| Re: |
Roaming
Messinger, Inc. (the “Company”)
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| Form SB-2 File No. 333-124600 |
| 1. |
We
note that the calculation of registration fee table is based on
the price
of your common stock on April 27, 2005. We also note that these
common
stock you are registering relates to a periodic equity investment
agreement in which the number of shares to be issued is based upon
a
discount to the market price of the common shares. Accordingly,
please
confirm to us as follows:
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You
have registered a good faith estimate of the maximum number of
shares you
may issue periodic equity
agreement;
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You
will not rely on Rule 416 if the market price of the common shares
results
in you having insufficient shares;
and
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You
will file a new registration statement to cover the resale of any
additional shares in the event that the number of shares actually
issued
exceeds the number of shares that you have included in the registration
fee table.
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It
has registered a good faith estimate of the maximum number of shares
that
may be issued under the periodic equity
agreement;
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It
will not rely on Rule 416 if the market price of the common shares
results
in having insufficient shares; and
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It
will file a new registration statement to cover the resale of any
additional shares in the event that the number of shares actually
issued
exceeds the number of shares included in the registration fee
table.
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3.
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Please
clarify in your summary, if accurate, that Roaming Messenger is
a new
product that has not generated any revenues. In this regard, more
clearly
but briefly articulate your current and historic sources of
revenues.
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4.
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Also,
the nature and impact of your Roaming Messenger product is unclear.
Please
revise your summary to briefly clarify exactly how it works and
its
advantages over other readily available communication
devices.
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5.
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Further,
we note your references to the use of Roaming Messenger in homeland
security, military operations, emergency response and enterprises
automation. Are these the primary markets for your product? Are
there
other markets in which the product may be used? Please revise to
briefly
clarify.
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6
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Please
add a disclosure to this section that briefly summarizes the potential
negative impact and limits of the periodic equity agreement. In
this
regard, you should summarize the potential dilutive effect, the
potential
change in control impact, the potential impact on your liquidity,
and
limits of your ability to make draws under the
agreement.
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7.
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In
general, descriptions of risks that describe circumstances that
could
apply equally to other businesses that are similarly situated,
are generic
risks that should not be included in your risk factor section.
Please
either eliminate these generic risks, or revise them to state specific
material risks to your company or to the purchasers in this offering.
For
example, we note that the following risk factors appear to contain
generic
disclosures:
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We
may be subject to government regulation, page
4
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We
are dependent upon the operation of the Internet. . . , page
4
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If
our system security is breached, our reputation could suffer. .
., page
4
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8.
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Also,
some of your risk factor discussions are vague. Present the risk
in more
concrete terms so the reader can assess the magnitude of the risk.
For
example, please revise the following risk factors to present the
risk in
more concrete terms:
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We
may need to raise additional capital. . ~, page
2
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We
may not be able to successfully develop. . ., page
2
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Our
success is dependent upon increasing acceptance. . ., page
2
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9.
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Currently,
it appears that you are including more than one risk factor under
this
subheading. For example, you appear to discuss your losses and
the fact
that your auditors have qualified their opinion concerning your
ability to
continue as a going concern. While these are related matters, please
avoid
bundling risk and if a risk is material, provide it with its own
descriptive subheading.
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10.
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Please
add a risk factor that address the risk that the number of shares
you
issue in connection with a draw down under the periodic. equity
investment
agreement will be based upon a discount to the then-prevailing
market
price and, as a result, the lower the stock price at the time
of the draw
down, the more common shares the shareholder will receive. To
the extent
that Wings as selling security holder receives and then sells
its common
stock, the common stock price may decrease due to the additional
shares in
the market. This could allow Wings to receive even greater amounts
of
common stock, the sales of which would further depress the stock
price.
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11.
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Also,
please add discussions reflecting the following risks, or advise
us why
you believe they are not appropriate. This disclosure need not
and should
not duplicate the discussion elsewhere in your prospectus, but
should only
highlight these risks. You should, however, include supporting
background
disclosure in the rest of the prospectus, as appropriate, to set
these and
the above risks in context. In all cases, provide clear, concise,
and
understandable disclosure focusing on the effect these items have
on your
shareholders. Logically organize your risk factors and separately
caption
separate risks:
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Restrictions
on being able to draw down on the financing, such that it may not
be
available to meet liquidity needs when you need
it.
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Liquidated
damages and other penalties associated with the financing. For
example,
are there certain triggering events relating to the timetable for
registration of the resale of the common stock that can cause additional
payments and default
events?
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Any
covenants and other prohibitions restricting your business and
actions,
particularly a restriction on additional capital raising activities
and
the right of first refusal in the subscription
agreement.
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Any
difficulties the equity line arrangement has on maintaining a stock
listing on quotation systems other than the Pink Sheets, such as
difficulties in complying with listing standards. See, e.g., the
NASD
Interpretive Material Regarding Future Priced Securities and the
American
Stock Exchange’s interpretive materials regarding future priced
securities.
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12.
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We
note that Section 7.2(g) of the periodic equity investment agreement
contains a limitation on the percentage of shares Wings may own.
Please
add a risk factor addressing this fact, including how it may limit
your
ability to obtain proceeds under the periodic equity agreement.
In this
regard, however, please also clarify that that Wings has the right
to
waive that limitation.
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13.
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It
appears you should unbundle the risk regarding a possible change
of
control and place it under its own caption. Please refer to prior
comment
9.
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14
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Please
review and if necessary revise the arithmetic of your use of proceeds
chart. You state that your offering expenses are $30,000 but it
appears
from the chart that you used
$25,000.
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15.
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Please
revise your disclosure to add a chart that discloses the maximum
amount of
proceeds you would receive from the sale by the selling shareholder
assuming that 25%, 50% and
100% of the shares are
sold.
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16.
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Please
refer to prior comments 3-5.
Your
discussion here also should clarify your present and historic business
and
sources of revenues.
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17.
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We
note that your management’s discussion and analysis does not address the
material implications of the uncertainties associated with the
methods,
assumptions and estimates underlying your critical accounting estimates.
Please tell us why you believe that it is appropriate that you
do not
discuss any accounting estimates you deem to be critical to your
operations. Please be aware that such discussion should supplement,
not
duplicate, the description of accounting policies already disclosed
in the
notes to your financial statements. Include the following qualitative
and
quantitative
considerations:
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Whether
these estimates bear the risk of change from either uncertainty
in your
assumptions or the level of difficulty to
measure;
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Quantify
how accurate your assumptions have been in the past in comparison
to
actual results;
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Quantify
whether the estimates or assumptions have changed materially in
the past
or are reasonably expected to change materially in the future;
and
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Quantify
the impact on the quality of your earnings if these estimates changed
by a
single percentage point.
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18.
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We
note that you have not provided a discussion regarding the six
month
period ended December 31, 2004. Please revise your disclosures
accordingly. See 303(b)(l) and (2) of Regulation
S-B.
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19.
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Please
revise to provide greater detail concerning the factors that have
impacted
your sources of revenues, cost and expenses, particular where there
has
been a significant period-to-period change. For example, we note
that in
the second paragraph on page 8 that your total costs and expenses
nearly
doubled, yet you do not clarify the reason for this increase. As
another
example, in your discussion of selling, general and administrative
costs
for the 12 months ended June 30, 2004 compared to the same period
in the
prior year, you have identified several factors that have resulted
in a
significant increase in expenses. Please separately quantify the
impact of
legal fees, bad debt expense, investor relations expenses, and
payroll
expense on the total
increase.
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20.
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Please
refer to the fifth paragraph on page 8. The language concerning
your
growth strategy, particularly the reference to “access to install based of
customers,” is confusing. Please revise
accordingly.
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21.
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Your
statement that you anticipate obtaining the necessary working capital
to
execute your business plan does not appear to clearly disclose
known
trends or uncertainties related to your cash flows, capital resources
or
liquidity. Your discussion of liquidity and capital resources should
quantitatively identify how you expect to meet your short and long-term
cash requirements and maintain operations, disclose your reliance
on
issuing common shares as a form of liquidity, the probability this
financing method will continue to be available to you in the future
and
the potential dilutive effects of issuing additional shares under
the
periodic equity investment agreement. Please revise accordingly.
See Item
303 of Regulation S-B and Section IV of SEC Release No.
33-8350.
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22.
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Also,
please revise here to fully address the potential impact of the
periodic
equity agreement on your liquidity and the related risk of the
under the
periodic equity agreement that you have and will discuss in your
Risk
Factor section.
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23.
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We
note that you have provided extensive information about Roaming
Messenger.
However, from your discussion it is not clear what the current
status of
the product is. For example, is it producing revenues? If not,
when do you
expect revenues? Have you executed any material contracts for the
product?
Please revise accordingly. Please also refer to prior comments
3-5. The
revisions in response to those comments reflect summary disclosure.
You
should expand upon the revisions by providing more detail here
in the
Business section.
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24.
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Also,
you need to discuss your current business, your current products
and
sources of revenues. In particular, you should provide greater
detail
concerning Warp 9’s products, business and
revenues.
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25.
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Please
revise to provide a more detailed description of the competitive
environment in the industries or markets that you operate in, your
position in that environment, and the methods of competition. See
Item
l0l(b)(4) of Regulation
S-B.
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26.
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Item
40 l(a)(4) of Regulation S-B requires that you provide a brief
description
of your officers and directors business experience during the last
five
years. We note that in the description of the background of the
directors
and officers that there is no disclosure about Mr. Dhillon for
the year 1
999 and about Mr. Djokovich for the year 2003. Please revise or
advise.
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| 27. |
Please
update your information here through March 31,
2005.
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28.
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Please
disclose the person that has the voting or investment control over
the
shares held by Wings Fund, Inc. Please see 1.60 of the Division
of
Corporation Finance’s Manual of Telephone Interpretations Manual (July
1997) and 4S of the Regulation S-K section of March 1999 supplement
to the
manual.
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29.
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Please
refer to the second and third paragraphs on page 24. Please be
aware that
short sales of common stock “against the box” that are covered with shares
subject to this registration statement cannot be made before the
registration statement becomes effective. It is our view that shares
underlying the short sale are deemed to be sold at the time the
sale is
made. As a result, any sale that occurs prior to effectiveness
of the
registration statement would be inconsistent with Section
5 of
the Securities Act. Please confirm your
understanding.
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30.
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Please
delete the reference to the commission’s Chicago and New York offices as
these public reference rooms have been
closed.
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31.
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The
financial statements included in your registration statement are
as of a
date more than 135 days prior to your expected effective date.
Please
update the registration statement with the unaudited financial
statements
for the three month period as of March 31, 2005. See Rule 3-12(a)
of
Regulation S-K.
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32.
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We
note you disclose most of your revenue is generated from monthly
fees
associated with web based applications. Tell us in more detail
about your
other sources of revenues, how comparatively significant these
sources are
with total revenues and how you account for these
revenues.
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33.
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Please
expand your policy disclosure to cite the adopted accounting
guidance for
your deployment pricing and subscription revenue models specifically
as it
relates to rights of return, return estimates, sales allowances
and
recognition of up-front fees, as
applicable.
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| 34. |
You
disclose you replaced employee stock options issued under the Warp
9 Inc.
Stock Option Plan with options under the Roaming Messenger Inc.
Plan and
some options became fully vested while others mirrored the vesting
periods
of the formerly cancelled options. Please tell us if the newly
issued
shares were accounted for as variable awards due to the modification
of
terms in comparison with preexisting terms of the cancelled shares
and if
so, if you recorded the associated compensation cost on the modification
date. If you did not have a modification of terms for a fixed award,
please clarify the current disclosure in your
response.
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| 35. |
You
disclose on page 22 you have 572,500 outstanding warrants exercisable
at
$0.10
per share, as of April 25, 2005. Please tell us how these warrants
reconcile to the Roaming Messenger and Warp 9 Inc. warrants exercisable
at
$1.00 - $3.00 per share presented in this footnote. Also, tell
us why you
did not record expense for the 600,000 warrants exercised at $0.08
per
share in light of the fact the fair value of your common stock
exceeded
the exercise price on the grant date, January 15,
2004.
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36.
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Please
tell us if 302,500 shares issued to Mr. Djokovich were for services
rendered in fiscal year end 2003 or 2004, how you established fair
value
for his services and recorded the costs in fiscal years ended 2003
or
2004.
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37.
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Please
tell us if you have an obligation to issue 200,000 common shares
to Wing
Fund Inc. Section 2.a of the Registration Rights Agreement states
that you
are required to prepare and file Form SB-i or SB-2 to register
common
shares within 30 days of signing the Registration Rights Agreement
on
March 28, 2005 . We note that you filed your registration statement
after
the 30-day milestone on May 3, 2005 . If you are required to issue
such
shares, tell us if you are able to settle this obligation by delivering
registered or unregistered shares and your accounting treatment
for this
contract. See Paragraph 14 of EITF No. 00-19. Further, please discuss
the
impact, if any, of the event in a subsequent event disclosure for
your
interim period March 31,
2005.
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38.
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Please
advise or revise your registration statement to include a letter
from your
independent accountant that acknowledges awareness of the use in
a
registration statement of a report on unaudited interim financial
information. See Item 601(15) if Regulation
S-B.
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| 39. |
Please
revise to provide the undertaking exactly as they appear in Item
5 i2 of
Regulation S-B.
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| 40. |
Please
revise to comply with the above comments as
applicable.
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41.
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The
certification should appear exactly as set forth in current Item
601(b)(3
1) of Regulation S-B. The certification you use here appears to
reflect an
outdated version. Accordingly, please amend your Form 10-KSB in
its
entirety with the certification in its correct
form.
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| 42. |
Please
revise to comply with the above comments as
applicable.
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43.
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Please
refer to prior comment 41. The certification here is missing paragraph
4(d). Accordingly, please amend your Form 10-QSB in its entirety
with the
certification in its correct
form.
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