8-K 1 b405920_8k.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 0R 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 7, 2005 SiVault Systems, Inc. ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada ------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-30711 98-0209119 ------------------------ --------------------------------- (Commission File Number) (IRS Employer Identification No.) 500 Fifth Avenue, Suite 1650, New York, New York 10110-0002 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (212) 931-5760 ------------------------------------------------------------------- Registrant's telephone number, including area code ------------------------------------------------------------------- (Former name or Former Address, If Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 7 - REGULATION FD. ITEM 7.01. REGULATION FD DISCLOSURE. On April 7, 2005, SiVault Systems, Inc. announced the closing of a $2,000,000 bridge financing which is set forth in the press release in an Exhibit hereto. SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements Not applicable. (b) Pro Forma Financial Information Not applicable. (c) Exhibits: 99.1 Press release issued on April 7, 2005* * Filed herewith SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SIVAULT SYSTEMS, INC. /s/ Wayne Taylor ----------------------------------- Wayne Taylor Interim Chief Financial Officer Date: April 8, 2005 EXHIBIT INDEX Exhibit: 99.1 Press Release issued on April 7, 2005* * Filed herewith

DECEMBER 31, --------------------------------- 2003 2002 ---- ---- CURRENT ASSETS Cash and cash equivalents $ 130,753 $ 68,154 Accounts receivable - 610 Other current assets - 3,500 ---------- ---------- TOTAL CURRENT ASSETS 130,753 72,264 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 178,335 273,865 CAPITALIZED SOFTWARE, NET OF ACCUMULATED AMORTIZATION 4,372,388 4,275,569 SECURITY DEPOSITS 25,001 25,935 ---------- ---------- $4,706,477 $4,647,633 ========== ==========

DECEMBER 31, -------------------------------------- 2003 2002 ---- ---- CURRENT LIABILITIES Accounts payable and accrued liabilities $ 152,896 $ 102,423 Accrued interest - stockholder 214,185 20,474 ------------ ------------ TOTAL CURRENT LIABILITIES 367,081 122,897 ------------ ------------ LONG TERM LIABILITIES Convertible notes payable - stockholder 3,619,000 1,235,000 ------------ ------------ 3,619,000 1,235,000 ------------ ------------ COMMITMENT AND CONTINGENCY STOCKHOLDERS' EQUITY Preferred stock - Series B-1: 5,000,000 shares authorized, issued, and outstanding, par value $.000001 ($5); liquidating value, $2.00 ($10,000,000,000); at the amount contributed 5,000,000 5,000,000 Preferred stock - Series B: 5,078,710 shares authorized, issued, and outstanding, par value $.000001 ($5); liquidating value, $2.00 ($10,000,000,000); at the amount contributed 5,078,710 5,078,710 Preferred stock - Series A: 2,250,000 shares authorized, issued, and outstanding, par value $.000001 ($2); liquidating value, $0.888889 ($2,000,000); at the amount contributed 2,000,000 2,000,000 Common stock - 154,107,950 shares authorized; issued and outstanding - 13,232,084 and 5,232,084 in 2003 and 2002, respectively, exclusive of treasury stock, par value $.000001 13 5 Additional paid-in capital 422,300 419,608 Accumulated deficit (11,760,627) (9,188,587) ------------ ------------ 740,396 3,309,736 Less: Treasury stock (1,260,000 shares) - at cost 20,000 20,000 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 720,396 3,289,736 ------------ ------------ $ 4,706,477 $ 4,647,633 ============ ============

YEARS ENDED DECEMBER 31, ------------------------------------ 2003 2002 ---- ---- REVENUES: Licensing fees $ - $ 610 ----------- ----------- - 610 ----------- ----------- OPERATING EXPENSES: Costs of unsalable inventory 144,471 -- Selling, general and administrative 2,278,167 2,166,424 ----------- ----------- 2,422,638 2,166,424 ----------- ----------- LOSS FROM OPERATIONS (2,422,638) (2,165,814) ----------- ----------- INTEREST EXPENSE, NET 149,402 4,417 ----------- ----------- NET LOSS $(2,572,040) $(2,170,231) =========== ===========

Series B-1 Series B Series A Preferred Stock Preferred Stock Preferred Stock ------------------------ ----------------------- ----------------------- Contributed Contributed Contributed Shares Amount Shares Amount Shares Amount ------ ------ ------ ------ ------ ------ BALANCES: December 31, 2001 3,500,000 $ 3,500,000 5,078,710 $ 5,078,710 2,250,000 $ 2,000,000 Issuance of preferred stock 1,500,000 1,500,000 - - - - Net loss - - - - - - --------- ------------ --------- ------------ --------- ------------ BALANCES: December 31, 2002 5,000,000 $ 5,000,000 5,078,710 $ 5,078,710 2,250,000 $ 2,000,000 ========= ============ ========= ============ ========= ============ Issuance of common stock upon exercise of warrants - - - - - - Net loss - - - - - - --------- ------------ --------- ------------ --------- ------------ BALANCES: December 31, 2003 5,000,000 $ 5,000,000 5,078,710 $ 5,078,710 2,250,000 $ 2,000,000 ========= ============ ========= ============ ========= ============ Issued Common Stock Additional Total --------------------- Paid-In Accumulated Treasury Stockholders' Shares Amount Capital Deficit Stock Equity ------ ------ ------- ------- ----- ------ BALANCES: December 31, 2001 5,232,084 $ 5 $ 419,608 $ (7,018,356) $ (20,000) $3,959,967 Issuance of preferred stock - - - - - 1,500,000 Net loss - - - (2,170,231) - (2,170,231) ---------- ----- ------------ ------------- ------------ ------------ BALANCES: December 31, 2002 5,232,084 $ 5 $ 419,608 $ (9,188,587) $ (20,000) $ 3,289,736 ========== ===== ============ ============= ============ ============ Issuance of common stock upon exercise of warrants 8,000,000 8 2,692 - - 2,700 Net loss - - - (2,572,040) - (2,572,040) ---------- ----- ------------ ------------- ------------ ------------ BALANCES: December 31, 2003 13,232,084 $ 13 $ 422,300 $(11,760,627) $ (20,000) $ 720,396 ========== ===== ============ ============= ============ ============

YEARS ENDED DECEMBER 31, ------------------------------------ 2003 2002 ------------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from operations $(2,572,040) $(2,170,231) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of property and equipment 109,727 189,710 Amortization of capitalized software 485,821 - Change in assets and liabilities: Accounts receivable 610 (610) Other current assets 3,500 (3,500) Security deposits 934 21,705 Accounts payable and accrued liabilities 244,184 15,775 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (1,727,264) (1,947,151) ----------- ----------- CASH FLOWS USED BY INVESTING ACTIVITIES: Purchase of property and equipment (14,197) (25,502) Development of capitalized software (582,640) (1,923,689) ----------- ----------- NET CASH USED BY INVESTING ACTIVITIES (596,837) (1,949,191) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of preferred stock - 1,500,000 Proceeds from the issuance of common stock upon the exercise of warrants 2,700 - Proceeds from issuance of convertible notes payable - stockholder 2,384,000 1,235,000 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 2,386,700 2,735,000 ----------- ----------- NET INCREASE (DECREASE) IN CASH 62,599 (1,161,342) CASH AND CASH EQUIVALENTS - BEGINNING 68,154 1,229,496 ----------- ----------- CASH AND CASH EQUIVALENTS - ENDING $ 130,753 $ 68,154 =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 14 $ 402 Income taxes - -

2003 2002 ---- ---- Equipment and furniture $ 46,006 $ 46,006 Computer equipment 365,206 358,949 Computer software 101,921 93,980 Telephone system 7,867 7,867 --------- --------- 521,000 506,802 Less: Accumulated depreciation and amortization (342,665) (232,938) --------- --------- $ 178,335 $ 273,864 ========= =========

2003 2002 ----------- ----------- Capitalized software $ 4,858,208 $ 4,275,569 Less: Accumulated amortization (485,821) -- ----------- ----------- $ 4,372,387 $ 4,275,569 =========== ===========

2003 2002 ---- ---- Net operating loss carryforwards $ 6,215,000 $ 5,164,000 Capitalized software (1,749,000) (1,710,000) Property and equipment (45,000) (21,000) ----------- ----------- 4,421,000 3,433,000 Less: Valuation Allowance (4,421,000) (3,433,000) ----------- ----------- $ - $ - =========== ===========

2003 2002 ---- ---- Federal - deferred $ 840,000 $ 1,406,000 State - deferred 148,000 248,000 ----------- ----------- 988,000 1,654,000 Less: Valuation Allowance (988,000) (1,654,000) ----------- ----------- $ - $ - =========== ===========

Weighted Average Shares - ISO Shares - NSO Exercise Price ------------ ------------ -------------- Options Outstanding at December 31, 2001 3,778,000 25,000 0.15 ---------- ---------- ---- Granted 303,770 -- 0.15 Expired (1,455,000) -- 0.15 ---------- ---------- ---- Options Outstanding at December 31, 2002 2,626,770 25,000 0.15 Granted 1,119,590 50,000 0.15 Expired (331,276) (50,000) 0.15 ---------- ---------- ---- Options Outstanding at December 31, 2003 3,415,084 25,000 0.15 ---------- ---------- ----

ViaSeal Satellite Transmission Access Control Secured Content 2003 Business Business Total ---- -------- -------- ----- Net sales $ - $ - $ - Operating loss (1,488,387) (934,251) (2,422,638) Total assets 4,550,723 155,754 4,706,477 Depreciation and amortization 595,548 - 595,548 Interest expense, net 89,641 59,761 149,402

Series B-1 Series B Series A Preferred Stock Preferred Stock Preferred Stock --------------------------- ----------------------- ---------------------------- Contributed Contributed Contributed Shares Amount Shares Amount Shares Amount ------ ------ ------ ------ ------ ------ BALANCES: December 31, 2003 (audited) 5,000,000 $ 5,000,000 5,078,710 $ 5,078,710 2,250,000 $ 2,000,000 Net loss - - - - - - --------- ------------ --------- ------------ --------- ------------ BALANCES: November 30, 2004(reviewed) 5,000,000 $ 5,000,000 5,078,710 $ 5,078,710 2,250,000 $ 2,000,000 ========= ============ ========= ============ ========= ============ Issued Total Common Stock Additional Stockholders' ------------------------- Paid-In Accumulated Treasury Equity Shares Amount Capital Deficit Stock (Deficiency) ------ ------ ------- ------- ----- ------------ BALANCES: December 31, 2003 (audited) 13,232,084 $ 13 $ 422,300 $(11,760,627) $ (20,000) $ 720,396 Net loss - - - (2,572,846) - (2,572,846) ---------- ------------ --------- ------------ ------------ ------------ BALANCES: November 30, 2004(reviewed) 13,232,084 $ 13 $ 422,300 $(14,333,473) $ (20,000) $ (1,852,450) ========== ============ ========= ============ ============ ============

Weighted Average Shares - ISO Shares - NSO Exercise Price ------------ ------------ -------------- Options Outstanding at December 31, 2003 3,415,084 25,000 0.15 --------- --------- ---- Granted 10,000 -- 0.15 Expired -- -- 0.15 --------- --------- ---- Options Outstanding at November 30, 2004 3,425,084 25,000 0.15 --------- --------- ----

ViaSeal Satellite Transmission Access Control Secured Content 2004 Business Business Total ---- -------- -------- ----- Net sales $ 300,000 $ 81,502 $ 381,502 Operating loss (941,975) (1,296,811) (2,238,786) Total assets 3,772,259 71,939 3,844,198 Depreciation and amortization 975,848 - 975,848 Interest expense, net $ 200,436 $ 133,623 $ 334,059

VIASEAL SIVAULT ACCESS SYSTEMS, INC./ SIVAULT SIVAULT CONTROL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CURRENT ASSETS Cash and cash equivalents $ 112,880 $ 5,622 $ -- $ -- $ 118,502 Accounts receivable 848,617 -- 300,000 (300,000)(1) 848,617 Inventory 3,884 -- -- -- 3,884 Prepaid expense and other current assets 58,788 -- -- -- 58,788 ------------ ------------ ------------ ------------ ------------ TOTAL CURRENT ASSETS 1,024,169 5,622 300,000 (300,000) 1,029,791 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 63,517 51,661 178,335 -- 293,513 CAPITALIZED SOFTWARE, NET OF ACCUMULATED AMORTIZATION 573,477 154 3,886,567 (3,886,567)(2) 573,631 SECURITY DEPOSITS AND OTHER ASSETS 56,916 450 -- -- 57,366 EXCESS COST OVER NET ASSETS AND OTHER INTANGIBLES ACQUIRED -- -- -- 9,237,436 (2) 9,237,436 ------------ ------------ ------------ ------------ ------------ $ 1,718,079 $ 57,887 $ 4,364,902 $ 5,050,869 $ 11,191,737 ============ ============ ============ ============ ============

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CURRENT LIABILITIES Accounts payable and accrued liabilities - non-related parties $2,558,883 $ -- $ 54,982 $ (105,499) (3) $ 2,508,366 Accounts payable and accrued liabilities - related parties 789,410 -- -- -- 789,410 Accrued expenses -- 487,446 -- (300,000)(1) 187,446 Billings in excess of costs and estimated earnings on uncompleted contracts 90,018 -- -- -- 90,018 Note and convertible debenture payable 1,358,569 -- -- -- 1,358,569 Note payable - related parties 339,983 -- -- -- 339,983 Shareholders advance -- 115,000 -- -- 115,000 Other current liabilities 227,162 -- -- -- 227,162 ------------ ------------ ------------ ------------ ------------ TOTAL CURRENT LIABILITIES $ 5,364,025 $ 602,446 $ 54,982 $ (405,499) $ 5,615,954 LONG TERM LIABILITIES Deferred rent 16,954 -- -- -- 16,954 ------------ ------------ ------------ ------------ ------------ TOTAL LONG TERM LIABILITIES 16,954 -- -- -- 16,954 STOCKHOLDERS' EQUITY (DEFICIENCY): Common Stock Authorized - 50,000,000 shares $0.001 par value Issued -15,114,664 and outstanding - 12,814,664 7,924 1,000 -- 6,190 (4) 15,114 Other Stockholders' Equity (3,670,824) (545,559) 4,309,920 5,450,178 (2) 5,543,715 ------------ ------------ ------------ ------------ ------------ TOTAL STOCKHOLDER' EQUITY (DEFICIENCY) (3,662,900) (544,559) 4,309,920 5,456,368 5,558,829 ------------ ------------ ------------ ------------ ------------ $ 1,718,079 $ 57,887 $ 4,364,902 $ 5,050,869 $ 11,191,737 ============ ============ ============ ============ ============

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- REVENUES: Contract revenues earned $ 7,110,034 $ - $ - $ - $ 7,110,034 Other revenues 21,403 41,000 300,000 (300,000)(1) 62,403 --------- ---------- ------------ ---------- ---------- 7,131,437 41,000 300,000 (300,000) 7,172,437 --------- ---------- ------------ ---------- ---------- OPERATING EXPENSES: Costs of revenue earned 3,649,302 - - - 3,649,302 Selling, general and administrative 3,737,955 598,637 1,510,041 (300,000)(1) 5,546,633 --------- ---------- ------------ ---------- ---------- 7,387,257 598,637 1,510,041 (300,000) 9,195,935 --------- ---------- ------------ ---------- ---------- LOSS FROM OPERATIONS (255,820) (557,637) (1,210,041) - (2,023,498) --------- ---------- ------------ ---------- ---------- OTHER EXPENSES Interest expense 796,220 - - - 796,220 Charge relating to issuance of stock warrants 2,496,000 - - - 2,496,000 --------- ---------- ------------ ---------- ---------- 3,292,220 - - - 3,292,220 --------- ---------- ------------ ---------- ---------- LOSS BEFORE PROVISION FOR INCOME TAXES (3,548,040) (557,637) (1,210,041) - (5,315,718) PROVISION FOR INCOME TAXES 34,934 - - - 34,934 LOSS FROM CONTINUING OPERATIONS BEFORE --------- ---------- ------------ ---------- ---------- MINORITY INTEREST IN LOSS OF SUBSIDIARY (3,582,974) (557,637) (1,210,041) - (5,350,652) Minority interest in loss of subsidiary 121 - - - 121 --------- ---------- ------------ ---------- ---------- LOSS FROM CONTINUING OPERATION (3,582,853) (557,637) (1,210,041) - (5,350,531) INCOME FROM DISCONTINUED OPERATIONS 176,193 - - - 176,193 NET LOSS $ (3,406,660) $ (557,637) $ (1,210,041) $ - $ (5,174,338) ========= ========== ============= ========== ========== BASIC AND DILUTED LOSS PER COMMON SHARE: Continuing operations ($0.51) ($0.06) - - ($0.45) Discontinued operations $0.02 $0.00 - - $0.01 --------- ---------- ------------ ---------- ---------- Net loss ($0.49) ($0.06) - - ($0.44) ========= ========== ============= ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,971,497 10,000,000 - (5,110,000) 11,861,497 ========= ========== ============= ========== ==========

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from continuing operations $(3,582,853) $ (557,637) $(1,210,041) - $(5,350,531) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 10,026 12,143 109,727 - 131,896 Amortization of capitalized software - 30 971,642 - 971,672 Deferred rent expense 16,954 - - - 16,954 Gain on settlement of debt (55,156) - - - (55,156) Issuance of common stock for consulting services 194,000 - - - 194,000 Issuance of stock to extend note and convertible debenture 2,496,000 - - - 2,496,000 Minority interest in equity of consolidated subsidiary (193) - - - (193) Change in assets and liabilities: Accounts receivable (753,983) - - - (753,983) Inventory (3,884) - - - (3,884) Prepaid expenses and other current assets (39,724) - - - (39,724) Security deposits (56,916) (450) - - (57,366) Accounts payable and accrued liabilities 1,500,439 487,446 (28,795) - 1,959,090 Billings in excess of costs and estimated earnings on uncompleted contracts 90,018 - - - 90,018 Corporate income taxes payable 34,934 - - - 34,934 ----------- ----------- ----------- ---------- ----------- NET CASH USED IN OPERATING ACTIVITIES (150,338) (58,468) (157,467) - (366,273) ----------- ----------- ----------- ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (7,002) (63,804) (10,626) - (81,432) Acquisition of capitalized software (200,000) (184) - - (200,184) Advances to discontinued subsidiary (288,796) - - - (288,796) ----------- ----------- ----------- ---------- ----------- NET CASH USED IN INVESTING ACTIVITIES (495,798) (63,988) (10,626) - (570,412) ----------- ----------- ----------- ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from the issuance of common stock 1,427,015 - - - 1,427,015 Proceeds from additional paid-in capital - 13,078 - - 13,078 Cash generated by activities prior to the acquisition and remaining in Viaquo Corp. -- - 168,094 - 168,094 Proceeds from issuance of common stock by subsidiary 27,593 - - - 27,593 Repayments of convertible debt and other note payable (694,936) - - - (694,936) Repayments on capital lease obligations (2,773) - - - (2,773) Proceeds from shareholders' advances -- 115,000 - - 115,000 ----------- ----------- ----------- ---------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 756,899 128,078 168,094 - 1,053,071 ----------- ----------- ----------- ---------- ----------- EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH (1,975) - - - (1,975) ----------- ----------- ----------- ---------- ----------- NET INCREASE IN CASH 108,788 5,622 - - 114,410 CASH: BEGINNING OF PERIOD 4,092 - - - 4,092 ----------- ----------- ----------- ---------- ----------- CASH: END OF PERIOD $ 112,880 $ 5,622 $ - $ - $ 118,502 =========== =========== =========== ========== ===========

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CASH PAID DURING THE PERIOD FOR: Interest $ 795,258 $ - $ - $ - $ 795,258 =========== ==== ========== ========== =========== Income taxes $ - $ - $ - $ - $ - =========== ==== ========== ========== =========== NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock for: Services $ 194,000 $ - $ - $ - $ 194,000 =========== ==== ========== ========== =========== Software $ 375,000 $ - $ - $ - $ 375,000 =========== ==== ========== ========== =========== Settlement of convertible debenture $ 100,000 $ - $ - $ - $ 100,000 =========== ==== ========== ========== =========== Settlement of note payable - related party $ 970,968 $ - $ - $ - $ 970,968 =========== ==== ========== ========== =========== Excess cost of net assets acquired in the purchase of: SiVault Analytics, Inc. $ - $ - $ - $7,863,060 (2) $ 7,863,060 =========== ==== ========== ========== =========== Viaquo asset purchase $ - $ - $ - $1,601,057 (2) $ 1,601,057 =========== ==== ========== ========== =========== Issuance of stock warrants for: Extended Convertible Deventures $ 2,016,000 $ - $ - $ - $ 2,016,000 =========== ==== ========== ========== =========== Extended Note Payable - Related Party $ 480,000 $ - $ - $ - $ 480,000 =========== ==== ========== ========== =========== Settle note payable - Related Party $ 640,000 $ - $ - $ - $ 640,000 =========== ==== ========== ========== =========== Conversion of accounts payable and accrued liabilities - related parties to note payable - related parties $ 325,000 $ - $ - $ - $ 325,000 =========== ==== ========== ========== ===========

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CURRENT ASSETS Cash and cash equivalents $ 675,381 $ - $ - $ - $ 675,381 Accounts receivable 858,788 - 250,000 (250,000) (1) 858,788 Inventory 140,490 - - - 140,490 Prepaid expense and other current assets 249,302 - - (37,046) (2) 212,256 ------------ ----------- ------------ ------------ ------------ TOTAL CURRENT ASSETS 1,923,961 - 250,000 (287,046) 1,886,915 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 113,072 - 40,542 (4,272) (2) 149,342 CAPITALIZED SOFTWARE, NET OF ACCUMULATED AMORTIZATION 645,784 - 3,481,717 (3,481,717) (2) 645,784 SECURITY DEPOSITS AND OTHER ASSETS 265,105 - - - 265,105 EXCESS COST OVER NET ASSETS AND OTHER INTANGIBLES ACQUIRED 7,863,060 - - 1,601,057 (2) 9,464,117 ------------ ----------- ------------ ------------ ------------ $ 10,810,982 $ - $ 3,772,259 $ (2,171,977) $ 12,411,264 ============ =========== ============ ============= ============

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CURRENT LIABILITIES Accounts payable and accrued liabilities - non-related parties $ 2,181,782 $ - $ 39,410 $ (236,857) (1,2) $ 1,984,335 Accounts payable and accrued liabilities - related parties 219,394 - - - 219,394 Note and convertible debenture payable 1,275,174 - - - 1,275,174 Note payable - related parties 150,000 - - - 150,000 Current portion of convertible notes 243,737 - - - 243,737 Other current liabilities 223,205 - - - 223,205 ------------ ------ ------------ ------------ ------------ TOTAL CURRENT LIABILITIES $ 4,293,292 $ - $ 39,410 $ (236,857) $ 4,095,845 LONG TERM LIABILITIES Convertible notes payable 974,949 - - - 974,949 Deferred rent 14,263 - - - 14,263 ------------ ------ ------------ ------------ ------------ TOTAL LONG TERM LIABILITIES 989,212 - - - 989,212 STOCKHOLDERS' EQUITY (DEFICIENCY): Common Stock - - - - Authorized - 50,000,000 shares $0.001 par value Issued - 19,037,530 and outstanding - 16,737,530 and 2,300,000 shares held in escrow 15,987 - - 3,050 (4) 19,037 Other Stockholders' Equity 5,512,491 - 3,732,849 (1,938,170) 7,307,170 ------------ ------ ------------ ------------ ------------ TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 5,528,478 - 3,732,849 (1,935,120) 7,326,207 ------------ ------ ------------ ------------ ------------ $ 10,810,982 $ - $ 3,772,259 $ (2,171,977) $ 12,411,264 ============ ====== ============ ============ ============

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- REVENUES: Contract revenues earned $ 1,123,230 $ - $ - $ - $ 1,123,230 Other revenues 4,200 - - - 4,200 ---------- ----- ------------ ------------ ------------ 1,127,430 - - - 1,127,430 ---------- ----- ------------ ------------ ------------ OPERATING EXPENSES: Costs of revenue earned 373,386 - - - 373,386 Selling, general and administrative 2,612,381 - 926,366 - 3,538,747 Issuance of common stock and stock options for services 2,064,000 - - - 2,064,000 ---------- ----- ------------ ------------ ------------ 5,049,767 - 926,366 - 5,976,133 ---------- ----- ------------ ------------ ------------ LOSS FROM OPERATIONS (3,922,337) - (926,366) - (4,848,703) ---------- ----- ------------ ------------ ------------ OTHER EXPENSES Interest expense 110,257 - - - 110,257 ---------- ----- ------------ ------------ ------------ 110,257 - - - 110,257 ---------- ----- ------------ ------------ ------------ LOSS BEFORE PROVISION FOR INCOME TAXES (4,032,594) - (926,366) - (4,958,960) PROVISION FOR INCOME TAXES - - - - - ---------- ----- ------------ ------------ ------------ NET LOSS $ (4,032,594) $ - $ (926,366) $ - $ (4,958,960) ============ ===== ============ ============ ============ BASIC AND DILUTED LOSS PER COMMON SHARE: Net loss ($ 0.29) $0.00 $ 0.00 ($ 0.05) ($ 0.34) ============ ===== ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 13,778,796 - - 750,000 14,528,796 ============ ===== ============ ============ ============

SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ----------------------- -------- ----------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss from continuing operations $(4,032,594) $- $ (926,366) $- $(4,958,960) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 24,252 - 85,177 - 109,429 Amortization of capitalized software 27,693 - 404,850 - 432,543 Deferred rent expense (2,691) - - - (2,691) Issuance of common stock for consulting services 1,704,000 - - - 1,704,000 Issuance of options for consulting services 360,000 - - - 360,000 Impairment of property and equipment - - 52,616 - 52,616 Change in assets and liabilities: Accounts receivable (10,171) - - - (10,171) Inventory (136,606) - - - (136,606) Prepaid expenses and other current assets (153,831) - - - (153,831) Security deposits (61,000) - - - (61,000) Accounts payable and accrued liabilities (693,237) - (15,572) - (708,809) Billings in excess of costs and estimated earnings on uncompleted contracts (90,018) - - - (90,018) ----------- --- ---------- --- ----------- NET CASH USED IN OPERATING ACTIVITIES (3,064,203) - (399,295) - (3,463,498) ----------- --- ---------- --- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash acquired in acquisition 5,622 - - - 5,622 Purchase of property and equipment (21,992) - - - (21,992) Acquisition of capitalized software (100,000) - - - (100,000) ----------- --- ---------- --- ----------- NET CASH USED BY INVESTING ACTIVITIES (116,370) - - - (116,370) ----------- --- ---------- --- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from the issuance of common stock 2,487,283 - - - 2,487,283 Proceeds from the exercise of stock warrants 333,334 - - - 333,334 Cash generated by activities prior to the acquisition and remaining in Viaquo Corp. - - 399,295 - 399,295 Proceeds from convertible debt 1,041,503 - - - 1,041,503 Repayments on capital lease obligations (3,957) - - - (3,957) Repayments of shareholders' advances (115,000) - - - (115,000) ----------- --- ---------- --- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 3,743,163 - 399,295 - 4,142,458 ----------- --- ---------- --- ----------- EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH (89) - - - (89) NET INCREASE IN CASH 562,501 - - - 562,501 CASH: BEGINNING OF PERIOD 112,880 - - - 112,880 ----------- --- ---------- --- ----------- CASH: END OF PERIOD $ 675,381 $- $ - $- $ 675,381 =========== === ========== === ===========

SIVAULT SYSTEMS, INC./ SIVAULT SIVAULT VIASEAL PRO FORMA VIASEAL SYSTEMS, INC. ANALYTICS BUSINESS ADJUSTMENTS COMBINED ------------- --------- -------- ----------- -------- CASH PAID DURING THE PERIOD FOR: Interest $ 90,500 $ - $ - $ - $ 90,500 =========== === === =============== ========== Income taxes $ - $ - $ - $ - $ - =========== === === =============== ========== NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock for: Services $ 1,704,000 $ - $ - $ - $1,704,000 =========== === === =============== ========== Software $ - $ - $ - $ - $ - =========== === === =============== ========== Settlement of account payables and accrued liabilities $ 693,237 $ - $ - $ - $ 693,237 =========== === === =============== ========== Prepaid expenses $ - $ - $ - $ - $ - =========== === === =============== ========== Settlement of convertible debenture $ - $ - $ - $ - $ - =========== === === =============== ========== Excess cost of net assets acquired in the purchase of: SiVault Analytics, Inc. $ 7,863,060 $ - $ - $ - $7,863,060 =========== === === =============== ========== Viaquo asset purchase $ - $ - $ - $ 1,601,057 (2) $1,601,057 =========== === === =============== ========== Issuance of stock options for services $ 360,000 $ - $ - $ - $ 360,000 =========== === === =============== ========== Issuance of a note payable - related party to payoff a note payable - related party $ 150,000 $ - $ - $ - $ 150,000 =========== === === =============== ==========

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