S-1 1 macrosolve_s1-041708.htm REGISTRATION STATEMENT macrosolve_s1-041708.htm


As filed with the Securities and Exchange Commission on April 18, 2008
 
Registration No. 333-
 
WASHINGTON D.C. 20549
 
FORM S-1
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
MACROSOLVE, INC.
(Name of small business issuer in its charter)
 
 Oklahoma
 
2860
 
26-0287664  
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(IRS Employer
Identification No.)

5800 East Skelly Drive, Suite 300
Tulsa, OK 74135
(918) 280-8693
(Address and telephone number of registrant’s principal offices)
 
James C. McGill
Chairman of the Board of Directors
MACROSOLVE, INC.
5800 East Skelly Drive, Suite 300
Tulsa, OK 74135
(918) 280-8693
(Name, address and telephone number of agent for service)

Copies to:
Gregory Sichenzia, Esq.
Matthew Kamen, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, NY 10006
(212) 930-9700
(212) 930-9725 Fax
 
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
 
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o
 


Title of Each Class of Securities To Be Registered
 
Amount
To Be
Registered
   
Proposed
Maximum
Offering
Price
Per Unit (1)(2)
   
Proposed
Maximum
Aggregate
Offering
Price
   
 
Amount of
Registration
Fee
 
                         
Common Stock offered by our Selling Stockholders (2)
    18,083,741     $ 0.60     $ 10,850,244.60     $ 426.42  
Common Stock offered by our Selling Stockholders (2)(3)
    2,874,976     $ 0.60     $ 1,724,985.60     $ 67.80  
Common Stock offered by our Selling Stockholders (2)(4)
    5,000,160     $ 0.60     $ 3,000,096.00     $ 117.90  
                                 
TOTAL
    25,958,877               15,575,326.20       612.12  

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. The proposed maximum offering price is based on the estimated high end of the range at which the common stock will initially be sold.

(2) The selling shareholders will offer their shares at $0.60 per share until the Company’s shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.

(3) Represents shares issuable upon exercise of warrants.

(4) Represents shares issuable upon exercise of options.
 
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
The information in this prospectus is not complete and may be changed. We may not sell these securities and the selling security holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


2


The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.
 
 
MACROSOLVE, INC.  
25,958,877 SHARES OF COMMON STOCK BY SELLING SHAREHOLDERS
$0.60 Per Share
 
The Selling shareholders are offering up to 25,958,877 shares of common stock. The selling shareholders will offer their shares at up to $0.60 per share until our shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.

There are no underwriting commissions involved in this offering. We have agreed to pay all the costs and expenses of this offering. Selling shareholders will pay no offering expenses. As of the date of this prospectus, there is no trading market in our common stock, and we cannot assure you that a trading market will develop Our common stock is not currently listed on any national securities exchange, the NASDAQ stock market, or the OTC Bulletin Board. There is no guarantee that our securities will ever trade on the OTC Bulletin Board or other exchange.

This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See "Risk Factors" beginning on page 9.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is April 18, 2008.

3

 
 
PROSPECTUS SUMMARY
5
SUMMARY FINANCIAL DATA
7
RISK FACTORS
8
FORWARD LOOKING STATEMENTS
13
USE OF PROCEEDS
13
DETERMINATION OF OFFERING PRICE
13
DILUTION
13
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
13
SELECTED FINANCIAL DATA
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
15
BUSINESS
19
DESCRIPTION OF PROPERTY  21
LEGAL PROCEEDINGS
21
MANAGEMENT  22
EXECUTIVE COMPENSATION
24
DIRECTOR COMPENSATION
25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
26
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 27
PLAN OF DISTRIBUTION
27
DESCRIPTION OF SECURITIES
28
SELLING STOCKHOLDERS
29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
35
LEGAL MATTERS
36
EXPERTS
36
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
36
WHERE YOU CAN FIND MORE INFORMATION 36
FINANCIAL STATEMENTS
F-1
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS 37
INDEMNIFICATION OF DIRECTORS AND OFFICERS 37
RECENT SALES OF UNREGISTERED SECURITIES 37
EXHIBITS AND FINANCIAL STATEMENT SCHEDULE 38
UNDERTAKINGS 39
SIGNATURES
40

You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus or that the information contained by reference to this prospectus is correct as of any time after its date.

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PROSPECTUS SUMMARY

The following summary highlights selected information contained in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the "RISK FACTORS" section, the financial statements and the notes to the financial statements. As used throughout this prospectus, the terms "MacroSolve", "Company", “Anyware” "we," "us," or "our" refer to MacroSolve, Inc.

Organization

MacroSolve, Inc. is an Oklahoma corporation formed on January 17, 1997, under the laws of the State of Oklahoma and does business as Anyware Mobile Solutions, a division of MacroSolve.

As with any investment, there are certain risks involved in this offering.  All potential investors should consult their own tax, legal and investment advisors prior to making any decision regarding this offering.  The purchase of the Shares is highly speculative and involves a high degree of risk, including, but not necessarily limited to, the “Risk Factors” described herein on page 7.  Any person who cannot afford the loss of their entire investment should not purchase the Shares.

Business
 
We are a mobile data and video enabling company which provides solutions to two complimentary customer types.  Since 1997, the Company has served businesses with Process Enabling; i.e., streamlining their operational processes with mobile technology, which includes the integration of wireless connectivity, mobile hardware, software and services.  Starting in 2005, the Company also began serving third party technology companies with needs to access large, new markets by ‘mobilizing’ their new or existing products; i.e., Product Enabling.  By Product Enabling these new products, the Company has established a niche where product development and market development expertise builds longer term projects with promising passive recurring revenues such as license fees, revenue share arrangements and equity participations. 

Our target market is medium and small enterprises that do not have the expertise to leverage mobile technology and technology companies who wish to serve business customers with mobile solutions.  We provide technical and business related services to these customers with emphasis on growing passive recurring revenue streams.  We are developing scalable mobile data and video platforms with customers and partners. These platforms are uniquely adaptive across a wide variety of hardware and wireless capabilities that are available today and that we foresee in the future.

Our address is 5800 East Skelly Drive, Suite 300, Tulsa, OK 74135 and our telephone number is (918) 280-8693.

5

 
The Offering
 
Common stock outstanding before the offering
32,435,236
   
Common stock offered by selling stockholders
 
Up to 25,958,877 shares.
 
The maximum number of shares to be issued to the selling stockholders, 25,958,877 represents 80.1% of our current outstanding stock.
   
Common stock to be outstanding after the offering
Up to 32,435,236 shares.
   
Use of proceeds
 
We will not receive any proceeds from the sale of the common stock. See "Use of Proceeds" for a complete description.
   
Risk Factors
 
The purchase of our common stock involves a high degree of risk. You should carefully review and consider "Risk Factors" beginning on page 9.
   
Forward-Looking Statements
 
This prospectus contains forward-looking statements that address, among other things, our strategy to develop our business, projected capital expenditures, liquidity, and our development of additional revenue sources. The forward-looking statements are based on our current expectations and are subject to risks, uncertainties and assumptions. We base these forward-looking statements on information currently available to us, and we assume no obligation to update them. Our actual results may differ materially from the results anticipated in these forward-looking statements, due to various factors.
 
The above information regarding common stock to be outstanding after the offering is based on 32,435,236 shares of common stock outstanding as of April 15, 2008.

Recent Developments

Subsequent to December 31, 2007, the Company raised an additional $115,000 in equity through the exercise of options and warrants by existing shareholders. Additionally, the Company has placed $950,000 in convertible notes with qualified investors.
 
Subsequent to December 31, 2007, the Company engaged Concordia Financial Group (Concordia) and Sichenzia Ross Friedman Ference LLP (Sichenzia) to provide financial advisory and legal services, respectively, in connection with the registration of the Company’s issued and outstanding common stock.  Consideration to be paid to Concordia for its services include monthly payments of $3,000 in addition to 1,126,900 shares of the Company’s common stock.  Consideration to be paid to Sichenzia for its services include a flat fee of $50,000 and 563,500 shares of the Company’s common stock.  The fee to Sichenzia is to be paid $20,000 on signing of the engagement letter, $20,000 on filing of the registration statement and $10,000 on the registration statement becoming effective.  In the case of both Concordia and Sichenzia, the shares of the Company’s common stock included as part of the consideration for services provided will be forfeited in the event that the registration of the Company’s issued and outstanding common stock is not declared effective by the Securities and Exchange Commission.
 
Effective February 26, 2008, all of the holders of Preferred Series A and Preferred Series B stock elected to convert their shares to 235,289  and 41,667 shares of common stock, respectively.

On March 25, 2008, the Company’s Certificate of Incorporation was amended to increase the number of authorized shares of common and preferred stock from 10,000,000 and 1,000,000, respectively, to 100,000,000 and 10,000,000.  The amendment had no effect on the par value of the stock.

Effective April 14, 2008, the Company issued a stock dividend of 19 shares for each share of common stock held to all shareholders of record as of March 31, 2008.  The result of this stock dividend was the creation of 32,435,236 shares of common stock outstanding as of April 15, 2008.

The following selected financial data should be read in conjunction with our financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The historical results are not necessarily indicative of results to be expected for future periods. The following information is presented in thousands, except per share data.

Statements of Operations Data:

 
 
Year Ended December 31,
 
   
2007
   
2006
 
(Dollar Amounts in Thousands except per share data)
               
Revenue
 
$
2,323
   
$
1,398
 
Cost of goods sold
   
1,155
     
675
 
Gross (loss) profit
   
1,168
     
723
 
Operating expenses:
               
Solution Services
   
425
     
277
 
                 
Selling, general and administrative
   
1,398
     
1,352
 
Total operating expenses
   
1,823
     
1,629
 
Loss from operations
   
(655)
     
(906)
 
Other income (expense), net
   
(14)
     
(62)
 
Net loss
 
$
(669)
   
$
(968)
 
                 
Basic and diluted loss per share
 
$
(1.03)
   
$
(1.60)
 
                 
Shares used in calculation of loss per share:
               
Basic and diluted
   
842,126
     
723,611
 
 
Balance Sheet Data:

 
 
Year Ended December 31,
 
   
2007
   
2006
 
(Dollar Amounts in Thousands)
               
Cash and cash equivalents
 
$
26
   
$
715
 
Working (deficit) capital
   
(207)
     
659
 
Total assets
   
1,366
     
1,239
 
Long-term obligations
   
234
     
261
 
Total shareholders’ (deficit) equity
 
$
60
   
$
716
 
 
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You should carefully consider the risks described below as well as other information provided to you in this document, including information in the section of this document entitled “Information Regarding Forward Looking Statements.” The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently believes are immaterial may also impair the Company’s business operations. If any of the following risks actually occur, the Company’s business, financial condition or results of operations could be materially adversely affected, the value of the Company common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry
 
We face intense competition in the market for mobile computing products and services, which could reduce our market share and revenue.
 
Our market contains few substantial barriers to entry. We believe we will face additional competition from existing competitors and new market entrants in the future.  We are subject to current and potential competition with respect to our Enabling Services from Accenture, IBM Global Services, Google, Apple, Microsoft, and Tira Wireless, among others.  In addition, we are subject to current and potential competition with respect to our Product Enabling from Flowfinity, iAnywhere, Formotus, Pendragon, and Mobile Frame, among others.

In addition to the direct competition noted above, we face indirect competition from existing and potential customers that may provide internally developed solutions for each of our products or services. As a result, we must educate prospective customers as to the advantage of our products compared to internally developed solutions.
 
Many of our competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater brand recognition and more established relationships in the industry than we do. Our larger competitors may be able to provide customers with additional benefits in connection with their products and costs, including reduced communications costs. As a result, these companies may be able to price their products and services more competitively than we can and respond more quickly to new or emerging technologies and changes in customer requirements. If we are unable to compete successfully against our current or future competitors, we may lose market share, and our business and prospects would suffer.
 
Consolidation in the wireless industry may strengthen our competitors’ position in our market. Consolidation of our competitors has occurred, and we expect it to continue to occur in the foreseeable future. Acquisitions may further strengthen our competitors’ financial, technical and marketing resources.
 
Most sales with mobile carriers and enterprises have a long sales cycle process, which increases the cost of completing sales and renders completion of sales less predictable.
 
The sales cycle process with mobile carriers could be long, making it difficult to predict the quarter in which we may recognize revenue from a sale, if at all. The general length of the sales cycle increases our costs and may cause license revenue and other operating results to vary significantly from period to period. Our products or services often are part of significant strategic decisions by our customers regarding their information systems. Accordingly, the decision to license our products or use our services typically requires significant pre-purchase evaluation. We spend substantial time providing information to prospective customers regarding the use and benefits of our products. During this evaluation period, we may expend significant funds in sales and marketing efforts. If anticipated sales from a specific customer for a particular quarter are not realized in that quarter, our operating results may be adversely affected.

If we fail to maintain our existing relationships or enter into new relationships with OEM and business development organizations, or if products offered by our OEM partners fail to achieve or maintain market acceptance, our brand awareness, the sales of our products and use of our services would suffer.
 
Our revenue from technology licensing depends, in large part, on our ability to develop and maintain relationships with OEMs and business development organizations that help distribute our products and promote our services. We depend on these relationships to:
 
distribute our products to purchasers of mobile devices;
 
increase the use of our services;
 
build brand awareness through product marketing; and
 
market our products and services cooperatively.
 
8

 
If the products that these equipment manufacturers or business development organizations sell,,or if any of these companies cease to use our product and service offerings in significant volumes, our product sales would decline and our business would suffer. For example, if growth in the number of devices sold by our OEM partners is delayed or did not occur, our business would suffer.
 
Our agreements with OEMs, distributors, and resellers generally are nonexclusive and may be terminated on short notice by either party without cause. Furthermore, our OEMs, distributors and resellers are not within our control, are not obligated to purchase products from us, and may represent other lines of products, including competing products. A reduction in sales effort or discontinuance of sales of our products by our OEMs, distributors, and resellers could lead to reduced sales and could materially adversely affect our operating results.
 
Our market changes rapidly due to evolution in technology and industry standards. If we do not adapt to meet the sophisticated needs of our customers, our business and prospects will suffer.
 
The market for our products and services is characterized by rapidly changing technology, evolving industry standards and frequent new product and service introductions. For example, the traditional personal digital assistant market is declining and may continue to do so. Our future success will depend to a substantial degree on our ability to offer products and services that adapt to these changing markets, incorporate leading technology, address the increasingly sophisticated and varied needs of our current and prospective customers and respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis. Our rapidly evolving market makes it more likely that:
 
our technology or products may become obsolete upon the introduction of alternative technologies;
 
we may not have sufficient resources to develop or acquire new technologies or to introduce new products or services capable of competing with future technologies or service offerings of other companies; and
 
we may not have sufficient resources to develop or acquire new technologies or to introduce new products or services capable of competing with future technologies or service offerings of other companies.
 
To the extent we determine that new technologies are required to remain competitive, the development, acquisition and implementation of these technologies is likely to continue to require significant capital investment by us. Moreover, we cannot be certain that we can develop, market and deliver new products and technology on a timely basis. Sufficient capital may not be available for this purpose in the future, and even if it is available, investments in new technologies may not result in commercially viable technological processes and there may not be commercial applications for such technologies. If we do not develop, acquire and introduce new products and services and achieve market acceptance in a timely manner, our business and prospects will suffer.
 
Our business and prospects depend, to a significant degree, on demand for wireless and other mobile computing devices.
 
The use of wireless and other mobile computing devices for retrieving, sharing and transferring information among businesses, consumers, suppliers and partners has begun to develop only in recent years. Our success will depend in large part on continued growth in the use of wireless and other mobile computing devices, including handheld computers, smart phones, pagers and other mobile devices. In addition, our markets face critical unresolved issues concerning the commercial use of wireless and other mobile computing devices, including security, reliability, cost, ease of access and use, quality of service, regulatory initiatives and necessary increases in bandwidth availability. Demand for, and market acceptance of, wireless and other mobile computing devices which require our products and services are subject to a high level of uncertainty and are dependent on a number of factors, including:
 
growth in sales of handheld devices, smart phones and other mobile computing devices and growth in wireless network capabilities to match end-user demand and requirements;
 
emergence of a viable and sustainable market for wireless and mobile computing services;
 
our product and services differentiation and quality;
 
the development of technologies that facilitate interactive communication between organizations;
 
our distribution and pricing strategies as compared with those of our competitors;
 
the growth in access to, and market acceptance of, new interactive technologies;
 
the effectiveness of our marketing strategy and efforts;
 
our industry reputation; and
 
general industry and economic conditions such as slowdowns in the computer or software markets or the economy in general.
 
9

 
If the market for wireless and other mobile computing devices as a commercial or business medium develops more slowly than expected, our business, results of operations and financial condition will be seriously harmed.
 
Even if the wireless and mobile computing services market does develop, our products and services may not achieve widespread market acceptance. If our target customers do not adopt, purchase and successfully deploy our other current and planned products and services, our revenue will not grow significantly and our business, results of operations and financial condition will be seriously harmed.

We might experience significant errors or security flaws in our products and services.
 
Despite testing prior to their release, software products may contain errors or security flaws, particularly when first introduced or when new versions are released. Errors in our software products could affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products and could adversely affect market acceptance of our products. If we experience errors or delays in releasing new products or new versions of products, we could lose revenues. Our customers rely on our products and services for critical parts of their businesses and they may have a greater sensitivity to product errors and security vulnerabilities than customers for software products generally. Software product errors and security flaws in our products or services could expose us to product liability, performance and/or warranty claims as well as harm our reputation, which could impact our future sales of products and services. The detection and correction of any security flaws can be time consuming and costly.

Insufficient protection for our intellectual property rights may have a material adverse affect on our results of operations or our ability to compete.
 
We attempt to protect our intellectual property rights in the United States and in selected foreign countries through a combination of reliance on intellectual property laws (including copyright, patent, trademark and trade secret laws) and registrations of selected patent, trademark and copyright rights in selected jurisdictions, as well as licensing and other agreements preventing the unauthorized disclosure and use of our intellectual property. We cannot assure you that these protections will be adequate to prevent third parties from copying or reverse engineering our products, from engaging in other unauthorized use of our technology, or from independently developing and marketing products or services that are substantially equivalent to or superior to our own. Moreover, third parties may be able to successfully challenge, oppose, invalidate or circumvent our patents, trademarks, copyrights and trade secret rights. We may elect or be unable to obtain or maintain certain protections for certain of our intellectual property in certain jurisdictions, and our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States because of the differences in foreign laws concerning intellectual property rights. Lack of protection of certain intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. Moreover, monitoring and protecting our intellectual property rights is difficult and costly. From time to time, we may be required to initiate litigation or other action to enforce our intellectual property rights or to establish their validity. Such action could result in substantial cost and diversion of resources and management attention and we cannot assure you that any such action will be successful.

If third parties claim that we are in violation of their intellectual property rights, it could have a negative impact on our results of operations or ability to compete.
 
Patent litigation involving software and telecom companies has increased significantly in recent years as the number of software and telecom patents has increased and as the number of patent holding companies has increased. We face the risk of claims that products or services that we provide have infringed the intellectual property rights of third parties.  We are not engaged in any litigation of any kind whatsoever at this time.

Pricing pressure in the mobile software and technology market could adversely affect our operating results.
 
Competition and industry consolidation in the mobile messaging market have resulted in pricing pressure, which we expect to continue in the future. This pricing pressure could cause large reductions in the selling price of our services. For example, consolidation in the wireless services industry could give our customers increased transaction volume leverage in pricing negotiations. Our competitors or our customers’ in-house solutions may also provide services at a lower cost, significantly increasing pricing pressures on us. While historically pricing pressure has been largely offset by volume increases and the introduction of new services, in the future we may not be able to offset the effects of any price reductions.

If we fail to maintain or expand our relationships with strategic partners and indirect distribution channels our revenues could decline.
 
Our development, marketing and distribution strategies depend in part on our ability to form strategic relationships with other technology companies. If these companies change their business focus, enter into strategic alliances with other companies or are acquired by our competitors or others, support for our products and services could be reduced or eliminated, which could have a material adverse effect on our business and financial condition.

System failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.
 
The success of our products, specifically ReForm™, is highly dependent on its ability to provide reliable services to customers. These operations could be interrupted by any damage to our customers, or suppliers, computer software, hardware or networks, and our connections and outsourced service arrangements with third parties.
 
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Anyware’s systems and operations are also vulnerable to damage or interruption from power loss, transmission cable cuts and other telecommunications failures, natural disasters, interruption of service due to potential facility migrations, computer viruses or software defects, physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events and errors by our employees or third-party service providers.

Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on, including that of our customers and vendors, could disrupt the operation of our network and the provision of our services, result in the loss of current and potential customers and expose us to potential customer liability.

Industry consolidation and other competitive pressures could affect prices or demand for our products and services, and our business may be adversely affected.
 
The IT industry and the market for our products and services is becoming increasingly competitive due to a variety of factors. There is also a growing trend toward consolidation in the software industry. Continued consolidation within the software industry could create opportunities for larger software companies, such as IBM, Microsoft and Oracle, to increase their market share through the acquisition of companies that dominate certain lucrative market niches or that have loyal installed customer bases. Continued consolidation activity could pose a significant competitive disadvantage to us.

The significant purchasing and market power of larger companies may also subject us to increased pricing pressures. Many of our competitors have greater financial, technical, sales and marketing resources, and a larger installed customer base than us. In addition, our competitors’ advertising and marketing efforts could overshadow our own and/or adversely influence customer perception of our products and services, and harm our business and prospects as a result. To remain competitive, we must develop and promote new products and solutions, enhance existing products and retain competitive pricing policies, all in a timely manner. Our failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate new revenues or sustain existing revenue levels.

The ability to rapidly develop and bring to market advanced products and services that are successful is crucial to maintaining our competitive position.
 
Widespread use of the Internet and fast-growing market demand for mobile and wireless solutions may significantly alter the manner in which business is conducted in the future. In light of these developments, our ability to timely meet the demand for new or enhanced products and services to support wireless and mobile business operations at competitive prices could significantly impact our ability to generate future revenues.  If the market for unwired solutions does not continue to develop as we anticipate, if our solutions and services do not successfully compete in the relevant markets, or our new products are not widely adopted and successful, our competitive position and our operating results could be adversely affected.   While acquisition of certain competitors could enhance our position, we have no discussions in that regard at this time.

System failures, delays and other problems could harm our reputation and business, cause us to lose customers and expose us to customer liability.
 
The success of our products, specifically ReForm™, is highly dependent on its ability to provide reliable services to customers. These operations could be interrupted by any damage to or failure of our or our customers, or suppliers, computer software, hardware or networks, and our connections and outsourced service arrangements with third parties.

Anyware’s systems and operations are also vulnerable to damage or interruption from power loss, transmission cable cuts and other telecommunications failures, natural disasters, interruption of service due to potential facility migrations, computer viruses or software defects, physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events and errors by our employees or third-party service providers.

Because many of our services play a mission-critical role for our customers, any damage to or failure of the infrastructure we rely on, including that of our customers and vendors, could disrupt the operation of our network and the provision of our services, result in the loss of current and potential customers and expose us to potential customer liability.

Economic conditions in the U.S. and worldwide could adversely affect our revenues.
 
Our revenues and operating results depend on the overall demand for our products and services. If the U.S. and worldwide economies continue to weaken, either alone or in tandem with other factors beyond our control (including war, political unrest, shifts in market demand for our products, actions by competitors, etc.), we may not be able to maintain or expand our recent revenue growth.

We will need significant additional capital, which we may be unable to obtain.
 
Our capital requirements in connection with our ecommerce development activities and transition to commercial operations have been and will continue to be significant. We will require additional funds to develop direct Internet sales of products and services.  There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.  There is no assurance additional funds will be available from any source; or, if available, such funds may not be on terms acceptable to the Company.  In either of the aforementioned situations, the Company may not be able to fully implement its growth plans. Moreover, we will not receive any proceeds from the sale of stock by our selling stockholders, and thus this offering will not affect our ability to meet capital requirements.
 
11


We depend on key employees in a competitive market for skilled personnel.
 
The success of our business will continue to depend upon certain key technical and senior management personnel many of whom would be extremely difficult to replace. Competition for such personnel is intense, and we cannot be certain that we will be able to retain our existing key managerial, technical, or sales and marketing personnel. The loss of these officers and other or key employees in the future might adversely affect our business and impede the achievement of our business objectives. We believe our ability to achieve increased revenue and to develop successful new products and product enhancements will depend in part upon our ability to attract and retain highly skilled sales and marketing and qualified product development personnel. In addition, competition for employees in our industry and geographic location could be intense. We may not be able to continue to attract and retain skilled and experienced personnel on acceptable terms. Our ability to hire and retain such personnel will depend in part upon our ability to raise capital or achieve increased revenue levels to fund the costs associated with such personnel. Failure to attract and retain key personnel may adversely affect our business.
  
We may have to spend substantial funds on sales and marketing in the future.
 
To increase awareness for our new and existing products, technology and services, we may have to spend significantly more on sales and marketing in the future. We also plan to continue to leverage our relationships with industry leaders and to expand and diversify our sales and marketing initiatives to increase our sales to mobile carriers and enterprises. If our marketing strategy is unsuccessful, we may not be able to recover these expenses or even generate any revenue. We will be required to develop a marketing and sales campaign that will effectively demonstrate the advantages of our products, technology and services. We may also elect to enter into agreements or relationships with third parties regarding the promotion or marketing of our products, technology and services. We cannot be certain that we will be able to establish adequate sales and marketing capabilities, that we will be able to enter into marketing agreements or relationships with third parties on financially acceptable terms, or that any third parties with whom we enter into such arrangements will be successful in marketing and promoting the products, technology and services offered by us.
 
Shareholders will have limited or no input on any investment or management decisions.
 
The Company will be managed by the Officers and by the Board. Very few matters will be submitted to Shareholder vote. Therefore, as a minority shareholder, you will have no or limited say in the management of the Company. Accordingly, no prospective investor should purchase any Shares unless it is willing to entrust all aspects of our business and operations to the current Officers and Board of the Company.
 
Risks Related to this Offering.
 
The Company arbitrarily determined the offering price and terms of the Shares offered through this Prospectus.
 
The price of the Shares has been arbitrarily determined and bears no relationship to the assets or book value of the Company, or other customary investment criteria.  No independent counsel or appraiser has been retained to value the Shares, and no assurance can be made that the offering price is in fact reflective of the underlying value of the Shares offered hereunder.  Each prospective investor is therefore urged to consult with his or her own legal counsel and tax advisors as to the offering price and terms of the Shares offered hereunder.
 
The Shares are an illiquid investment and transferability of the Shares is subject to significant restriction.
 
There are substantial restrictions on the transfer of the Shares. Therefore, the purchase of the Shares must be considered a long-term investment acceptable only for prospective investors who are willing and can afford to accept and bear the substantial risk of the investment for an indefinite period of time.  There is not a public market for the resale of the Shares.  A prospective investor, therefore, may not be able to liquidate its investment, even in the event of an emergency, and Shares may not be acceptable as collateral for a loan.  
 
Our shares are subject to the U.S. “Penny Stock” Rules and investors who purchase our shares may have difficulty re-selling their shares as the liquidity of the market for our shares may be adversely affected by the impact of the “Penny Stock” Rules.
 
Our stock is subject to U.S. “Penny Stock” rules, which may make the stock more difficult to trade on the open market. Our common shares are not currently traded on the OTCBB, but it is the Company’s plan that the common shares be quoted on the OTCBB. A “penny stock” is generally defined by regulations of the U.S. Securities and Exchange Commission (“SEC”) as an equity security with a market price of less than US$5.00 per share. However, an equity security with a market price under US$5.00 will not be considered a penny stock if it fits within any of the following exceptions:

(i) 
the equity security is listed on NASDAQ or a national securities exchange;
(ii) 
the issuer of the equity security has been in continuous operation for less than three years, and either has (a) net tangible assets of at least US$5,000,000, or (b) average annual revenue of at least US$6,000,000; or
(iii) 
the issuer of the equity security has been in continuous operation for more than three years, and has net tangible assets of at least US$2,000,000.
 
12

 
Our common stock does not currently fit into any of the above exceptions.

If an investor buys or sells a penny stock, SEC regulations require that the investor receive, prior to the transaction, a disclosure explaining the penny stock market and associated risks. Furthermore, trading in our common stock will be subject to Rule 15g-9 of the Exchange Act, which relates to non-NASDAQ and non-exchange listed securities. Under this rule, broker/dealers who recommend our securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Securities are exempt from this rule if their market price is at least $5.00 per share. Since our common stock is currently deemed penny stock regulations, it may tend to reduce market liquidity of our common stock, because they limit the broker/dealers’ ability to trade, and a purchaser’s ability to sell, the stock in the secondary market.

The low price of our common stock has a negative effect on the amount and percentage of transaction costs paid by individual shareholders. The low price of our common stock also limits our ability to raise additional capital by issuing additional shares. There are several reasons for these effects. First, the internal policies of certain institutional investors prohibit the purchase of low-priced stocks. Second, many brokerage houses do not permit low-priced stocks to be used as collateral for margin accounts or to be purchased on margin. Third, some brokerage house policies and practices tend to discourage individual brokers from dealing in low-priced stocks. Finally, broker’s commissions on low-priced stocks usually represent a higher percentage of the stock price than commissions on higher priced stocks. As a result, the Company’s shareholders may pay transaction costs that are a higher percentage of their total share value than if our share price were substantially higher. For more information about penny stocks, contact the U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, or by telephone at (202) 551-6551.
 
 
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this prospectus and other filings with the Securities and Exchange Commission, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “may,” “should,” variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. Among the important factors on which such statements are based are assumptions concerning our ability to obtain additional funding, our ability to compete against our competitors, our ability to integrate our acquisitions and our ability to attract and retain key employees.
 
USE OF PROCEEDS
 
This prospectus relates to shares of our common stock that may be offered and sold from time to time by the selling stockholders. We will not receive any proceeds from the sale of shares of common stock in this offering.
 
DETERMINATION OF OFFERING PRICE

The pricing of the Shares has been arbitrarily determined and established by the Company.  No independent accountant or appraiser has been retained to protect the interest of the investors.  No assurance can be made that the offering price is in fact reflective of the underlying value of the Shares.  Each prospective investor is urged to consult with his or her counsel and/or accountant as to offering price and the terms and conditions of the Shares. Factors to be considered in determining the price include the amount of capital expected to be required, the market for securities of entities in a new business venture, projected rates of return expected by prospective investors of speculative investments, the Company’s prospects for success and prices of similar entities.

DILUTION

Not applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
OTC Bulletin Board Considerations

As discussed elsewhere in this registration statement, the Company’s common stock is not currently traded on the Over the Counter Bulletin Board (“OTCBB”). To be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. We have engaged in preliminary discussions with an NASD Market Maker to file our application on Form 211 with the NASD, but as of the date of this prospectus, no filing has been made.
 
Holders

As of April 15, 2008, the approximate number of stockholders of record of the Common Stock of the Company was 68.
 
13



The following table summarizes our financial data for the periods presented. We prepared this information using our financial statements for each of the periods presented. The following selected financial data should be read in conjunction with our financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The historical results are not necessarily indicative of results to be expected for future periods.

Statements of Operations Data:

   
Year Ended December 31,
 
 
 
2007
   
2006
 
(In thousands)
               
Revenue
 
$
2,323
   
$
1,398
 
Cost of goods sold
   
1,155
     
675
 
Gross (loss) profit
   
1,168
     
723
 
Operating expenses:
               
Solution Services
   
425
     
277
 
                 
Selling, general and administrative
   
1,398
     
1,352
 
Total operating expenses
   
1,823
     
1,629
 
Loss from operations
   
(655)
     
(906)
 
Other income (expense), net
   
(14)
     
(62)
 
Net loss
 
$
(669)
   
$
(968)
 
                 
Basic and diluted loss per share
 
$
(1.03)
   
$
(1.60)
 
                 
Shares used in calculation of loss per share:
               
Basic and diluted
   
842,126
     
723,611
 
 
Balance Sheet Data:
 
 
 
Year Ended December 31,
 
   
2007
   
2006
 
(In thousands)
               
Cash and cash equivalents
 
$
26
   
$
715
 
Working (deficit) capital
   
(207)
     
659
 
Total assets
   
1,366
     
1,239
 
Long-term obligations
   
234
     
261
 
Total shareholders’ (deficit) equity
 
$
60
   
$
716
 
 
14

 
AND RESULTS OF OPERATIONS

Background
 
We are a mobile data and video enabling company which provides solutions to two complimentary customer types.  Since 1997, the Company has served businesses with Process Enabling; i.e., streamlining their operational processes with mobile technology, which includes the integration of wireless connectivity, mobile hardware, software and services.  Starting in 2005, the Company also began serving third party technology companies with needs to access large, new markets by ‘mobilizing’ their new or existing products; i.e., Product Enabling.  By Product Enabling these new products, the Company has established a niche where product development and market development expertise builds longer term projects with promising passive recurring revenues such as license fees, revenue share arrangements and equity participations. 

Our target market is medium and small enterprises that do not have the expertise to leverage mobile technology and technology companies who wish to serve business customers with mobile solutions.  We provide technical and business related services to these customers with emphasis on growing passive recurring revenue streams.  We are developing scalable mobile data and video platforms with customers and partners. These platforms are uniquely adaptive across a wide variety of hardware and wireless capabilities that are available today and that we foresee in the future.
 
Plan of Operation and Financing Needs

We currently have sufficient funds with which to operate the Company but lack growth capital.  We anticipate that approximately $10 million in additional capital will be required within the next three years to execute our growth strategy.  We will be investigating various financing alternatives including equity and/or debt financing.  There is no assurance that capital in any form would be available to us and, if available, on terms and conditions that are acceptable.  If we are unable to obtain sufficient funds, we may not be able to implement our growth strategy.

Positioned as an experienced provider of mobile solutions, we will continue to market our goods and services to enterprises seeking operational efficiencies (“Process Enabling”) while also marketing our expertise and relationships to technology companies who wish to ‘mobilize’ their current products (“Product Enabling”).  We will take advantage of our long standing relationships with wireless carriers, mobile hardware manufacturers and related applications companies and jointly market to each customer segment.  Within these customer engagements we seek longer term projects with promising passive revenues including license fees, revenue share arrangements and equity participations.

Our near term focus will be on the expansion of marketing and sales efforts which will increase the number of revenue streams, especially those with more passive recurring revenue including license fees and revenue share arrangements.   We are completing the development of a new version of ReForm which has advantages for both Enabling customer types.  Our mobile video platform project will position us as a leader in a high growth segment.  Growth in these and other areas will require more geographical sales resource coverage with modest plans to expand within Oklahoma and the Midwest in the near term.  Finally, we will augment our joint marketing arrangements with other mobile industry technology leaders and utilize more efficient and effective Web-based methods for attracting customers and streamlining the sales process.

We continuously monitor industry trends and adjust projections about the direction of the business in anticipation of the continuous disruption across the ecosystem.  We believe that our current direction is one that will bring profits, however our ability to drive sales volume is limited.  There is no expected purchase or sale of plant, significant equipment or intellectual property in the next 12 months.
 
Results of Operations

Year Ended December 31, 2007 compared to Year Ended December 31, 2006 (all references are to fiscal years).

Total Net Sales:  Total Net Sales increased $925,000 or 66% to $2.323 million in 2007 from $1.398 million for 2006.  Sources of revenue were derived from services related to our Enabling business, hardware sales and software licensing.  Services revenue increased $851,000 in 2007 to $2.136 million as the Company expanded its activities with several of its major clients and established new relationships with a number of new clients.  Hardware sales to third parties and in support of our services activities increased $87,000 in 2007 to $158,000.  Software licensing sales declined $14,000 in 2007 to $28,000 from $42,000 in 2006.   The Company’s ReForm™ software product is still in development stage and has not been actively marketed to date.

Cost of Sales and Gross Profit:  Cost of Sales for 2007 of $1.156 million increased $481,000 or 71% from the $675,000 in 2006.  The resultant Gross Profit for 2007 of $1.167 million was up $443,000 or 61% over the Gross Profit for 2006 of $724,000.

Operating, Selling, General and Administrative Expenses:  Operating, selling, general and administrative expenses increased in support of net sales by $193,000, or 12% in 2007 to $1.823 million from $1.630 million in 2006.

Loss from Operations:  Loss from operations for 2007 of $655,000 was down $251,000 or 27% from the loss from operations in 2006 of $906,000 as a result of the growth in gross profit and management’s control of operating, selling, general and administrative expenses.

Other Income and Expense:  Total other expense of $14,000 in 2007 was $47,000 less than the total of $61,000 in 2006 as a result of lower net interest expense in 2007 than in 2006.
 
15

 
Net Loss:  Net loss of $669,000 in 2007 was $299,000 or 31% less than the net loss in 2006 of $968,000 as a result of the growth in revenues and gross profit and management’s control of operating, selling, general and administrative expenses.

The following table presents certain financial data as a percentage of total revenue for the periods indicated. Our historical operating results are not necessarily indicative of the results for any future period.

 
 
Year ended December 31,
 
 
 
2007
   
2006
 
(in thousands) 
           
Revenue
   
100
%
   
100
%
Cost of goods sold
   
50
     
48
 
Gross (loss)/income
   
50
     
52
 
Operating expenses:
               
                 
Solutions Services
   
18
     
20
 
Selling, general and administrative
   
60
     
97
 
    Total operating expenses
   
78
     
117
 
Loss from operations
   
(28)
     
(65)
 
Other income (expense)
   
(1)
     
(4)
 
Net loss
   
(29)
%
   
(69)
%

Liquidity and Capital Resources

We finance our operations primarily through internally generated funds, a bank line of credit and investments of equity by qualified investors or placement of debt with qualified lenders.  As of December 31, 2007, we had cash and cash equivalents in the amount of $26,000 and a negative cash flow from operations for the year ended December 31, 2007 of $711,000 including changes in receivables, accounts payable and unearned income.  Liabilities at December 31, 2007 totaled $1.306 million and included $110,000 in accounts payable, $205,000 outstanding under a bank line of credit, $341,000 in long term debt and $650,000 in unearned income.  Long term debt included $108,000 in current maturities due during 2008 and $233,000 in maturities due in 2009-2011.  The majority of the unearned income related to a major client contract that provided for a sizable down payment which represents revenues that will be earned during the first six months of 2008. 

Since inception, we have been dependent upon proceeds from equity investments by qualified investors to fund our continuing activities. Subsequent to December 31, 2007, the Company raised an additional $115,000 in equity through the exercise of options and warrants by existing shareholders.  Additionally, the Company has placed $950,000 in convertible notes with qualified investors.

Sources and Uses of Cash:

 
 
Years ended December 31,
 
(in thousands)
 
2007
   
2006
 
Cash flow data:
           
Net cash used in operating activities
 
$
(711)
   
$
(600)
 
Net cash provided by (used in) investing activities
   
(248)
     
(182)
 
Net cash provided by (used in) financing activities
   
270
     
1,448
 
Net increase ( decrease) in cash and cash equivalents
   
(689)
     
666
 
Cash and cash equivalents, beginning of period
   
715
     
49
 
Cash and cash equivalents, end of period
 
$
26
   
$
715
 

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.
 
16


Critical Accounting Policies

Nature of Operations:

The accompanying financial statements include the accounts and transactions of MacroSolve Inc.  A division of the Company operates “doing business as” Anyware Mobile Solutions™.

Cash Equivalents:

Cash equivalents are represented by operating accounts or money market accounts maintained with insured financial institutions.

Accounts Receivable and Credit Policies:

Trade accounts receivable consist of amounts due from the sale of solution services, software and hardware.  Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days of receipt of the invoice.  The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable.  At December 31, 2007 and 2006, the Company deems all amounts recorded as collectible and, thus has not provided an allowance for uncollectible amounts.

Property and Equipment:

Property and equipment are recorded at cost.  Depreciation is computed using straight-line methods applied to individual property items based on estimated useful lives.

Revenue Recognition:

Revenue generated from the provision of services is recognized at the time the service is provided.  Sales of hardware are recognized upon delivery to the customer.   Revenue from the licensing of software is recognized ratably over the license period.

Software Development Costs:

The Company accounts for software development costs in accordance with Statement of Financial Accounting Standards No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”.  Costs incurred prior to the establishment of technological feasibility are expensed as incurred as research and development costs.  Costs incurred after establishing technological feasibility and before the product is released for sale to customers are capitalized.  These costs are amortized over three years and are reviewed for impairment at each period end.

Use of Estimates:

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could differ from these estimates.

Long-Lived Assets:

The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-lived assets.  This Statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.  No impairment charges were incurred during the period ended December 31, 2007.

Stock-Based Compensation:

The Company accounts for stock-based compensation in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 123(R) requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period.
 
17


Income Taxes

The Company accounts for income taxes utilizing Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS No. 109).  SFAS No. 109 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carryforwards, and of deferred tax liabilities for taxable temporary differences.  Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law.  The effects of future changes in tax laws or rates are not included in the measurement.  The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns.  The Company currently has substantial net operating loss carryforwards.  The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.


In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109,” (“FIN 48”). FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of this standard on its financial statements.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when quantifying Misstatements in Current Year Financial Statements,” (“SAB 108”). SAB 108 requires companies to evaluate the materiality of identified unadjusted errors on each financial statement and related financial statement disclosure using both the rollover approach and the iron curtain approach. The rollover approach quantifies misstatements based on the amount of the error in the current year financial statements whereas the iron curtain approach quantifies misstatements based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatement’s year(s) origin. Financial statements would require adjustment when either approach results in quantifying a misstatement that is material. Correcting prior year financial statements for immediate errors would not require previously filed reports to be amended. SAB 108 is effective for the first fiscal year ending after November 15, 2006. The Company is currently evaluating the effect, if any, the adoption of SAB 108 will have on its financial statements, results of operations and cash flows.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted. The Company is currently evaluating the effect, if any, the adoption of SFAS 159 will have on its financial statements, results of operations and cash flows.
 
18

 
BUSINESS

History

We are a mobile data and video enabling company which provides solutions to two complimentary customer types.  Since 1997, the Company has served businesses with Process Enabling.  These customers are enterprises with needs to streamline their operational processes with mobile technology, which includes the integration of wireless connectivity, mobile hardware, software and services.  Starting in 2005, the Company also began serving third party technology companies with needs to access large, new markets by ‘mobilizing’ their new or existing product.  By Product Enabling these new products, the Company has established a niche where product development and market development expertise builds longer term projects with promising passive revenues.

We are specialized by mature and proven sales and operational processes which satisfy the business objectives of both customer types with expediency and accuracy.  This specialization is further valued by our customers with our broad and long standing relationships with the market leaders in mobile hardware, wireless connectivity and software which are marketing, sales, product development, reselling partners and customers of MacroSolve.

After incorporating, the Company served business customers in the manufacturing industry.  Most of the professional services engagements included systems integration and customization.  Its largest customer was Titan Tire and Wheel, the largest tractor tire and wheel manufacturer in the U.S., which relied on the Company to streamline paper intensive business processes with distributed applications on the manufacturing floor.  This discipline gave the company experience in mobile computing with rugged handheld devices in an era where bar-coding inventory and using handheld scanners for data entry was in its infancy.

Handspring, Inc. partnered with the Company in 1998 on a project with BAE (British Aerospace).  The paperwork process between ground crews and pilots were driving operational inefficiencies. The Company defined, designed and developed a mobile data platform, utilizing Handspring Visor handheld devices.

In 2001, the Company was approached by a major supplier of food products to McDonalds.  Quality assurance processes surrounding food quality was problematic and a web-based data collection and tracking tool was being utilized throughout the McDonalds supplier community.  A mobile solution was needed in order to collect data more efficiently in the field at 20,000 restaurant locations. The earliest forms of mobile phones and PDAs with wireless data connections were forecast to be entering the market.  New operating systems and other technological disruptions were quickly approaching. With this opportunity and considerable depth of experience in mobile data solutions, the company sought out its first private equity investors, new management, and began to build a device, operating system and network agnostic mobile data collection platform which it named ReForm™.

A major national campaign for the sale of ReForm was launched with Palm, Inc. in February 2003.  Shortly thereafter, Palm, Inc. determined to divide into two companies and the sales campaign was cancelled, which resulted in substantial financial losses to the Corporation.  The Corporation thereafter developed relationships with other mobile computer manufacturers and wireless carriers.

A second sales campaign was launched with Sprint Corporation (“Sprint”) on September 1, 2004 under a Joint Marketing Agreement between the Corporation and Sprint, which was entered into in August 2004.  This campaign focused on Enabling.  This second sales campaign was placed on hold by Sprint on or about October 1, 2004 due to a reorganization of Sprint Corporation.

The Sprint sales campaign was expanded to include other Sprint offices and launched again in February of 2005 and was to terminate at year end 2005.  The four city joint campaign was restructured in the third quarter of 2005 and renewed in January 2006.  The acquisition of Nextel by Sprint caused the campaign to be cancelled in the third quarter of 2006.

The Corporation entered into a development and support agreement with Navigation Solutions, a wholly owned subsidiary of Hertz Corporation, in 2005.  Under this agreement, the Corporation provides ongoing development and support work associated with the Never Lost GPS Navigation and Sirius satellite radio systems, which are offered on Hertz rental cars.

Working jointly with a leading provider of industry leading video software, the Corporation entered into a Product Enabling agreement on behalf of a major wireless carrier in 2005.  The project is expected to be complete in late 2008 or early 2009 and will result in the Corporation having a mobile video platform which it believes will be a technology leader of the mobile video industry.  This development agreement is covered by a confidentiality agreement to which interested parties must agree prior to receiving further information.  All other Product Enabling projects are under confidentiality agreements as well.

In 2006 and 2007, the Company focused efforts on expanding and broadening industry relationships which could augment development and marketing advantages for its Enabling business.  To this end, the company is in a wide range of agreements and relationships with Verizon, AT&T, Sprint, Palm, RIM, Intermec, PsionTeklogix, Symbol/Motorola, OpSource, WBS, ScanSource and other North American mobile industry leaders.
 
19

 
Currently the Company has ongoing projects centered in Africa, Canada, Texas, California, Nevada, Arizona, Kansas, Oklahoma, Pennsylvania and Virginia

Our Products

Our primary product is ReForm™, a mobile data collection platform.  The product simplifies the process of converting paper forms to a digital form that can be utilized on most Smartphones available in the United States.  A web-based interface allows a non-technical user to create and dispatch forms to users and easily manage data input from the field.  The components of the platform are also utilized as mobile application development tools for other Enabling projects, saving time and money for customers needing more customized solutions.  ReForm is currently available in beta version and no material sales effort has been made.  The first commercial version of ReForm is scheduled for release in mid-2008.  ReForm has not materially contributed to our financial performance in the past and is not expected to materially contribute in the near term.

Intellectual Property

The Corporation reviews each of its intellectual properties and makes a determination as to the best means to protect such property, by trademark, by copyright, by patent, by trade secret, or otherwise. The Corporation believes that it has taken appropriate steps to protect its intellectual properties, depending on its evaluation of the factors unique to each such property, but cannot guarantee that this is the case. United States and foreign patents applications regarding ReForm™ were applied for in 2003 and the applications are pending before the United States Patent and Trademark Office at the date of this document.  The Corporation views the office actions of the United States Patent and Trademark Office as being positive but there is no guarantee that a patent will be issued.

The corporation has intellectual property that relates to extending applications to multiple handsets operating on multiple wireless networks which it handles as a trade secret and which it considers to be valuable.

Recent Product and/or Market Developments:

None.

United States Industry Overview

The mobile technology industry which serves business customers is comprised of three primary growth segments:  hardware, applications and wireless data. According to NPD Group’s publication in RCR Wireless, March 21, 2008, the mobile hardware segment grew to $11BB in sales of cell phones and Smartphones by year end 2007.  The Smartphone sub-segment sales doubled in 2007 to 14 million units from the prior year and will continue to outpace the global industry growth rate according the M:Metrics feature in RCR Wireless on March 31, 2008.  According to Insight Research Corporation’s May 2007 report, the mobile applications segment has grown to a $4BB industry with 12% CAGR growth forecast through 2012.  The U.S. Enterprise Application sub-segment has grown to a $1.2BB industry with 23% CAGR forecast through 2010 by IDC.  As published in AORTA, March 18, 2008 hardware and applications are leveraging the growth of the wireless data  industry which reached  $24.5BB in data services revenues at an annual growth rate of 55% and crossing the 250 million subscriber mark.

Market Opportunity

MacroSolve has been marketing mobile solutions in cooperation with the leading mobile technology vendors nationwide for over four years while assisting applications companies with mobile offering for three years.  In our research and experience , we are seeing the advancement of mobile technology as an operational tool in businesses.  Many businesses have adopted mobile devices with mobile email and are more active in exploring the utilization of the technology to streamline business processes with mobile data and video solutions.  This market is growing as new Smartphone and rugged devices are reaching the market, giving end users and enterprises more computing power and flexibility beyond a cell phone or laptop.  Large enterprises have the technical and financial resources to purchase substantial mobile application platforms.  These customers are well served by the leading wireless carriers, mobile hardware manufacturers and application developers.  Over 8 million medium and small businesses are currently underserved by the industry leaders.  At the same time, PC and web-based application companies are seeking to modify their solutions with mobile offerings.  Entering the mobile application market complicates established business models, marketing channels and challenges technical resources with the dynamics of developing to a much wider variety of devices, operating systems, connectivity and users. Finally, wireless carriers and mobile hardware companies are looking for more niche applications and are opening their platforms in order to increase the value of their products and services.  All of these developments create demand for MacroSolve to bring business customers and technology suppliers together.

Strategy

Operating Strategies
 
The Enabling business is divided into Process Enabling and Product Enabling units.  Each is supported by a dedicated sales function, and share in a pool of resources which provides solution management, product development, project management, QA and support.  Each unit also leverages hardware sales, ReForm integration, hosting, licensing and other passive revenue functions.

Given the increasing demand, longer term projects, options for more passive revenue and niche positioning within Product Enabling, technical resources are being augmented in the talent pool along with more specialized mobile industry marketing resources.  In order to manage growth, communications, project management, billing, and other processes are currently being streamlined with new automation platforms.

20


Growth Strategies

With a proven operational model in place, the growth strategies are centered on marketing.

Our Community Website Growth Strategy is centered on the aggregation of news, information, blogs and forums that are available in the mobile industry which is focused on solutions for businesses.  This web site will serve as a social network for businesses with modest or no I.T. staff and it will serve as a platform to promote our Enabling customers’ products and related Anyware offerings.  This strategy augments and automates event marketing that the Company has undertaken for the past five years under the brand name Anyware University™.  Anyware University has educated hundreds of companies on the advantages of mobile technology while providing forums and feedback with industry leaders in wireless connectivity, hardware and software.  Anyware University will continue to expand with geographical reach.

Our Geographical Growth Strategy will expand the Company’s presence in the Midwestern U.S. and where customer demand is beginning to centralize.  With offices in Tulsa, OK and Dallas, TX, near term plans include expansion into Oklahoma City, OK and Kansas City, Missouri.
 
Our Partner Growth Strategy involves more substantial joint marketing activities with industry leaders.  Wireless carriers and mobile hardware manufacturers are primarily involved in the development of leads for the Product Enabling business and for support of the Community Website Strategy.  Continued awareness and the formalization of business development processes are currently underway.

Employees

As of the date of this prospectus, we have 30 full-time employees and 1 employee working part-time in the management, operations and maintenance of the Company.

Dividends

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.

Report To Shareholders

As a result of this offering, and the effectiveness of this registration statement, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and will file current reports, periodic reports, annual reports, proxy statements, and other information with the Securities and Exchange Commission, as required.
 
DESCRIPTION OF PROPERTY

The Company currently leases office space at 5800 E. Skelly Drive, Suite 300, Tulsa, Oklahoma 74135.   The Company currently pays monthly rent of $ 5,400 per month pursuant to a lease, which expires July 31, 2008.

LEGAL PROCEEDINGS
 
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, Management of the Company does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

21



Directors and Executive Officers

The following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each, as of April 15, 2008. The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director is elected for the term of one year, and until his or her successor is elected and qualified, or until his or her earlier resignation or removal.  All members of the Board of Directors listed below are management nominees for re-election at the Annual Meeting of the Shareholders scheduled to occur on May 22, 2008 except Bob F. McCoy, who will retire effective May 22, 2008.

Name
 
Age
 
Position
James C. McGill
 
64
 
Chairman of the Board of Directors
Clint Parr
 
43
 
Chief Executive Officer, President, and Director
David L. Humphrey
 
52
 
Director
John Clerico
 
66
 
Director and Chairman of the Audit Committee
Dr. Dale A. Schoenefeld
 
62
 
Director
Howard Janzen
 
54
 
Director and Chairman of the Compensation Committee
James W. Dutton
 
62
 
Senior Vice President and Chief Financial Officer
Eric Fultz
 
44
 
Vice President, Operations
Michael Ishmael
 
46
 
Vice President of Sales
Chris Kingham
 
41
 
Vice President of Marketing

Executive Biographies:

James C. McGill, Chairman of the Board of Directors

Jim McGill is an investor with background in a wide variety of organizations, public and private, for profit, and not for profit.  Prior to joining the Company, Mr. McGill ran McGill Resources, Inc., a business consulting and investment firm with offices in Tulsa, Oklahoma and Sydney, Australia.  From 1970 to 1986, Mr. McGill was Chairman and Chief Executive Officer of McGill Environmental Systems, Inc., a company that he founded.  McGill Environmental Systems, Inc. was sold in 1986 to The IT Group and Mr. McGill served on the board of directors of The IT Group until 2003.  Mr. McGill currently serves on the Board of AAdvantage Technologies Group, Inc., several private boards, and the Board of Trustees of the University of Tulsa.  Mr. McGill has been a member of the Board of Directors of MacroSolve, Inc. since 1999.

Clint Parr, President, Chief Executive Officer and Director

Clint Parr joined MacroSolve in 2002 as Vice President of Sales and Marketing.  The Board of Directors promoted him to President and Chief Operating Officer in 2003 and to Chief Executive Officer in 2007.  He graduated from Baylor University in 1986 with a bachelor's degree in Entrepreneurship, and obtained an executive MBA in 2000 from The University of Tulsa. He brings a wealth of marketing experience from numerous companies, including the Williams Companies. Parr is a graduate of Leadership Oklahoma, is Chairman of the Tulsa County Election Board and Founder of TulsaBusiness2.0.

David L. Humphrey, Director

David Humphrey currently serves as the Chief Operating Officer of Oklahoma Equity Partners, a venture capital fund.  Oklahoma Equity Partners focuses exclusively on Oklahoma venture opportunities and utilizes a network of venture capital firms as lead investors.  Mr. Humphrey is responsible for all investment operations of Oklahoma Equity Partners.  Prior to joining Oklahoma Equity Partners, Mr. Humphrey served from 1997 to 2004 as a principal of Davis, Tuttle Venture Partners.  From 1995 to 1997, Mr. Humphrey was a senior business development coordinator at Texaco Natural Gas Liquids.  During his two-year stay with Texaco, he led ten major acquisition and expansion projects.  Prior to joining Texaco in 1996, Mr. Humphrey spent thirteen years with Koch Industries, Inc. serving in a variety of business development initiatives.  Mr. Humphrey earned his Bachelor of Science in Chemical Engineering from the University of Wisconsin and his Master of Business Administration from Texas A&M University.  Mr. Humphrey joined the board of directors of MacroSolve, Inc. in 2004.
 
John Clerico, Director and Chairman of the Audit Committee

John Clerico is chairman and a registered financial adviser at ChartMark Investments, Inc., an independent investment advisory firm that manages equity funds for individuals and small pension funds. Mr. Clerico co-founded ChartMark in 2000, where his current focus is on day-to-day portfolio management and strategic direction of the firm. Prior to founding ChartMark, Mr. Clerico served in numerous senior management capacities including Executive Vice President, Chief Financial Officer and Director of Praxair, Inc., a Fortune 200 company. In addition to his financial responsibilities, Mr. Clerico managed Praxair’s business operations in Europe and South America. Prior experience includes CFO of Union Carbide Corporation, Conoco, Inc. and Phillips Petroleum Co. Mr. Clerico was named as one of four "Leading Corporate Treasurers" by Corporate Finance Magazine in 1995 and "CFO of the Year" by CFO Magazine in 1997 and Business Week in 1998. Mr. Clerico joined the board of directors of MacroSolve, Inc., in 2006.
 
22

 
Dr. Dale A. Schoenefeld, Director

Dr. Schoenefeld currently serves as Vice President for Information Services and CIO at the University of Tulsa including academic computing, administrative computing, networking services, computer system administration, and university libraries.  Dr. Schoenefeld represents the University of Tulsa at OneNet, Oklahoma’s telecommunications and information network for education and government, and is a member of an Oklahoma statewide committee chaired by the Secretary of Science and Technology.  Prior to becoming Vice Provost for Information Services, Dr. Schoenefeld served as Professor of Computer Science and Mathematics and Director of the Computer Resource Center at the University of Tulsa.  He received his B.A.E. at Wayne State College and his M.S. and Ph.D. at the University of Iowa.  His research expertise is in the area of combinatorial optimization and involves optimization techniques to the design and operation of telecommunication networks, often using evolutionary techniques.  Dr. Schoenefeld joined the Board of Directors of MacroSolve, Inc. in 2004.

Howard Janzen, Director and Chairman of the Compensation Committee

Howard Janzen is currently president and CEO of One Communications, a leading integrated communications provider.  Until September 2005, he was president of Sprint Business Solutions.  In this role, he led the business unit responsible for the $12 billion revenue Sprint worldwide business customer base, ranging from small business to Sprint’s largest domestic and international accounts.  His responsibilities included integration of Sprint’s wireless, wireline and local voice and data services.  He previously was president of the Sprint Global Markets Group, responsible for the long distance business for both consumer and business customers.

Before joining Sprint in May 2003, Mr. Janzen served as chairman, president and chief executive officer for Williams Communications, where he led the company in completing its $7 billion next-generation fiber network.

Mr. Janzen joined Williams in 1979 and served in a number of leadership roles in Williams’ energy and natural gas pipeline businesses.  In January 1995, he was named president of the communications business unit of The Williams Companies, Inc.  In April 1997, he became president and chief executive officer of Williams Communications Group, which became an independent company in 2001.

James W. Dutton, Senior Vice President and Chief Financial Officer

Jim Dutton joined MacroSolve in 2005 as Senior Vice President and Chief Financial Officer.  Mr. Dutton spent a number of years in banking and served as Senior Vice President for Bank One (now JPMorgan Chase) in Tulsa.  In 1995 he joined Williams Communications and served as Vice President Corporate Development and Planning for eight years before joining MacroSolve, Inc. He graduated from DePauw University with a degree in Economics and received an MBA with a Marketing Major from The University of Indiana.

Eric Fultz, Vice President, Operations

Eric Fultz joined the Corporation in 2003 as Director of Solution Services whereupon he defined and implemented the current Anyware Solution Delivery Methodology. This methodology focuses on increasing customer satisfaction through a disciplined approach to project management and understanding underlying business problems prior to recommending a technology solution. He was promoted to Vice President of Operations in March of 2004. Prior to joining Anyware, Fultz served as an IT Strategy Consultant and Project Manager with IBM Global Services, was the founder and President of a nutritional supplement manufacturing company, and served in the Strategic Marketing and eBusiness group at Williams Companies. Mr. Fultz graduated from the University of Oklahoma with a Bachelors of Science in Civil Engineering and later gained his MBA from Southern Methodist University with an emphasis in MIS and business strategy.

Michael Ishmael, Vice President, Sales

Michael Ishmael joined the Corporation in 2004 as Director of Sales and Marketing.  He was promoted to Vice President in 2005.  He is a graduate of Oklahoma State University with a degree in Computer Science.  Prior to joining the Corporation, Mr. Ishmael served as Director of Strategic Sales for Esker Software and in various positions with IBM Corporation for seventeen years.
 
Chris Kingham, Vice President of Marketing
 
Chris Kingham joined the Corporation as Director of Marketing in 2004, bringing 15 years of experience in planning, implementing and marketing high-tech and online properties. Prior to his arrival at Anyware, Mr. Kingham spent over five years at the Williams Companies in both marketing and IT roles for some of the their most critical systems and projects. Prior to Williams, Mr. Kingham spent five years at PennWell Publishing developing the plan and process to take their historically printed publications to the new online medium. Mr. Kingham graduated with a Bachelor of Science in Marketing from Oklahoma State University.

Employment Agreements
 
MacroSolve, Inc. does not have any employment agreements with any of its personnel.
23


 
The following table sets forth the compensation (including cash bonuses) paid or accrued by us to our Chief Executive Officer and our five most highly compensated officers other than the Chief Executive Officer from January 1, 2005 to December 31, 2007.
 
Name and Principal Position
 
Year
 
Salary
 
Bonus
 
Option
Awards (7)
 
Non-Equity
Incentive Plan
 Compensation
 
Change in
Pension Value
 and Non-
Qualified
 Deferred
 Compensation
 Earnings ($)
 
All other
Compensation
(8)
 
Total
 
Clint Parr,
Chief Executive Officer,
President and Director (1)
 
2007
2006
2005
 
$
$
$
105,075
97,500
93,000
 
0
 
5,390
4,709
6,704
 
0
 
0
 
$
$
$
8,946
8,946
8,946
 
$
295,575
 
                                         
James C. McGill,
Chairman of the Board
of Directors (2)
 
2007
2006
2005
 
$
$
$
24,000
12,000
12,000
 
0
 
10,832
11,832
16,236
 
0
 
0
 
$
$
$
9,643
9,643
9,643
   
48,000
 
                                         
James W. Dutton,
Senior Vice President and
Chief Financial Officer (3)
 
2007
2006
2005
 
$
$
$
90,300
84,500
68,332
 
0
 
3,640
5,153
5,017
 
0
 
0
 
$
$
$
2,368
1,360
680
   
243,132
 
                                         
Eric Fultz,
Vice President (4)
 
2007
2006
2005
 
$
$
$
105,075
97,500
88,500
 
0
 
1,411
2,041
3,118
 
0
 
0
 
$
$
$
1,789
1,789
1,789
   
291,075
 
                                         
Michael Ishmael,
Vice President (5)
 
2007
2006
2005
 
$
$
$
98,775
91,500
78,000
 
0
 
1,935
2,541
3,029
 
0
 
0
 
$
$
$
680
680
340
   
268,275
 
                                         
Chris Kingham,
Vice President (6)
 
2007
2006
2005
 
$
$
$
77,355
70,950
66,000
 
0
 
1,887
1,589
1,648
 
0
 
0
 
$
$
$
539
136
68
   
214,305
 
 
 
(2)
Mr. McGill received an option to acquire 7,267 shares of common stock at a price of $6.88 per share for 2002 services, options to acquire 11,764 shares of common stock at a price of $8.50 per share for 2003 services, options to acquire 16,868 shares of common stock at a price of $8.50 per share for 2004 services, options to acquire 16,236 shares of common stock at a price of $8.50 per share for 2005 services, options to acquire 11,832 shares of common stock at a price of $12.00 per share for 2006 services and options to acquire 10,832 shares of common stock at a price of $12.00 per share for 2007 services.
 
(3)
Eric Fultz received an option to acquire 1,500 shares of common stock at a price of $8.50 per share upon his employment in June 2003.  Mr. Fultz received an option to acquire 1,500 shares of common stock at a price of $8.50 per share for outstanding performance in March 2004, and received options to acquire 3,463 shares of common stock at a price of $8.50 per share for 2004 services.  In 2005, Mr. Fultz received options to acquire 3,118 shares of common stock at a price of $8.50 per share for services. In 2006, Mr. Fultz received options to acquire 2,041 shares of common stock at a price of $12.00 per share for services.   In 2007, Mr. Fultz received options to acquire 1,411 shares of common stock at a price of $12.00 per share for services.
 
(4) 
Mike Ishmael was granted an option to acquire 1,000 shares of common stock at a price of $8.50 per share upon his employment in September 2004.  In 2004, Mr. Ishmael was granted options to acquire 441 shares of common stock at a price of $8.50 per share for services.  In 2005, Mr. Ishmael received options to acquire 3,029 shares of common stock at a price of $8.50 per share for services. In 2006, Mr. Ishmael received options to acquire 2,541 shares of common stock at a price of $12.00 per share for services.  In 2007, Mr. Ishmael received options to acquire 1,935 shares of common stock at a price of $12.00 per share for services.
 
(5)
Jim Dutton was granted options to acquire 5,017 shares of common stock at a price of $8.50 per share for services in 2005. For services in 2006, Mr. Dutton received options to acquire 5,153 shares of common stock at a price of $12.00 per share.  For services in 2007, Mr. Dutton received options to acquire 3,640 shares of common stock at a price of $12.00 per share.
 
(6) 
Chris Kingham received an option to acquire 1,000 shares of common stock at a price of $8.50 per share upon his employment in July 2004.  Mr. Kingham received options to acquire 412 shares of common stock at a price of $8.50 per share for 2004 services. Mr. Kingham received options to acquire 1,648 shares of common stock at a price of $8.50 per share for 2005 services. Mr. Kingham received options to acquire 1,589 shares of common stock at a price of $12.00 per share for 2006 services.  Mr. Kingham received options to acquire 1,887 shares of common stock at a price of $12.00 per share for 2007 services.
 
(7) 
Company management have determined that the options granted have no cash value and as such are calculated as zero dollars ($0.00) toward each executive’s compensation. The number of Option Awards referenced above are prior to the 19 for 1 forward stock split effective April 14, 2008.
 
(8)
The Macrosolve Employee Stock Trust has allocated shares to Grantees which have been recorded on the Company financial statements as stock based compensation.
 
24

 
DIRECTOR COMPENSATION

Name and Principal Position
 
Year
 
Salary
 
Bonus
 
Option
Awards (1)
 
Non-Equity
Incentive Plan
 Compensation
 
Change in
Pension Value
 and Non-
Qualified
 Deferred
 Compensation
 Earnings ($)
 
All other
Compensation
 
Total
 
Clint Parr,
Chief Executive Officer,
President and Director
 
2007
2006
2005
      $ 0   0   0   0   0   $ 0  
                                       
James C. McGill,
Chairman of the Board of Directors
 
2007
2006
2005
      $ 0   0   0   0   0     0  
                                       
Howard Janzen, Director
 
2007
2006
      $ 0  
2,000
2,000
  0   0   0     0  
                                       
David L. Humphrey, Director
 
2007
2006
2005
      $ 0  
2,000
2,000
2,000
  0   0   0     0  
   
 
                                 
John Clerico, Director
 
2007
      $ 0   4,000   0   0   0     0  
                                       
Dr. Dale A. Schoenefeld, Director
 
2007
2006
2005
      0  
2,000
2,000
2,000
  0   0   0     0  

(1)
Under a plan adopted in 2003, the independent members of the Board of Directors of the Company receive options to acquire 2,000 shares of common stock for each year of service, with a maximum of 10,000 shares.  The price is set at the price of the most recent sale as of the date of the grant.  Options to acquire 2,000 shares of common stock are issued at the time that a director joins the Board of Directors, and the 2,000 options are granted each year thereafter.  All options vest 20% per year and have an exercise period of five (5) years from the date of issuance.  The members of the Board of Directors do not currently receive cash compensation for their services.    Effective with the 19:1 stock dividend enacted on April 14, 2008, the options to acquire 2,000 shares annually increased to 40,000 shares annually with a maximum of 200,000 share options. Additionally, Company management have determined that the options granted have no cash value and as such are calculated as zero dollars ($0.00) toward each director’s compensation.
 
25



The following table sets forth the number of and percent of the Company's common stock beneficially owned by:
 
·   
all directors and nominees, naming them,
·   
our executive officers,
·   
our directors and executive officers as a group, without naming them, and
·   
persons or groups known by us to own beneficially 5% or more of our Common Stock or our Preferred Stock having voting rights:
 
The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our capital stock outstanding on April 15, 2008 and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative securities owned by that person which are exercisable within 60 days of April 1, 2008. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our capital stock owned by them.

Name and address of owner
 
Title of Class
 
Capacity with Company
 
Number of
Shares Beneficially
Owned (1)
 
Percentage of
Class (2)
 
Clint H. Parr
 
Common Stock
 
Chief Executive Officer, President and Director
    647,000    
1.99%
 
                       
James C. McGill
 
Common Stock
 
Chairman and Director
    4,116,540    
12.69%
 
                       
Howard E. Janzen
 
Common Stock
 
Director
    198,320    
*
 
                   
 
 
James W. Dutton
 
Common Stock
 
Chief Financial Officer 
    301,100    
*
 
                     
 
David L. Humphrey
 
Common Stock
 
Director
    160,000    
*
 
                       
John C. Clerico
 
Common Stock
 
Director
    1,746,660    
5.39%
 
                       
Dr. Dale A. Schoenefeld
 
Common Stock
 
Director
    194,980    
*
 
                       
J. David Payne
 
Common Stock
 
Shareholder
    1,936,460    
5.97%
 
                       
Philip B. Smith Revocable Trust
 
Common Stock
 
Shareholder
    1,950,000    
6.01%
 
                       
Paula Marshall
 
Common Stock
 
Shareholder
    2,946,420    
9.08%
 
                       
Eric Fultz
 
Common Stock
 
Vice President
    271,880    
*
 
   
 
                 
Michael Ishmael
 
Common Stock
 
Vice President
    192,840    
*
 
   
 
                 
Chris Kingham
 
Common Stock
 
Vice President
    149,460    
*
 
   
 
                 
Macrosolve Employee Stock Trust
 
Common Stock
 
Shareholder
    3,000,000    
9.25%
 
   
 
                 
Officers and Directors as a Group
 
Common Stock
        10,987,780    
33.88%
 
 
* Less than 1% ownership
(1) 
This column represents the total number of votes each named stockholder is entitled to vote upon matters presented to the shareholders for a vote.
(2)
Applicable percentage ownership is based on shares of Common Stock outstanding as of April 15, 2008, together with securities exercisable or convertible into shares of Common Stock within 60 days of April 1, 2008 for each stockholder. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock that are currently exercisable or exercisable within 60 days of April 15, 2008 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

TRANSFER AGENT
 
The Company has not engaged the services of a Transfer Agent and Registrar as of the date of this Prospectus.
 
26

 
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES  

Our Bylaws, as amended, provide to the fullest extent permitted by Oklahoma law that our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our Articles of Incorporation, as amended, is to eliminate our rights and our shareholders (through shareholders' derivative suits on behalf of our company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our Articles of Incorporation, as amended, are necessary to attract and retain qualified persons as directors and officers.

Title 18 of the Oklahoma Statutes provides that a corporation may indemnify a director, officer, employee or agent made a party to an action by reason of that fact that he or she was a director, officer employee or agent of the corporation or was serving at the request of the corporation against expenses actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal action, had no reasonable cause to believe his or her conduct was unlawful.  

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 

 

ordinary brokerage transactions and transactions in which the broker-dealer solicits the purchaser;
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal
facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately-negotiated transactions;
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
through the writing of options on the shares;
a combination of any such methods of sale; and
any other method permitted pursuant to applicable law.
 
The selling stockholders may also sell shares under Rule 144 of the Securities Act, if available, rather than under this prospectus. The selling stockholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory at any particular time.
 
The selling stockholders or their respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then existing market price. We cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold by, the selling stockholders. The selling stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, may be deemed to be "underwriters" as that term is defined under the Securities Exchange Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations of such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
 
27

 
We are required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of counsel to the selling stockholders, but excluding brokerage commissions or underwriter discounts.
 
The selling stockholders, alternatively, may sell all or any part of the shares offered in this prospectus through an underwriter. The selling stockholders have not entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.
 
The selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. The selling stockholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations under such Act, including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the shares by, the selling stockholders or any other such person. In the event that any of the selling stockholders are deemed an affiliated purchaser or distribution participant within the meaning of Regulation M, then the selling stockholders will not be permitted to engage in short sales of common stock. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. In addition, if a short sale is deemed to be a stabilizing activity, then the selling stockholders will not be permitted to engage in a short sale of our common stock. All of these limitations may affect the marketability of the shares.
 
If a selling stockholder notifies us that it has a material arrangement with a broker-dealer for the resale of the common stock, then we would be required to amend the registration statement of which this prospectus is a part, and file a prospectus supplement to describe the agreements between the selling stockholder and the broker-dealer.
 
DESCRIPTION OF SECURITIES
The following description is a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this pr
ospectus is a part.

Common and Preferred Stock
 
We are authorized to issue 100,000,000 shares of common stock with $0.01 par value per share and 10,000,000 shares of preferred stock with a par value of $0.01.  As of April 15, 2008, there were 24,560,100 shares of common stock issued and outstanding held by 68 shareholders of record.  There are no issued and outstanding shares of preferred stock.
 
Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends on common stock since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.

The Corporation sold common stock as well as two series of preferred stock, Series A and Series B Convertible Preferred Stock.  All holders of Series A and Series B Preferred Stock elected to convert their Preferred Stock to common shares effective February 26, 2008.

Options

During 2002, the shareholders approved 150,000 shares to be available to offer to employees in the form of stock options.  An additional 250,000 option shares were approved by the shareholders in 2005.  All of these numbers are prior to the April 14, 2008, 19 for 1 forward stock split.  These options have been used to attract and retain employees, recognize performance, provide non cash compensation to directors and as partial compensation in lieu of cash salary for employees.  As mentioned, the salary differential options are granted on a quarterly basis to employees whereas the director options are granted annually.  At employment options and performance options are granted at time of employment and when performance justifies a grant, respectively. 
 
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Warrants

Warrants have been issued principally since 2004, either in connection with the Series A and Series B Preferred Stock offering, which offered forty percent (40%) warrant coverage, or as partial compensation in connection with shareholder loans (see “Related Party Transactions”).

SELLING STOCKHOLDERS  
 
The selling shareholders named below are selling the securities. The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling shareholders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling shareholders upon termination of this offering. These selling shareholders acquired their shares by purchase in a single private placement exempt from registration under section 4(2) of the Securities Act of 1933. We believe that the selling shareholders listed in the table have sole voting and investment powers with respect to the securities indicated. We will not receive any proceeds from the sale of the securities by the selling shareholders. No selling shareholders are broker-dealers or affiliates of broker-dealers.
 
Stockholder
 
Shares of
Common Stock
Included in
Prospectus
 
Beneficial
Ownership
Before
Offering (1)
 
Percentage of
Common Stock
Before Offering
   
Beneficial Ownership
After the
Offering (2)
   
Percentage of
Common Stock
Owned After
Offering (2)
 
Robert E. Craine, Jr. 2001 Revocable Trust (3)
    814,000     814,000     2.5 %     --0       --0  
James C. McGill Revocable Living Trust (4)
    2,441,300     4,116,540     12.69 %     --0       --0  
The BAMA Companies, Inc. (5)
    2,703,080     2,703,080     8.33 %     --0       --0  
David B. Kesler
    117,640     117,640     *       --0       --0  
A. Marion Finklea
    117,640     117,640     *       --0       --0  
Sherman Smith Trust (6)
    141,176     141,176     *       --0       --0  
Lilah B. Marshall
    117,640     117,640     *       --0       --0  
The Lorton Family Partnership, Ltd. (7)
    235,300     235,300     *       --0       --0  
Douglas P. Hanke
    100,000     100,000     *       --0       --0  
Douglas P. Hanke IRA (8)
    100,000     100,000     *       --0       --0  
Bob F. McCoy (9)
    200,000     200,000     *       --0       --0  
McCoy Family LLC (10)
    51,400     51,400     *       --0       --0  
LAW LLC (11)
    327,680     327,680     *       --0       --0  
Budco, Inc. (12)
    286,000     286,000     *       --0       --0  
DNA LLC (13)
    376,499     376,499     1.16 %     --0       --0  
Arthur H. II &/or Sharon McElroy (14)
    377,069     377,069     1.16 %     --0       --0  
David G. Dutton Living Trust (15)
    377,069     377,069     1.16 %     --0       --0  
Rudy Revocable Investment Trust (16)
    377,069     377,069     1.16 %     --0       --0  
Jean B. McGill Revocable Living Trust (17)
    185,079     185,079     *       --0       --0  
Mike McGill (18)
    112,509     112,509     *       --0       --0  
Harry L. Summers (19)
    185,079     185,079     *       --0       --0  
William K.Warren Foundation (20)
    1,083,234     1,083,234     3.33 %     --0       --0  
Wilfredo Jatem
    180,280     180,280     *       --0       --0  
Lawson Partners, Ltd. (21)
    206,768     206,768     *       --0       --0  
John R. Elmburg Revocable Trust (22)
    247,048     247,048     *       --0       --0  
 
29

 
Kathy McGill (23)
    135,527     135,527     *       --0       --0  
Cindy Yanik (24)
    102,348     102,348     *       --0       --0  
L. Duane Wilson Trust  (25)
    360,520     360,520     1.11 %     --0       --0  
Geremy C. Ferguson
    200     200     *       --0       --0  
Eric Fultz (26)
    271,880     271,880     *       --0       --0  
David Humphrey (27)
    160,000     160,000     *       --0       --0  
Mike Ishmael (28)
    192,840     192,840     *       --0       --0  
Chris Kingham (29)
    149,460     149,460     *       --0       --0  
Clint Parr (30)
    647,000     647,000     1.99 %     --0       --0  
Dale Schoenefeld (31)
    160,000     160,000     *       --0       --0  
Schoenefeld Family Trust (32)
    9,420     34,980     *       --0       --0  
Jim Dutton (33)
    301,100     301,100     *       --0       --0  
Michael J. Fletcher (34)
    137,446     137,446     *       --0       --0  
Kendall Carpenter (35)
    80,860     80,860     *       --0       --0  
Randy A. Foutch
    654,700     654,700     2.02 %     --0       --0  
Howard E. Janzen Revocable Trust (36)
    89,420     198,320     *       --0       --0  
iQ Ventures, Inc.(37)
    83,320     83,320     *       --0       --0  
John Clerico (38)
    80,000     1,746,660     5.39 %     --0       --0  
Paula Marshall (39)
    243,340     243,340     *       --0       --0  
The World Publishing Company (40)
    235,300     235,300     *       --0       --0  
Lawson Family Trust (41)
    63,980     63,980     *       --0       --0  
Brock Family Partnership (42)
    740,480     740,480     2.28 %     --0       --0  
Spavinaw Partners Limited Partnership (43)
    235,300     235,300     *       --0       --0  
BAMA Venture Capital (44)
    235,300     235,300     *       --0       --0  
Philip B. Smith Revocable Trust (45)
    1,950,000     1,950,000     6.0 %     --0       --0  
Tulsa Community Foundation (46)
    810,980     810,980     2.5 %     --0       --0  
David A. Carpenter Living Trust (47)
    660     660     *       --0       --0--0  
Valerie E. Carpenter Trust (48)
    660     660     *       --0       --0  
Grant A. Carpenter Trust (49)
    660     660     *       --0       --0  
Raymond H. Burrus
    20,000     20,000     *       --0       --0  
Sophie Yanik
    20,000     20,000     *       --0       --0  
Matthew Yanik
    20,000     20,000     *       --0       --0  
James Yanik
    20,000     20,000     *       --0       --0  
Gavin Yanik
    20,000     20,000     *       --0       --0  
Susie McRight
    20,000     20,000     *       --0       --0  
Jeffrey McRight
    20,000     20,000     *       --0       --0  
Robert McRight
    20,000     20,000     *       --0       --0  
Thomas McRight
    20,000     20,000     *       --0       --0  
Scott A. Noble
    20,000     20,000     *       --0       --0  
Braxton Noble
    20,000     20,000     *       --0       --0  
Jennifer Noble
    20,000     20,000     *       --0       --0  
Lori McGill
    20,000     20,000     *       --0       --0  
David Payne Children's Trust A and B (50)
    360,000     360,000     1.1 %     --0       --0  
David P. McCabe
    100,000     100,000     *       --0       --0  
Thomas A. Wilson
    163,840     163,840     *       --0       --0  
Will S. Smith Revocable Trust (51)
    321,300     321,300     *       --0       --0  
 
30

 
Susan S. Burghart Revocable Trust (52)
    321,300     321,300     *       --0       --0  
George Kirk Baird (53)
    19,360     19,360     *       --0       --0  
Brian Bollenback (54)
    75,660     75,660     *       --0       --0  
Samantha Box (55)
    13,840     13,840     *       --0       --0  
Kevin Brunel (56)
    11,540     11,540     *       --0       --0  
Alana Duncan (57)
    3,000     3,000     *       --0       --0  
Chris Elliott (58)
    20,520     20,520     *       --0       --0  
Michael Ford (59)
    75,220     75,220     *       --0       --0  
Sean Haddock (60)
    7,320     7,320     *       --0       --0  
Glenn Harris (61)
    9,860     9,860     *       --0       --0  
Alexei Ivanov (62)
    6,600     6,600     *       --0       --0  
Michael Jacobs (63)
    30,660     30,660     *       --0       --0  
Philip Jaques (64)
    7,280     7,280     *       --0       --0  
Mark Jones (65)
    125,240     125,240     *       --0       --0  
Tim Kilpatrick (66)
    9,520     9,520     *       --0       --0  
Richard Mason (67)
    8,300     8,300     *       --0       --0  
Jim Meyer (68)
    6,940     6,940     *       --0       --0  
Wayne Rachel (69)
    4,100     4,100     *       --0       --0  
April Sailsbury (70)
    5,000     5,000     *       --0       --0  
Shawn Sicking (71)
    25,540     25,540     *       --0       --0  
Shawn Spieth (72)
    124,320     124,320     *       --0       --0  
Regan Unruh (73)
    56,340     56,340     *       --0       --0  
Eric Vardeman (74)
    9,060     9,060     *       --0       --0  
Jon Wiese (75)
    53,120     53,120     *       --0       --0  
Robert Young (76)
    9,880     9,880     *       --0       --0  
Denise McIntosh (77)
    10,000     10,000     *       --0       --0  
Jack Woodward (78)
    151,600     151,600     *       --0       --0  
Carlos Jorda (79)
    308,980     308,980     *       --0       --0  
James David Payne Revocable Trust (80)
    1,936,460     1,936,460     5.97 %     --0       --0  
Concordia Financial Group, Inc. (81)
    1,126,900     1,126,900     3,47 %     --0       --0  
Sichenzia Ross Friedman Ference, LLP (82)
    563,500     563,500     1.74 %     --0       --0  
Total
     25,958,877     29,435,236             --0       --0  
 
*Less than 1% ownership
(1)
 
 
(2)
(3)
The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose.  The percentage of shares owned by each selling stockholder is based on shares issued and outstanding as of April 15, 2008.
Assumes that all securities registered will be sold.
Robert E. Craine, Jr. in his/her capacity as the Trustee of the Robert E. Craine, Jr. 2001 Revocable Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(4)
Represents (i) 891,160 shares of common stock underlying warrants, of which 66,660 are currently exercisable at $0.90, 83,340 are currently exercisable at $0.60, and 741,160 are currently exercisable at $0.425, all of which are being registered; and (ii) 1,550,140 shares of common stock underlying options, of which 143,340 are currently exercisable at $0.34, 897,360 are currently exercisable at $0.43, and 509, 440 are currently exercisable at $0.60, all of which are being registered.  James C. McGill in his/her capacity as the Trustee of the James C. McGill Revocable Living Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(5)
Represents (i) 1,952,760 shares of common stock, all of which are being registered; and (ii) 750,320 shares of common stock underlying warrants of which 44,440 are currently exercisable at $0.90, and 705,880 are currently exercisable at $0.425, all of which are being registered. Paula Marshall in his/her capacity as the CEO of The BAMA Companies, Inc. has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(6)
Represents (i) 141,176 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered William S. Smith in his/her capacity as the Trustee of the Sherman Smith Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
 
31

 
(7)
Robert E. Lorton  in his/her capacity as the General Partner of the Lorton Family Partnership, Ltd. has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(8)
Dougals P. Hanke in his/her capacity as the Owner of Douglas P. Hanke IRA has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(9)
Represents (i) 200,000 shares of common stock underlying options, of which 120,00 are currently exercisable at $0.43, and 80,00 are currently exercisable at $0.60, all of which are being registered.
(10)
Represents (i) 43,400 shares of common stock, all of which are being registered; (ii) 8,000 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered; Robert F. McCoy in his/her capacity as the President of  McCoy Family LLC has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(11)
D. Nicholas Allen in his/her capacity as the President of LAW LLC has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(12)
D. Nicholas Allen   in his/her capacity as the President of Budco, Inc. has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(13)
Represents (i) 329,440 shares of common stock, all of which are being registered; (ii) 47,059 shares of common stock underlying warrants that are currently exercisable at $ 0.425, all of which are being registered. D. Nicholas Allen_ in his/her capacity as the President of DNA LLC has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(14)
Represents (i) 353,540 shares of common stock, all of which are being registered; (ii) 23,529 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered.
(15)
Represents (i) 353,540 shares of common stock, all of which are being registered; (ii) 23,529 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered. David G., Dutton in his/her capacity as the Trustee of David G. Dutton Living Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(16)
Represents (i) 353,540 shares of common stock, all of which are being registered; (ii) 23,529 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered. Peggy M. Tanner in his/her capacity as the Trustee of Rudy Revocable Investment Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(17)
Represents (i) 138,020 shares of common stock, all of which are being registered; (ii) 47,059 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered; Jean B. McGill in his/her capacity as the Trustee of Jean B. McGill Revocable Living Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer. Jean B. McGill is the wife of James C. McGill.  James C. McGill denies any beneficial ownership of shares owned by Jean B. McGill or the Jean B. McGill Revocable Trust.
(18)
Represents (i) 88,980 shares of common stock, all of which are being registered; (ii) 23,529 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered.
(19)
Represents (i) 138,020 shares of common stock, all of which are being registered; and (ii) 47,059 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered.
(20)
Represents (i) 847,940 shares of common stock, all of which are being registered; and (ii) 235,294 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered. Mark A. Buntz in his/her capacity as the Chief Financial Officer of the William K.Warren Foundation has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(21)
Represents (i) 136,180 shares of common stock, all of which are being registered; and (ii) 70,588 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered. David R. Lawson in his/her capacity as the General Partner of Lawson Partners, Ltd. has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(22)
Represents (i) 176,460 shares of common stock, all of which are being registered; and (ii) 70,588 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered. John R. Elmburg in his/her capacity as the Trustee of John R. Elmburg Revocable Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(23)
Represents (i) 97,880 shares of common stock, all of which are being registered; (ii) 37,647 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered.
(24)
Represents (i) 78,820 shares of common stock, all of which are being registered; and (ii) 23,529 shares of common stock underlying warrants that are currently exercisable at $0.425, all of which are being registered.
 
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(25)
L. Duane Wilson in his/her capacity as the Trustee of the L. Duane Wilson Trust has the voting and investment power over the shares listed. The selling stockholder has advised us that it is not a broker-dealer or affiliate of a broker-dealer and that it believes it is not required to be a broker-dealer.
(26)
Represents (i) 271,880 shares of common stock underlying options, of which 191,640 are currently exercisable at $0.43 and 80,240 are currently exercisable at $0.60, all of which are being registered.
(27)
Represents (i) 160,000 shares of common stock underlying options, of which 80,000 are currently exercisable at $0.43 and 80,000 are currently exercisable at $0.60,  all of which are being registered.
(28)
Represents (i) 192,840 shares of common stock underlying options, of which 89,420 are currently exercisable at $0.43 and 103,420 are currently exercisable at $0.60, all of which are being registered