FORM 10-KSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: June 30, 2005
For the transition period from July 1, 2004 to June 30, 2005
Commission file number 0-13215
ROAMING MESSENGER, INC.
------------------------------
(Exact name of registrant as specified in its charter)
Nevada 30-0050402
-------------- ------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
50 Castilian Dr. Suite A, Santa Barbara, California 93117
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(805) 683-7626
--------------------
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
COMMON STOCK OTC
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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|
The aggregate market value of voting stock held by non-affiliates of
the registrant was approximately $8,575,058 as of September 30, 2005 (computed
by reference to the last sale price of a share of the registrant's Common Stock
on that date as reported by NASDAQ).
There were 181,917,092 shares outstanding of the registrant's Common
Stock as of September 30, 2005.
TABLE OF CONTENTS
10KSB
PART I................................................................... 1
ITEM 1................................................................... 1
ITEM 2................................................................... 7
ITEM 3................................................................... 7
ITEM 4................................................................... 7
PART II.................................................................. 8
ITEM 5................................................................... 8
ITEM 6................................................................... 9
ITEM 7................................................................... 13
ITEM 8..................................................................... 30
ITEM 8A.................................................................... 30
ITEM 8B.................................................................... 30
PART III................................................................... 30
ITEM 9..................................................................... 30
ITEM 10.................................................................... 33
ITEM 11.................................................................... 36
ITEM 12.................................................................... 37
ITEM 13.................................................................... 37
ITEM 14.................................................................... 38
SIGNATURES................................................................. 39
PART I
ITEM 1. BUSINESS
COMPANY HISTORY
Roaming Messenger, Inc. (the "Company") is a Nevada corporation formerly known
as Latinocare Management Corporation ("LMC"). The Company originally
incorporated in Colorado in July 1983. Effective April 1, 2003, the Company
completed a Plan and Agreement of Reorganization with Warp 9, Inc., a Delaware
corporation ("W9") and effective June 30, 2003, the Company completed a second
Plan and Agreement of Reorganization with W9 (collectively the
"Reorganization"). Pursuant to the Reorganization, LMC acquired all of the
issued and outstanding common stock of W9 in exchange for approximately
131,026,173 newly issued shares of LMC common stock, W9 became a wholly owned
subsidiary of LMC, and the shareholders of W9 became the controlling
shareholders of LMC. Prior to its business combination with W9, LMC had no
tangible assets and insignificant liabilities. Subsequent to the organization
the Company changed its name to Roaming Messenger, Inc.
GENERAL
We are a software company and have developed a proprietary system that enables
software programs and other business applications to connect to wired and
wireless devices, such as cellular phones, computers and personal digital
assistants. This system, known as the Roaming Messenger Platform, serves as a
gateway to the mobile world for a variety of software programs and other
business applications such as those used in emergency response, homeland
security, logistics, healthcare and financial services.
The Roaming Messenger Platform allows applications to send out smart messages,
or "messengers," to mobile devices. Unlike regular e-mail messages, these
software messengers are encrypted, and have the ability to roam automatically
among mobile devices, trying to get the attention of the user, confirm receipt,
deliver interactive content, and transmit real-time responses back to the
sending application. They also have the ability to move independently to
alternative recipients in an organization's chain of command if the originally
intended recipient does not respond in a timely fashion.
-1-
For example, a software messenger may try to locate a person on his or her
computer, and, if there is no response, move to that person's cellular phone,
and subsequently move to that person's personal digital assistants. If still
unanswered, the messenger will travel automatically to the next person with
authority to act on the message, such as the superior of the originally intended
recipient.
We have generated only minimal revenues from the Roaming Messenger Platform. To
date, almost all of our revenues have been generated by Warp 9, Inc., our
wholly-owned subsidiary, that offers web-based e-commerce software products and
services to the catalog and direct marketing industry. However, in the future,
we believe that a large majority of our revenues will come from the sale of our
Roaming Messenger technology.
ROAMING MESSENGER PRODUCT LINE
We offer a range of gateway servers configured to meet the various mobile
communication demands of users and organizations. All the necessary Roaming
Messenger software is pre-installed in the Gateway Appliances for instant
integration and deployment. We also offer a hosted version of the Roaming
Messenger system where customers can pay a monthly fee to access the
capabilities of Roaming Messenger without large upfront fees.
The entire Roaming Messenger software suite is available for licensing to
strategic VAR and OEM partners for creating customized or private labeled
Roaming Messenger systems.
APPLICATIONS FOR ROAMING MESSENGER
Emergency Response.
We believe that Roaming Messenger can be the mobile messaging extension for any
Emergency Response Management system in automating the notification,
authorization, and deployment of an Emergency Response Team. For example, a
response team can be dynamically assembled by sending off a Roaming Messenger to
the mobile devices of Emergency Managers, informing them of the situation and
requesting authorization to deploy a Response Team. After receiving
authorization, Roaming Messenger could then proceed to all selected Tier 1 First
Responders, get their acknowledgment and also deliver the emergency incident
report.
Security.
Roaming Messenger can be integrated with any security monitoring system to
deliver real-time notification with actionable responses. Notifications
regarding security breaches such as fire alarms, HVAC failures, motion sensors
and restricted access can be enhanced by Roaming Messenger. Responsible
personnel are presented with information regarding the breach, as well as
actions such as informing law enforcement, turning on or off mechanisms to
resolve the breach - all from mobile or desktop devices.
Military and Defense.
The battlefield is going hi-tech with the goal of enabling real-time command and
control capabilities from the highest to the lowest tactical echelons. Roaming
Messenger can be used for delivering situational awareness and command and
control information to tactical personnel with wireless mobile devices. Roaming
Messenger can facilitate a seamless flow of battle command information across
the battle space by roaming from person to person.
Healthcare.
Roaming Messenger can be deployed along side existing healthcare management
systems to improve response time and patient satisfaction within a hospital.
-2-
Patient requests or patient monitoring systems can alert appropriate nurses of
problems or escalate accordingly to ensure timely response. When Roaming
Messenger finds the nurse, the nurse accepts that task or delegates it to an
appropriate aide. After the nurse's aide has resolved the patient request,
Roaming Messenger can go back to the nurse, inform the nurse of the resolution
and, if appropriate, log the incident into the hospital's central patient
monitoring system. Communication processes at the doctor's level can also be
automated in the same way.
Real-time Enterprise.
The essence of a Real-time Enterprise is event-driven. When something happens,
the people who care about it need to respond. As the workforce becomes
increasingly mobile, Enterprise information systems need to be able to securely
and efficiently contact them. Roaming Messenger is an ideal mobile extension to
any Enterprise system by providing an intelligent message that can track down
appropriate people and obtain approvals to push along the business process.
Whether it is getting an invoice paid, ordering more parts for the production
line or updating a customer management system, Roaming Messenger can be used as
the mobile messaging component.
Manufacturing.
For manufacturing businesses, reaching the right people at the right time and
monitoring and assessing critical information from production lines and security
systems can significantly reduce costs and improve employee safety. Roaming
Messenger can be integrated to any manufacturing monitoring system to deliver
actionable notifications regarding equipment failures, security breaches,
chemical spills, and other critical events to responsible technicians, as well
as keep plant managers informed of situation progress and resolution.
Mobile Commerce.
Roaming Messenger can also facilitate mobile commerce transactions. For example,
wireless mobile vending solutions today require the physical machine to have a
dedicated Internet connection, which makes mass deployment very difficult and
costly. Using Roaming Messenger, a purchase transaction can be completed with
end-to-end security by allowing the vending machine to piggy-back on the
Internet connection of the user's smart phone or PDA via a local Infrared or
Bluetooth connection. Roaming Messenger can be initiated by the vending machine
to the user's handheld device, request item and payment selections, interact
with an Internet payment server, report inventory and status to a different
server and return back to the vending machine to complete the transaction in
real-time.
MARKETING STRATEGY
We intend to enhance, promote and support the idea that Roaming Messenger is the
most compelling and efficient solution available in the marketplace for mobile
messaging. In order to create a favorable environment for sales, we plan to
undertake advertising and promotion efforts. These efforts will be outsourced
and will require the services of an advertising firm and public relations firm.
We plan to interview various firms and select those most capable of assisting us
with comprehensive advertising and promotion plans. We have recently commenced
building out our marketing department staff to accelerate these efforts. We have
not yet determined the potential costs of our marketing strategy.
We will continue to invest in small test campaigns before committing to large
promotions or marketing campaigns. Our overall marketing strategy is a three
pronged approach.
o First, we will market to channel sales partners in our target
markets. Channel partners are application developers and
system integrators who we believe can benefit from integrating
Roaming Messenger into their products or solutions to fulfill
their mobile messaging requirements.
o Second, we will execute direct marketing campaigns to
potential end users of our technology and make them aware of
the capabilities of our technology.
-3-
o Third, we will execute direct marketing campaigns to multiple
market segments to see what other markets have an immediate
interest for Roaming Messenger technology. Once a new market
is determined to be a hot market, then we shall execute the
First and Second prong of our three-pronged strategy on that
new market.
SALES STRATEGY
We currently have limited number of customers, which generate nominal revenue.We
intend to aggressively promote the Roaming Messenger product in the United
States. We intend to pursue international sales after establishing sales in the
domestic marketplace. Our management has identified the following primary target
market segments for the Roaming Messenger solution:
o Homeland Security
o Emergency Response, Public Health and Safety
o Military and Defense
o Enterprises
o Wireless Carriers
DISTRIBUTION CHANNELS
Roaming Messenger is a mobile messaging component with applications in many
markets. We intend to sell and license the Roaming Messenger products to system
integrators and application developers in markets such as Homeland Security,
Emergency Response, Military and Enterprise Automation. We intend to sell
Roaming Messenger through channel partners and value-added resellers (VARs) who
are established in their respective vertical markets.
SOURCES OF REVENUE
Our management believes that most of our revenues will come from the licensing
of our Roaming Messenger product, customer training and support, and software
upgrades to application developers and system integrators.
We have decided to use a deployment pricing model for the gateway server version
of Roaming Messenger based on the number of users enabled to send and receive
Roaming Messengers. Customers will be asked to pay a one-time license fee for
each user that is activated for Roaming Messenger communication. Customers will
then be invited to subscribe to an ongoing service plan (optional) that would
provide training, support, maintenance and software upgrades.
On the hosted, or subscription model, customers pay a monthly fee to us for
access to a Roaming Messenger system hosted and managed by us. The monthly fee
is assessed based on the number of users in the customer's Roaming Messenger
deployment, and on monthly message volume. The hosted version of Roaming
Messenger is in essence a messaging service infrastructure for applications that
are integrated into it.
PROPRIETARY TECHNOLOGY
Our intellectual property portfolio consists of the following patent
applications, which are pending:
Self Contained Business Transaction Capsules
- --------------------------------------------
A self-contained business transaction capsule, or eCapsule, is a small
electronic capsule that contains all the necessary data and logic to complete a
business transaction. The eCapsule is a "thin" and "lightweight" small
computer-readable file that is device independent. The eCapsule allows a
-4-
business, for example, to encapsulate an individual product or offer into an
intelligent object that is capable of completing entire transactions. The
eCapsule includes data about the product or service being provided, such as the
product price, a textual description, or options of the product or service (a
transaction description). The eCapsule also includes transaction logic or
business logic capable of completing the transaction, such as billing and
shipping information, order routing information, order status information,
shipping status information, and any other transaction rules necessary to
process the transaction. Moreover, the eCapsule is adapted to be broadcasted to,
and stored on, a portable electronic device, such as a mobile wireless-enabled
device, like a cellular telephone, a personal digital assistant (PDA) or a
laptop computer. The application for this patent was filed on January 2, 2001.
Utilizing Mobile Devices as a Communication Proxy for Non-Connected Terminals
- -----------------------------------------------------------------------------
This invention is a method and system in which terminals, appliances and
machines without dedicated Internet connections can complete Internet based
transactions by piggy-backing on the connection of the user's handheld device.
An example of an application of this invention is a vending machine that can
conduct electronic wireless payments without having an internal wireless device
that communicates with a server on the Internet. Existing solutions require the
vending machine to be equipped with an internal cell phone. Using this
invention, the vending machine can communicate with the consumer's handheld
device via Infrared or Bluetooth and simply uses the handheld device as the
conduit to the Internet for remote payment processing. This invention also
covers many other applications including secured doorways, factory floors and
smart data acquisition sensors. The application for this patent was filed on
February 21, 2002.
A Method of and System for Transmitting a Mobile Agent for Instruction Execution
- --------------------------------------------------------------------------------
This invention relates to transmitting a mobile agent for executing programmable
instructions and, more particularly, to transmitting a virtual machine in a
mobile agent to assist instruction execution. This patent application discloses
the actual system implementation of the Roaming Messenger platform using a
mobile agent approach. The application for this patent was filed on December 7,
2004.
A Method of and Instruction Set for Executing Operations on a Device
- --------------------------------------------------------------------
This invention relates to executable instructions and, more particularly, to
instructions that are executable on a device that receives a mobile agent. This
patent application discloses the actual implementation of the Roaming Messenger
device engine and messenger instruction sets and modes of execution. The
application for this patent was filed on December 7, 2004.
COMPETITION
The market for our products and services is becoming increasingly competitive.
The widespread adoption of open standards may make it easier for new market
entrants and existing competitors to introduce products that compete against
ours. We believe that we will compete primarily on the basis of our unique
ability to encapsulate data and logic into smart software messengers that can
travel automatically among user devices, track down users, deliver interactive
content, and bring decisions and data back to business applications in
real-time. Because we are smaller than most of our competitors, we believe that
we can be more attentive to the needs of our customers than some of our
competitors. As a provider of next-generation mobile data technology, we assess
potential competitors based primarily on the functionality of their products and
the range of services offered by them, the security and scalability of their
product architecture, their customer base and geographic focus and their
capitalization and other resources.
Our potential competitors may be found among various industries, including:
Mobile Access Gateway Vendors And Messaging Solution Providers:
companies in this category include Openwave Systems, 724 Solutions,
LogicaCMG, Comverse, Materna, Nokia and Ericsson.
-5-
Alerts Focused Businesses: companies in this area include Xiam, First
Hop, Materna, and Infospace. These companies are competitive in the
time-critical communication application of our technology.
Our competitors have established, and may establish in the future, strategic
relationships among themselves or with third parties to increase their ability
to address the needs of our current and prospective customers. Through these
relationships or independently, current and potential competitors may be able to
adapt more quickly than we can to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products to both our existing customers and our potential customers.
There can be no assurance that we will be able to compete successfully with
existing or new competitors, many of which have greater financial resources,
greater name recognition, more management experience, and longer operating
histories than we have.
OTHER PRODUCTS AND SERVICES
Our wholly owned subsidiary, Warp 9 Inc., offers two primary web-based
e-commerce software products to the catalog and direct marketing industry.
Warp 9 ICS.
The Warp 9 ICS is a proprietary and extensible software system that enables
catalogers and retailers to expand their operation to the Internet with minimal
investment, overhead and risk. A business does not need to invest in new
hardware or software in order to utilize the Warp 9 ICS, because the products
are offered as a fully managed online catalog solution that includes hosting at
our datacenter. As a total solution, Warp 9 offers project management,
development and integration into a customer's existing business processes. We
charge our customers a monthly subscription fee to the Warp 9 ICS product using
an application service provider ("ASP") model. There are various package levels
for the Warp 9 ICS product. Customers pay anywhere from $1,000/month to
$14,000/month depending on the size of their system configuration and monthly
sales volume through ICS.
Warp 9 EMS.
Warp 9 EMS is a web-based e-mail campaign and list management system designed
for high performance and reliability. EMS's sophisticated technology will allow
markets to send targeted e-mail campaigns that help grow, retain and maximize
the lifetime value of their customers. Through content personalization and list
segmentation, campaign efforts will result in higher response rates, higher
conversion rates and improved customer loyalty. Warp 9 EMS enables unprecedented
response rates that are not achievable through traditional forms of direct
marketing. EMS customers typically pay anywhere from $100/month to $2,000/month
depending the size of their e-mail list and monthly volume on outgoing e-mails.
Most ICS customers also purchase EMS to complement their online commerce
strategy.
Professional Services
Most customers of Warp 9 ICS and Warp 9 EMS are not technology companies and
have very little internal expertise in the areas of e-commerce, online marketing
and web technologies. To provide a complete solution to our customers, we also
offering professional services to help our customers maximize the use of our
technology or other online e-commerce technologies and services in general.
Professional services include but not limited to e-commerce web page template
development, custom system configuration, graphics design, integration to
backend business systems and management of 3rd party online service.
Revenue Model
We charge our customers a monthly subscription fee to the Warp 9 ICS and Warp 9
EMS products using an ASP model. Over half of Warp 9's revenues are from the ICS
product which continues to be a growing product for Warp 9. EMS is a smaller
revenue-generating product and usually sold to customers already on the ICS
product.
-6-
GOVERNMENT REGULATION
We are subject to various federal, state, and local laws affecting medical
e-commerce and communication businesses. The Federal Trade Commission and
equivalent state agencies regulate advertising and representations made by
businesses in the sale of their products, which apply to us. We are also subject
to government laws and regulations governing health, safety, working conditions,
employee relations, wrongful termination, wages, taxes and other matters
applicable to businesses in general.
EMPLOYEES
As of June 30, 2005, we had eighteen full time equivalent employees, seven of
whom are employed in administrative, marketing, and sales positions, and eleven
technical employees employed in research, development, and technical product
maintenance positions.
We use independent contractors, who are available to us on a half or near full
time basis, counted as full time equivalents, for sales, marketing and business
development efforts. It is our intention during the next 12 months to increase
our workforce to 30 employees, with five of the new positions being in the
administrative, marketing, and sales areas and the remaining seven of the new
positions being in research, development, and production positions.
All of our employees have executed agreements that impose nondisclosure
obligations on the employee and assign to us (to the extent permitted by
California law) all copyrights and other inventions created by the employee
during his employment with us. Additionally, we have a trade secret protection
policy in place that management believes to be adequate to protect our
intellectual property and trade secrets.
SEASONALITY
We do not anticipate that our business will be substantially affected by
seasonality.
TRADEMARKS
We have registered trademarks for Roaming Messenger(R), Warp 9(R), and
eCapsule(R).
ITEM 2. PROPERTIES
The Company currently leases approximately 8,605 square feet of office space at
50 Castillian Dr., Suite A, Santa Barbara, California 93117 for approximately
$7,750 per month, triple net, pursuant to a six year lease agreement with rent
commencing on October 1, 2004.
The Company has vacated its old office space of approximately 3,650 square feet
located at 6144 Calle Real, Suite 200 Santa Barbara, California 93117 which it
has subleased for the remainder of the lease until March 2007.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. It is the opinion of management, based on advice of
legal counsel, that such litigation and claims will be resolved without a
material effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Effective September 22, 2004, the Company amended its Articles of Incorporation
(the "Amendment") to increase the authorized number of shares of common stock
from 200,000,000 to 495,000,000 and to establish the number of shares of
Preferred Stock at 5,000,000. The Board of Directors of the Company unanimously
approved the adoption of the Amendment. The holders of 99,691,525 shares or
-7-
approximately 58% of the total issued and outstanding shares of the Company
voted to ratify the adoption of the Amendment. No shares of the Company voted
against ratifying the adoption of the Amendment. The remaining outstanding
shares abstained.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the OTC Bulletin Board Market under the
symbol "RMSG." The range of high and low bid quotations for each fiscal quarter
within the last two fiscal years was as follows:
Year Ended June 30, 2005 High Low
---- ---
First Quarter ended September 30, 2004 $0.68 $0.04
Second Quarter ended December 31, 2004 $0.75 $0.25
Third Quarter ended March 31, 2005 $0.31 $0.19
Fourth Quarter ended June 30, 2005 $0.26 $0.11
Year Ended June 30, 2004 High Low
---- ---
First Quarter ended September 30, 2003 $0.52 $0.27
Second Quarter ended December 31, 2003 $0.45 $0.25
Third Quarter ended March 31, 2004 $3.60 $0.27
Fourth Quarter ended June 30, 2004 $1.90 $0.45
- ------------------
The above quotations reflect inter-dealer prices, without retail markup,
mark-down, or commission and may not necessarily represent actual transactions.
As of June 30, 2005, there were approximately 550 record holders of the
Company's common stock, not including shares held in "street name" in brokerage
accounts which is unknown. As of June 30 2005, there were approximately
180,807,091 shares of common stock outstanding on record.
The Company has not declared or paid any cash dividends on its common stock and
does not anticipate paying dividends for the foreseeable future.
Effective July 10, 2003, the Company adopted the Roaming Messenger, Inc. 2003
Stock Option Plan for Directors, Officers, Employees and Key Consultants (the
"Plan") authorizing the issuance of up to 25,000,000 shares of the Company's
common stock pursuant to the grant and exercise of up to 25,000,000 stock
options. The Plan has been approved by the holders of the outstanding shares of
the Company. The following table sets forth certain information regarding the
Plan as of June 30, 2005:
Number of securities
Number of securities to be Weighted-average exercise remaining available for
issued upon exercise of price of outstanding stock future issuance under equity
outstanding stock options options compensation plans
-------------------------- -------------------------- ----------------------------
Equity compensation plans 4,234,994 $0.11 22,225,000
approved by security
holders
On March 28, 2005, we entered into a Periodic Equity Investment Agreement with
Wings Fund, Inc. Pursuant to the Periodic Equity Investment Agreement, we may,
on a monthly basis commencing after the effective date of the registration
statement filed by us and declared effective by the Securities and Exchange
-8-
Commission on August 11, 2005 in connection with that agreement, periodically
sell to Wings Fund, Inc. shares of common stock for a total purchase price of up
to $3,000,000. Such monthly sales are limited to a maximum aggregate of
$250,000. Further, upon execution of the Periodic Equity Investment Agreement,
we issued to Wings Fund, Inc. an aggregate of 5,000,000 shares of our common
stock at a price of $0.10 per share for gross proceeds of $500,000.
For the fiscal year ended June 30, 2005, employees of the Company exercised a
total of 275,000 stock options at an exercise price of $0.08 per share. The
Company received gross proceeds of $22,000 for the employee stock option
exercises.
For the fiscal year ended June 30, 2005, the Company issued 1,682,477 shares of
unregistered common stock, at a weighted average price of $0.20 per share, to
various consultants for business development and financial advisory services in
lieu of cash.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
CAUTIONARY STATEMENTS
This Form 10-KSB contains financial projections and other "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: statements concerning the potential for
revenues and expenses and other matters that are not historical facts. These
statements may be made expressly in this Form 10-KSB. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates," or similar expressions used in this Form 10-KSB. These
forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause the Company's actual results to be materially
different from any future results expressed or implied by the Company in those
statements. The most important facts that could prevent the Company 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 and barriers to raising the additional
capital or to obtaining the financing needed to implement its
business plans;
(e) inadequate capital to continue business;
(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.
Because the statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. The Company cautions you not to place undue reliance on the
statements, which speak only as of the date of this Form 10-KSB. 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
the Company 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-KSB or to
reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our condensed
consolidated financial statements and notes to those statements. In addition to
historical information, the following discussion and other parts of this
quarterly report contain forward-looking information that involves risks and
uncertainties.
-9-
OVERVIEW
We are a software company and have developed a proprietary system that enables
software programs and other business applications to connect to wired and
wireless devices, such as cellular phones, computers and personal digital
assistants. This system, known as the Roaming Messenger Platform, serves as a
gateway to the mobile world for a variety of software programs and other
business applications such as those used in emergency response, homeland
security, logistics, healthcare and financial services.
The Roaming Messenger Platform allows applications to send out smart messages,
or "messengers," to mobile devices. Unlike regular e-mail messages, these
software messengers are encrypted, and have the ability to roam automatically
among mobile devices, trying to get the attention of the user, confirm receipt,
deliver interactive content, and transmit real-time responses back to the
sending application. They also have the ability to move independently to
alternative recipients in an organization's chain of command if the originally
intended recipient does not respond in a timely fashion.
For example, a messenger may try to locate a person on his or her computer, and
if there is no response, move to that person's cellular phone, and subsequently
move to that person's personal digital assistants. If still unanswered, the
messenger will travel automatically to the next person with authority to act on
the message, such as a superior of the originally intended recipient.
We have rolled out an improved version of the Roaming Messenger Platform which
is being offered as a standalone server product within an organization or a
hosted service on the Internet. It can be integrated into existing or new
business systems and is distributed primarily via a value-added-reseller ("VAR")
or private labeled model where it is an add-on to existing solutions.
We have forged a number of partnerships with small to medium sized companies in
the Homeland Security and Public Safety sector. While we have validated the need
for the unique capabilities of Roaming Messenger in these markets, significant
revenue has yet to be derived due to the lengthy sales cycles associated with
channel sales. Also, it took much longer than anticipated for federal funds to
flow into the information technology procurement departments of government and
public safety agencies to which most of our channel partners sell.
The need for better messaging and communication in emergency management and
business continuity systems is becoming increasingly apparent as recent
terrorist acts and natural disasters put these systems to the test. Potential
channel partners that expressed minimal interest before are now contacting us
and having very meaningful discussions with us regarding issues of integrating
Roaming Messenger into their product.
We have generated only minimal revenues from the Roaming Messenger Platform. To
date, almost all of our revenues have been generated by Warp 9, Inc., our
wholly-owned subsidiary, that offers web-based e-commerce software products and
services to the catalog and direct marketing industry. However, in the future,
we believe that a large majority of our revenues will come from the sale of our
Roaming Messenger technology.
As of the date of this report we are actively work with channel partners in the
homeland security and public safety sector. We have also begun preliminary
business development with partners in the healthcare and enterprise mobility
markets. While Roaming Messenger is a horizontal platform with application in
many markets, our primary sales and marketing strategy continues to be
vertically focused.
Our growth strategy consists of three phases:
o During Phase I we will focus our marketing efforts on the Homeland Security
and Public Safety markets
o During Phase II we will focus on the enterprise markets for business
process management and communication applications.
o During Phase III we will focus on the consumer markets for application such
as mobile commerce and mobile gaming.
In executing our growth strategy, strategic acquisition of synergistic companies
may be explored. When decide on potential acquisition candidates, we will
consider whether the candidate offers (i) access to customers and (ii)
complementary products or services.
-10-
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of
operations, including the discussion on liquidity and capital resources, are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an ongoing basis,
management re-evaluates its estimates and judgments, particularly those related
to the determination of the estimated recoverable amounts of trade accounts
receivable, impairment of long-lived assets, revenue recognition and deferred
tax assets. We believe the following critical accounting policies require more
significant judgment and estimates used in the preparation of the financial
statements.
We maintain an allowance for doubtful accounts for estimated losses that may
arise if any of our customers are unable to make required payments. Management
specifically analyzes the age of customer balances, historical bad debt
experience, customer credit-worthiness, and changes in customer payment terms
when making estimates of the uncollectability of our trade accounts receivable
balances. If we determine that the financial conditions of any of our customers
deteriorated, whether due to customer specific or general economic issues,
increases in the allowance may be made. Accounts receivable are written off when
all collection attempts have failed.
We follow the provisions of Staff Accounting Bulletin ("SAB") 101, "Revenue
Recognition in Financial Statements" for revenue recognition and SAB 104. Under
Staff Accounting Bulletin 101, four conditions must be met before revenue can be
recognized: (i) there is persuasive evidence that an arrangement exists, (ii)
delivery has occurred or service has been rendered, (iii) the price is fixed or
determinable and (iv) collection is reasonably assured.
Income taxes are accounted for under the asset and liability method. Under this
method, to the extent that we believe that the deferred tax asset is not likely
to be recovered, a valuation allowance is provided. In making this
determination, we consider estimated future taxable income and taxable timing
differences expected in the future. Actual results may differ from those
estimates.
RESULTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
Total revenue for the twelve month period ended June 30, 2005 increased by
$230,440 to $1,184,212 from $953,772 in the prior year. Revenue was derived
principally from our Warp 9 Inc. subsidiary. The increase in revenue was the
result of an increase in Warp 9 Inc.'s client base and reselling of third party
online marketing service.
The cost of revenue, in terms of percentage of revenue, for the twelve month
period ending June 30, 2005 was 34% as compared to 14% for the twelve-month
period ending June 30, 2004. This increase in cost of revenue was primarily due
to the reselling of third party online marketing services.
Total costs and expenses for the twelve month period ended June 30, 2005
increased by $1,397,472 from $1,849,398 in 2004 to $3,246,870 in 2005. They
consisted primarily of selling, general and administrative expenses.
Selling, general and administrative expenses increased by $1,261,784 during the
twelve months ended June 30, 2005 to $2,735,890 from $1,474,106 in the prior
year. The increase in selling, general and administrative expenses were the
primarily caused by the increased of (i) $454,688 sales and marketing salaries
and expenses, (ii) $84,567 in legal expenses, (ii) $90,868 in rent, (iii)
$30,398 in corporate and health insurance premiums (iv) $59,850 in office and
travel expenses, and (v) $459,482 in non-cash expenses. As a result of vacating
its previous office space in October 2004, the Company recognized a one time
charge of $122,852 for leasehold improvements and remaining rent expenses under
the lease agreement.
-11-
Non-cash expenses for the year ended June 30, 2005 totaled $459,482 in warrant
and stock compensation in lieu of payment to our consultants and independent
contractors for business development and financial advisory services. The value
of the warrants was determined using the Black Scholes model.
Expense related to depreciation were $113,775 for the twelve months ended June
30, 2005 as compared to $60,231 for the prior year, and interest expense was
$26,435 for the twelve months ended June 30, 2005 as compared to $15,031 in the
prior year.
Research and development expenses increased by $82,144 during the twelve months
ended June 30, 2005 to $397,205 from 315,061 in the prior year due to additional
staff.
For the twelve months ended June 30, 2005, our consolidated net loss was
$2,479,100 as compared to a consolidated net loss of $1,035,945 for the twelve
months ended June 30, 2004.
LIQUIDITY AND CAPITAL RESOURCES
We had cash at June 30, 2005 of $237,529 as compared to cash of $1,495,102 as of
June 30, 2004. We had net working deficit (i.e. the difference between current
assets and current liabilities) of ($308,364) at June 30, 2005 as compared to a
net working capital of $1,191,108 at June 30, 2004. Cash flow utilized by
operating activities was ($1,677,199) for the year ended June 30, 2005 as
compared to cash utilized for operating activities of ($948,193) for the year
ended June 30, 2004. Cash flow used in investing activities was ($151,603) for
the year ended June 30, 2005 as compared to cash used in investing activities of
($64,684) during the year ended June 30, 2004. Cash flow provided by financing
activities was $571,229 for the year ended June 30, 2005 as compared to cash
provided by financing activities of $2,450,571 during the year ended June 30,
2004. We have incurred operating deficits since inception, which are expected to
continue until our business model is fully developed.
On March 28, 2005, we entered into a Periodic Equity Investment Agreement with
Wings Fund, Inc. Pursuant to the Periodic Equity Investment Agreement, we may,
on a monthly basis commencing after the effective date of the registration
statement in connection with that agreement, periodically sell to Wings Fund,
Inc. shares of common stock for a total purchase price of up to $3,000,000. Such
monthly sales are limited to a maximum aggregate of $250,000. The registration
statement was filed on May 3, 2005 and declared effective by the Securities and
Exchange Commission on August 11, 2005. We may now sell up to $250,000 per month
worth of registered common stock to Wings Fund Inc. at our discretion until
August 11, 2006.
We believe that the funds to be received from Wings will be sufficient to fund
and expand our business over the next 24 months. The issuance and sale of shares
pursuant to the Periodic Equity Investment Agreement is likely to result in
substantial dilution to the interests of our other stockholders. The number of
shares issuable pursuant to the Periodic Equity Investment Agreement will
increase if the market price of our stock decreases. There is no upper limit on
the number of shares that we may be required to issue under the agreement with
Wings. This will have the effect of further diluting the proportionate equity
interest and voting power of holders of our common stock. Our agreement with
Wings contains a provision that limits its interest in our common stock to 4.99%
of the outstanding shares. Although Wings may waive this provision, there can be
no assurance that it will do so. Therefore, we may never receive the entire
amount of capital contemplated under the agreement.
If for some reason we are not able to draw down the entire $3,000,000, we may
have to obtain additional operating capital from other sources to enable us to
execute our business plan. We anticipate that we will obtain any additional
required working capital 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 we will obtain the additional working
capital that we need through the private placement of common stock. In addition,
such financing may not be available in sufficient amounts or on terms acceptable
to us.
-12-
ITEM 7. FINANCIAL STATEMENTS OF ROAMING MESSENGER, INC.
ROAMING MESSENGER, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
CONTENTS
PAGE
Report of Independent Registered Public Accounting Firm .............. 14
Consolidated Balance Sheets............................................ 15
Consolidated Statements of Operations................................. 16
Consolidated Statements of Changes in Shareholders Equity............. 17
Consolidated Statements of Cash Flows ................................ 18
Notes to Consolidated Financial Statements ............................. 19-29
-13-
ROSE, SNYDER & JACOBS
A CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Roaming Messenger, Inc.
We have audited the accompanying consolidated balance sheets of Roaming
Messenger, Inc. (a Nevada Corporation) and Subsidiary (collectively referred to
as the "Company") as of June 30, 2005 and 2004 and the related consolidated
statements of operations, shareholders' deficit and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards established by the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Roaming Messenger, Inc. and Subsidiary as of June 30, 2005 and 2004, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in note
2 to the consolidated financial statements, the Company has suffered recurring
losses and negative cash flows from operations that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/Rose, Snyder & Jacobs
- -------------------------
Rose, Snyder & Jacobs
A Corporation of Certified Public Accountants
Encino, California
September 16, 2005
15821 Ventura Boulevard, Suite 490, Encino, California 91436
Phone: (818) 461-0600 * Fax: (818) 461-0610
-14-
ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005 AND 2004
ASSETS
June 30, June 30,
2005 2004
----------- -----------
CURRENT ASSETS
Cash $ 237,529 $ 1,495,102
Accounts receivable net of allowance for doubtful account of $7,380 and $20,000 178,729 116,407
Prepaid expenses 19,347 9,944
----------- -----------
TOTAL CURRENT ASSETS 435,605 1,621,453
----------- -----------
PROPERTY & EQUIPMENT
Furniture, Fixtures & Equipment 88,341 83,225
Computer Equipment 435,292 278,715
Commerce Server 50,000 50,048
Computer Software 7,960 3,535
Leasehold Improvements - 42,194
----------- -----------
581,593 457,717
Less: Accumulated depreciation & amortization (331,053) (261,370)
----------- -----------
NET PROPERTY & EQUIPMENT 250,540 196,347
----------- -----------
OTHER ASSETS
Lease deposit 10,237 7,029
Restricted Cash (see note 8) 93,000 -
Other assets 3,935 2,503
----------- -----------
TOTAL OTHER ASSETS 107,172 9,532
----------- -----------
TOTAL ASSETS $ 793,317 $ 1,827,332
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 121,645 $ 24,892
Accrued liabilities (note 8) 227,420 42,093
Deferred income (note 2) 26,667 -
Officer salary payable 237,981 243,730
Staff salaries payable 50,410 46,499
Note payable (note 4) 30,000 39,500
Current portion - obligations under capitalized leases (note 3) 49,846 33,631
----------- -----------
TOTAL CURRENT LIABILITIES 743,969 430,345
----------- -----------
LONG TERM LIABILITIES
Obligations under capitalized leases (note 3) 89,785 45,059
----------- -----------
TOTAL LONG TERM LIABILITIES 89,785 45,059
----------- -----------
TOTAL LIABILITIES 833,754 475,404
----------- -----------
SHAREHOLDERS' EQUITY (DEFICIT)
Capital Stock 180,807 172,400
Additional Paid-in Capital 4,950,066 3,871,738
Accumulated deficit (5,171,310) (2,692,210)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (40,437) 1,351,928
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 793,317 $ 1,827,332
=========== ===========
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
-15-
ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
June 30, 2005 June 30, 2004
------------- -------------
REVENUE $ 1,184,212 $ 953,772
COST OF REVENUE 399,265 132,404
------------- -------------
GROSS PROFIT 784,947 821,368
OPERATING EXPENSES
Selling, general and administrative expenses 2,735,890 1,474,106
Research and development 397,205 315,061
Depreciation and amortization 113,775 60,231
------------- -------------
TOTAL OPERATING EXPENSES 3,246,870 1,849,398
------------- -------------
OPERATING LOSS (2,461,923) (1,028,030)
------------- -------------
OTHER INCOME (EXPENSES)
Interest income 9,258 7,116
Interest expense (26,435) (15,031)
------------- -------------
TOTAL OTHER INCOME (EXPENSES) (17,177) (7,915)
------------- -------------
NET LOSS $ (2,479,100) $ (1,035,945)
============= =============
BASIC AND DILUTED LOSS
PER SHARE $ (0.01) $ (0.01)
============= =============
WEIGHTED AVERAGE
NUMBER OF SHARES 174,247,486 161,432,015
============= =============
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
-16-
ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2005 AND 2004
Additional
Common Paid-in Accumulated
Shares Stock Capital Deficit Total
------------ ----------- ------------ ----------- -----------
Balance, June 30, 2003 147,912,035 $ 147,912 $ 1,306,502 $(1,656,265) $ (201,851)
Issuance of common stock, note 6 24,487,579 24,488 2,515,236 - 2,539,724
Issuance of warrants, note 7 - - 50,000 - 50,000
Net loss - - - (1,035,945) (1,035,945)
------------ ----------- ------------ ----------- -----------
Balance, June 30, 2004 172,399,614 $ 172,400 $ 3,871,738 $(2,692,210) $1,351,928
Issuance of common stock, note 6 8,407,477 8,407 949,308 - 957,716
Issuance of warrants, note 7 129,020 129,020
Net loss - - - (2,479,100) (2,479,100)
------------ ----------- ------------ ----------- -----------
Balance, June 30, 2005 180,807,091 $ 180,807 $ 4,950,066 $(5,171,310) $ (40,437)
============ =========== ============ =========== ===========
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
-17-
ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2005 AND 2004
June 30, 2005 June 30, 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,479,100) $ (1,035,945)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 111,877 60,231
Warrants issued for services 129,020 50,000
Common stock issued for services 330,462 82,917
Decrease (increase) in account receivable (62,322) (39,509)
Decrease (increase) in prepaid and other assets (14,043) (5,602)
(Decrease) increase in accounts payable 96,752 (20,506)
(Decrease) increase in officer salaries payable (5,749) (63,636)
(Decrease) increase in staff salaries payable 3,911 23,052
(Decrease) Increase in deferred income 26,667 -
(Decrease) increase in other liabilities 185,327 805
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (1,677,198) (948,193)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted Cash (93,000)
Purchase of property & equipment (58,603) (64,684)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (151,603) (64,684)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 627,254 2,485,324
Payment on note payable (9,500) (10,500)
Payments on capitalized lease obligations (46,526) (24,253)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 571,228 2,450,571
------------- -------------
NET INCREASE (DECREASE) IN CASH (1,257,573) 1,437,694
CASH AT BEGINNING OF PERIOD 1,495,102 57,408
------------- -------------
CASH AT END OF PERIOD $ 237,529 $ 1,495,102
============= =============
Supplementary disclosures:
Interest paid $ 26,435 $ 15,031
============= =============
Capitalized leases contracted: $ 107,467 $ 70,250
============= =============
See report of independent registered public accounting firm and
notes to condensed consolidated financial statements.
-18-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
1. ORGANIZATION
Roaming Messenger, Inc., formerly known as Latinocare Management
Corporation ("LMC), originally known as JNS Marketing, Inc. was
incorporated in Colorado in 1983, and then reincorporated in Nevada.
On April 1, 2003, LMC a publicly traded company, entered into a Plan and
Agreement of Reorganization which resulted in Warp 9, Inc. ("Warp 9")
becoming a wholly-owned subsidiary of LMC. In connection with the
transaction, all officers and directors of LMC resigned and were replaced
by the management team and directors of Warp 9. Subsequently, LMC was
renamed to Roaming Messenger Inc. by the new board of directors. Although
from a legal perspective, Roaming Messenger, Inc. acquired Warp 9, Inc.,
the transaction is viewed as a recapitalization of Warp 9, Inc.,
accompanied by an issuance of stock by Warp 9, Inc. to the shareholders of
Roaming Messenger, Inc. This is because Roaming Messenger, Inc. did not
have operations immediately prior to the transaction, and following the
transaction, Warp 9, Inc. was the operating company.
Warp 9, Inc. was incorporated in the state of Delaware, under the name of
eCommerceland, on August 27, 1999. The Company, based in Goleta,
California, began operations October 1, 1999. Prior to October 1, 1999, the
Company was operated as WARP 9 Technologies, LLC ("LLC"), a California
limited liability company. LLC was merged with and into eCommerceland
effective at its close of business, September 30, 1999, and on December 21,
2000 changed its name to Warp 9, Inc. For accounting and reporting
purposes, the "merger" was considered a continuation of the same business,
under a different type of entity. The operations and ownership of Warp 9,
Inc. were substantially the same as LLC. The Company's primary source of
income is service of their Warp 9 contracts, which relates to Internet data
service and fully hosted web based software products.
Roaming Messenger, Inc. and Warp 9, Inc. (collectively referred to as the
"Company")'s strategy is to provide a proprietary solution for real-time
communication over wired and wireless devices. The Company's flagship
product, Roaming Messenger, is a system for delivering real-time
information 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
getting responses in real-time.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GOING CONCERN
The accompanying consolidated 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. The Company
has funded its operation through the sale of its common stock through
private offerings. The Company will be selling securities through private
placements and, as discussed in note 11, through its Periodic Equity
Investment Agreement . Management believes, but there is no assurance, that
the Company will obtain the additional working capital that it needs
through the sale of its Common Stock. The Company has incurred operating
deficits since inception, which are expected to continue until its business
model is fully developed.
See report of independent registered public accounting firm
-19-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ACCOUNTS RECEIVABLE
The Company extends credit to its customers, who are located primarily in
California. Accounts receivable are customer obligations due under normal
trade terms. The Company performs continuing credit evaluations of its
customers' financial condition. Management reviews accounts receivable on a
regular basis, based on contracted terms and how recently payments have
been received to determine if any such amounts will potentially be
uncollected. The Company includes any balances that are determined to be
uncollectible in its allowance for doubtful accounts. After all attempts to
collect a receivable have failed, the receivable is written off. Based on
the information available, management believes the Company's accounts
receivable are all collectible.
REVENUE RECOGNITION
The Company recognizes income when the service is provided or when product
is delivered. We present revenue, net of customer incentives. Most of the
income is generated from monthly fees from clients who subscribe to the
Company's fully hosted web products on terms averaging six months to one
year. When the term ends, clients normally go on a month-to-month basis or
extend the contract for another six months to one year.
We provide online marketing services that we purchase from third parties.
The gross revenue presented in our statement of operations is in accordance
with EITF No. 99-19.
We also offer professional services such as development services. The fees
for development services constitute a separate unit of accounting in
accordance with EITF No. 00-21, and are recognized as the work is
performed.
Upfront fee for development services or other customer services are
deferred until certain implementation or contractual milestones have been
achieved. Deferred income for the fiscal year ended, June 30, 2005, was
$26,667.
For the fiscal year ended, June 30, 2005, monthly fee from web products and
associated service fees account for 55% of the Company's total revenues,
professional services account for 23% and the remaining 22% of total
revenues are from resale of third party products and services.
For the fiscal year ended, June 30, 2004, monthly fee from web products and
associated service fees account for 75% of the Company's total revenues,
professional services account for 20% and the remaining 5% of total
revenues are from resale of third party products and services.
RETURNS POLICY
On all service offerings such as web based e-commerce products, or hosted
Roaming Messenger service, there are no returns. Monthly fees are assessed
and revenue is recognized at the end of every month, after service has been
provided. Some higher paying customers may have service level agreements
where we guarantee system uptime such as 99% of the time per month. If we
fall below the agreed upon level of uptime, we shall credit one day of
service fee for each hour our system is down up to a maximum of one monthly
fee. This guarantee only covers downtime as a result of failure in the
Company's hardware, software or gross negligence. Historical, the Company
has not had to issue any credits for such returns.
COST OF REVENUE
Cost of revenue includes the direct costs of operating the Company's
network, including telecommunications charges and internet marketing
charges.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Total research and
development costs were $397,205 and $315,061 for the years ended June 30,
2005 and 2004, respectively.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
See report of independent registered public accounting firm
-20-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the accompanying financial
statements. Significant estimates made in preparing these financial
statements include the allowance for doubtful accounts, the estimate of
useful lives of property and equipment, the deferred tax valuation
allowance, and the fair value of stock options and warrants. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried
at cost, which approximates their fair value, due to the relatively short
maturity of these instruments. As of June 30, 2005 and 2004, the Company's
capital lease obligations and notes payable have stated borrowing rates
that are consistent with those currently available to the Company and,
accordingly, the Company believes the carrying value of these debt
instruments approximates their fair value.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, and are depreciated or amortized
using the straight-line method over the following estimated useful lives:
Furniture, fixtures & equipment 7 Years
Computer equipment 5 Years
Commerce server 5 Years
Computer software 3-5 Years
Leasehold improvements Length of the lease
Property and equipment assets with an original cost of $199,418 and
$115,084 at June 30, 2005 and 2004, respectively were leased under
capitalized leases. Amortization of assets under capitalized leases is
included in depreciation and amortization expense. During the years ended
June 30, 2005 and 2004, additions to fixed assets through capitalized
leases totaled $107,467 and $70,250, respectively.
During the year ended June 30, 2005, the Company vacated its premises on
6144 Calle Real in Santa Barbara. The Company recorded an expense for
$23,485, representing the cost of the abandoned related leasehold
improvements,
CONCENTRATIONS OF BUSINESS AND CREDIT RISK
The Company operates in a single industry segment. The Company markets its
services to companies and individuals in many industries and geographic
locations. The Company's operations are subject to rapid technological
advancement and intense competition in the telecommunications industry.
Accounts receivable represent financial instruments with potential credit
risk. The Company typically offers its customers credit terms. The Company
makes periodic evaluations of the credit worthiness of its enterprise
customers and other than obtaining deposits pursuant to its policies, it
generally does not require collateral. In the event of nonpayment, the
Company has the ability to terminate services.
ADVERTISING COSTS
The Company expenses the cost of advertising and promotional materials when
incurred. Total advertising costs were $53,147 and $20,156 for the years
ended June 30, 2005 and 2004, respectively.
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.
See report of independent registered public accounting firm
-21-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
The pro forma net loss and loss per share had the Company accounted for the
options using FAS 123 would have been as follows:
2005 2004
--------------------- -------------------
Net loss as reported $ (2,479,100) $ (1,035,945)
Basic and diluted net loss per share (0.01) (0.01)
as reported
Add: Stock-based employee compensation - 50,000
expense included in net reported loss
Deduct: Stock based employee (13,839) (134,000)
compensation expense determined under fair
value based method for all awards
--------------------- -------------------
Pro forma net loss $ (2,492,939) $ (1,119,945)
===================== ===================
Basic and diluted pro forma loss per share $ (0.01) $ (0.01)
===================== ===================
NET LOSS PER SHARE
Net loss per common share is computed using the weighted average number of
common shares outstanding during the periods presented. Options to purchase
shares of the Company's stock under its stock option plan and warrants may
have a dilutive effect on the Company's earnings per share in the future
but are not included in the calculation for 2005 and 2004 because they have
an antidilutive effect in these periods.
INCOME TAXES
The Company uses the liability method of accounting for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to financial statements carrying amounts of
existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. The measurement of deferred
tax assets and liabilities is based on provisions of applicable tax law.
The measurement of deferred tax assets is reduced, if necessary, by a
valuation allowance based on the amount of tax benefits that, based on
available evidence, is not expected to be realized.
NEW ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Santdards Board ("FASB") issued
revised Statement 123R, "Share-Based Payment," to be effective for annual
periods beginning after December 15, 2005 for Roaming Messenger, Inc.
Statement 123R requires all share-based payments to employees, including
grants of employee stock options, to be recognized as compensation expense
in the income statement. The cost is recognized over the requisite service
period based on fair values measured on grant dates. The new standard may
be adopted using either the modified prospective transition method or the
modified retrospective method. We are currently evaluating our share-based
employee compensation programs, the potential impact of this statement on
our consolidated financial position and results of operations, and the
alternative adoption methods.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4." SFAS No. 151 seeks to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs and wasted material (spoilage) in the determination of inventory
carrying costs. The statement requires such costs to be treated as a
current period expense. This statement is effective for the company on July
2, 2006. The company does not believe the adoption of SFAS No. 151 will
have a material impact on its financial statements.
See report of independent registered public accounting firm
-22-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
3. OBLIGATIONS UNDER CAPITALIZED LEASES
Lessor Description 2005 2004
- ------------- ---------------------------------------------- -------------- -------------
SBBT Payable in monthly installments of $281
interest at 16%, matures in November, 2009 $ 10,669 $ -
SBBT Payable in monthly installments of $726
interest at 17%, matures in August, 2009 25,760 -
GE Payable in monthly installments of $551
interest at 17%, matures in September, 2008 17,653 -
GE Payable in monthly installments of $1206
interest at 17%, matures in September, 2008 39,745 -
Washoe/BofA Payable in monthly installments of $1513,
interest at 6.8%, matures in April, 2007. 31,206 46,651
GE Payable in monthly installments of $710
interest at 12.8%, matures in October, 2006. 10,394 16,360
Avaya Payable in monthly installments of $655,
interest at 16%, matures in December, 2004. - 3,753
GE Payable in monthly installments of $348,
interest at 13%, matured in October 2005. 1,357 5,094
Dell Payable in monthly installments of $200,
interest at 13%, matures in January 2006. 1,504 3,407
Dell Payable in monthly installments of $203,
interest at 21%, matures in February 2006. 1,344 3,425
-------------- -------------
139,632 78,690
Less current portion 49,846 20,348
-------------- -------------
Long-term portion of obligations under
capitalized leases $ 89,786 $ 58,342
============== =============
Minimum annual lease payments under capitalized lease obligations at June
30, 2005 are as follows:
2006 $ 64,663
2007 51,138
2008 33,168
2009 17,355
2010 2,857
------------
169,181
Less amount representing interest 29,549
------------
139,632
Less current portion 49,846
------------
Long term portion of capitalized lease obligations $ 89,786
============
See report of independent registered public accounting firm
-23-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
4. NOTE PAYABLE
The Company has a note payable to a vendor in the amount of $50,000,
bearing interest at 10%, with monthly interest payment only. The maturity
date, which was originally October 15, 2001, was subsequently amended to
March 15, 2002 and then on demand. At June 30, 2005, the outstanding
principal amount on this note is $30,000. This note is secured by furniture
of the Company. See note 8.
5. INCOME TAXES
At June 30, 2005, the Company has available for federal and state income
tax purposes, net operating loss carryforwards of approximately $8,500,000
and $3,900,000, respectively, which expire at dates that have not been
determined.
The difference between the Company's effective income tax rate and the
statutory federal rate for the years ended June 30, 2005 and 2004 relates
primarily to losses incurred for which no tax benefit was recognized, due
to the uncertainty of its realization. The valuation allowance was
$3,300,000 and $2,300,000 at June 30, 2005 and 2004, respectively,
representing an increase of $1,000,000 for the year ended June 30, 2005.
Because of statutory "ownership changes" the amount of net operating losses
which may be utilized in future years are subject to significant annual
limitations.
A reconciliation of income tax expense that would result from applying the
domestic Federal statutory rate to pre-tax income, with federal income tax
expense presented in the financial statements is as follows:
2005 2004
--------- ----------
Income tax benefit computed
at U.S. federal statutory rate (34%) $ 840,000 $ 350,000
State income taxes, net of benefit federal taxes 144,000 63,000
Other 16,000 (73,000)
Less valuation allowance (1,000,000) (340,000)
--------- ----------
Income tax expense $ - $ -
--------- ----------
The deferred income tax benefit at June 30, 2005, and 2004 reflects the
impact of temporary differences between the amounts of assets and
liabilities recorded for financial reporting purposes and such amounts as
measured in accordance with tax laws. The items, which comprise a
significant portion of, deferred tax assets and liabilities are
approximately as follows:
2005 2004
----------- --------------
Property and Equipment $ 55,000 $ 56,000
Net operating loss carryforwards 3,150,000 2,148,000
Officer salaries payable 95,000 96,000
----------- --------------
3,300,000 2,300,000
Less: valuation allowance (3,300,000) (2,300,000)
----------- --------------
Deferred income tax asset $ - $ -
=========== ==============
See report of independent registered public accounting firm
-24-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
6. SHAREHOLDERS' DEFICIT
For the fiscal year ended, June 30, 2004, the Company issued 23,807,579
shares of restricted common stock for total cash consideration of
$2,485,324 as a result of a series of private offerings of common stock
ranging from $0.08 per share to $0.50 per share as well as stock options
and warrants exercises. 680,000 shares of restricted common stock were also
issued for $54,400 of services.
For the fiscal year ended, June 30, 2005, the Company issued 6,875,000
shares of restricted common stock for a net cash consideration of $627,254
as a result of a series of private offerings of common stock ranging from
$0.08 per share to $0.10 per share as well as exercise of stock options.
1,532,477 shares of restricted common stock were also issued for $330,462
of services.
On March 28, 2005, the Company entered into a Periodic Equity Investment
Agreement with Wings Fund, Inc. Pursuant to the Periodic Equity Investment
Agreement, the Company may, on a monthly basis commencing after the
effective date of the registration statement in connection with that
agreement, periodically sell to Wings Fund, Inc. shares of common stock for
a total purchase price of up to $3,000,000. Such monthly sales are limited
to a maximum aggregate of $250,000. Further, upon execution of the Periodic
Equity Investment Agreement, the Company issued to Wings Fund, Inc. an
aggregate of 5,000,000 shares of common stock at a price of $0.10 per share
for gross proceeds of $500,000 (included in the $627,254 above).
The common stock of Roaming Messenger, Inc. has a par value of $0.001, and
495,000,000 shares are authorized to be issued. The Company is also
authorized to issue 5,000,000 shares of preferred stock with a par value of
$0.001. The rights, preferences and privileges of the holders of the
preferred stock will be determined by the Board of Directors prior to
issuance of such shares.
At June 30, 2005, 22,225,000 shares of common stock were reserved for the
issuance of common stock pursuant to the Stock Option Plan, and 838,500
were reserved for the issuance of common stock pursuant to outstanding
warrants.
7. STOCK OPTIONS AND WARRANTS
In July 10, 2003, the Company adopted the Roaming Messenger, Inc. Stock
Option Plan for Directors, Executive Officers, and Employees of and Key
Consultants to Roaming Messenger, Inc. This Plan, may issue 25,000,000
shares of common stock. Options granted under the Plan could be either
Incentive Options or Nonqualified Options, and are administered by the
Company's Board of Directors. Each options may be exercisable in full or in
installment and at such time as designated by the Board. Notwithstanding
any other provision of the Plan or of any Option agreement, each option are
to expire on the date specified in the Option agreement, which date are to
be no later than the tenth anniversary of the date on which the Option was
granted (fifth anniversary in the case of an Incentive Option granted to a
greater-than-10% stockholder). The purchase price per share of the Common
Stock under each Incentive Option are to be no less than the Fair Market
Value of the Common Stock on the date the Option was granted (110% of the
Fair Market Value in the case of a greater-than-10% stockholder).
The purchase price per share of the Common Stock under each Nonqualified
Option were to be specified by the Board at the time the Option was
granted, and could be less than, equal to or greater than the Fair Market
Value of the shares of Common Stock on the date such Nonqualified Option
was granted, but were to be no less than the par value of shares of Common
Stock. The plan provided specific language as to the termination of options
granted hereunder.
See report of independent registered public accounting firm
-25-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
7. STOCK OPTIONS AND WARRANTS (Continued)
SFAS 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
3,500,000 shares of Roaming Messenger, Inc. were granted during the year
ended June 30, 2005. The fair value of options granted during the years
ended June 30, 2005 and 2004, which have been estimated at $131,960 and
$159,000, respectively, at the date of grant were determined using the
Black-Scholes Option pricing model with the following assumptions:
2005 2004
------------ ------------
Risk free interest rate 3.36-4.00% 2.79%-3.27%
Stock volatility factor 0.29-0.81 0.01
Weighted average expected option life 4 years 4 years
Expected dividend yield None None
A summary of the Company's stock option activity and related information
follows:
Year ended Year ended
---------- ----------
June 30, 2005 June 30, 2004
-------------- -------------
Weighted Weighted
average average
exercise exercise
Options price Options price
------------- ------------ ------------- ------------
Outstanding -beginning of year 8,297,494 $ 0.11 8,444,000 $ 0.08
Granted 3,500,000 0.12 2,478,494 0.18
Exercised 275,000 0.08 2,500,000 0.08
Forfeited 7,287,500 0.12 125,000 0.08
------------- ------------ ------------- ------------
Outstanding - end of year 4,234,994 $ 0.11 8,297,494 $ 0.11
============= ============ ============= ============
Exercisable at the end of year 972,980 $ 0.09 5,720,935 $ 0.09
============= ============ ============= ============
Fair value of options granted
during the year $ 131,960 $ 159,000
============ ============
The weighted average remaining contractual life of options as of June 30,
2005 was as follows:
Weighted
Average
Number of remaining
Exercise options contractual
prices outstanding life (years)
--------- ------------ ------------
$ 0.08 1,234,994 2.31
$ 0.10 2,300,000 3.79
$ 0.17 700,000 3.18
See report of independent registered public accounting firm
-26-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
Stock Warrants
--------------
During the year ended June 30, 2005, Roaming Messenger, Inc. issued
warrants for services valued at $129,020, to purchase shares of common
stock of Roaming Messenger, Inc. These warrants became exercisable on their
grant date. Warrants were granted as follows:
Date Number of shares Maturity date Exercise Price
- ------------------- ---------------------- ---------------------- ------------------
September 30, 2004 100,500 September 30, 2006 $ 0.10
December 31, 2004 271,000 December 31, 2006 $ 0.10
March 31, 2005 201,000 March 31, 2006 $ 0.10
April 1, 2005 50,000 March 31, 2008 $ 0.20
April 30, 2005 15,000 April 30, 2010 $ 0.10
June 30, 2005 201,000 June 30, 2007 $ 0.10
-----------------------
Total Granted 838,500
At June 30, 2005, warrants to purchase 838,500 shares were outstanding.
During the year ended June 30, 2005, Warp 9 Inc. cancelled 52,021 warrants,
resulting in 25,192 total outstanding warrants.
The following Warp 9 Inc. warrants, which are exercisable, were outstanding
at June 30, 2005:
Number of shares Exercise Price Expiration date
- -------------------- ------------------- -----------------------
25,192 $ 1.00 per share December 31, 2005
See report of independent registered public accounting firm
-27-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
8. COMMITMENTS AND CONTINGENCIES
Operating Leases
The following is a schedule, by years, of future minimum rental payments
required under operating leases for the facilities and equipment. The lease
for one of the facilities expires in 2010. The following is a schedule of
minimum lease payments for the next five years.
Years Ending Rent Payment Rent Income
June 30,
------------ ---------------- ----------------
2006 $ 196,000 $ 38,000
2007 $ 176,000 $ 29,000
2008 $ 109,000 $ -
2009 $ 108,000 $ -
2010 $ 109,000 $ -
Total lease expense for the years ended June 30, 2005 and 2004 was $193,708
and $120,832, respectively. The Company is also required to pay its pro
rata share of taxes, building maintenance costs, and insurance in according
to the lease agreement.
During the year ended June 30, 2005, the Company vacated its premises
located at 6144 Calle Real, Santa Barbara, California. The lease expires in
March 2007, therefore the Company is obligated to pay the rent under the
terms of the lease. The Company is subleasing these premises at an agreed
rent amount lower than the rent amount per the original lease, which will
generate a total cumulative shortfall of $99,367 by the end of the lease.
This shortfall has been recognized as an expense for the year ended June
30, 2005, and is included in the accrued liabilities.
LOAN DEFAULT
The note payable (note 4) has a default clause that allows the lender to
assess late payment charges at his option, in the amount of 10% of the
delinquency. The delinquent charges which could amount to approximately
$15,000 have not been accrued by the Company.
LEGAL MATTERS
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. It is the opinion of management, based on
advice of legal counsel, that such litigation and claims will be resolved
without a material effect on the Company's financial position.
RESTRICTED CASH
The Company has restricted cash in the amount of $93,000. This restricted
cash is used to collateralize a standby letter of credit in favor of the
landlord as part of the Company's lease agreement for its current office
space at 50 Castilian Dr. Santa Barbara, CA 93117. This cash amount is
restricted until the lease expires on June 30, 2010 or when negotiated
down.
See report of independent registered public accounting firm
-28-
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
9. CONCENTRATIONS
For the year ended June 30, 2005, the Company had two customers who
represented approximately 42% of total revenue. For the year ended June 30,
2004, the Company had two customers who represented approximately 30% of
total revenue.
Accounts receivable from two customers represented approximately 37% of
total accounts receivable at June 30, 2005. Accounts receivable from two
customers represented approximately 55% of total accounts receivable at
June 30, 2004.
The Company has a concentration of credit risk for cash by maintaining
deposits with banks, which may at a time exceed insured amounts. At June
30, 2005, the Company had $181,373 exceeding the amount insured by the U.S.
Federal Deposit Insurance Corporation (FDIC).
10. RELATED PARTY TRANSACTIONS
On June 30, 2005, the Company issued 350,000 shares of common stock to Mr.
Tom Djokovich for serving on the Company's Board of Directors through June
30, 2005. An expense of $56,000 was recorded in connection with the
issuance of these shares.
11. FUNDING AGREEMENT
On March 28, 2005, we entered into a Periodic Equity Investment Agreement
with Wings Fund, Inc. Pursuant to the Periodic Equity Investment Agreement,
we may, on a monthly basis commencing after the effective date of the
registration statement to be filed by us in connection with that agreement,
periodically sell to Wings Fund, Inc. shares of common stock for a total
purchase price of up to $3,000,000. Such monthly sales are limited to a
maximum aggregate of $250,000. The registration statement was filed on May
3, 2005 and declared effective by the Securities and Exchange Commission on
August 11, 2005. We may now sell up to $250,000 per month worth of
registered common stock to Wings Fund, Inc. at our discretion until August
11, 2006.
See report of independent registered public accounting firm
-29-
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
ITEM 8A. 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 annual 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 fourth fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
ITEM 8B. OTHER INFORMATION
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF EXCHANGE ACT
The following table lists the executive officers and directors of the Company as
of September 30, 2005:
Name Age Position
- -------------------- --- ----------------------------------------
Jonathan Lei 33 Chief Executive Officer, President,
Chief Financial Officer, Secretary,
and Chairman
Harinder Dhillon 32 Senior Vice President
(President of Warp 9 Inc. Subsidiary)
Bryan Crane 46 Vice President of Corporate Development
Michael Chuises 44 Vice President of Engineering
Louie Ucciferri 45 Director
Tom Djokovich (1) 48 Director
- ----------
(1) Member of Audit Committee.
Jonathan Lei has been our Chairman of the Board of Directors, Chief Executive
Officer, President, Chief Financial Officer, and Secretary since April 2003. Mr.
Lei received a Bachelor Degree in Electrical and Computer Engineering from the
University of California, Santa Barbara ("UCSB") in 1995 and a Master of Science
Degree in Electrical and Computer Engineering from UCSB in 1996. While at UCSB,
he studied and worked in the field of computer aided design and development of
VLSI and ASIC silicon chips. Mr. Lei was employed by Lockheed Martin in 1993
where he built data acquisition systems for spacecraft testing. In 1995, he
worked for Intel Corporation where he developed the Triton II Pentium PCI
chipset. From 1995 to 1996, Mr. Lei worked for RC Electronics where he designed
PCI based data acquisition systems. Mr. Lei founded Warp 9, Inc., our wholly
owned subsidiary in 1996 and in 1998, he negotiated a transaction to sell Warp
9's consumer ISP division, Sbnet, to MindSpring Enterprises. Mr. Lei was an
officer and is a lifetime member of Tau Beta Pi, a national engineering honor
society.
-30-
Bryan Crane has been our Vice President of Corporate Development since October
2002. Prior to joining Roaming Messenger, from 1995 to 2002, he worked for Muir,
Crane & Co., a partnership he co-founded and in which he still maintains an
ownership interest. From 1994 to 1995, Mr. Crane was a Managing Director of
Johnson & Co. For most of his career, Mr. Crane held positions in portfolio
management from retail investments at Prudential-Bache Securities to Vice
President of Investments at A.G. Edwards & Son, where, as a member of the
Presidents Council, he managed debt and equity portfolios for institutional
clients. Mr. Crane earned his dual degree in Political Science and International
Economics from San Diego State University. He is a member of the San Diego Stock
Bond Association and the Los Angeles Chapter of the National Investor Relations
Institute (NIRI).
Harinder Dhillon has been our Vice President of Operations since October 2001
and has been the President of Warp 9 Inc. since July 1, 2005. Mr. Dhillon joined
us in July 2000. Prior to joining us, from 1993 to1998, Mr. Dhillon served as
the Chief Information Officer of Informax Data Systems, an enterprise systems
integrator headquartered in Southern California. Thereafter, during 1999 until
he joined us, he worked as an independent technology consultant. He has
designed, managed, and led the development and deployment of multi-million
dollar enterprise Internet, Intranet and integration projects for Fortune 500
companies and various government units. His client list included Department of
Justice, Immigration and Naturalization Services, US Navy, US Air Force, and the
City of Los Angeles. His projects included enterprise work flow automation,
real-time field services, infrastructure build out, and network and systems
integration. Mr. Dhillon received a Bachelor degree in Electrical and Computer
Engineering from the University of California at Santa Barbara in 1996.
Mike Chuises has been our Vice President of Engineering since October 2004.
Prior thereto, he was our Director of Engineering from December 2003 to October
2004. From 1994 to 2001, Mr. Chuises was the principal engineer for OutBack
Resource Group Inc., a consulting firm located in San Luis Obispo, California,
founded by Mr. Chuises, where he consulted on and implemented services and
software for service providers and commercial software companies such as Wynd
Communications, Inc. In 2001, OutBack was acquired by GoAmerica Communications,
Inc., a wireless service provider, and from 2001 to 2003, Mr. Chuises served as
a lead architect on the Go.Web enterprise wireless messaging platform. Prior to
founding OutBack, Mr. Chuises worked for several commercial software publishers
including Cheyenne Software, XTree Company and Arcada Software. Mr. Chuises
brings many years of disciplined, process-oriented methodologies to full
life-cycle software development.
Louie Ucciferri has been one of our directors since 2003 and is currently the
CEO of Regent Capital Group, a NASD registered broker dealer dedicated to real
estate investments. From 1995 to 2004, Mr. Ucciferri served as the President of
Westlake Financial Architects, an investment-banking firm he founded in 1995 to
provide financial and investment advisory services to early stage companies. He
has raised investment capital for both private and public companies and has
created liquidity for investors in the form of public offerings. Since November
1998, he has also served as President of Camden Financial Services, a NASD
registered broker dealer that serves as the dealer manager for a real estate
company that has raised in excess of $150 million in equity capital for the
acquisition of commercial office properties in southern California and Arizona.
Tom Djokovich has been one of our directors since 2003 and is the Chief
Executive Officer of XsunX, Inc., a position he has held since 2004. From 2003
until 2004, he was an independent technology consultant. Prior thereto, he was
the founder and served from 1995 to 2002 as the Chief Executive Officer of
Accesspoint Corporation, a vertically integrated provider of electronic
transaction processing and e-business solutions for merchants. Under Mr.
Djokovich's guidance, Accesspoint became a member of the Visa/MasterCard
association, the national check processing association (NACHA), and developed
one of the payment industry's most diverse set of network based transaction
processing, business management and CRM systems for both Internet and
conventional points of sale. During his tenure, Accesspoint became an early
adopter of WAP based e-commerce capabilities and the industry's first certified
Level 1 Internet payment processing engine. In his last year as executive
manager, Accesspoint grew its processing revenues by over 800% and overall
revenues by nearly 300%. Prior to Accesspoint, Mr. Djokovich founded
TMDConstruction and Development where he developed an early business-to-business
ordering system for the construction industry.
-31-
Under the Nevada General Corporation Law and the Company's Articles of
Incorporation, as amended, the Company's directors will have no personal
liability to the Company or its stockholders for monetary damages incurred as
the result of the breach or alleged breach by a director of his "duty of care".
This provision does not apply to the directors' (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the corporation or its shareholders or that involve the absence of good faith
on the part of the director, (iii) approval of any transaction from which a
director derives an improper personal benefit, (iv) acts or omissions that show
a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders, (v) acts or omissions
that constituted an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, or
(vi) approval of an unlawful dividend, distribution, stock repurchase or
redemption. This provision would generally absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
BOARD COMMITTEES
The Board of Directors has appointed an Audit Committee. As of September 30,
2005, the sole member of the Audit Committee is Tom Djokovich. Mr. Djokovich is
considered independent as defined in Rule 4200 of the National Association of
Securities Dealers' listing standards because he is not employed by the Company,
does not participate in the day-to-day management of the Company, and does not
receive a salary or other employment benefits from the Company. The Board of
Directors has adopted a written charter of the audit committee. The Audit
Committee is authorized by the Board of Directors to review, with the Company's
independent accountants, the annual financial statements of the Company prior to
publication, and to review the work of, and approve non-audit services preformed
by, such independent accountants. The Audit Committee will make annual
recommendations to the Board for the appointment of independent public
accountants for the ensuing year. The Audit Committee will also review the
effectiveness of the financial and accounting functions and the organization,
operations and management of the Company. The Audit Committee was formed on
April 19, 2003. The Audit Committee held four meetings during fiscal year ended
June 30, 2005. As of September 30, 2005, the Company has not yet appointed a
Compensation Committee.
AUDITOR INDEPENDENCE
GENERAL. Rose Snyder & Jacobs, CPAs ("RSJ") is the Company's principal auditing
accountant firm. RSJ has also provided other non-audit services to the Company.
The Audit Committee of the Company's Board of Directors has considered whether
the provisions of non-audit services is compatible with maintaining RSJ's
independence.
AUDIT FEES. RSJ billed the Company $37,200 during the fiscal year ended June 30,
2005 for the following professional services: audit of the annual financial
statement of the Company for the fiscal year ended June 30, 2004, and review of
the interim financial statements included in quarterly reports on Form 10-QSB
for the periods ended September 30, 2004, December 31, 2004, and March 31, 2005.
ALL OTHER FEES. RSJ billed the Company $7,665 for other services for the fiscal
year ended June 30, 2005.
-32-
REPORT OF THE AUDIT COMMITTEE
The Company's Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended June 30, 2005 with senior
management. The Audit Committee has reviewed and discussed with management the
Company's audited financial statements. The Audit Committee has also discussed
with RSJ, the Company's independent auditors, the matters required to be
discussed by the statement on Auditing Standards No. 61 (Communication with
Audit Committees) and received the written disclosures and the letter from RSJ
required by Independence Standards Board Standard No. 1 (Independence Discussion
with Audit Committees). The Audit Committee has discussed with RSJ the
independence of RSJ as auditors of the Company. Finally, the Audit Committee has
considered whether the independent auditors provision of non-audit services to
the Company is compatible with the auditors' independence. Based on the
foregoing, the Company's Audit Committee has recommended to the Board of
Directors that the audited financial statements of the Company be included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
2005 for filing with the United States Securities and Exchange Commission. The
Audit Committee also approved RSJ's engagement to prepare the Company's
consolidated tax returns for its fiscal year ending June 30, 2005. The Company's
Audit Committee did not submit a formal report regarding its findings.
AUDIT COMMITTEE
Tom Djokovich
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the United States Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate this report in future filings with the Securities and Exchange
Commission, in whole or in part, the foregoing report shall not be deemed to be
incorporated by reference into any such filing.
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and directors,
and certain persons who own more than 10% of a registered class of the Company's
equity securities (collectively, "Reporting Persons"), to file reports of
ownership and changes in ownership ("Section 16 Reports") with the Securities
and Exchange Commission (the "SEC"). Reporting Persons are required by the SEC
to furnish the Company with copies of all Section 16 Reports they file.
Based solely on its review of the copies of such Section 16 Reports received by
it, or written representations received from certain Reporting Persons, all
Section 16(a) filing requirements applicable to the Company's Reporting Persons
during and with respect to the fiscal year ended June 30, 2005 have been
complied with on a timely basis.
ITEM 10. EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Directors receive no cash compensation for their services to the Company as
directors, but are reimbursed for expenses actually incurred in connection with
attending meetings of the Board of Directors.
On June 30, 2005, the Company issued 350,000 shares of common stock to Mr. Tom
Djokovich for serving on the Company's Board of Directors through June 30, 2005.
An amount of $56,000 was recognized as an expense for the year ended June 30,
2005 for this issuance of shares. Mr. Djokovich also serves as the Chairman of
our Audit Committee, for which he receives no separate compensation.
-33-
EXECUTIVE OFFICER COMPENSATION
The following table and notes set forth the annual cash compensation
paid to officers of the Company.
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------------------------------------------------------------------------
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
--------------------------- ---- ------ ----- ------------ ---------- ------------
Jonathan Lei............... 2005 $138,000 - 0 - - 0 - -0- - 0 -
President, Chief Financial 2004 $138,000 - 0 - - 0 - -0- - 0 -
Officer, and Secretary 2003 $138,000 - 0 - - 0 - -0- - 0 -
--------------------------------------------------------------------------------------------------------------
Harinder Dhillon........... 2005 $125,000 $2,894 - 0 - -0- - 0 -
Senior Vice President 2004 $125,000 $8,714 - 0 - -0- - 0 -
2003 $105,000 - 0 - - 0 - 1,875,000 (1) - 0 -
--------------------------------------------------------------------------------------------------------------
Bryan Crane................ 2005 $84,000 $8,000 (2) - 0 - -0- - 0 -
VP of Corporate Development 2004 $84,000 $29,000 (2) - 0 - 878,494 (2) - 0 -
2003 $84,000 - 0 - - 0 - 700,000 (2) - 0 -
--------------------------------------------------------------------------------------------------------------
Michael Chuises............ 2005 $120,000(3) - 0 - - 0 - 1,000,000 (1) - 0 -
VP of Corporate Development 2004 -0- - 0 - - 0 - -0- - 0 -
2003 -0- - 0 - - 0 - -0- - 0 -
--------------------------------------------------------------------------------------------------------------
- ------------------
(1) Consists of options granted under the Company's 2003 Stock Option Plan
on July 15, 2003. These stock options are fully vested at the time of
grant. Options are to purchase unregistered common stock at an exercise
price equal to the fair market value of unregistered common stock at
the time of grant, which was $0.08 per share for these stock options.
(2) 878,494 options were granted under the Company's 2003 Stock Option Plan
on July 15, 2003. These stock options were fully vested at time of
grant. Options are to purchase unregistered common stock at an exercise
price equal to the fair market value of unregistered common stock at
the time grant, which was $0.08 per share for these stock options. On
May 20, 2003, 700,000 shares of unregistered common stock were issued
to Mr. Crane in lieu of cash payment for salaries accrued to that
point. A total amount of $29,000 and $8,000 of cash bonus was given to
Mr. Crane, during the fiscal year ending June 30, 2004 and June 30,
2005, respectively, for achieving certain milestones in managing the
Company's investment capital efforts.
(3) Mr. Chuises was promoted to Vice President of Engineering on October 1,
2004, with a base salary of $120,000. On April 15, 2005, Mr. Chuises
was granted 1,000,000 stock options to purchase unregistered common
stock at an exercise price equal to the fair market value of
unregistered common stock at the time grant, which was $0.10 per share.
Prior to his promotion, Mr. Chuises had 450,000 options at and exercise
price of $0.08 and 550,000 options at an exercise price of $0.17.
-34-
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information with respect to options to purchase
common stock of the Company granted to the Company's officers during fiscal year
2005.
- -------------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term
-------------------------
Percent of Total
Options Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year per Share Date 5% 10%
- ---- ------------- ---------------- --------- ----------- --------- ----------
Michael Chuises 550,000 (1) 18% $0.17 Four years from the $20,150 $43,393
VP of Engineering date of grant
1,000,000 (2) 33% $0.10 Four years from the $143,101 $192,820
date of grant
- --------------------
(1) These stock options vest 1/48 over a 48 month period
(2) 25% of these stock options will become fully vested after 12 months of
consecutive employment. The balance will vest 1/36 for 36 months after
12 months of consecutive employment.
FISCAL YEAR-END OPTION EXERCISES AND OPTION VALUES
The following table sets forth information with respect to options to
purchase common stock of the Company held by the Company's executive officers at
September 30, 2005.
------------------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Options Held at In-the-Money Options
September 30, 2005 at September 30, 2005 (2)
------------------ -------------------------
Shares
Acquired
Upon
Name Exercise Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------------- ----------- ------------- ----------- -------------
Michael Chuises -0- -0- 278,125 1,721,875 $4,219 $19,281
VP of Engineering
Bryan Crane -0- -0- 253,494 -0- $7,605 -0-
VP of Corporate
Development
- ----------------
(1) The value realized is the difference between the market price of the common
stock on the date of exercise and the exercise price of the stock option.
The underlying securities held upon exercise are unregistered common stock.
(2) The value of unexercised "in-the-money" options is the difference between
the market price of the common stock on September 30, 2005 ($0.11 per
share) and the exercise price of the option, multiplied by the number of
shares subject to the option. The underlying securities held upon exercise
are unregistered common stock.
-35-
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with its executive
officers to date. The Company may enter into employment agreements with them in
the future.
STOCK OPTION PLAN
On July 10, 2003, the Board of Directors of the Company adopted the 2003 Stock
Option Plan for Directors, Executive Officers, Employees and Key Consultants of
the Company (the "2003 Plan"). The 2003 Plan was ratified by the shareholders of
the Company by written consent effective August 25, 2003. The 2003 Plan
authorizes the issuance of up to 25,000,000 shares of the Company's common stock
pursuant to the grant and exercise of up to 25,000,000 stock options. To date,
4,234,994 options to purchase 4,234,994 shares of common stock at volume
weighted average price of $0.11 per share granted under the 2003 Plan are
outstanding. To date, 2,775,000 options have been exercised.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the names the executive officers and directors of
the Company and all persons known by the Company to beneficially own 5% or more
of the issued and outstanding common stock of the Company at September 30, 2005
Name, Title and Address Number of Shares Beneficially Owned Percentage Ownership
- --------------------------------------- ----------------------------------- --------------------
Jonathan Lei
President, Chief Financial Officer,
Secretary, and Chairman 95,639,025 52.57%
Bryan Crane
VP of Corporate Development 1,231,500 0.68%
Harinder Dhillon
Senior Vice President
(President of Warp 9 Inc.) 2,935,000 1.61%
Michael Chuises
Vice President of Engineering 4,000 0.00%
Louie Ucciferri
Director 3,500,000 1.92%
Tom Djokovich
Director 652,500 0.36%
- ----------------------------------------------------------------------------------------------------------
All current Executive Officers as a Group 99,809,525 54.87%
All current Directors who are not
Executive Officers as a Group 4,152,500 2.28%
-36-
- ---------------
(1) Except as pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned. The total number of
issued and outstanding shares and the total number of shares owned by
each person does not include unexercised warrants and stock options,
and is calculated as of September 30, 2005.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 30, 2005, the Company issued 350,000 shares of common stock to Mr. Tom
Djokovich for serving on the Company's Board of Directors and Chairman of the
Company's Audit Committee thru June 30, 2005. $56,000 was recognized as expense
for the years ended June 30, 2005.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 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)
5.1 Opinion of Sichenzia Ross Friedman Ference LLP(3)
10.1 First Agreement and Plan of Reorganization between Latinocare Management Corporation,
a Nevada corporation, and Warp 9, Inc., a Delaware corporation (4)
10.2 Second Agreement and Plan of Reorganization between Latinocare Management Corporation,
a Nevada corporation, and Warp 9, Inc., a Delaware corporation (5)
10.3 Exchange Agreement and Representations for shareholders of Warp 9, Inc.(4)
10.4 Securities Purchase Agreement dated as of March 28, 2005 between Roaming Messenger,
Inc. and Wings Fund, Inc.(6)
10.5 Periodic Equity Investment Agreement dated as of March 28, 2005 between Roaming
Messenger, Inc. and Wings Fund, Inc.(6)
10.6 Registration Rights Agreement dated as of March 28, 2005 between Roaming Messenger,
Inc. and Wings Fund, Inc.(6)
21 List of Subsidiaries(3)
(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) Previously Filed.
(4) 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.
(5) 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.
(6) Incorporated by reference to exhibits filed with the Company's
Current Report on Form 8-K filed with the Securities and Exchange
Commission dated March 30, 2005.
-37-
(b) The following is a list of Current Reports on Form 8-K filed by the Company
during and subsequent to the last quarter of the fiscal year ended June 30,
2005.
(1) Form 8-K, dated March 28, 2005, filed with the SEC describing the
Securities Purchase Agreements between Roaming Messenger, Inc. and
Wings Fund, Inc.
(2) Form 8-K, dated October 14, 2004, filed with the SEC reflecting the
resignation of Brian Fox as Chief Technology Officer of the Company.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Rose Snyder & Jacobs, CPAs ("RSJ") is the Company's principal auditing
accountant firm. RSJ has also provided other non-audit services to the Company.
The Audit Committee approved the engagement of RSJ before RSJ rendered audit and
non-audit services to the Company.
AUDIT FEES
RSJ billed the Company $37,200 for the following professional services: audit of
the annual financial statement of the Company for the fiscal year ended June 30,
2004, and review of the interim financial statements included in quarterly
reports on Form 10-QSB for the periods ended September 30, 2004, December 31,
2004, and March 31, 2005.
TAX FEES
RSJ has not yet provided tax return preparation services for the Company for the
fiscal year ended June 30, 2005, and therefore has not billed the Company for
those services.
ALL OTHER FEES
RSJ billed the Company $7,665 for other services, including preparation of the
tax returns for the Company for 2004, during the fiscal year ended June 30,
2005.
-38-
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: October 12, 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: October 12, 2005
--------------------------------------
Jonathan Lei, Chairman of the Board,
Chief Executive Officer, President
Chief Financial Officer, and Secretary
By: \s\ Tom Djokovich Dated: October 12, 2005
--------------------------------------
Tom Djokovich
Director
By: \s\ Louie Ucciferri Dated: October 12, 2005
--------------------------------------
Louie Ucciferri
Director
-39-