UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 2005
Commission file number 0-13215
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ROAMING MESSENGER, INC.
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(Exact name of Registrant as Specified in its Charter)
Nevada 30-0050402
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(State of Incorporation) (I.R.S. Employer Identification No.)
50 Castilian Dr. Suite A, Santa Barbara, California 93117
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(Address of principal executive offices) (Zip Code)
(805) 683-7626
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Registrant's telephone number, including area code
Securities registered pursuant to Section 12(B) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
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COMMON STOCK OTC
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 during the proceeding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:
As of May 1, 2005 the number of shares outstanding of the registrant's
only class of common stock was 180,337,092.
Transitional Small Business Disclosure Format (check one):
Yes No X
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Table of Contents
Page
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Balance Sheets as of March 31, 2005 (unaudited)
and June 30, 2004...................................................3
Statements of Operations for the Three Months and
Nine Months ended March 31, 2005 and 2004 (unaudited)...............4
Statements of Cash Flows for the Nine Months ended
March 31, 2005 and 2004 (unaudited).................................5
Notes to Condensed Consolidated Financial Statements
(unaudited).........................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...............................................8
Item 3 Controls and Procedures.............................................12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ..................................................12
Item 2. Changes in Securities...............................................13
Item 3. Defaults upon Senior Securities.....................................13
Item 4. Submission of Matters to a Vote of Security Holders.................13
Item 5. Other Information...................................................14
Item 6. Exhibits and Reports on Form 8-K....................................14
Signatures...................................................................15
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PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ROSE, SNYDER & JACOBS
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A Corporation of Certified Public Accountants
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors
Roaming Messenger, Inc.
Santa Barbara, California
We have reviewed the accompanying consolidated balance sheet of Roaming
Messenger, Inc. and Subsidiary as of March 31, 2005 and the consolidated
statements of operations for the three months and nine months ended March 31,
2005 and 2004, and the consolidated statements of cash flows for the nine months
ended March 31, 2005 and 2004. All information included in these financial
statements is the representation of the management of Roaming Messenger, Inc.
We conducted our reviews in accordance with standards established by the
Public Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with the standards established by the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements in order
for them to be in conformity with accounting principles generally accepted in
the United States of America.
/s/Rose, Snyder & Jacobs
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Rose, Snyder & Jacobs
A Corporation of Certified Public Accountants
Encino, California
May 12, 2005
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15821 Ventura Boulevard, Suite 490, Encino, California 91436
Phone: (818) 461-0600 * Fax: (818) 461-0610
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ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31, June 30,
2005 2004
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CURRENT ASSETS
Cash $ 636,678 $ 1,495,102
Accounts receivable, net of allowance for doubtful
accounts of $30,000 and $20,000 respective1y 72,355 116,407
Prepaid expenses 24,624 9,944
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TOTAL CURRENT ASSETS 833,657 1,621,453
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PROPERTY & EQUIPMENT
Furniture, Fixtures & Equipment 87,811 83,225
Computer Equipment 429,729 278,715
Commerce Server 50,000 50,048
Computer Software 4,998 3,535
Tenant Improvements 42,194 42,194
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614,732 457,717
Less: Accumulated depreciation & amortization (325,193) (261,370)
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NET PROPERTY & EQUIPMENT 289,539 196,347
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OTHER ASSETS
Lease deposit 10,237 7,029
Other assets 4,260 2,503
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TOTAL OTHER ASSETS 14,497 9,532
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TOTAL ASSETS $ 1,137,693 $ 1,827,332
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 91,855 $ 24,892
Accrued liabilities 81,573 42,093
Officer salaries payable 237,981 243,730
Staff salaries payable 49,813 46,499
Note payable 30,000 39,500
Current portion - obligations under capitalized leases 50,661 33,631
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TOTAL CURRENT LIABILITIES 541,883 430,345
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LONG TERM LIABILITIES
Obligations under capitalized leases 100,987 45,059
Deposit - shareholder 19,875 -
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TOTAL LONG TERM LIABILITIES 120,862 45,059
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TOTAL LIABILITIES 662,745 475,404
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SHAREHOLDERS' EQUITY
Capital Stock 178,736 172,400
Additional Paid-in Capital 4,705,026 3,871,738
Accumulated deficit (4,408,814) (2,692,210)
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TOTAL SHAREHOLDERS' EQUITY 474,948 1,351,928
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,137,693 $ 1,827,332
============== =============
Prepared without audit.
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
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ROAMING MESSENGER, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Three Nine Three Nine
months ended months ended months ended months ended
March 31, 2005 March 31, 2005 March 31, 2004 March 31, 2004
---------------- ---------------- ---------------- ----------------
REVENUE $ 295,925 $ 912,857 $ 234,701 $ 688,827
COST OF REVENUE (92,593) (331,181) (25,088) (85,039)
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 203,332 581,676 209,613 603,788
OPERATING EXPENSES
Selling, general and administrative expenses 806,280 1,936,967 443,351 953,219
Research and development 98,399 287,151 109,492 194,892
Depreciation and amortization 22,889 63,361 15,153 41,946
---------------- ---------------- ---------------- ----------------
TOTAL OPERATING EXPENSES 927,568 2,287,479 567,996 1,190,057
---------------- ---------------- ---------------- ----------------
OPERATING LOSS (724,236) (1,705,803) (358,383) (586,269)
---------------- ---------------- ---------------- ----------------
OTHER INCOME (EXPENSES)
Interest income 1,257 7,867 2,194 4,026
Interest expense (7,473) (18,580) (3,433) (12,589)
---------------- ---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSES) (6,216) (10,713) (1,239) (8,563)
---------------- ---------------- ---------------- ----------------
NET LOSS $ (730,452) $ (1,716,516) $ (359,622) $ (594,832)
================ ================ ================ ================
BASIC AND DILUTED LOSS
PER SHARE $ (0.00) $ (0.01) $ (0.00) $ (0.00)
================ ================ ================ ================
WEIGHTED AVERAGE
NUMBER OF SHARES 173,305,432 172,756,708 167,747,115 157,989,963
================ ================ ================ ================
Prepared without audit.
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
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ROAMING MESSENGER, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Nine
months ended months ended
March 31, 2005 March 31, 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,716,516) $ (594,832)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 63,823 41,946
Warrants issued for services 102,026
Common stock issued for services 259,173 40,000
Decrease (increase) in account receivable (55,948) (25,261)
Decrease (increase) in prepaid and other assets (14,680) (40,065)
(Decrease) increase in accounts payable 66,962 (6,245)
(Decrease) increase in officer salaries payable (5,749) (63,635)
(Decrease) increase in staff salaries payable 3,314
(Decrease) increase in other liabilities 34,515 (7,433)
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NET CASH USED IN OPERATING ACTIVITIES (1,263,080) (655,525)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property & equipment (49,548) (25,507)
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NET CASH USED IN INVESTING ACTIVITIES (49,548) (25,507)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 478,338 2,312,047
Deposit for shares of common stock 19,875 -
Payment on note payable (9,500) (4,500)
Payments on capitalized lease obligations (34,509) (20,909)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 454,204 2,286,638
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NET INCREASE (DECREASE) IN CASH (858,424) 1,605,606
CASH AT BEGINNING OF PERIOD 1,495,102 57,408
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CASH AT END OF PERIOD $ 636,678 $ 1,663,014
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Supplementary disclosures:
Interest paid $ 18,580 $ 12,589
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Capitalized leases contracted: $ 107,467 $ 12,125
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Prepared without audit.
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
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ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
1. BASIS OF PRESENTATION AND GOING CONCERN
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal recurring adjustments considered necessary for a fair
presentation have been included. Operating results for the three-month
period ended March 31, 2005 are not necessarily indicative of the results
that may be expected for the year ending June 30, 2005. For further
information refer to the financial statements and footnotes thereto
included in the Company's Form 10K-SB for the year ended June 30, 2004.
The accompanying financial statements have been prepared on a going concern
basis of accounting, which contemplates continuity of operations,
realization of assets and liabilities and commitments in the normal course
of business. The accompanying financial statements do not reflect any
adjustments that might result if the Company is unable to continue as a
going concern. The Company's losses and negative cash flows from operations
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other things, additional cash infusion.
2. STOCK OPTIONS AND WARRANTS
Stock-Based Compensation
------------------------
The Company accounts for employee stock option grants in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations (APB 25), and has adopted the
"disclosure only" alternative described in Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, amended by SFAS No. 148 Accounting for Stock-Based
Compensation-Transition and Disclosure.
SFAS No. 123, Accounting for Stock-Based Compensation, requires pro forma
information regarding net income (loss) using compensation that would have
been incurred if the Company had accounted for its employee stock options
under the fair value method of that statement. Options to purchase
1,200,000 and 2,465,994 shares of Roaming Messenger, Inc. were granted
during the nine months ended March 31, 2005 and 2004, respectively. The
fair value of options granted, which have been estimated at $65,030 and
$60,982, respectively, at the date of grant were determined using the
Black-Scholes Option pricing model with the following assumptions:
2005 2004
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Risk free interest rate 3.36%-4.17% 3.18%-3.83%
Stock volatility factor 0.32-0.70 0.01
Weighted average expected option life 4 years 4 years
Expected dividend yield None None
Prepared without audit.
See report of independent registered public accounting firm
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ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
2. STOCK OPTIONS AND WARRANTS (Continued)
The pro forma net loss and loss per share had the Company accounted for the
options using FAS 123 would have been as follows:
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
March March March March
31, 2005 31, 2005 31, 2004 31, 2004
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Net loss as reported $(730,452) $(1,716,516) $ (359,622) $ (594,832)
Basic and diluted net loss per share as
reported (0.00) (0.01) (0.00) (0.00)
Add: Stock-based employee compensation
expense included in net reported loss, - -
net of related taxes
Deduct: Stock-based employee
compensation expense determined under fair
value based method for all awards,
net of related taxes (4,456) (13,368) (14,402) (22,832)
----------- ----------- ------------- ------------
Pro forma net loss $(734,908) $(1,729,884) $ (374,024) $ (617,664)
=========== =========== ============= ============
Basic and diluted pro forma loss per share $ (0.00) $ (0.01) $ (0.00) $ (0.00)
=========== =========== ============= ============
During the nine month period ended March 31, 2005 (ii) 1,200,000 options
were granted at an exercise price of $0.17 per share, (ii) 6,787,500
previously granted options were cancelled and/or forfeited. As of March 31,
2005, total outstanding unexercised options are 1,934,994.
Warrants
--------
On March 31, 2005, the Company granted warrants to purchase 201,000 shares
of common stocks at $0.10 per share for consulting services. These warrants
expire on March 31, 2007, and were valued at $20,964 using the
Black-Scholes model.
Prepared without audit.
See report of independent registered public accounting firm
-7-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENTS
This Form 10-QSB may contain "forward-looking statements," as that term
is used in federal securities laws, about Roaming Messenger, Inc.'s financial
condition, results of operations and business. These statements include, among
others:
o statements concerning the potential benefits that Roaming Messenger, Inc.
("RMI" or the "Company") may experience from its business activities and
certain transactions it contemplates or has completed; and
o statements of RMI's expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts.
These statements may be made expressly in this Form 10-QSB. You can find
many of these statements by looking for words such as "believes,"
"expects," "anticipates," "estimates," "opines," or similar expressions
used in this Form 10-QSB. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties that may cause RMI's actual
results to be materially different from any future results expressed or
implied by RMI in those statements. The most important facts that could
prevent RMI from achieving its stated goals include, but are not limited
to, the following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability
to raise additional capital or financing to implement its
business plans;
(e) failure to commercialize its technology or to make sales;
(f) changes in demand for the Company's products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside
parties;
(i) insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company
may not be able to successfully develop, manage or market its products and
services, the Company may not be able to attract or retain qualified executives
and technology personnel, the Company may not be able to obtain customers for
its products or services, the Company's products and services may become
obsolete, government regulation may hinder the Company's business, additional
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dilution in outstanding stock ownership may be incurred due to the issuance of
more shares, warrants and stock options, or the exercise of outstanding warrants
and stock options, and other risks inherent in the Company's businesses.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. RMI cautions you not to place undue reliance on the
statements, which speak only as of the date of this Form 10-QSB. The cautionary
statements contained or referred to in this section should be considered in
connection with any subsequent written or oral forward-looking statements that
RMI or persons acting on its behalf may issue. The Company does not undertake
any obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this Form 10-QSB, or to reflect the
occurrence of unanticipated events.
CURRENT OVERVIEW
The Company has developed a proprietary solution called "Roaming
Messenger" for delivering real-time actionable information to wired and wireless
devices for homeland security, emergency response, military and enterprise
applications. Unlike solutions based on existing messaging technology such as
e-mail, text messaging, and voicemail, Roaming Messenger packages time-critical
information into smart messages. These messages automatically roam throughout
the wired and wireless worlds - from mobile devices to desktop PCs to central
servers - tracking down people and obtaining responses in real-time.
The Roaming Messenger product line is a new line from which the Company
has not yet earned significant revenue. The Company has established a number of
channel partners in several vertical markets, some of which are starting to
generate revenue. We are targeting the Public Safety and Emergency Response
industry where advanced real-time wireless messaging is a valuable addition to
existing solutions. Roaming Messenger is primarily distributed via a
Value-Added-Reseller ("VAR") or private labeled model where it is an add-on to
existing solutions such as personnel scheduling, threat detection and response,
and computer aided dispatch. The Company intends to focus on the Public Safety
vertical market over the next few quarters by establishing more channel partners
and VARs.
Management believes that the channel sales strategy is an appropriate
strategy for the Roaming Messenger product line. Roaming Messenger fundamentally
enhances any business application by providing it with mobile messaging
capabilities not available from any other vendor. The Company has committed to
marketing Roaming Messenger as an integration and deployment platform for
mobilizing business applications and using the channel sales model to achieve
exponential revenue possibilities in multiple markets.
Business development with large potential channel partners is
progressing at our anticipated pace. Feedback from the market during the last
quarter has been incorporated into the product development path. With the
current interest in the pipeline, the Company believes revenue is likely to
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increase over the next several quarters when the pipeline results in tangible
orders as anticipated.
In facilitating longer term strategic plans, the Company is engaged in
early developments in the corporate enterprise application sector as well.
Current deployments through channel partners include mobile roaming alerts for
customer service and mobile field service applications. Exploratory
opportunities are in automated process control, remote monitoring, mobile
commerce and end-user messaging applications. All of these are expected to be
significant market opportunities for the Roaming Messenger technology within the
next 2 to 5 years.
The Company currently generates almost all of its revenue from its
wholly owned subsidiary, Warp 9 Inc. ("W9"), and financial statements for the
Company and W9 are consolidated for reporting purposes. Roaming Messenger and W9
are housed in the same office as much of the technology and administrative
infrastructure in the W9 operation is readily available to the Roaming Messenger
operations. W9 currently offers two primary web-based e-commerce software
products, Internet Commerce System and Email Marketing System, to the catalog
and retail industry. Customers of these e-commerce products pay a recurring
monthly fee for their access and use of the system. A majority of the total
revenues are recurring monthly revenue from e-commerce products. Every new
customer is expected to increase the topline for at least several quarters. From
an operational perspective the e-commerce product line is already profitable.
Revenue from the past quarters has been relatively stable. The Company
anticipates the e-commerce operation to function as a growing profit center
without significant capital investment.
The Company intends to continue to fulfill its working capital
requirements through the sale of Common Stock. A majority of the investment
proceeds will be allocated for the sales, marketing and technical support of the
Roaming Messenger product line. The Company believes most of its rapid growth in
revenue and shareholder value, if achieved, will come from the Roaming Messenger
product line as the wireless industry continues to grow and more channel
partners sell solutions with Roaming Messenger integrated in as their mobile
messaging component.
Our overarching growth strategy, with respect to the Roaming Messenger
line, remains a three phase strategy. Phase I is the Homeland Security and
Public Safety markets. Phase II is the enterprise markets for business process
management and communication applications. Phase III is the consumer markets for
applications such as mobile commerce and mobile gaming.
In executing our growth strategy, strategic acquisition of synergistic
companies will be explored. Acquisition synergy is expected to be based on two
primary factors: (i) access to an existing base of customers and (ii)
complementary product or service offerings.
-10-
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2005 COMPARED
TO THE SAME PERIOD IN 2004
Total revenue for the three-month period ending March 31, 2005 was
$295,925 as compared to $234,701 for the three-month period ending March 31,
2004. The increase of $61,224 was primarily due to the reselling of third party
online marketing services.
The cost of revenue for the three-month period ending March 31, 2005
was 31% as compared to 11% for the three-month period ending March 31, 2004.
This increase in cost of revenue was primarily due to the reselling of third
party online marketing services.
Operating expenses increased from $567,996 for the three months ended
March 31, 2004 to $927,568 for the three months ended March 31, 2005. The
increase in operating expenses between the two periods is primarily due
increased in non-cash expenses for sales, marketing and advisory services.
The $927,568 operating expenses includes non-cash charges of (i)
$242,173 of unregistered stock for business development and advisory services,
and (ii) $20,964 expense for the issuance of warrants to business development
contractors in lieu of cash payment for their services. The value of the
warrants was determined using the Black Scholes model.
Operating costs are expected to exceed revenue in the foreseeable
future as the Company continues to increase sales and marketing efforts as well
as increasing staff.
For the three months ended March 31, 2005, the Company's consolidated
net loss was ($730,452) as compared to a consolidated net loss of ($359,622) for
the three months ended March 31, 2004.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash at March 31, 2005 of $636,678 as compared to cash
of $1,495,102 as of June 30, 2004. The Company had net working capital (i.e. the
difference between current assets and current liabilities) of $291,774 at March
31, 2005 as compared to a net working capital of $1,191,108 at June 30, 2004.
Cash flow utilized by operating activities was ($1,263,080) for the nine months
ended March 31, 2005 as compared to cash utilized for operating activities of
($655,525) during the nine months ended March 31, 2004. Cash flow used in
investing activities was ($49,548) for the nine months ended March 31, 2005 as
compared to cash used in investing activities of ($25,507) during the nine
months ended March 31, 2004. Cash flow provided by financing activities was
$454,204 for the nine months ended March 31, 2005 as compared to cash provided
by financing activities of $2,286,638 for the nine months ended March 31, 2004.
On or about March 28, 2005, the Company ("RMI") entered into a
Securities Purchase Agreement, Periodic Investment Agreement, and Registration
Rights Agreement (collectively, the "Agreement") with Wings Fund, Inc. pursuant
to which Wings Fund, Inc. agreed to purchase up to $3,500,000 worth of the
common stock of RMI (the "Common Stock"). At the closing on March 28, 2005 (the
"Closing Date"), Wings Fund, Inc. purchased 5,000,000 shares of Common Stock for
a purchase price of $500,000. The remaining $3,000,000 will be funded by Wings
Fund, Inc. at RMI's discretion in monthly increments of up to $250,000 (the
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"Monthly Purchases") within twelve months after a registration statement for the
Common Stock has been declared effective by the Securities and Exchange
Commission. The price per share of the Common Stock for the Monthly Purchases
will be 60% of the volume weighted average price ("VWAP") of the Common Stock as
quoted by Bloomberg, LP over the twenty (20) trading days prior to the date of
each Monthly Purchase.
The Company will need to obtain additional operating capital to enable
continuing execution of its business plan. The Company anticipates that it will
obtain the additional working capital it requires through the private placement
of Common Stock to domestic accredited investors pursuant to Regulation D of the
Securities Act of 1933, as amended (the "Act"), or to offshore investors
pursuant to Regulation S of the Act. There is no assurance that the Company will
obtain the additional working capital that it needs through the private
placement of Common Stock. The Company has incurred operating deficits since
inception, which are expected to continue until its business model is fully
developed.
Item 3. CONTROLS AND PROCEDURES
The Company's Chairman, Chief Executive Officer, and Chief Financial
Officer has evaluated the effectiveness of the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this
quarterly report and, based on this evaluation, has concluded that the
disclosure controls and procedures are effective.
There have been no changes in the Company's internal control over
financial reporting that occurred during the Company's third fiscal quarter that
has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On June 21, 2004, one of our shareholders filed a lawsuit against us in
California Superior Court in Santa Barbara, California, alleging that we did not
process the shareholder's request for the removal of the restrictive transfer
legend on the shareholder's stock pursuant to Rule 144 of the Securities Act of
1933, as amended. We answered the complaint, asserting that we did not in any
way impair the processing of the shareholder's request for legend removal and
that we did not violate any of our duties. We never objected or interfered with
his request or its processing by the transfer agent, and did not believe that
his case had any merit. In March 2005, the plaintiff dismissed the lawsuit with
prejudice. In consideration for the dismissal, a general release of all claims
by both parties, and as a resolution to a separate dispute regarding a
consulting agreement between the Company and the shareholder, we agreed to (i)
pay the plaintiff $18,000, $3,000 in cash upon settlement, and issuance of an
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unsecured promissory note in the principal amount of $15,000, payable $1,000 per
month until maturity and (ii) issued 424,000 shares of our common stock to the
plaintiff.
Item 2. CHANGES IN SECURITIES
During the quarter ended March 31,2005, the Company issued 1,051,589
shares to 4 individuals as compensation for services rendered to the Company.
The shares were valued at the market price of the Company's common stock at the
time of issuance ranging from $0.20 to $0.30 per share.
On or about March 28, 2005, the Company ("RMI") entered into a Securities
Purchase Agreement, Periodic Investment Agreement, and Registration Rights
Agreement (collectively, the "Agreement") with Wings Fund, Inc. pursuant to
which Wings Fund, Inc. agreed to purchase up to $3,500,000 worth of the common
stock of RMI (the "Common Stock"). At the closing on March 28, 2005 (the
"Closing Date"), Wings Fund, Inc. purchased 5,000,000 shares of Common Stock for
a purchase price of $500,000. The remaining $3,000,000 will be funded by Wings
Fund, Inc. at RMI's discretion in monthly increments of up to $250,000 (the
"Monthly Purchases") within twelve months after a Registration Statement on Form
SB-2 or other appropriate form (the "Registration Statement") covering the
Common Stock purchased and to be purchased by Wings Fund, Inc. pursuant to the
Agreement is declared effective by the Securities and Exchange Commission. The
price per share of the Common Stock for the Monthly Purchases will be 60% of the
volume weighted average price ("VWAP") of the Common Stock as quoted by
Bloomberg, LP over the twenty (20) trading days prior to the date of each
Monthly Purchase. VWAP will be calculated by adding the dollar value of each
transaction in RMI's Common Stock (price times number of shares traded), divided
by the total volume of shares of Common Stock traded for the trading day. There
will be a minimum of twenty (20) trading days between Monthly Purchases. RMI
filed the Registration Statement (the "Filing Date"). RMI will use its best
efforts to cause the Registration Statement to become effective within one
hundred twenty (120) days from the Filing Date (the "Effective Date"). If the
Registration Statement has not been declared effective by the Effective Date,
RMI will be liable to Wings Fund, Inc. for liquidated damages in the amount of
200,000 shares of Common Stock for every thirty (30) day period the Registration
Statement has not been filed or declared effective, as the case may be.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Specimen Certificate for Common Stock (1)
4.2 Non-Qualified Employee Stock Option Plan (2)
10.1 First Agreement and Plan of Reorganization between Latinocare
Management Corporation, a Nevada corporation, and Warp 9,
Inc., a Delaware corporation (3)
10.2 Second Agreement and Plan of Reorganization between Latinocare
Management Corporation, a Nevada corporation, and Warp 9,
Inc., a Delaware corporation (4)
10.3 Exchange Agreement and Representations for Shareholders of
Warp 9, Inc.(3)
31.1 Section 302 Certification
32.1 Section 906 Certification
(1) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 10-KSB filed with the Securities and Exchange
Commission, dated March 31, 2002.
(2) Incorporated by reference from the exhibits included in the Company's
Information Statement filed with the Securities and Exchange
Commission, dated August 1, 2003.
(3) Incorporated by reference from the exhibits included with the Company's
prior Report on Form SC 14F1 filed with the Securities and Exchange
Commission, dated April 8, 2003.
(4) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 8K filed with the Securities and Exchange
Commission, dated May 30, 2003.
(b) The following is a list of Current Reports on Form 8-K filed by the Company
during and subsequent to the quarter for which this report is filed.
Form 8-K Report filed on March 30, 2005.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 14, 2005 ROAMING MESSENGER, INC.
By: \s\ Jonathan Lei
--------------------------------------
Jonathan Lei, Chairman of the Board,
Chief Executive Officer, President
Chief Financial Officer, and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: \s\ Jonathan Lei Dated: May 14, 2005
--------------------------------------
Jonathan Lei, Chairman of the Board,
Chief Executive Officer, President
Chief Financial Officer, and Secretary
By: \s\ Louie Ucciferri Dated: May 14, 2005
---------------------------------------
Louie Ucciferri, Director
By: \s\ Tom Djokovich Dated: May 14, 2005
---------------------------------------
Tom Djokovich, Director
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