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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Period Ended
December 31, 2002 Commission File No. 0-18399
SIRICOMM, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 62-1386759
------------------------------ ---------------------------------
(State or jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2900 Davis Boulevard, Suite 130, Joplin, Missouri 64804
------------------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (417) 626-9961
Former name, former address and former fiscal year, if changed since last
report: N/A
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for a shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares issued and outstanding of the Registrant's Common Stock,
$.001 par value, as of February 14, 2003 was 12,449,442.
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PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets as of December 31, 2002 and
September 30, 2002 F-2
Consolidated Statements of Operations for the three
months ended December 31, 2002 and 2001 and from
inception (April 24, 2000) to December 31, 2002 F-3
Consolidated Statements of Changes in Stockholders'
Deficit from inception (April 24, 2000) to December 31, 2002 F-4
Consolidated Statements of Cash Flows for the three
months ended December 31, 2002 and 2001 and from
inception (April 24, 2000) to December 31, 2002 F-5 to F-6
Notes to the financial statements F-7 to F-22
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
ASSETS
December 31,
2002 September 30,
(unaudited) 2002
-------------- --------------
Current assets:
Cash $ 80,256 $ 44,304
Prepaid expenses and other current assets 156 26,670
Due from affiliate - 15,000
-------------- --------------
Total current assets 80,412 85,974
Furniture and equipment, net of accumulated
depreciation of $27,231 and $22,408 as of December 31,
2002 and September 30, 2002, respectively 69,233 74,057
-------------- --------------
$ 149,645 $ 160,031
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of notes payable and long-term debt $ 1,529,934 $ 1,284,397
Notes payable, related parties 55,000 -
Subordinated convertible debentures 100,000 -
Accounts payable 89,201 12,436
Accrued expenses 159,996 103,843
-------------- --------------
Total current liabilities 1,934,131 1,400,676
Notes payable and long-term debt, less current maturities 49,689 79,255
-------------- --------------
Total liabilities 1,983,820 1,479,931
-------------- --------------
Commitments -
Stockholders' deficit:
Common stock, $.001 par value, 50,000,000 shares
authorized, 10,478,233 shares issued and outstanding 10,478 10,000
Additional paid-in capital 1,851,749 483,912
Deficit accumulated during the development stage (2,164,162) (1,780,599)
Unearned stock-based compensation (1,532,240) -
Treasury stock, 222 shares at cost - (33,213)
-------------- --------------
Total stockholders' deficit (1,834,175) (1,319,900)
-------------- --------------
$ 149,645 $ 160,031
============== ==============
See notes to consolidated financial statements.
F-2
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
From Inception
For the Three Months (April 24, 2000) to
Ended December 31, December 31,
---------------------------------- ---------------
2002 2001 2002
-------------- -------------- --------------
Revenues $ - $ - $ -
-------------- -------------- --------------
Operating expenses:
General and administrative 52,628 39,642 416,312
Salaries and consulting fees 83,125 104,617 1,074,570
Research and development 35,643 6,910 294,295
Write-off of note receivable - - 50,000
Depreciation 4,823 1,921 27,989
-------------- -------------- --------------
Total operating expenses 176,219 153,090 1,863,166
-------------- -------------- --------------
Operating loss (176,219) (153,090) (1,863,166)
Interest expense (17,795) (3,951) (61,447)
Loan costs (189,549) (18,907) (239,549)
-------------- -------------- --------------
Loss before income taxes (383,563) (175,948) (2,164,162)
Income taxes - - -
-------------- -------------- --------------
Net loss $ (383,563) $ (175,948) $ (2,164,162)
============== ============== ==============
Net loss per share, basic and diluted $ (0.10) $ (17.59) $ (5.98)
============== ============== ==============
Weighted average shares, basic and diluted 3,782,212 10,000 361,860
============== ============== ==============
Unaudited pro forma presentation applicable
to conversion from an S Corporation to
C Corporation:
Net loss before pro forma income tax expense $ (175,948) $ (2,079,919)
Pro forma income tax expense - -
-------------- --------------
Pro forma net loss $ (175,948) $ (2,079,919)
============== ==============
Pro forma net loss per share $ (17.59) $ (5.75)
============== ==============
See notes to consolidated financial statements.
F-3
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(unaudited)
Common Stock Additional Unearned Total
--------------------- Paid-in Accumulated Treasury Stock-based Stockholders'
Shares Amount Capital Deficit Stock Compensation Deficit
---------- -------- ----------- ------------ --------- ------------ ------------
Issuance of founder shares at
inception 3,333 $ 3,333 $ - $ - $ - $ - $ 3,333
Conversion of debt to equity 6,372 6,372 379,844 - 386,216
Net loss for the period - - - (398,391) - - (398,391)
---------- -------- ----------- ------------ --------- ------------ ------------
Balances, September 30, 2000 9,705 9,705 379,844 (398,391) - - (8,842)
Issuance of common stock 295 295 288,709 - - - 289,004
Net loss for the year - - - (470,597) - - (470,597)
---------- -------- ----------- ------------ --------- ------------ ------------
Balances, September 30, 2001 10,000 10,000 668,553 (868,988) - - (190,435)
Treasury stock acquisition
(1,694 shares) - - - - (253,524) - (253,524)
Issuance of 1,472 treasury shares
of common stock - - (184,641) - 220,311 - 35,670
Net loss for the year - - - (911,611) - - (911,611)
---------- -------- ----------- ------------ --------- ------------ ------------
Balances, September 30, 2002 10,000 10,000 483,912 (1,780,599) (33,213) - (1,319,900)
Reverse merger and reorganization 9,712,866 (277) (247,892) - 33,213 - (214,956)
Stock-based compensation 716,000 716 1,531,524 - - (1,532,240) -
Stock issued for loan costs 39,367 39 84,205 - - - 84,244
Net loss - - - (383,563) - - (383,563)
---------- -------- ----------- ------------ --------- ------------ ------------
Balances, December 31, 2002
(unaudited) 10,478,233 $ 10,478 $ 1,851,749 $ (2,164,162) $ - $ (1,532,240) $ (1,834,175)
========== ======== =========== ============ ========= ============ ============
See notes to consolidated financial statements.
F-4
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
From Inception
For the three months (April 24, 2000) to
Ended December 31, December 31,
-------------------------- -------------
2002 2001 2002
----------- ----------- -------------
Cash flows from operating activities:
Net loss $ (383,563) $ (175,948) $ (2,164,162)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Depreciation 4,824 1,921 27,990
Amortization of loan costs - 13,025 50,000
Loan costs 84,244 - 84,244
Stock-based compensation - - 9,000
Settlement expense funded from debt
assumption - - 28,000
Write-off of note receivable - - 50,000
Changes in assets and liabilities:
Current assets 14,844 - (156)
Current liabilities 43,153 9,813 196,432
----------- ----------- -------------
Net cash flows from operating activities (236,498) (151,189) (1,718,652)
----------- ----------- -------------
Cash flows from investing activities:
Cash acquired in business combination 1,479 - 1,479
Acquisition of furniture and equipment - (22,098) (98,629)
Proceeds from sale of furniture and
equipment - - 1,406
----------- ----------- -------------
Net cash flows from investing activities 1,479 (22,098) (95,744)
----------- ----------- -------------
Cash flows from financing activities:
Issuance of note receivable - - (50,000)
Borrowings under line of credit, net - 28,000 97,043
Proceeds from notes payable 250,000 527,606 1,301,035
Proceeds from notes payable, related parties 55,000 - 55,000
Payments of notes payable (34,029) - (136,979)
Payment of loan costs - (44,118) (50,000)
Advances from (repayments to) officers, net - (371) 386,216
Proceeds from sale of common stock - - 292,337
----------- ----------- -------------
Net cash flows from financing activities 270,971 511,117 1,894,652
----------- ----------- -------------
Change in cash 35,952 337,830 80,256
Cash, beginning of period 44,304 896 -
----------- ----------- -------------
Cash, end of period $ 80,256 $ 338,726 $ 80,256
=========== =========== =============
See notes to consolidated financial statements.
F-5
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(unaudited)
From Inception
For the three months (April 24, 2000) to
Ended December 31, December 31,
-------------------------- -------------
2002 2001 2002
----------- ----------- -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 3,197 $ 3,464 $ 19,672
=========== =========== =============
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
Conversion of debt to 6,372 shares of common
stock $ - $ - $ 386,216
=========== =========== =============
Acquisition of 1,694 shares of treasury stock
for a note payable $ - $ 253,524 $ 253,524
=========== =========== =============
Issuance of 716,000 shares of common stock
for services to be performed in the future $ 1,532,240 $ - $ 1,532,240
=========== =========== =============
Loan costs funded through:
Issuance of stock $ 82,244 $ - $ 82,244
=========== =========== =============
Increase in accrued expenses for stock to be issued $ 105,305 $ - $ 105,305
=========== =========== =============
Stock offering costs funded through issuance of stock $ 26,670 $ - $ 26,670
=========== =========== =============
Debt assumed pursuant to reverse acquisition $ 100,000 $ - $ 100,000
=========== =========== =============
See notes to consolidated financial statements.
F-6
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies:
Nature of business and basis of presentation:
SiriCOMM is engaged in the development of broadband wireless application
service technologies intended for use in the marine and transportation
industries. SiriCOMM's development activities include integrating multiple
technologies including satellite communications, the Internet, wireless
networking, and productivity enhancing software into commercially viable
products and services. SiriCOMM expects to complete development activities
and commence revenue generating activities in late 2003.
Acquisition:
On November 21, 2002, SiriCOMM Delaware (formerly known as Fountain
Pharmaceuticals, (the "Company") completed the acquisition of all of the
issued and outstanding shares of SiriCOMM, Inc. - a Missouri Corporation
("SiriCOMM Missouri"). An aggregate 9,623,195 post-reverse split shares
were issued to SiriCOMM Missouri shareholders. Furthermore, the Company
agreed to issue the equivalent of 15.5% of the post-merger entity's shares
(1,922,000 post reverse split shares) to retire $1,000,000 of convertible
notes issued by SiriCOMM Missouri. As a result and following completion of
the acquisition, the sole director of the Company resigned and four of
SiriCOMM Missouri's principal shareholders were elected in his place. In
connection with this transaction the Company changed its name to "SiriCOMM,
Inc."
Since SiriCOMM Missouri is considered the acquirer for accounting and
financial reporting purposes, the transaction has been accounted for in
accordance with reverse acquisition accounting principles as though it were
a recapitalization of SiriCOMM Missouri and a sale of shares by SiriCOMM
Missouri in exchange for the net assets of the Company. The financial
statements include the historical results of operations and cash flows of
SiriCOMM Missouri from inception and operations of SiriCOMM Delaware from
November 21, 2002 through December 31, 2002.
F-7
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Reporting periods:
In connection with the acquisition discussed in Note 2, the financial
information has been presented on a September 30 fiscal year and SiriCOMM
Missouri will adopt that fiscal year in the near future.
Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Interim financial information:
The financial statements for the quarter ended December 31, 2002 and notes
thereto should be read in conjunction with the financial statements and
notes thereto for the year ended September 30, 2002 for SiriCOMM Delaware
as filed in the annual report on Form 10-KSB and SiriCOMM Missouri as filed
in Form 8K.
In the opinion of management, all adjustments necessary for a fair
presentation of the results of operations for the periods presented have
been included. The results of operations for the three months ended
December 31, 2002 and 2001, are not necessarily indicative of the results
for a full year.
The report of the Company's independent auditors for the year ended
September 30, 2002 contains an explanatory paragraph as to the substantial
doubt of the Company's ability to continue as a going concern. No
adjustments have been made to the accompanying financial statements to give
effect to this uncertainty.
Financial instruments:
The carrying value of the Company's financial instruments, including cash,
accounts payable, and notes payable, approximate their fair market values.
F-8
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Furniture and equipment:
Furniture and equipment is depreciated using the straight-line method over
the estimated useful life of 5 years.
Stock-based compensation:
The Company accounts for compensation costs associated with stock options
issued to employees under the provisions of Accounting Principles Board
Opinion No. 25 whereby compensation is recognized to the extent the market
price of the underlying stock at the grant date exceeds the exercise price
of the option granted. (There have been no option grants to employees since
inception.) Stock-based compensation to non-employees is accounted for
using the fair-value based method prescribed by Financial Accounting
Standard No. 123 - Accounting for Stock-Based Compensation.
Research and development costs:
The Company incurs costs, principally paid to outside consultants,
associated with computer software to be marketed in the future. Costs
incurred in connection with establishing technological feasibility have
been expensed as research and development costs. Costs incurred subsequent
to establishing technological feasibility, including coding and testing,
will be capitalized.
Income taxes:
Effective November 21, 2002, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. This method also
requires the recognition of future tax benefits such as net operating loss
carryforwards, to the extent that realization of such benefits is more
likely than not. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
deferred tax assets are reviewed periodically for recoverability and
valuation allowances are provided, as necessary.
F-9
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Income taxes (continued):
Prior to November 21, 2002, the operations of SiriCOMM Missouri were
included in the personal income tax returns of the stockholders under
Subchapter S of the Internal Revenue Code. The unaudited pro forma income
tax information assumes that the Company was taxed as a C Corporation. For
these purposes, the Company has used the asset and liability method in
accounting for income taxes, prescribed in SFAS No. 109, "Accounting for
Income Taxes." Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
The acquisition described in Note 1 resulted in the revocation of the
Company's S Corporation election.
Net loss per share:
Net loss per share represents the net loss available to common stockholders
divided by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflect the potential dilution that
could occur if convertible debt was converted into common stock. Diluted
net loss per share is considered to be the same as basic net loss per share
since the effect of the issuance of common stock associated with the
convertible debt is anti-dilutive.
F-10
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Recent Accounting Pronouncements
FASB Statement No. 148 Accounting for Stock-Based Compensation--Transition
and Disclosure (Statement 148)
During December 2002, the Financial Accounting Standards Board (FASB)
issued Statement 148. Statement 148 establishes standards for two
alternative methods of transition to the fair value method of accounting
for stock-based employee compensation of FASB Statement 123 Accounting for
Stock-Based Compensation (Statement 123). Statement 148 also amends and
augments the disclosure provisions of Statement 123 and Accounting
Principles Board Opinion 28 Interim Financial Reporting to require
disclosure in the summary of significant accounting policies for all
companies of the effects of an entity's accounting policy with respect to
stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. The transitions standards
and disclosure requirements of Statement 148 are effective for fiscal years
and interim periods ending after December 15, 2002.
FASB Statement No. 148 Accounting for Stock-Based Compensation--Transition
and Disclosure (Statement 148) (continued)
This statement has no current impact on the Company as the Company does not
currently plan to transition to the fair value approach in Statement 123
nor have stock-based employee compensation equity instruments been issued
by the Company.
F-11
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Recent Accounting Pronouncements (continued)
FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others
(Interpretation 45)
During November 2002, the FASB issued Interpretation 45. Under
Interpretation 45 guarantees, contracts and indemnification agreements are
required to be initially recorded at fair value. Current practice provides
for the recognition of a liability only when a loss is probable and
reasonably estimable, as those terms are defined under FASB Statement 5
Accounting for Contingencies. In addition Interpretation 45, requires
significant new disclosures for all guarantees even if the likelihood of
the guarantor's having to make payments under the guarantee is remote. The
disclosure requirements are effective for financial statements of interim
and annual periods ending after December 15, 2002. The initial recognition
and measurement provisions of Interpretation 45 are applicable on a
prospective basis to guarantees, contracts or indemnification agreements
issued or modified after December 31, 2002.
The Company currently has no guarantees, contracts or indemnification
agreements that would require fair value treatment under the new standard.
The Company's current policy is to disclose all material guarantees and
contingent arrangements, similar to the disclosure requirements of
Interpretation 45, which provide for disclosure of the approximate term,
nature of guarantee, maximum potential amount of exposure, and the nature
of recourse provisions and collateral.
F-12
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
1. Nature of operations and summary of significant accounting policies
(continued):
Recent Accounting Pronouncements (continued)
FASB Statement No.146 Accounting for Costs Associated with Exit or Disposal
Activities (Statement 146)
During July 2002, the FASB issued Statement 146. Statement 146 addresses
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue No. 94-3
Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). Statement 146 requires the recognition of a liability for
costs associated with exit or disposal activities when the liability is
actually incurred. Under EITF 94-3, such costs were generally recognized in
the period in which an entity committed to and exit plan or plan of
disposal. While both standards covered costs associated with one-time
termination benefits (e.g. severance pay or stay-bonus arrangements),
Statement 146 provides standards that provide for the timing of recognition
of these types of benefits. Statement 146 is effective for exit or disposal
activities initiated after December 31, 2002.
Management's plans with respect to the continuation of the Company are
described in Note 2. While there are currently no specific plans to exit
activities as part of these plans, any such activity would require the
application of Statement 146.
FASB Statement 145 Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13 and Technical Corrections (Statement
145)
During April 2002, the FASB issued Statement 145. Statement 145 rescinds
FASB Statement No. 4, Reporting Gains and Losses from Extinguishments of
Debt, which required all gains and losses from extinguishments of debt to
be aggregated and, if material, classified as an extraordinary item, net of
related income tax effect. As a result of the rescission of Statement No.
4, the classification of gain and losses arising from debt extinguishments
requires consideration of the criteria for extraordinary accounting
treatment provided in Accounting Principles Board Opinion No. 30 Reporting
the Results of Operations. In the absence of Statement No. 4, debt
extinguishments that are not unusual in nature and infrequent in occurrence
would be treated as a component of net income or loss from continuing
operations. Statement 145 is effective for financial statements issued for
fiscal years beginning after May 15, 2002.
F-13
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
2. Management's plan of operation:
Since its inception, SiriCOMM has financed its activities primarily from
short-term loans, a substantial portion of which are in default (Note 4).
To date, SiriCOMM has not introduced its products and services
commercially, has limited assets, significant liabilities and limited
business operations. Managements' plan of operation for fiscal 2003 is for
SiriCOMM to raise additional capital ($6-$10 million) and SiriCOMM to build
a network to service up to 250,000 simultaneous users. The construction of
the initial network is estimated to cost $4-$6 million and is expected to
be financed by a private sale of securities. At this time, there are no
firm commitments on anyone's part to invest in the Company and if the
Company is unable to obtain such financing, the technology may never be
commercially sold.
There can be no assurances that the Company will be successful in obtaining
debt or equity financing in order to achieve its financial objectives and
continue as a going concern. The financial statements do not include any
adjustments to the carrying amount of assets and the amounts and
classifications of liabilities that might result from the outcome of this
uncertainty.
3. Notes payable and long-term debt:
Notes payable and long-term debt consist of the following at December 31,
2002:
Line of credit, interest at 7%, secured by all assets of the Company
(currently existing or thereafter acquired) and personally guaranteed
by a stockholder of the Company, due July 20, 2003, or upon demand by
the bank. $ 112,769
Note payable, former stockholder, bearing interest at 2.5%, unsecured,
principal and interest due in monthly installments of $10,000 through
May 2004. 166,854
F-14
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
3. Notes payable and long-term debt (continued):
Note payable, bearing interest at 4%, unsecured, principal and interest
due March 15, 2002; convertible into common shares equaling 4.25% of
the Company's outstanding shares of stock on the date that the holder
exercises its option. (a) 250,000
Note payable, bearing interest at 4%, unsecured, principal and interest
due March 15, 2002; convertible into common shares equaling 3.5% of the
Company's outstanding shares of stock on the date that the holder
exercises its option. (a) 250,000
Note payable, bearing interest at 4%, unsecured, principal and interest
due July 15, 2002; convertible into common shares of stock equaling
4.25% of the Company's outstanding shares of stock on the date that the
holder exercises its options. (a) 250,000
Note payable, bearing interest at 4%, unsecured, principal and interest
due July 15, 2002; convertible into common shares of stock equaling
3.5% of the Company's outstanding shares of stock on the date that the
holder exercises its options. (a) 250,000
Notes payable, bearing interest at 10%, unsecured, interest and
principal due January 27, 2002. (a) 75,000
Notes payable, bearing interest ranging from 4% to 8%, unsecured,
interest and principal due on the date which the Company shall receive
sufficient invested or borrowed sums to pay all amounts due. 50,000
F-15
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
3. Notes payable and long-term debt (continued):
Notes payable, bearing interest at 4%, unsecured, interest and
principal due the earlier of the date which the Company shall receive
sufficient invested or borrowed sums to pay all amounts due or dates
ranging from October 31, 2003 through January 3, 2004. 175,000
---------------
1,579,623
Less current maturities (1,529,934)
---------------
$ 49,689
===============
Future maturities of notes payable and long-term debt are as follows:
Year ending December 31,
2003 $ 1,529,934
2004 49,689
-----------------
$ 1,579,623
=================
(a) As of February 18, 2003, the Company was in default with
respect to notes payable covering $75,000 of indebtedness. The
Company converted $1,000,000 of these notes to common stock in
January 2003 (see Note 10).
4. Notes payable, related parties:
Related party promissory note:
In November and December 2002, the Company borrowed $55,000 from major
stockholders. The notes bear interest at 4 percent, are unsecured, and are
due the earlier of either the date on which the Company shall receive
sufficient invested or borrowed sums to pay all amounts owed or December
26, 2003.
Interest expense on these notes was nominal in the period ending December
31, 2002.
F-16
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
5. Subordinated convertible debenture:
On February 20, 2002 the Company issued a 6% Subordinated Convertible
Debenture (the Debenture) due May 31, 2002 in the principal amount of
$100,000. The Debenture is convertible into the Company's common stock at
$1.00 per share, which resulted in a beneficial conversion feature of
$100,000. The beneficial conversion feature amount was allocated to paid in
capital and immediately charged to operations. Despite the fact the
Debenture is past due, the Debenture holder has not made a demand for
payment or conversion.
6. Stockholders' deficit:
Common stock:
In November 2002 in connection with the merger discussed in Note 1, the
Company combined the outstanding shares of common stock to a single class
of common stock and affected a one-for-sixty reverse split of the
outstanding shares. In connection therewith the par value of the stock was
decreased to $.001. Additionally, the authorized number of shares of common
stock was increased to 50,000,000 shares and preferred stock authorized
increased to 5,000,000 shares.
On November 21, 2002, the Company issued 9,623,195 post-reverse split
common shares in exchange for all of the outstanding common stock of
SiriCOMM Missouri.
In November, the Company issued 716,000 shares of its common stock
registered with the SEC on Form S-8, at the fair market value of the stock
for services based on a consulting agreement (see Note 9). As of February
18, 2003, no services have been performed under this agreement and
therefore all stock-based compensation has been included as unearned
stock-based compensation in the accompanying statements. It is management's
intent to terminate this agreement in the near future and as such all
issued stock will be returned to the Company.
The Company issued shares of common stock (valued based on the average
trading price of the stock for the previous 90 days or $84,244) for loan
costs incurred. The related expense is included as loan costs in the
accompanying financial statements. The Company has also recorded
approximately $105,000 of loan costs for shares of common stock which were
issued in January 2003. This amount is included in accrued expenses in the
accompanying financial statements.
F-17
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
6. Stockholders' deficit (continued):
2002 Incentive stock option plan:
The Company has adopted an incentive stock option plan (the "Plan")
covering 3,000,000 post reverse split shares of the Company's common stock,
pursuant to which eligible participants of the Company and its subsidiaries
and affiliates are eligible to receive stock options, stock appreciation
rights, restricted stock performance stock awards and bonus stock until May
15, 2012.
The Plan permits the granting of non-transferable stock options that are
intended to qualify as incentive stock options ("ISO's") under section 422
of the Internal Revenue code of 1986 and stock options that do not so
qualify ("Non-Qualified Stock Options"). The option exercise price for each
share covered by an option shall be determined by the Stock Option
Committee but shall not be less than 100% of the fair market value of a
share on the date of grant. The term of each option will be fixed by the
Stock Option Committee, but may not exceed 10 years from the date of the
grant in the case of an ISO or 10 years and two day s from the date of the
grant in the case of a Non-Qualified Stock Option. In the case of 10%
stockholders, no ISO shall be exercisable after the expiration of five
years from the date the ISO is granted.
Non-transferable stock appreciation rights ("SAR's") may be granted in
conjunction with options, entitling the holder upon exercise to receive an
amount in any combination of cash or unrestricted common stock of the
Company as determined by the Stock Option Committee, not greater in value
than the increase since the date of grant in the value of the shares
covered by such right. Each SAR will terminate upon the termination of the
related option.
Restricted shares of the common stock may be awarded by the Stock Option
Committee subject to such conditions and restrictions as they may
determine. The Stock Option Committee shall also determine whether a
recipient of restricted shares will pay a purchase price per share or will
receive such restricted shares without any payment in cash or property. No
restricted stock award may provide for restrictions beyond ten (10) years
from the date of grant.
F-18
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
6. Stockholders' deficit (continued):
2002 Incentive stock option plan (continued):
Performance shares of common stock may be awarded without any payment for
such shares by the Stock Option Committee if specified performance goals
established by the Committee are satisfied. The Committee shall establish
the maximum number of shares of stock to be issued to a designated employee
if the performance goals are attained. The Committee must certify in
writing that a performance goal has been attained prior to issuance of any
certificate for a performance stock award to any employee.
The committee may also award shares of common stock as bonus stock to
senior officers, consultants and employees designated by the Committee,
without any payment for such shares and without any specified performance
goals.
The Plan provides that (a) in the event of a "Change of Control" (as
defined in the Plan), unless otherwise determined by the Stock Option
Committee prior to such Change of Control, or (b) to the extent expressly
provided by the Stock Option Committee at or after the time of grant, in
the event of a "Potential Change of Control" (as defined in the Plan), (i)
all stock options and related SAR's (to the extent outstanding for at least
six months) will become immediately exercisable: (ii) the restrictions and
deferral limitations applicable to outstanding restricted stock awards and
deferred stock awards will lapse and the shares in question will be fully
vested: and (iii) the value of such options and awards, to the extent
determined by the Stock Option Committee, will be cashed out on the basis
of the highest price paid (or offered) during the preceding 60-day period,
as determined by the Stock Option Committee. The Change of Control and
Potential Change of Control provisions may serve as a disincentive or
impediment to a prospective acquirer of the Company and, therefore, may
adversely affect the market price of the common stock of the Company.
There are no awards currently outstanding under this Plan.
F-19
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
7. Income taxes:
Deferred tax assets consist of the following at December 31, 2002:
Net operating loss carryover $ 115,000
Valuation allowance (115,000)
-----------------
$ -
=================
Income tax (expense) benefit consists of the following:
2002
-----------------
Current:
Federal $ -
-----------------
Deferred:
Deferred -
Benefit of net operating loss carryover 115,000
Change in valuation allowance (115,000)
-----------------
-
-----------------
$ -
=================
The expected income tax benefit at the statutory tax rate differed from
income taxes in the accompanying statements of operations as follows:
Percentage
of loss before
income taxes
2002
-----------------
Statutory tax rate 35.0%
State tax 3.5%
Change in deferred tax asset
valuation allowance (38.5%)
-----------------
Effective tax rate in accompanying
statement of operations 0%
=================
F-20
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
8. Related party transactions:
During 2001, SiriCOMM Missouri was a defendant in a suit filed by a
founding stockholder. This suit was settled on December 21, 2001 for an
aggregate amount of $300,524. The settlement agreement provided for
reimbursement of $22,000 in out-of-pocket expenses, $15,000 in compensation
for services previously performed and repurchase of all shares of common
stock owned by this stockholder. The Company paid $10,000 in December 2001
in connection with the settlement and issued a note payable in the amount
of $290,524 for the remaining balance due, payable over a 29-month period.
In addition, as part of the settlement agreement the Company assumed a
$28,000 note payable which was accrued as general and administrative
expense at September 30, 2001. On December 18, 2001, the then existing bank
line of credit agreement and the note payable of $28,000 were consolidated
into a single line of credit.
9. Commitments:
Employment agreements:
The Company has four executive employee agreements with certain
officers/directors. As part of these agreements the Company is obligated to
pay these individuals aggregate compensation of $525,000 annually through
February 2005.
Consulting agreement:
On December 12, 2002, the Company entered into a consulting agreement with
RJ Diamond Consulting for services related to NASD transactions, NASDAQ
qualification and SEC reporting requirements. The agreement provides for
such services to be provided through May 31, 2003 in exchange for the
issuance of 716,000 post reverse split shares of the Company's stock. On
December 23, 2002, as required by the agreement, the Company filed a Form
S-8 Registration Statement to register the shares under the Securities Act
of 1933. In December 2002, the Company issued 716,000 shares of common
stock. As of February 18, 2003, no services had been performed under this
agreement. It is managements' intent to terminate this agreement in the
near future and shares issued pursuant to the agreement will be returned to
the Company.
F-21
SIRICOMM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO DECEMBER 31, 2002
(unaudited
10. Subsequent events
Promissory notes:
In early 2003, the Company raised an aggregate of $75,000 pursuant to two
loan agreements. The loans provide for a one year maturity, and interest at
4 percent. In connection with obtaining the loan, the Company agreed to
issue an aggregate of 29,525 shares of its common stock, which will be
valued and recorded consistent with similar issuances in the first quarter.
Conversion of notes payable to common stock:
In January 2003, the Company converted $1,000,000 of notes payable to
1,922,000 shares of the Company's common stock.
F-22
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Background
----------
SiriCOMM, Inc. ("Company"), was incorporated in the State of Delaware
on March 23, 1989 as Fountain Pharmaceuticals, Inc. The Company ceased
operations and has been inactive since July 2001.
On November 21, 2002, the Company completed the acquisition of
SiriCOMM, Inc., a company organized under the laws of the State of Missouri in
April 2000 (SiriCOMM). In connection with the acquisition, the Company changed
its name to SiriCOMM, Inc. and the former director resigned his positions with
the Company and appointed Henry P. Hoffman, David Mendez, Kory S. Dillman and
Tom Noland officers and directors of the Company. As a result of the
acquisition, the Company's business operations are those of SiriCOMM.
Plan of Operations
------------------
SiriCOMM was incorporated in April 2000. SiriCOMM is engaged in the
development of broadband wireless applications service provider technologies
serving the marine and highway transportation industries. SiriCOMM's current
development activities include integrating multiple technologies including
satellite communications, the Internet (and intranets), wireless networking, and
productivity enhancing software into commercially viable products and services
for its target industries. SiriCOMM, to date, has not introduced its products
and services commercially and is considered a development stage enterprise.
SiriCOMM has limited assets, significant liabilities and limited business
operations. To date, activities have been limited to organizational matters,
development of its products and services and capital raising.
Management's plan of operation for the next twelve months is to raise
additional capital and build a network to service up to 250,000 simultaneous
users within six (6) months of raising capital. The construction of the initial
network is estimated to cost $4-6 million and is expected to be financed by the
private sale of the Company's securities following the SiriCOMM Acquisition.
There are no firm commitments on anyone's part to invest in the Company or
SiriCOMM and if the combined entity is unable to finance the acquisition through
the private sale of its securities or other financing, the SiriCOMM technology
may never be commercially sold.
From inception (April 24, 2000) through December 31, 2002, SiriCOMM has
not generated any revenues. During the period from inception (April 24, 2000)
through September 30, 2000, the years ended September 30, 2001 and 2002 and the
three months ended December 31, 2002, SiriCOMM had net losses of $398,391,
$470,597, $911,611 and $383,563 respectively. From inception through December
31, 2002, SiriCOMM's general and administrative expenses totaled $416,312 or 21%
of expenses, of which $74,156, $160,748, $128,780 and $52,628 were incurred in
the period from inception (April 24, 2000) through September 30, 2000, the years
2
ended September 30, 2001 and 2002, and the three months ended December 31, 2002,
respectively. As of December 31, 2002, the SiriCOMM incurred salaries and
consulting fees of $1,074,570 or 54% of expenses, of which $271,543, $175,525,
$544,377 and $83,125 were incurred in the period from inception (April 24, 2000)
through September 30, 2000, the years ended September 30, 2001 and 2002, and the
three months ended December 31, 2002, respectively. SiriCOMM's research and
development costs were $294,294 or 15% of expenses of which $50,205, $73,787,
$134,660 and $35,643 were incurred in the period from inception (April 24, 2000)
through September 30, 2000, the years ended September 30, 2001 and 2002, and the
three months ended December 31, 2002, respectively.
From inception through December 31, 2002, SiriCOMM has incurred
interest expenses primarily related to the issuance of convertible notes
aggregating $1,000,000 or $61,447 or 2% of expenses, of which $4,609, $39,043
and $17,795 were incurred in the years ended September 30, 2001 and 2002, and
the three months ended December 31, 2002, respectively.
SiriCOMM has four (4) executive employee agreements with certain
officers/directors. As part of these agreements, SiriCOMM is obligated to pay
these individuals an aggregate annual compensation of $525,000 through February
2005.
Liquidity and Capital Resources
-------------------------------
Since inception, SiriCOMM has financed its activities primarily from
short-term loans. As of December, 2002, the amount of these loans aggregated
$1,579,623. These loans are comprised of four (4) convertible notes in the
aggregate amount of $1,000,000, a note payable to a former stockholder, Mr. Greg
Sanders, in the principal amount of $166,584 , a credit facility with Southwest
Missouri Bank (the "Bank") in the amount of $112,769 and eight (8) unsecured
notes payable aggregating $300,000. On January 7, 2003 the $1,000,000 in
convertible notes and accrued interest thereon were converted into an aggregate
of 1,922,000 shares of the Company's common stock. The note payable to Mr.
Sanders has a principal balance due as of December 31, 2002 of $166,584. This
note bears interest at the rate of 2.5% per annum. Interest and principal is due
in monthly installments of $10,000 per month through May 2004.
In July 2002 SiriCOMM signed a note with the Bank for $121,325, bearing
interest at 7% per annum requiring eleven monthly payments of $2,400, with the
principal balance maturing on July 20, 2003. The proceeds of this note were used
to substantially pay down the outstanding line of credit due to the Bank as of
June 30, 2002.
As of December 31, 2002, the Company had total assets of $149,645 and
total current assets of $80,412. At December 31, 2002, the Company had total
liabilities of $1,983,820 and total current liabilities of $1,934,131. The
Company's working capital deficit at December 31, 2002 was ($ 1,853,719) and an
equity deficiency of ($1,834,175).
The Company is dependent on raising additional funding necessary to
implement its business plan as outlined above. The Company's auditors have
issued a "going concern" opinion on the financial statements for the year ended
September 30, 2002, indicating that SiriCOMM is in the development stage of
operations, has a working capital and net equity deficiency, is in default with
respect to a substantial portion of its loan agreements and has not yet
generated revenues through January 15, 2003 (the date of said auditors' report).
These factors raise substantial doubt in the Company's ability to continue as a
going concern. If the Company is unable to raise the funds necessary to build a
network and fund its operations, it is unlikely that the Company will remain as
a viable going concern.
3
Forward Looking Statements. This report contains certain forward-looking
statements that are based on current expectations. In light of the important
factors that can materially affect results, including those set forth above and
elsewhere in this report, the inclusion of forward-looking information herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. The Company may
encounter competitive, technological, financial and business challenges making
it more difficult than expected to continue to market its products and services;
competitive conditions within the industry may change adversely; the Company may
be unable to retain existing key management personnel; the Company's forecasts
may not accurately anticipate market demand; and there may be other material
adverse changes in the Company's operations or business. Certain important
factors affecting the forward looking statements made herein include, but are
not limited to (i) accurately forecasting capital expenditures and (ii)
obtaining new sources of external financing. Assumptions relating to budgeting,
marketing, product development and other management decisions are subjective in
many respects and thus susceptible to interpretations and periodic revisions
based on actual experience and business developments, the impact of which may
cause the Company to alter its capital expenditure or other budgets, which may
in turn affect the Company's financial position and results of operations.
4
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) On November 21, 2002 the Company issued an aggregate of 9,662,562
to the shareholders of SiriCOMM. These shares were issued under the exemption
from registration provided in Section 4(2) of the Securities Act of 1933. The
SiriCOMM shareholders represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution of the securities and appropriate legends were affixed to the
certificates.
In December 2002, the Company borrowed an aggregate of $75,000 from an
unaffiliated third party. In connection with this loan, the Company issued the
lender an aggregate 29,525 shares of its common stock. The shares were issued
under the exemption from registration provided in Section 4(2) of the Securities
Act of 1933. The lenders represented their intention to acquire the securities
for investment only and not with a view to or for sale in connection with any
distribution of the securities and appropriate legends were affixed to the
certificates.
In early 2003 the Company borrowed an aggregate of $75,000 from two
unaffiliated parties. In connection with these loans, the Company issued the
lenders an aggregate 29,525 shares of its common stock. The shares were issued
under the exemption from registration provided in Section 4(2) of the Securities
Act of 1933. The lenders represented their intention to acquire the securities
for investment only and not with a view to or for sale in connection with any
distribution of the securities and appropriate legends were affixed to the
certificates.
On January 7, 2003 the Company issued an aggregate of 1,922,000 shares
to Wasson (868,000) and Quest (1,054,000) in connection with the conversion of
an aggregate of $1,000,000 of convertible notes and accrued interest thereon.
The shares were issued under the exemption from registration provided in Section
4(2) of the Securities Act of 1933. The lenders represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution of the securities and appropriate legends were
affixed to the certificates.
(d) Not Applicable
5
Item 3: Defaults upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
Pursuant to a written consent of a majority of the Company's
shareholders, the Company approved an amendment and restatement of the Company's
Certificate of Incorporation which (a) changed the name of the Company to
SiriCOMM, Inc.; (b) combined the outstanding shares of the Company's Common
Stock into a single class of Common Stock; (c) reverse split the outstanding
shares of the Company's Common Stock one-for-sixty; (d) decreased the par value
of the Company's Common Stock resulting from the reverse split to $.001; (e)
increased the number of shares of Common Stock the Company is authorized to
issue to 50,000,000; and (f) increased the number of shares of Preferred Stock,
$.001 par value, the Company is authorized to issue from 2,000,000 to 5,000,000.
As part of the aforementioned written consent, a majority of the Company's
shareholders approved the adoption of the Company's 2002 Equity Incentive Plan.
Item 5: Other Information
On November 21, 2002, as a direct result of the transactions referred
to in Part I, Item 2 hereof, Henry P. (Hank) Hoffman, David N. Mendez, Kory S.
Dillman and Tom Noland, shareholders and officers and directors of SiriCOMM,
became "control persons" of the Company as that term is defined in the
Securities Act of 1933, as amended. The status of Messrs. Hoffman, Mendez,
Dillman and Noland arise from the issuance of an aggregate of 9,662,562 shares
of the Company's common stock (approximately 99% of the total issued and
outstanding shares) to the shareholders of SiriCOMM. Additionally, with the
consummation of the transactions referred to in Item 2, Mr. Brendon K. Rennert,
the sole officer and director of the Company prior to the transaction described
below, resigned his positions as an officer and director of the Company. Henry
P. (Hank) Hoffman, David N. Mendez, Kory S. Dillman and Tom Noland were elected
directors in his place and stead.
The new Board of Directors then appointed the following officers:
Henry P. (Hank) Hoffman - President and Chief Executive Officer
David N. Mendez - Executive Vice President - Sales
and Marketing
Kory S. Dillman - Executive Vice President - Internet
Business Development
Tom Noland - Executive Vice President -
Administration, General Counsel
and Secretary
6
On November 21, 2002, the Company completed the acquisition of all of
the issued and outstanding shares of SiriCOMM. Pursuant to the transaction, the
Company issued an aggregate of 9,662,562 shares to the sixteen (16) shareholders
of SiriCOMM. An aggregate of 8,179,419 shares were issued to Henry P. (Hank)
Hoffman (5,762,303), David N. Mendez (1,098,331), Kory S. Dillman (1,023,535)
and Tom Noland (295,250), members of the Company's newly elected Board of
Directors.
The above-described transaction was intended to qualify as a tax-free
reorganization, within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended.
In connection with this transaction, the Company agreed to issue shares
of its common stock to Quest Capital Alliance LLC ("Quest") and Mr. Jeff Wasson
("Wasson") upon the conversion of an aggregate of $1,000,000 in convertible
notes issued by SiriCOMM to Quest ($500,000) and Wasson ($500,000). Pursuant to
the terms of their respective convertible notes, Quest was entitled to 8.5% of
the then outstanding shares of the Company and Wasson 7% of the then outstanding
shares of the Company. On January 7, 2003, Quest converted its convertible notes
into an aggregate of 1,054,000 shares of the Company's common stock and Wasson
converted his convertible notes into an aggregate of 868,000 shares of the
Company's common stock.
On December 12, 2002, the Company entered into a consulting agreement
with RJ Diamond Consulting for services related to NASD transactions, NASDAQ
qualification and SEC reporting requirements. The agreement provides for such
services to be provided through May 31, 2003 in exchange for the issuance of
716,000 post reverse split shares of the Company's stock. On December 23, 2002,
as required by the agreement, the Company filed a Form S-8 Registration
Statement to register the shares under the Securities Act of 1933. In December
2002, the Company issued 716,000 shares of common stock. As of February 18,
2003, no services had been performed under this agreement. It is managements'
intent to terminate this agreement in the near future and shares issued pursuant
to the agreement will be returned to the Company.
Item 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
99.1 Certification pursuant to 18 U.S.C. Section 1350
99.2 Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on December 3, 2002 to
report the Change of Control of the Company whereby the
officers and directors of SiriCOMM became "control persons" of
the Company as well as the acquisition of SiriCOMM
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 19, 2003 SIRICOMM, INC.
By: /s/ Henry P. Hoffman
-----------------------------------
Henry P. Hoffman, President and
Chief Executive Officer
8
CERTIFICATION
I, Henry P. Hoffman, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SiriCOMM,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respect the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, is made
known to me by others, particularly during the period in which
this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
February 19, 2003 /s/ Henry P. Hoffman
---------------------------------------
Henry P. Hoffman, President and CEO
9