control
Committee for which they are each paid 240,000 Euros per annum.  Mr.
Aubay and Ms. Pérus previously served as members of the Company’s Board of
Directors from July 1, 2008 through November 7, 2008.  Messrs. Aubay
and Recordon and Ms. Pérus serve certain of the Company’s subsidiaries but are
not separately compensated for such services.





Mr. Gerry
Sullivan served as our Chief Financial Officer from February 6, 2008 until
January 7, 2009.  From February 6, 2008 through August 22, 2008, Mr.
Sullivan served on a part time basis and was compensated at a rate of $100,000
per annum for such part time services.  From August 23, 2008 through
January 7, 2009, Mr. Sullivan was compensated at a rate of $300,000 per
annum.  Mr. Sullivan resigned on January 7, 2009.





Equity
Incentive Plan




The
Company does not currently have an equity compensation plan.  The
Company expects to adopt an equity incentive plan for its officers, directors
and key employees during 2009 and make grants under such plan in
accord


67


ITEM 12:
            SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March __, 2009 by (i) each director of the
Company, (ii) each of the Company's officers named in the Summary Compensation
Table and other key employees of our Company, (iii) each person who is known by
the Company to be the beneficial owner of more than five percent of the
Company's outstanding Common Stock, and (iv) all directors and named executive
officers as a group. Except as otherwise indicated below, each person named has
sole voting and investment power with respect to the shares
indicated.  The percentage of ownership set forth below reflects each
holder's ownership interest in 44,179,540 issued and outstanding shares of the
Company's common stock as of March 12, 2009.





The
Company intends to adopt an equity incentive plan for its officers, directors
and key employees during the fiscal year ended December 31, 2009.





Amount
and Nature of Beneficial Ownership




Name and Address of Beneficial Owner
                              
                              Shares
                              
                              
                              Options/
                                Warrants
                              
                              
                              Total
                              
                              
                              Percentage of
                                Shares
                                OutstandingFive
      Percent ShareholdersRudana
      Investment Group AG (1)
                              
                              
                              29,300,858
                              
                              
                              
                              0
                              
                              
                              
                              29,300,858
                              
                              
                              
                              66.3
                              %Executive
      Officers and DirectorsJean-Robert
      Martin (2)
                              
                              
                              0
                              
                              
                              
                              10,000
                              
                              
                              
                              10,000
                              
                              
                              
                              *Anastasios
      Angeloglou (3)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Olivier
      de Vergnies (4)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Gerald
      Sullivan (5)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Mathias
      Kaiser (6)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0Dr.
      Riccardo Maggiora (7)
                              
                              
                              1,000,000
                              
                              
                              
                              0
                              
                              
                              
                              1,000,000
                              
                              
                              
                              2.3
                              %Phillip
      Aubay (8)
                              
                              
                              0
                              
                              
                              
                              10,000
                              
                              
                              
                              10,000
                              
                              
                              
                              *Anne-Marie
      Pérus (9)
                              
                              
                              0
                              
                              
                              
                              10,000
                              
                              
                              
                              10,000
                              
                              
                              
                              *Dr.
      Augustine Fou (10)
                              
                              
                              0
                              
                              
                              
                              10,000
                              
                              
                              
                              10,000
                              
                              
                              
                              *Sharif
      Rehuman (no longer serving) (11)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0John
      Genner (no longer serving) (12)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0All
      Officers and Directors as a Group (13)
                              
                              
                              1,000,000
                              
                              
                              
                              40,000
                              
                              
                              
                              1,040,000
                              
                              
                              
                              2.4
                              %


* Less
than 1%.





(1) On
December 18, 2007, Rudana acquired 5 million shares of the Company’s common
stock from Mr. Alexei Gavriline. Pursuant to the payment of a stock dividend to
all Company shareholders of record as of January 2, 2008, the common stock
ownership of Rudana increased to 35 million shares on January 4,
2008.  Since inception of its ownership of shares of the Company,
Rudana has made certain dispositions of its restricted stock to third parties
pursuant to the exemption from registration provided under Regulation S
promulgated under the Securities Act of 1933, as amended.  All shares
of Company Common Stock owned by Rudana and its transferees are restricted and
may not be publicly traded or sold.





(2) Mr.
Martin has served as a Chairman of the Board of Directors of the Company since
April 29, 2008 and was appointed President on August 26, 2008.  On
June 11, 2008 Mr. Martin was granted an option for the purchase of 10,000 shares
of our common stock which will become exercisable at a purchase price of $5.10
per share on June 11, 2009 and will expire on June 11, 2013.





(3) Mr.
Angeloglou has served as our Chief Executive Officer since February 5,
2009.


68


(4) Mr.
de Vergnies served as the Chief Executive Officer of the Company from July 1,
2008 until February 1, 2009 and has served as a Director since August 22,
2008.





(5) Mr.
Sullivan served as our Chief Financial Officer from February 6, 2008 until
January 7, 2009.  From February 6, 2008 until June 30, 2008, Mr.
Sullivan served as our Interim President and Chief Executive Officer. Mr.
Sullivan resigned on January 7, 2009.





(6) Mr.
Kaiser has served as our Chief Financial Officer since January 7,
2009.





(7) Dr.
Maggiora has served as a director of the Company since December 18, 2007 and as
Chief Technology Officer since July 11, 2008 pursuant to the Chief Technology
Officer Services Agreement under which he was granted 1,000,000 shares of
restricted common stock.





(8) Mr.
Aubay served as a Director of the Company from July 1, 2008 until November 19,
2008. On June 11, 2008 Mr. Aubay was granted an option for the purchase of
10,000 shares of our common stock which will become exercisable at a purchase
price of $5.10 per share on June 11, 2009 and will expire on June 11,
2013.





(9) Ms.
Pérus served as a Director of the Company from July 1, 2008 until November 19,
2008. On June 11, 2008 Ms. Pérus was granted an option for the purchase of
10,000 shares of our common stock which will become exercisable at a purchase
price of $5.10 per share on June 11, 2009 and will expire on June 11,
2013.





(10) Dr.
Fou has served as a Director of the Company since February 6,
2008.  On June 11, 2008 Dr. Fou was granted an option for the purchase
of 10,000 shares of our common stock which will become exercisable at a purchase
price of $5.10 per share on June 11, 2009 and will expire on June 11,
2013.





(11) Mr.
Rehuman served as the President and Chief Executive Officer of the Company from
December 18, 2007 until February 4, 2008.





(12) Mr.
Genner served as a director of the Company from December 18, 2007 until February
5, 2008.





(13)
Includes only the CEO and other officers and directors who serve in
policy-making authority capacities of the Company and earn more than $100,000 as
calculated after reductions for non-tax qualified compensation and nonqualified
deferred compensation plans.





The
mailing address for each of the listed individuals is c/o 4C Controls Inc., 100
Wall Street, 21st Floor,
New York, NY 10005.





As of the
date of this Report, the Company is not aware of any pledges of any shares,
options or warrants by any of the individuals or entities listed
above.





Changes
in Control





As of the
date of filing of this Report, the Company is unaware of any arrangement which
may result in a change in control.


69


ITEM 13:
            CERTAIN RELATIONSHIPS AND
      RELATED TRANSACTIONS AND DIRECTOR
  INDEPENDENCE





Transactions
with Rudana Investment Group AG





Our
majority controlling shareholder, Rudana Investment Group AG (“Rudana”),
acquired its shares in our Company in a private transaction with Mr. Alexei
Gavriline, the former majority controlling shareholder of the
Company.  Rudana purchased 5 million shares from Mr. Gavriline at an
aggregate purchase price of $75,000.00.  At the date of the
transaction, we had no operations, substantially no assets and we were a “shell
company”, as defined by the Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended.  At the date of the transaction Mr. Gavriline
served as the sole officer and director of our Company and approved the
transaction as being in the best interests of our Company and its
shareholders.  As a result of the transaction, Rudana became the
controlling shareholder of our Company.





Following
the change of control, Rudana has financed our activities primarily with
shareholder loans and other means.  Each of the loans bears interest
at a rate of 7.5% per annum and are repayable thirty days after demand by
Rudana. Each of the loans were made on terms and conditions which were reviewed
and assessed by Dr. Augustine Fou, whom on the respective dates was the sole
independent member of our Board of Directors.  Dr. Fou determined that
the applicable terms and conditions of the loans and the stock purchase were
fair and reasonable to our Company and our shareholders.





On March
7, 2008, Rudana made a stock purchase from our Company in respect of the payment
of $1 million Australian dollars (approximately US $940,900) paid by Rudana on
behalf of our Company to 4C Security Solutions.  The payment was the
first installment in respect of the establishment of our Company’s strategic
alliance with 4C Security Solutions.  Rudana purchased 470,450 of our
common shares at a purchase price of $2.00 per share, and 117,613 Warrants
exercisable for the purchase of one share of our Company common stock at a
purchase price of $0.25 per share.  On August 26, 2008, our Company
and Rudana mutually agreed to rescind the March 2008 stock purchase and cancel
the March 2008 warrants and converted the rescinded purchase price to a
shareholder loan.  Since December 18, 2007 through the period covered
by this Report, Rudana made an aggregate total of $1,539,175 in loans to our
Company, including the conversion to a shareholder loan of the March 2008 stock
purchase rescission.





Rudana
has made certain private sales and open market share purchase
transactions.  Upon review of its reports filed in accordance with
Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations promulgated thereunder (the “Rules”), Rudana
concluded that it had short-swing profit liability of $1,522,164.00 to our
Company under Section 16 of the Exchange Act.  We have agreed to
accept payment by Rudana for the Section 16 short-swing profit liability by
reduction of our Company’s obligation to repay Rudana’s shareholder loans in the
amount of such liability.  The outstanding principal amount of all
shareholder loans repayable by our Company to Rudana after giving effect to the
Section 16 short swing profit liability payments to our Company have therefore
been reduced to $905,735 as of the period covered by this Report.





We have
been advised by Rudana that it has made open market share purchases in
accordance with Rule 10b-18 which provides a safe harbor from liability for
manipulation under the Exchange Act solely by reason of the manner, timing,
price, and volume of their repurchases when they repurchase the issuer's common
stock in the market in accordance with the section's manner, timing, price, and
volume conditions. As a safe harbor, compliance with Rule 10b-18 is
voluntary.  To come within the safe harbor, however, Rudana’s
repurchases must satisfy (on a daily basis) each of the section's four
conditions. Failure to meet any one of the four conditions would remove all of
Rudana’s repurchases from the safe harbor for that day.  All of the
shares purchased in the open market by Rudana become control shares and cannot
be sold except pursuant to registration or an available exemption from
registration.  Rudana currently controls as of the date of this Report
approximately seventy-five percent (75%) of the issued and outstanding stock of
our Company.


70


Transactions
Involving Prime Asset Finance Ltd.





We have
entered into an agreement with Prime Asset Finance Ltd. (“PAF”), a U.K. company
which is a wholly owned subsidiary of Rudana.  Under the terms of the
agreement, PAF has assisted and advised us on developing strategic plans for
inception of operations, preparing acquisition growth plans, identifying
potential acquisition candidates, initiating discussion with potential
acquisition candidates and strategic alliance partners, analyzing the financial
implications of potential acquisitions and strategic alliances; negotiating
terms and conditions of transactions and strategic alliances; outlining and
managing the due diligence process; developing strategies to maximize revenue
and corporate value including growth through sales, utilizing alternative
distribution channels and enhancing marketing programs and providing support for
investor relations programs.  We agreed to pay an initial services fee
of $250,000 to PAF as of August 1, 2008 and to continue to pay management
services fees of $25,000 per month in respect of the management
services.  As of the date of this report, all PAF fees have only been
accrued and none have been paid.  In addition, PAF will be compensated
in the amount of 5% of the total transaction value of any company acquired by us
by merger or acquisition.  We believe that the services of PAF have
been valuable to us with respect to inception of our operations and activities,
particularly in regard to establishing our initial strategic alliances,
recruiting our highly qualified senior management team and introducing us to
prospective customers.





Prime
Asset Finance Ltd. also has a management services agreement with 4C Security
Solutions Limited, a company with whom we have established a strategic alliance
and in whom we own approximately 19.8% of the issued and outstanding shares with
options to acquire approximately 12.8% of additional common shares
..  Under the terms of its management agreement with 4C Security
Solutions Limited, PAF has received compensation in respect of payments made by
our Company to 4C Security Solutions in the amount of a commission of eight per
cent (8%) of all such capital.  PAF has received approximately AUD
$320,000 (approximately US $280,000) in commissions in respect of payments of
AUD $4 million (approximately US $3.5 million) made by our Company to 4C
Security Solutions in connection with the payments under our strategic alliance
agreement with 4C Security Solutions.  PAF has also been issued
options by 4C Security Solutions to purchase 4.5 million shares at a purchase
price of AUD$ 0.10 per share and replacement options for previously issued
options to purchase 7,714,286 shares at a reset purchase price of AUD $0.10 per
share, in each case exercisable prior to December 31, 2013.  In
addition, PAF is the owner of 40% of the issued and outstanding shares of 4C
Satellites PTY Limited, an Australian Company and subsidiary of 4C Security
Solutions which we intend to utilize as a platform for our satellites production
business.  We have agreed with 4C Security Solutions to subscribe for
40% of the shares of 4C Satellites in consideration for a capital contribution
(or other commercially reasonable means of financing) of AUD $14 million
(approximately US $12.3 million).  Under the terms of the agreements
between PAF and 4C Security Solutions, our equity capitalization of 4C
Satellites would result in a commission payment to PAF of AUD $1.1 million
(approximately US $985,000).  We have not yet made the equity payment
to 4C Satellites and we are uncertain when we will have the financial resources
to close the equity capitalization commitment.  Rudana and PAF have
fully disclosed to us their respective agreements with 4C Security Solutions and
its subsidiaries.  We have determined that the overall benefits to our
business model and our long term plans are fair and reasonable to our
shareholders.  We have therefore waived any conflicts in respect of
the agreements of PAF.  The shareholders of 4C Security Solutions
approved the share issuances and option grants to PAF on June 23,
2008.





Transactions
Involving Dr. Riccardo Maggiora





On July
11, 2008, we entered into a license agreement with Dr. Riccardo Maggiora, our
Chief Technology Officer and member of our Board of Directors (the “License
Agreement”).  The License Agreement provides us with exclusive rights
to proprietary high technology intellectual properties invented and/or developed
by Dr. Maggiora, that we will further develop and offer to our
customers.  These proprietary solutions include Electromagnetic
Security (EMSEC) systems, Real Time Positioning System (RTPS), RADAR and GUIDAR
Systems and Real Time Locating Systems (RTLS).  Under the terms of the
License Agreement, we will pay to Dr. Maggiora a royalty commencing in the
second year equal to one-half of one percent of the Company’s gross sales of
products and services attributable to the licensed intellectual properties. We
have also agreed to pay a minimum royalty of 250,000 Euros per year commencing
in the second year of the Agreement notwithstanding the gross sales made by the
Company.  We have the right to terminate the License Agreement at the
first anniversary date of the agreement if we determine that the licensed
intellectual properties are not commercially viable.


71


Dr.
Riccardo Maggiora also serves as CEO of 4C Polito Space, a joint venture created
as an Italian private stock company with 4C Satellites.  4C Satellites
owns 75% of the equity interests in 4C Polito Space.  The Politecnico
di Torino owns 17% of 4C Polito Space.  The remaining 8% of 4C Polito
Space is owned by other parties, including Dr. Riccardo Maggiora, our Chief
Technology Officer and member of our Board of Directors, who owns 2% of 4C
Polito Space.  In addition, Dr. Maggiora serves as an Associate
Professor of the Politecnico di Torino.  We expect to acquire 40% of
the equity interests in 4C Satellites pursuant to the terms of our strategic
alliance agreement with 4C Security Solutions.  We intend to utilize
4C Satellites as the platform to deploy our satellites program.  We
have been advised by Dr. Maggiora of the potential for conflicts of interest in
respect of his position at 4C Polito Space and his professorship at the
Politecnico di Torino. We have reviewed and assessed the potential conflicts and
we have determined that it is reasonable to waive the potential conflicts. Dr.
Maggiora is compensated at a rate of 10,000 Euros (approximately USD $13,000)
per month by 4C Polito Space.  The payments to Dr. Maggiora have been
accruing since June 2008 and will be paid as and when 4C Controls makes
sufficient payments to 4C Polito Space. Subsequent to the period covered by this
Report, the 4C Controls subsidiary 4C SatImage entered into a management
services agreement with 4C Polito Space which includes provisions for payments
to be made by 4C SatImage to 4C Polito Space in consideration for performance of
satellite development and management services.





Director
Independence





As of the
date of this Report we have four persons serving as Directors: Jean-Robert
Martin, Dr. Riccardo Maggiora, Olivier de Vergnies and Dr. Augustine
Fou.  Our Board of Directors has determined that Dr. Augustine Fou is
independent and the other directors are not independent since they have
employment affiliations with our Company.  The Company has adopted the
standards for Director independence contained in the Nasdaq Marketplaces Rule
4200(a)(15).





The
Company’s Board of Directors currently has an Executive Committee, Audit
Committee and Disclosure Committee.  Our Executive Committee consists
of Jean-Robert Martin, Olivier de Vergnies and Dr. Augustine
Fou.  Under our current Audit Committee charter and Disclosure
Committee structure, both of these committees currently consist of the entire
Board of Directors.  We intend to amend our audit committee charter so
that the Audit Committee will consist solely of Independent Directors and
operate in accordance with Nasdaq Marketplaces Rule 4350(d).  We
intend to appoint two additional independent members of the Board of Directors
who will serve on the Audit Committee.  We also intend to appoint an
audit committee financial expert during the foreseeable future.  We
compensate Dr. Fou for his services as an independent member of the Board of
Directors at a rate of $24,000 per annum.  Dr. Fou also serves as an
independent member of the Board of Directors of two other public companies in
which Rudana is a majority shareholder at the same rate of compensation as our
Company, but Dr. Fou has no relationships pertaining to his services which would
compromise his independence as defined under Nasdaq Marketplaces Rules, Rule
4200(a)(15) and as determined by the Board of Directors.


72


ITEM 14:
            PRINCIPAL ACCOUNTANT FEES AND
      SERVICES





Audit
Fees





The
aggregate fees billed by Paritz & Company, P.A., for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2008 totaled $41,800.  The aggregate
fees billed by Paritz & Company, P.A., for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2007 totaled $15,000.  The aggregate fees billed by
Manning Elliot LLP, Charted Accountants, for professional services rendered for
the quarterly review of the Company’s financial statements and for that portion
of the audit of the Company’s annual financials statements for the fiscal year
ended December 31, 2006 which was performed in the year ended December 31, 2007
totaled $10,625.





Audit-Related
Fees





The
aggregate fees billed by Paritz & Company, P.A. for audit related services
for the fiscal year ended December 31, 2008, and which are not disclosed in
“Audit Fees” above, were $0.  The aggregate fees billed by Paritz
& Company, P.A. for audit related services for the fiscal year ended
December 31, 2007, and which are not disclosed in “Audit Fees” above, were
$0.





Tax
Fees





The
aggregate fees billed by Paritz & Company, P.A. for tax compliance for the
fiscal year ended December 31, 2008 was $0.  The aggregate fees billed
by Paritz & Company, P.A. for tax compliance for the fiscal year ended
December 31, 2007 was $3,000.





All
Other Fees





The
aggregate fees billed by Paritz & Company, P.A. for services other than
those described above, for the year ended December 31, 2008, were
$5,475.  The aggregate fees billed by Paritz & Company, P.A. for
services other than those described above, for the year ended December 31, 2007,
were $0.




Audit
Committee Pre-Approval Policies





Our Board
of Directors reviewed the audit and non-audit services rendered by Paritz &
Company, P.A. and by Manning Elliott LLP during the periods set forth above and
concluded that such services were compatible with maintaining the auditors’
independence. All audit and non-audit services performed by our independent
accountants are pre-approved by our Board of Directors to assure that such
services do not impair the auditors’ independence from us.


73


PART
IV





ITEM
      15:
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES




Exhibit No.
              
              Description of ExhibitsExhibit
      3.1
              
              Articles
      of Incorporation, incorporated by reference to Exhibit 3.1 to the
      Company’s Registration Statement on Form SB-2, filed with the Securities
      and Exchange Commission on March 2, 2005.Exhibit
      3.4
              
              Articles
      of Incorporation, as amended, incorporated by reference to Exhibit 3.4 to
      the Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on May 15, 2008.Exhibit
      3.2
              
              Bylaws,
      as amended, incorporated by reference to Exhibit 3.2 to the Company’s
      Report on Form 10-KSB, filed with the Securities and Exchange Commission
      on March 31, 2008.Exhibit
      3.3
              
              Articles
      of Incorporation, as amended, incorporated by reference to Exhibit 3.3 to
      the Company’s Report on Form 8-K, filed with the Securities and Exchange
      Commission on February 15, 2008.Exhibit
      4.1
              
              Specimen
      Stock Certificate, incorporated by reference to Exhibit 4.1 to the
      Company’s Registration Statement on Form SB-2, filed with the Securities
      and Exchange Commission on March 2, 2005.Exhibit
      10.1
              
              Securities
      Purchase and Sale Agreement, dated December 5, 2007, between Rudana
      Investment Group AG and Alexei Gavriline, incorporated by reference to
      Exhibit 99.1 to Rudana Investment Group AG’s Schedule 13D, filed with the
      Securities and Exchange Commission on December 18,
2007.Exhibit
      10.2
              
              Subscription
      Agreement, by and between the Company and Rudana Investment Group AG,
      dated as of March 7, 2008, incorporated by reference to Exhibit 10.2 to
      the Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on  May 15, 2008.Exhibit
      10.3
              
              Promissory
      Note issued by the Company to Rudana Investment Group AG, dated as of
      March 12, 2008, incorporated by reference to Exhibit 10.3 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.4
              
              Common
      Stock Purchase Warrant issued to Arimathea Limited, dated March 25, 2008,
      incorporated by reference to Exhibit 10.4 to the Company’s Report on Form
      10-Q, filed with the Securities and Exchange Commission on May 15,
      2008.Exhibit
      10.5
              
              Promissory
      Note issued by the Company to Rudana Investment Group AG, dated as of
      April 11, 2008, incorporated by reference to Exhibit 10.5 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.6
              
              Director’s
      Agreement by and between the Company and Jean-Robert Martin, dated as of
      April 29, 2008, incorporated by reference to Exhibit 10.6 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.


74





Exhibit
      10.7
              
              Director’s
      Agreement by and between the Company and Augustine Fou, dated as of April
      30, 2008, incorporated by reference to Exhibit 10.7 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.8
              
              Amended
      & Restated Securities Purchase Agreement by and between 4C Security
      Solutions Limited, 4C Satellites and BQT Security Systems Pty Ltd, dated
      as of May 1, 2008, incorporated by reference to Exhibit 10.8 to the
      Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on May 15, 2008.Exhibit
      10.9
              
              Form
      of Promissory Note issued by the Company to Rudana Investment Group AG,
      incorporated by reference to Exhibit 10.9 to the Company’s Report on Form
      10-Q, filed with the Securities and Exchange Commission on August 19,
      2008.Exhibit
      10.10
              
              Form
      of Company Director’s Agreement, incorporated by reference to Exhibit
      10.10 to the Company’s Report on Form 10-Q, filed with the Securities and
      Exchange Commission on August 19, 2008.Exhibit
      10.11
              
              Employment
      Agreement by and between the Company and Olivier de Vergnies, dated July
      1, 2008, incorporated by reference to Exhibit 10.11 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      August 19, 2008.Exhibit
      10.12
              
              Chief
      Technology Officer Services Agreement by and between the Company and
      Riccardo Maggiora dated July 10, 2008, incorporated by reference to
      Exhibit 10.12 to the Company’s Report on Form 10-Q, filed with the
      Securities and Exchange Commission on August 19,
  2008.Exhibit
      10.13
              
              License
      Agreement by and between the Company and Riccardo Maggiora dated July 10,
      2008, incorporated by reference to Exhibit 10.13 to the Company’s Report
      on Form 10-Q, filed with the Securities and Exchange Commission on August
      19, 2008.Exhibit
      10.14
              
              Form
      of Securities Purchase Agreement, incorporated by reference to Exhibit
      10.14 to the Company’s Report on Form 10-Q, filed with the Securities and
      Exchange Commission on November 19, 2008.Exhibit
      10.15
              
              Strategic
      Alliance Agreement, by and between the Company and Sire Contracting
      Company, incorporated by reference to Exhibit 10.15 to the Company’s
      Report on Form 10-Q, filed with the Securities and
      Exchange Commission on November 19, 2008.Exhibit
      10.16
              
              Form
      of Amendment No. 2 to 4C Controls Inc. Common Stock Purchase Warrant
      “A-1,” incorporated by reference to Exhibit 10.16 to the Company’s Report
      on Form 10-Q, filed with the Securities and Exchange Commission on
      November 19, 2008.Exhibit
      14.1
              
              Code
      of Ethics, adopted March 27, 2008, incorporated by reference to Exhibit
      14.1 to the Company’s Report on Form 10-KSB, filed with the Securities and
      Exchange Commission on March 31, 2008.Exhibit
      21
              
              List
      of Subsidiaries.Exhibit
      31.1
              
              Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.Exhibit
      31.2
              
              Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of
2002.


75





Exhibit
      32.1
              
              Certification
      of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.Exhibit
      32.2
              
              Certification
      of the Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.Exhibit
      99.1
              
              Audit
      Committee Charter, incorporated by reference to Exhibit 99.1 to the
      Company’s Report on Form 10-KSB, filed with the Securities and Exchange
      Commission on February 28, 2006.Exhibit
      99.2
              
              Disclosure
      Committee Charter, incorporated by reference to Exhibit 99.2 to the
      Company’s Report on Form 10-KSB, filed with the Securities and Exchange
      Commission on February 28,
2006.




76




SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




4C
      CONTROLS INC.By:
              /s/ Anastasios
AngeloglouName:
              Anastasios
      AngeloglouTitle:
              Principal
      Executive OfficerBy:
              /s/ Mathias KaiserName:
              Mathias
      KaiserTitle:
              Principal
      Financial Officer and
                Principal
      Accounting Officer





Dated:
  April 15, 2009




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





/s/ Olivier de VergniesName:
              Olivier
      de VergniesTitle:
              DirectorDated:
              April
      15, 2009/s/Augustine FouName:
              Dr.
      Augustine FouTitle:
              DirectorDated:
              April
      15, 2009/s/ Riccardo MaggioraName:
              Dr.
      Riccardo MaggioraTitle:
              DirectorDated:
              April
      15, 2009/s/ Jean-Robert MartinName:
              Jean-Robert
      MartinTitle:
              DirectorDated:
              April
      15, 2009




77


Exhibit
Index





Exhibit No.
              
              Description of ExhibitsExhibit
      3.1
              
              Articles
      of Incorporation, incorporated by reference to Exhibit 3.1 to the
      Company’s Registration Statement on Form SB-2, filed with the Securities
      and Exchange Commission on March 2, 2005.Exhibit
      3.4
              
              Articles
      of Incorporation, as amended, incorporated by reference to Exhibit 3.4 to
      the Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on May 15, 2008.Exhibit
      3.2
              
              Bylaws,
      as amended, incorporated by reference to Exhibit 3.2 to the Company’s
      Report on Form 10-KSB, filed with the Securities and Exchange Commission
      on March 31, 2008.Exhibit
      3.3
              
              Articles
      of Incorporation, as amended, incorporated by reference to Exhibit 3.3 to
      the Company’s Report on Form 8-K, filed with the Securities and Exchange
      Commission on February 15, 2008.Exhibit
      4.1
              
              Specimen
      Stock Certificate, incorporated by reference to Exhibit 4.1 to the
      Company’s Registration Statement on Form SB-2, filed with the Securities
      and Exchange Commission on March 2, 2005.Exhibit
      10.1
              
              Securities
      Purchase and Sale Agreement, dated December 5, 2007, between Rudana
      Investment Group AG and Alexei Gavriline, incorporated by reference to
      Exhibit 99.1 to Rudana Investment Group AG’s Schedule 13D, filed with the
      Securities and Exchange Commission on December 18,
2007.Exhibit
      10.2
              
              Subscription
      Agreement, by and between the Company and Rudana Investment Group AG,
      dated as of March 7, 2008, incorporated by reference to Exhibit 10.2 to
      the Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on  May 15, 2008.Exhibit
      10.3
              
              Promissory
      Note issued by the Company to Rudana Investment Group AG, dated as of
      March 12, 2008, incorporated by reference to Exhibit 10.3 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.4
              
              Common
      Stock Purchase Warrant issued to Arimathea Limited, dated March 25, 2008,
      incorporated by reference to Exhibit 10.4 to the Company’s Report on Form
      10-Q, filed with the Securities and Exchange Commission on May 15,
      2008.Exhibit
      10.5
              
              Promissory
      Note issued by the Company to Rudana Investment Group AG, dated as of
      April 11, 2008, incorporated by reference to Exhibit 10.5 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.6
              
              Director’s
      Agreement by and between the Company and Jean-Robert Martin, dated as of
      April 29, 2008, incorporated by reference to Exhibit 10.6 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.Exhibit
      10.7
              
              Director’s
      Agreement by and between the Company and Augustine Fou, dated as of April
      30, 2008, incorporated by reference to Exhibit 10.7 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      May 15, 2008.


78





Exhibit
      10.8
                
                Amended
      & Restated Securities Purchase Agreement by and between 4C Security
      Solutions Limited, 4C Satellites and BQT Security Systems Pty Ltd, dated
      as of May 1, 2008, incorporated by reference to Exhibit 10.8 to the
      Company’s Report on Form 10-Q, filed with the Securities and Exchange
      Commission on May 15, 2008.Exhibit
      10.9
                
                Form
      of Promissory Note issued by the Company to Rudana Investment Group AG,
      incorporated by reference to Exhibit 10.9 to the Company’s Report on Form
      10-Q, filed with the Securities and Exchange Commission on August 19,
      2008.Exhibit
      10.10
                
                Form
      of Company Director’s Agreement, incorporated by reference to Exhibit
      10.10 to the Company’s Report on Form 10-Q, filed with the Securities and
      Exchange Commission on August 19, 2008.Exhibit
      10.11
                
                Employment
      Agreement by and between the Company and Olivier de Vergnies, dated July
      1, 2008, incorporated by reference to Exhibit 10.11 to the Company’s
      Report on Form 10-Q, filed with the Securities and Exchange Commission on
      August 19, 2008.Exhibit
      10.12
                
                Chief
      Technology Officer Services Agreement by and between the Company and
      Riccardo Maggiora dated July 10, 2008, incorporated by reference to
      Exhibit 10.12 to the Company’s Report on Form 10-Q, filed with the
      Securities and Exchange Commission on August 19,
  2008.Exhibit
      10.13
                
                License
      Agreement by and between the Company and Riccardo Maggiora dated July 10,
      2008, incorporated by reference to Exhibit 10.13 to the Company’s Report
      on Form 10-Q, filed with the Securities and Exchange Commission on August
      19, 2008.Exhibit
      10.14
                
                Form
      of Securities Purchase Agreement, incorporated by reference to Exhibit
      10.14 to the Company’s Report on Form 10-Q, filed with the Securities and
      Exchange Commission on November 19, 2008.Exhibit
      10.15
                
                Strategic
      Alliance Agreement, by and between the Company and Sire Contracting
      Company, incorporated by reference to Exhibit 10.15 to the Company’s
      Report on Form 10-Q, filed with the Securities and
      Exchange Commission on November 19, 2008.Exhibit
      10.16
                
                Form
      of Amendment No. 2 to 4C Controls Inc. Common Stock Purchase Warrant
      “A-1,” incorporated by reference to Exhibit 10.16 to the Company’s Report
      on Form 10-Q, filed with the Securities and Exchange Commission on
      November 19, 2008.Exhibit
      14.1
                
                Code
      of Ethics, adopted March 27, 2008, incorporated by reference to Exhibit
      14.1 to the Company’s Report on Form 10-KSB, filed with the Securities and
      Exchange Commission on March 31, 2008.Exhibit
      21
                
                List
      of Subsidiaries.Exhibit
      31.1
                
                Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.Exhibit
      31.2
                
                Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of
2002.


79





Exhibit
      32.1
              
              Certification
      of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.Exhibit
      32.2
              
              Certification
      of the Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.Exhibit
      99.1
              
              Audit
      Committee Charter, incorporated by reference to Exhibit 99.1 to the
      Company’s Report on Form 10-KSB, filed with the Securities and Exchange
      Commission on February 28, 2006.Exhibit
      99.2
              
              Disclosure
      Committee Charter, incorporated by reference to Exhibit 99.2 to the
      Company’s Report on Form 10-KSB, filed with the Securities and Exchange
      Commission on February 28,
2006.




80


Paritz
      & Company, P.A.
              15
      Warren Street, Suite 25
                Hackensack,
      New Jersey 07601
                (201)342-7753
                Fax:
      (201) 342-7598
                E-Mail:
      paritz @paritz.comCertified
      Public Accountants
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board of
Directors
 4C
Controls, Inc.
 (A
Development Stage Company)
 New York,
New York
 
 We have
audited the accompanying balance sheet of 4C Controls, Inc. (A Development Stage
Company) as of December 31, 2008 and 2007 and the related statements of
operations, changes in stockholders’ deficiency and cash flows for the years
then ended and the period from inception (December 28, 2004) to December 31,
2008.  We did not audit the statements of operations and changes in
stockholders’ equity of the Company from inception (December 28, 2004) to
December 31, 2006 (not presented separately herein).  Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion insofar as it relates to amounts included for that period is based
solely on the report of the other auditors.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of 4C Controls, Inc., (A Development
Stage Company) as of December 31, 2008 and 2007, and the results of its
operations and its cash flows for the years then ended and for the period from
inception (December 28, 2004) to December 31, 2008, in conformity with
accounting principles generally accepted in the United States of
America.
  
 
 As
discussed in Note 3, the accompanying financial statements have been prepared
assuming the Company will continue as a going concern.  The ability of
the Company to continue as a going concern and to emerge from the development
stage is dependent upon its successful execution of its plan of operations and
ability to raise additional financing.  There is no guarantee that the
Company will be able to raise additional capital or sell any of its products or
services at a profit.  These factors, among others, raise substantial
doubt regarding the Company’s ability to continue as a going
concern.  The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
 
 /s/
Paritz & Company, P.A.
 
 Hackensack,
New Jersey
 April 13,
2009


4C
Controls Inc.
 (A
Development Stage Company)
 Balance
Sheets
 
 December 31
                  
                  
                  December 31,2008
                  
                  
                  2007ASSETSCurrent
      AssetsCash
                  
                  $
                  104,708
                  
                  
                  $
                  6,313Prepaid
      expenses and other current assets
                  
                  
                  43,097Total
      Current Assets
                  
                  
                  147,805
                  
                  
                  
                  6,313Property
      & Equipment, net of accumulated depreciation of $957
                  
                  
                  14,343
                  
                  
                  
                  -Investment
      in and Advances to 4C Security Solutions, Ltd.
                  
                  
                  3,806,601
                  
                  
                  
                  -Total
      Assets
                  
                  $
                  3,968,749
                  
                  
                  $
                  6,313LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)Current
      LiabilitiesAccrued
      liabilities
                  
                  $
                  1,579,845
                  
                  
                  $
                  74,392Interest
      payable - related party
                  
                  
                  23,305
                  
                  
                  
                  -Loan
      payable - related party
                  
                  
                  1,539,175
                  
                  
                  
                  -Total
      Current Liabilities and Total Liabilities
                  
                  
                  3,142,325
                  
                  
                  
                  74,392Stockholders'
      Equity (Deficiency):Common
      Stock, par value $.00001 per share 100,000,000 shares authorized,
      44,649,990 issued and 44,179,540 outstanding at December 31, 2008 and
      42,053,550 issued and outstanding at December 31, 2007
                  
                  
                  441
                  
                  
                  
                  420Additional
      paid in capital
                  
                  
                  13,428,602
                  
                  
                  
                  99,147Donated
      Capital
                  
                  
                  24,000
                  
                  
                  
                  24,000Treasury
      Stock, 470,450 shares at cost
                  
                  
                  (940,895
                  )
                  
                  
                  -Deficit
      accumulated during development stage
                  
                  
                  (5,867,715
                  )
                  
                  
                  (191,646
                  )Deferred
      Compensation
                  
                  
                  (5,818,009
                  )
                  
                  
                  -Total
      Stockholders' Equity (Deficiency)
                  
                  
                  826,424
                  
                  
                  
                  (68,079
                  )Total
      Liabilities and Stockholders' Equity (Deficiency)
                  
                  $
                  3,968,749
                  
                  
                  $
                  6,313
 
 See Notes
to Financial Statements
  
 
 4C
Controls Inc.
 (A
Development Stage Company)
 Statement
of Cash Flows
 
 Accumulated
      fromFor
      the Year ended
                          
                          
                          December
      28, 2004December
      31
                          
                          
                          (Date
      of Inception)2008
                          
                          
                          2007
                          
                          
                          to
      December 31, 2008Operating
      ActivitiesNet
      loss
                          
                          $
                          (5,676,369
                          )
                          
                          $
                          (93,677
                          )
                          
                          $
                          (5,867,715
                          )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amoritzation
      of deferred compensation
                          
                          
                          1,081,991
                          
                          
                          
                          
                          
                          
                          
                          1,081,991Depreciation
                          
                          
                          957
                          
                          
                          
                          
                          
                          
                          
                          957Issuance
      of stock options
                          
                          
                          100,791
                          
                          
                          
                          
                          
                          
                          
                          100,791Donated
      Services
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          24,000Impairment
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          5,000Equity
      in loss of unconsolidated subsidiary
                          
                          
                          36,173
                          
                          
                          
                          
                          
                          
                          
                          36,173Change
      in operating assets and liabilitiesInterest
      payable
                          
                          
                          23,305
                          
                          
                          
                          -
                          
                          
                          
                          23,305Accrued
      expenses
                          
                          
                          1,505,453
                          
                          
                          
                          73,987
                          
                          
                          
                          1,579,845Prepaid
      expenses and other current assets
                          
                          
                          (43,097
                          )
                          
                          
                          29
                          
                          
                          
                          (43,097
                          )Net
      Cash Used in Operating Activities
                          
                          
                          (2,970,796
                          )
                          
                          
                          (19,661
                          )
                          
                          
                          (3,058,750
                          )Investing
      ActivitiesInvestments
      in 4C Security Solutions, Ltd.
                          
                          
                          (3,690,808
                          )
                          
                          
                          
                          
                          
                          
                          (3,690,808
                          )Advances
      to 4C Security Solutions, Ltd.
                          
                          
                          (151,966
                          )
                          
                          
                          
                          
                          
                          
                          (151,966
                          )Acquisition
      of Property and Equipment
                          
                          
                          (15,300
                          )
                          
                          
                          
                          
                          
                          
                          (15,300
                          )Website
      development costs
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (5,000
                          )Net
      Cash Used in Investing Activities
                          
                          
                          (3,858,074
                          )
                          
                          
                          -
                          
                          
                          
                          (3,863,074
                          )Financing
      ActivitiesProceeds
      of Loan from related party
                          
                          
                          2,120,439
                          
                          
                          
                          
                          
                          
                          
                          2,154,458Repayments
      to a related party
                          
                          
                          -
                          
                          
                          
                          (794
                          )
                          
                          
                          (34,019
                          )Net
      proceeds from issuance of common shares
                          
                          
                          4,806,826
                          
                          
                          
                          -
                          
                          
                          
                          4,906,093Net
      Cash Provided by (used in) Financing Activities
                          
                          
                          6,927,265
                          
                          
                          
                          (794
                          )
                          
                          
                          7,026,532Increase
      (Decrease) in Cash
                          
                          
                          98,395
                          
                          
                          
                          (20,455
                          )
                          
                          
                          104,708Cash-
      Beginning of Period
                          
                          
                          6,313
                          
                          
                          
                          26,768
                          
                          
                          
                          -Cash
      - End of Period
                          
                          $
                          104,708
                          
                          
                          $
                          6,313
                          
                          
                          $
                          104,708See
      Notes to Financial StatementsSupplemental
      disclosure of cash flow informationCommon
      Stock issued for deferred compensation
                          
                          
                          6,900,000
                          
                          
                          
                          -
                          
                          
                          
                          6,900,000Profits
      from shareholder sales of stock capitalized to loan
    recievable
                          
                          
                          1,522,164
                          
                          
                          
                          -
                          
                          
                          
                          1,522,164Treasury
      stock acquired through offset of loan to related party
                          
                          
                          940,895
                          
                          
                          
                          -
                          
                          
                          
                          940,895
  
 
 4C
Controls Inc.
 (A
Development Stage Company)
 Statements
of Operations
 
 Accumulated
      fromFor
      the Year ended
                    
                    
                    December
      28, 2004December
      31
                    
                    
                    (Date
      of Inception)2008
                    
                    
                    2007
                    
                    
                    to
      December 31, 2008RevenueInterest
      Income
                    
                    $
                    3,219
                    
                    
                    
                    -
                    
                    
                    $
                    3,219ExpensesDirector
      fees and expenses
                    
                    
                    320,882
                    
                    
                    
                    -
                    
                    
                    
                    320,882Donated
      Services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    24,000General
      & Administrative
                    
                    
                    2,474,983
                    
                    
                    
                    1,075
                    
                    
                    
                    2,486,797Interest
      - related party
                    
                    
                    52,621
                    
                    
                    
                    -
                    
                    
                    
                    52,621Marketing
      and public relations
                    
                    
                    510,430
                    
                    
                    
                    -
                    
                    
                    
                    510,430Professional
      fees
                    
                    
                    2,284,499
                    
                    
                    
                    92,602
                    
                    
                    
                    2,440,031Equity
      in loss of unconsolidated subsidiary
                    
                    
                    36,173
                    
                    
                    
                    -
                    
                    
                    
                    36,173Total
      expenses
                    
                    
                    5,679,588
                    
                    
                    
                    93,677
                    
                    
                    
                    5,870,934Net
      Loss
                    
                    $
                    (5,676,369
                    )
                    
                    $
                    (93,677
                    )
                    
                    $
                    (5,867,715
                    )Net
      Loss Per Share
                    
                    $
                    (0.13
                    )
                    
                    $
                    (0.00
                    )Weighted
      Average Shares Outstanding
                    
                    
                    43,253,646
                    
                    
                    
                    42,053,550
 
 See Notes
to Financial Statements
  
 
 4C
Controls Inc.
 (A
Development Stage Company)
 Statement
of Stockholders' Equity
 For the
Period from December 28, 2004 (Date of Inception) to December 31,
2008
 
 Deficit
                    AccumulatedDuring
      theCommon
      Stock
                  
                  
                  Additional
                  
                  Treasury
      Stock
                  
                  
                  Donated
                  
                  
                  Deferred
                  
                  
                  DevelopmentShares
                  
                  
                  Par
                  
                  
                  Paid-in
      Capital
                  
                  Shares
                  
                  Value
                  
                  
                  Capital
                  
                  
                  Compensation
                  
                  
                  Stage
                  
                  
                  TotalValueCommon
      stock issued for cash at $0.00001 per share
                  
                  
                  35,000,000
                  
                  
                  $
                  350
                  
                  
                  $
                  (300
                  )
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  50Net
      loss for the period
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  (6,520
                  )
                  
                  
                  (6,520
                  )Balance
      – December 31, 2004
                  
                  
                  35,000,000
                  
                  
                  $
                  350
                  
                  
                  $
                  (300
                  )
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  (6,520
                  )
                  
                  $
                  (6,470
                  )Common
      stock issued for cash at $0.10 per share
                  
                  
                  7,053,550
                  
                  
                  
                  70
                  
                  
                  
                  100,695
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  100,765Shares
      issuance costs
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,548
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,548
                  )Donated
      services
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  12,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  12,000Net
      loss for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (48,442
                  )
                  
                  
                  (48,442
                  )Balance
      – December 31, 2005
                  
                  
                  42,053,550
                  
                  
                  $
                  420
                  
                  
                  $
                  98,847
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  12,000
                  
                  
                  $
                  -
                  
                  
                  $
                  (54,962
                  )
                  
                  $
                  56,305Donated
      services
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  12,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  12,000Net
      loss for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (42,707
                  )
                  
                  
                  (42,707
                  )Balance
      – December 31, 2006
                  
                  
                  42,053,550
                  
                  
                  $
                  420
                  
                  
                  $
                  98,847
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  24,000
                  
                  
                  $
                  -
                  
                  
                  $
                  (97,669
                  )
                  
                  $
                  25,598Net
      loss for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (93,677
                  )
                  
                  
                  (93,677
                  )Balance
      – December 31, 2007
                  
                  
                  42,053,550
                  
                  
                  $
                  420
                  
                  
                  $
                  98,847
                  
                  
                  
                  $
                  -
                  
                  
                  $
                  24,000
                  
                  
                  $
                  -
                  
                  
                  $
                  (191,346
                  )
                  
                  $
                  (68,079
                  )Issuance
      of Common Stock
                  
                  
                  1,596,440
                  
                  
                  
                  16
                  
                  
                  
                  4,806,810
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,806,826Non
      cash compensation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  100,791
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  100,791Shareholder
      profits from sale of securities
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,522,164
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,522,164Stock
      grant
                  
                  
                  1,000,000
                  
                  
                  
                  10
                  
                  
                  
                  6,899,990
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (6,900,000
                  )
                  
                  
                  
                  
                  
                  
                  -Amortization
      of deferred compensation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,081,991
                  
                  
                  
                  
                  
                  
                  
                  1,081,991Treasury
      stock acquired
                  
                  
                  (470,450
                  )
                  
                  
                  (5
                  )
                  
                  
                  
                  
                  470,450
                  
                  
                  (940,895
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (940,900
                  )Net
      loss for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (5,676,369
                  )
                  
                  
                  (5,676,369
                  )Balance
      – December 31, 2008
                  
                  
                  44,179,540
                  
                  
                  $
                  441
                  
                  
                  $
                  13,428,602
                  
                  $   470,450
                  
                  $
                  (940,895
                  )
                  
                  $
                  24,000
                  
                  
                  $
                  (5,818,009
                  )
                  
                  $
                  (5,867,715
                  )
                  
                  $
                  826,424
 
 See Notes
to Financial Statements


4C
CONTROLS INC.


(A
Development Stage Company)





NOTES TO
FINANCIAL STATEMENTS





DECEMBER
31, 2008





NOTE
1 – BUSINESS DESCRIPTION




Organization
and Business Description




4C
Controls Inc. (the “Company”) was incorporated in the State of Nevada on
December 28, 2004 and is a development stage company as defined by Statement of
Financial Accounting Standard No. 7, “Development Stage
Companies”.  On January 10, 2008, a change of control of the Company
occurred and Rudana Investment Group AG (“Rudana”) a corporation formed under
the laws of Switzerland, became the new majority shareholder of the Company,
controlling approximately 66% of the issued and outstanding shares of the
Company’s common stock.  On February 12, 2008, the Company changed its
name from Amecs, Inc. to 4C Controls Inc.  The Company’s business plan
focuses on offering cutting edge satellites, Synthetic Aperture Radar (SAR) and
high resolution optical satellite images, and integrated high technology
security, surveillance and access control solutions.  During the year
ended December 31, 2008, the Company has been refining its business plan,
recruiting its management team, and establishing strategic
alliances.




NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis
of accounting




These
financial statements are prepared in conformity with accounting principles
generally accepted in the United States and are presented in U.S.
Dollars.




Use
of Estimates




The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  The actual results experienced by the Company may differ
materially and adversely from the Company’s estimates.  To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.




Cash
and cash equivalents




The
Company considers all highly liquid debt investments with original maturities of
three months or less when purchased to be cash equivalents.  The
carrying amounts approximate fair market value because of the short
maturity.





The
Company maintains cash balances at various financial
institutions.  Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $250,000.  The Company's accounts
at these institutions may, at times, exceed the Federally insured
limits.  The Company has not experienced any losses in such
accounts.








Property
and Equipment





Property
and equipment consisting of office furniture and equipment, is stated at cost
and are depreciated over their estimated useful life (seven years), using the
straight line method. Maintenance and repairs are expensed as
incurred.




Income
taxes




The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (“SFAS 109”) which requires that deferred tax
assets and liabilities be recognized for future tax consequences attributable to
differences between financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  In addition, SFAS 109
requires recognition of future tax benefits, such as carry forwards, to the
extent that realization of such benefits is more likely than not and that a
valuation allowance be provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.




Long-lived
assets




In
accordance with the Financial Accounting Standards Board (“FASB”) SFAS No. 144,
“Accounting for the Impairment of Disposal of Long-Lived Assets”, the carrying
value of intangible assets and other long-lived assets is reviewed on a regular
basis for the existence of facts or circumstances that may suggest
impairment.  The Company recognizes impairment when the sum of the
expected undiscounted future cash flows is less than the carrying amount of the
asset.  Impairment losses, if any, are measured as the excess of the
carrying amount of the asset over its estimated fair value.




Financial
instruments




The fair
values of cash, prepaid expense, accrued liabilities and amounts due to a
related party was estimated to approximate their carrying values due to the
immediate or short-term maturity of these financial instruments.




Basic
and diluted net income (loss) per share




The
Company computes net income (loss) per share in accordance with SFAS No. 128,
“Earnings Per Share”
(“SFAS 128”).  SFAS 128 requires presentation of both basic and
diluted earnings per share (“EPS”) on the face of the income
statement.  Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period.  Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
including stock options, using the treasury stock method, and convertible
preferred stock, using the if-converted method.  In computed Diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or
warrants.  Diluted EPS excludes all dilutive potential shares if their
effect is anti-dilutive.







Stock
based compensation





Common
stock, stock options and warrants issued to other than employees or directors in
exchange for services are recorded on the basis of their fair value, as required
by SFAS No. 123R, which is measured as of the date required by EITF
Issue 96-18, “Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services”.  In accordance
with EITF 96-18, the non-employee stock options or warrants are measured at
their fair value by using the Black-Scholes option pricing model as of the
earlier of the date at which a commitment for performance to earn the equity
instruments is reached (“performance commitment date”) or the date at which
performance is complete (“performance completion date”).  The
stock-based compensation expenses are recognized on a straight-line basis over
the shorter of the period over which services are to be received or the vesting
period.  Accounting for non-employee stock options or warrants which
involve only performance conditions when no performance commitment date or
performance completion date has occurred as of reporting date requires
measurement at the equity instruments then-current fair value.  Any
subsequent changes in the market value of the underlying common stock are
reflected in the expense recorded in the subsequent period in which that change
occurs.




Other
comprehensive income




SFAS No.
130, “Reporting Comprehensive Income/(Loss)”, establishes standards for the
reporting and display of comprehensive income or loss and its components in the
financial statements.  As of December 31, 2008 and 2007, the Company
has no items that represent comprehensive income.




Recent
accounting pronouncements




In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations, a replacement
of FASB Statement No. 141 (SFAS No. 141(R)), which significantly
changes the principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the
acquiree.  The statement also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination.  This
statement is effective prospectively, except for certain retrospective
adjustments to deferred tax balances, for fiscal years beginning after
December 15, 2008.  The Company will assess the impact of this
statement upon any future business combinations.




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51(SFAS
No. 160).  This statement establishes accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary.  The accounting and reporting for
minority interests will be recharacterized as noncontrolling interests and
classified as a component of equity separate from the parent’s
equity.  In addition, SFAS No. 160 establishes reporting requirements
that provide sufficient disclosures that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners.  This statement is effective prospectively, except for certain
retrospective disclosure requirements, for fiscal years beginning after
December 15, 2008.  Accordingly, the Company will adopt SFAS No.
160 in fiscal year 2009.








In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(“SFAS 161”).  SFAS 161 is intended to improve transparency in
financial reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities.  This statement requires
additional disclosures about the objectives of derivative instruments and
hedging activities, the method of accounting for such instruments under SFAS No.
133 and its related interpretations, and a tabular disclosure of the effects of
such instruments and related hedged items on the Company’s financial position,
financial performance, and cash flows.  SFAS 161 is effective for
fiscal years and interim periods beginning after November 15, 2008 and will be
adopted by the Company in 2009.  The Company is currently assessing
the potential impact of SFAS 161 on its consolidated financial
statements.





NOTE
3 - GOING CONCERN





The
Company is in the development stage during which management has devoted most of
its activities to the development of a business plan for the
Company.  As of December 31, 2008, the Company has an accumulated
deficit of $5,867,715.  The ability of the Company to continue as a
going concern and to emerge from the development stage is dependent upon its
successful execution of its plan of operations and ability to raise additional
financing.  There is no guarantee that the Company will be able to
raise additional capital or sell any of its products and services at a
profit.  These factors, among others, raise substantial doubt
regarding the Company’s ability to continue as a going concern.  The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





NOTE
4 - STOCKHOLDERS’ EQUITY




On
December 18, 2007, the Board of Directors declared the payment of a stock
dividend to the stockholders of record of the Company as of January 2,
2008.  The stock dividend was paid on January 4, 2008.  Each
stockholder received six additional shares of the Company’s common stock for
each one share of the Company’s common stock which they held on the record
date.  Following the payment of the stock dividend, the issued and
outstanding share ownership of the Company increased from 6,007,650 shares of
Company common stock to 42,053,550 shares of common stock.  The
statement of Stockholders’ Equity and per share amounts have been retroactively
adjusted to reflect the historical impact of the stock dividend.





On March
7, 2008, Rudana purchased 470,450 shares of common stock at a purchase price of
$2.00 per share, and received 117,613 warrants exercisable for the purchase of
one share of the Company’s common stock at an exercise price of $0.25 per share.
On August 26, 2008 the Company and Rudana mutually agreed to rescind the March
2008 stock purchase and cancel the March 2008 warrants. In addition, the
original purchase price was converted to a shareholder loan.





It was
determined that Rudana had entered into transactions that resulted in a
short-swing profit liability under Section 16 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and the rules and regulations promulgated
thereunder of $1,522,164. The company agreed to accept payment from Rudana for
the Section 16 short-swing profit liability by reduction of the Company’s
obligations to repay loans due to Rudana.








NOTE 5 - INVESTMENT INFCSSOLUTIONS
LTD.





As of
December 31, 2008, the Company had made a cumulative investment of $3,690,808
(AUD $4,000,000) into 4C Security Solutions Limited (“FCS”), an Australian
company, formerly known as BQT Solutions Limited (“BQT”) in consideration for
12,800,000 ordinary shares of FCS representing approximately 19.8% of the issued
and outstanding shares of FCS.  The Company was also awarded 9,500,000
options with a strike price of AUD $0.10 and an expiration date of December 31,
2013.





In
addition, the Company advanced $151,966 to a subsidiary of FCS Solutions, which
amount is included in Investment in and Advances to FCS Solutions on the
accompanying Balance Sheet at December 31, 2008.





FCS is an
Australian public company specializing in access control systems, biometric and
smart card readers, CCTV, cameras and customized developments for selected
clients. FCS’s strategy is to diversify and expand its activities in the
security and surveillance technology sector. FCS intends to focus on
commercializing its SMAX access control system and support sales of existing
company technologies of biometrics, smart card readers, CCTV cameras and
customized solutions for selected key clients. The SMAX Access Control
Management System is a sophisticated, intelligent and cost effective security
application that provides movement and access controls within a
facility.





The
investment in FCS is accounted for using the equity method of
accounting.  Summarized financial information for the investment in
FCS, assuming a 100% ownership interest, is as follows (in U.S.
Dollars):





BALANCE
      SHEETDecember
      31, 2008Current
      assets
                  
                  $
                  2,777,443Non-current
      assets
                  
                  
                  1,468,520Current
      liabilities
                  
                  
                  1,951,306STATEMENT
      OF OPERATIONSfrom
      September 22, 2008 to December 31, 20008Revenues
                  
                  $
                  1,296,020Gross
      profit
                  
                  
                  1,010,945Net
      loss
                  
                  
                  72,749





NOTE
6 - RELATED PARTY TRANSACTION





As of
December 31, 2008, Rudana, the Company’s majority shareholder and companies
controlled by Rudana had loaned the Company $1,539,175. The funds were used by
the Company for general corporate use and for financing its strategic alliance
investment obligations in FCS Solutions Limited.  These loans bear
interest at 7.5% per annum and are due thirty (30) days after demand. Interest
expense related to this loan was $52,621 for the year ended December 31,
2008.








The
Company has a management service agreement with Prime Asset Finance Ltd., a UK
company which is a wholly owned subsidiary of Rudana, to assist the Company in
advising and developing  its strategic plans. The agreement provides
for an initial service fee of $250,000, which is being amortized over the three
year life of the agreement, and (a) a monthly management fee of $25,000, (b) a
fee equal to 5% of the total value of each transaction involving mergers,
acquisitions, and divestitures by the Company or any of its subsidiaries, and
(c) a fee equal to 8% of the total value of each customer sales contracts,
contractor and sub-contractor agreements with the Company.  The
company has recorded an expense of $127,778 relating to this agreement during
the year ended December 31, 2008, which is included in professional fees on the
Statement of Operations for the year ended December 31, 2008, and is included in
Accrued Liabilities on the accompanying Balance Sheet at December 31,
2008.





NOTE
7 – EMPLOYEE OPTION GRANT





On June
11, 2008 the Company granted an option to purchase ten thousand (10,000) shares
of the Company’s common stock to each of seven officers and directors of the
Company and its subsidiaries at an exercise price of $5.10 per
share.  This purchase price was equal to the closing price of the
Company’s common stock as quoted on the Nasdaq Over-the-Counter Bulletin Board
on the day immediately preceding the grant.  Using the Black Scholes
options pricing model, the options were valued at $1.06 per
share.  The total options granted valuation on June 11, 2008 was
$74,200.





On August
22, 2008 the Company appointed Major General Khalid Abdulla Mabarak Al Buainain,
Commander & Chief of UAE Air Force and Air Defense (Ret.), as Vice President
for Middle East Military and Defense Security.  The Company and Major
General Khalid have agreed that Major General Khalid will be receive the
following compensation: (i) $5,000 per month; (ii) stock options to purchase
500,000 shares of the Company’s common stock at an exercise price per share of
$1.64; and (iii) a commission equal to three percent (3%) of the total sales
price collected by the Company on any sales of the Company’s products to any
individual or entity which Major General Khalid shall (a) initially introduce
the Company to, and (b) which sales Major General Khalid shall facilitate as the
Company may reasonably request. Major General Khalid will perform his services
in the United Arab Emirates.  Using the Black Scholes options pricing
model, the options were valued at $0.33 per share.  The total options
granted valuation on August 22, 2008 was $165,859. See note
10.





The
fair value was estimated based on the following assumptions:





Risk-free
      rate
                1.5%
      - 2.33%Expected
      volatility
                50%Expected
      life
                1
      YearDividend
      yield
                -








NOTE
8 – INCOME TAXES





The
Company has available $5,575,000 of net operating loss carryforwards available
to offset future taxable income, if any.  These carryforwards expire
in the year 2024.





The
Company has a deferred tax asset of approximately $2,200,000 relating to
available net operating loss carryforwards for which a full valuation allowance
has been provided.  Utilization of the net operating loss carry
forwards will be limited due to the change in control referred to in Note
1.





NOTE
9 – CHIEF TECHNOLOGY OFFICER SERVICE AGREEMENT





On July
11, 2008, the Company entered into a Chief Technology Officer Services Agreement
(the “Services Agreement”) and license agreement with Dr. Riccardo
Maggiora.




Under the
Services Agreement, Dr. Maggiora has agreed to serve as Chief Technology Officer
for a three year period.  Dr. Maggiora has agreed to devote such time to
his work as Chief Technology Officer as he deems reasonably necessary, with the
Company acknowledging that Dr. Maggiora serves as an Assistant Professor at
Politechnico di Torino and shall continue such service, and therefore the
Company agrees that his services shall be rendered on a part-time
basis.  In consideration for services rendered to the Company, Dr.
Maggiora has been issued one million shares of the Company’s common stock. 
The Services Agreement contains provisions regarding protection of Company trade
secrets, non-solicitation of Company employees or customers and non-competition
with the Company during the term of the Agreement.  All discoveries and
works made or conceived by Dr. Maggiora while working on Company matters which
are not subject to intellectual property interests of any third parties, that
relate to the Company’s present or anticipated activities, or are used or
useable by the Company, shall be governed by the License Agreement described
below.  Either the Company or Dr. Maggiora may terminate the Services
Agreement, with or without cause, upon ten days notice to the other
party.




Under the
License Agreement, the Company acquired exclusive rights to
technologies in the field of intrusion detection systems, radar systems for
border and pipeline surveillance, and technologies for monitoring and
surveillance systems (collectively, the “Acquired Technologies”).  The
License Agreement has granted to the Company the right to file patents on the
Acquired Technologies, and all improvements and related know-how.  The
Company shall pay to Dr. Maggiora a royalty of one-half percent of sales of
products related to the Acquired Technologies which are sold by the Company or
any sublicensee.  Starting in the second year of the License Agreement,
there will be a minimum royalty payment to Dr. Maggiora of 250,000 Euros per
year.  The License Agreement includes rights to sublicense all of the
Acquired Technologies.  The term of the Agreement is three years and
shall automatically renew for subsequent three year periods, unless for any
reason the Company gives notice of non-renewal.  The Company has also
reserved the right to terminate the License Agreement after one
year.  The License Agreement may not be terminated by Dr. Maggiora
except in the event of a breach of the Agreement by the Company which has not
been cured within ninety days of notice of any breach.  Dr. Maggiora
has agreed to provide reasonable support and technical assistance during the
term of the License Agreement with respect to the Company’s use of the Acquired
Technologies and exercise of the Company’s rights under the License
Agreement.







NOTE
10 – SUBSEQUENT EVENTS





On
February 24, 2009, the Company entered into a new Executive Services
Agreement with General Khalid Abdulla Mabarak Al Buainain regarding his service
as the Company’s Vice President for Middle East Military and Defense
Projects.  The new agreement completely supersedes and replaces
all terms and conditions of the August 2008 agreement.  The 2009 Executive
Services Agreement has a term of two years.  Pursuant to the Executive
Services Agreement, General Khalid will receive (i) a salary of 220,000
Euros per year; (ii) a stock grant equal of 750,000 shares of the Company’s
common stock (the “4C Controls Shares”); (iii) ten percent (10%) of the equity
shares of the Company’s partially-owned subsidiary 4C Gulf Earth Observation
Center (the “4C GEOC Shares”); and (iv) ten percent (10%) of the equity shares
of the 4C GulfSatellites program (the “GulfSatellites
Shares”).   The 4C Controls Shares, the 4C GEOC Shares and the
GulfSatellites Shares shall be issued in the name of General Khalid and placed
into Company escrow for release to General Khalid after two years from the date
of the Executive Services Agreement.  In the case of the 4C GEOC
Shares, release from escrow shall also require the condition precedent that
there be revenues received by the Company from sales of ten (10) satellite
images per day by 4C GEOC attributable to introductions to customers made by
General Khalid.  In the case of the GulfSatellites Shares, release
from escrow shall also require the provision of a financial asset and/or
technological participation (direct or indirectly through a third party), or
investment or viable economic off-take agreement equivalent to the value of ten
percent equity interest in GulfSatellites.  If General Khalid achieves
his performance commitments before the two year escrow period has lapsed, all of
the shares shall be released immediately to General
Khalid.





On March
12, 2009, effective as of February 5, 2009 the Company entered into a three year
employment agreement (the “Employment Agreement”) with Mr. Anastasios Angeloglou
regarding his service as the Company’s Chief Executive
Officer.  Pursuant to the Employment Agreement, Mr. Angeloglou will
receive (i) a base salary of 400,000 Euros (approximately U.S. $520,000) per
year; (ii) contributions to a pension fund in the amount of 108,000 Euros
(approximately U.S. $140,000) for the first year of service and 35,000 Euros
(approximately U.S. $46,000) for each of the second and third years of service;
(iii) an annual bonus to be granted on the basis of obtaining certain
performance benchmarks; (iv) reasonable education of costs for Mr. Angeloglou’s
children and other benefits.





The
Company has also entered into two related agreements with 4C Security Solutions
Limited (“4C Security Solutions”).





The
Company entered into a Provision of Services Agreement with 4C Security
Solutions dated as of February 5, 2009, pursuant to which the Company agreed to
pay a monthly fee to 4C Security Solutions for the use of certain 4C Security
Solutions’ staff.  This agreement terminates on June 30,
2011.  The Company entered into a second Provision of Services
Agreement with 4C Security Solutions dated as of February 5, 2009, pursuant to
which 4C Security Solutions agreed to pay a monthly fee to the Company for the
shared, part-time allocation of services by the Company’s Chief Executive
Officer, Anastasios Angeloglou.  Pursuant to this agreement, Mr.
Angeloglou serves as the Chief Executive Officer of 4C Security Solutions as
well as the Company.  Mr. Angeloglou allocates approximately twenty
eight hours per month to the business of 4C Security Solutions.  This
agreement terminates on June 30, 2011.