U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 0-20259
SEAMLESS WI-FI, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation of organization)
33-0845463
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(I.R.S. Employer Identification No.)
800 No. Rainbow Blvd. Parkway, Suite 200 Las Vegas, Nevada 89109
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(Address of principal executive offices)
(775) 588-2387
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(Issuer's telephone number)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check mark whether the issuer (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) been subject to such filing requirements for the past 90
days. Yes [X] No [ ].
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 2006, the Issuer
had 1,309,297,154 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
TABLE OF CONTENTS
PART I - CONDENSED CONSOLIDATED FINANCIAL INFORMATION 2
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006. 3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS
ENDED SEPBETMBER 30, 2006 AND 2005 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS 15
ITEM 3. CONTROLS AND PROCEDURES 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 20
ITEM 2. CHANGES IN SECURITIES 20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 21
ITEM 5. OTHER INFORMATION 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
SIGNATURES 22
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements of Seamless Wi-Fi, Inc. and subsidiaries
(collectively, the "Company"), included herein were prepared, without audit,
pursuant to rules and regulations of the Securities and Exchange Commission.
Because certain information and notes normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America were condensed or omitted pursuant to such rules and
regulations, these financial statements should be read in conjunction with the
financial statements and notes thereto included in the audited financial
statements of the Company as included in the Company's Form 10-KSB for the year
ended June 30, 2006.
2
SEAMLESS WI-FI, INC.
f/k/a ALPHA WIRELESS BROADBAND, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2006
------------------
ASSETS
Current assets
Cash $ 116,823
Notes receivable-related parties, current portion 410,957
Accrued interest receivable 138,629
------------------
Total current assets 666,409
Property and equipment (net of accumulated depreciation $20,281) 74,970
Technology 516,000
Investments 88
Notes receivable - related parties (net of allowance $246,265) 1,107,265
Employee Advance 630
Restricted cash 75,000
Security deposit 6,600
------------------
TOTAL ASSETS $ 2,446,962
==================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accounts payable $ 941,387
Payroll taxes 137,656
Judgments payable 361,054
Other current liabilities 844,731
Payable to officer 24,980
Investment payable 125,000
Note payable related party 12,468
Note payable 66,833
Interest payable on long term debt 81,252
------------------
Total current liabilities 2,595,361
Long term debt 2,000,000
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TOTAL LIABILITIES 4,595,361
Stockholders' deficiency
Preferred A stock, par value $0.001, 10,000,000 shares authorized, 868
868,914 shares issued and outstanding
Preferred B stock, par value $0.001, 10,000,000 shares authorized, -
0 shares issued and outstanding
Preferred C stock, par value $1.00, 5,000,000 shares authorized, 300,000
300,000 shares issued and outstanding
Common stock, par value $0.001, 11,000,000,000 shares authorized, 1,309,297
1,309,297,154 shares issued and outstanding -
Additional paid-in capital 19,051,806
Accumulated deficit (22,710,370)
------------------
Total stockholders' deficiency (2,048,399)
(Less:) Treasury stock at cost 100,000
------------------
Adjusted stockholders' deficiency (2,148,399)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 2,446,962
==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
SEAMLESS WI-FI, INC.
f/k/a ALPHA WIRELESS BROADBAND, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
2006 2005
---- ----
Revenues $ 10,746 $ 6,408
Cost of revenues 39,638 33,323
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Gross Income (Loss) (28,892) (26,915)
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Expenses:
Selling, general and admin. 144,462 1,084,066
Technology development costs 131,945 -
Consulting 242,914 540,658
Interest 123,521 108,707
Legal 9,569 37,534
Officer Payroll 141,000 179,900
Bad Debt Expense 17,000 -
Depreciation and amortization 7,937 -
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Total Expenses 818,348 1,950,865
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Net loss from operations (847,240) (1,977,780)
Other income
Interest 27,567 -
Other 6,500 37,176
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Loss before income taxes (813,173) (1,940,604)
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Minority interest - 33,527
Income taxes (benefit) (note 8) - -
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Net Loss (813,173) (1,907,077)
================== ==================
Basic and Diluted loss per common shares $ (0.01) $ (0.03)
================== ==================
Weighted average basic and diluted common shares 133,750,923 57,564,270
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
SEAMLESS WI-FI, INC.
f/k/a ALPHA WIRELESS BROADBAND, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
2006 2005
---- ----
Cash flows used in operating activities
Net loss from continuing operations $ (813,173) $ (1,907,077)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 7,937
Issuance of common stock for services 105,000 494,000
Bad Debt Expense 17,000 -
Payable to officer (4,366) (50,400)
Changes in operating assets and liabilities
Accrued interest receivable (27,536) -
Other Receivable - (1,198,388)
Accounts payable 4,337 71,770
Other current liabilities 27,110 (656,144)
Payroll taxes payable - 16,607
Judgements payable (56,220) 37,312
------------------ ------------------
Net cash used by operating activities (739,911) (3,192,320)
Cash flows used in investing activities:
Employee advance (630) -
Investments - (143,500)
Advances to related party (415,223) (120,000)
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Net cash used in investing activities (415,853) (263,500)
Cash flows from financing activities
Net proceeds from debt issuance - 3,661,294
Increase in long term debt 1,210,245 -
Repayment of investment payable (25,000) -
Repayment of related party advances (7,000) (5,000)
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Net cash provided by financing activities 1,178,245 3,656,294
Increase (decrease) in cash 22,481 200,474
Cash at beginning of period 94,342 270
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Cash at end of period $ 116,823 $ 200,744
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS,
5
SEAMLESS WI-FI, INC.
f/k/a ALPHA WIRELESS BROADBAND, INC
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
-------------
2006 2005
---- ----
Cash paid for:
Interest $ - $ -
Taxes $ - $ -
Noncash investing and financing activities
Common stock issued for services $ 81,000 $ 494,000
Common stock issued for payment of financing costs $ - $ -
Common stock issued for officer's compensation $ - $ -
Common stock issued for conversion of preferred
stock and settle operating expenses $ 24,000 $ -
Common stock issued for conversion of preferred stock $ 2,392,991 $ -
Common stock and preferred stock issued for acquisition of assets $ - $ -
Common stock issued for investment $ - $ -
Subsidiary common stock issued for investment $ - $ -
SEE NOTES TO FINANCIAL STATEMENTS.
6
SEAMLESS WI-FI, INC.
F/K/A ALPHA WIRELESS BROADBAND, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND OPERATIONS
Prior to December 31, 1997, Seamless Wi-Fi, Inc ("The Company") formerly known
as Alpha Wireless Broadband, Inc. "the Company" was in the food product
manufacturing business and formerly known as International Food and Beverage,
Inc. In November 1998, new stockholders bought majority control from the
previous Chief Executive Officer through a private transaction. Immediately
thereafter, the former CEO resigned and the new stockholders assumed the
executive management positions. In December 1998, after new management was in
place, a decision was made to change the Company's principal line of business
from manufacturing to high technology. The Company changed its name from
International Food & Beverage, Inc. to Internet Business's International, Inc.,
and reincorporated the Company on December 8, 1998 in the state of Nevada.
During April of 1999, the Company announced the opening of its first e-commerce
site and engaged in the development, operation and marketing of a number of
commercial web sites. The Company's subsidiaries consisted of: Lending on Line
(providing real estate loans and equipment leasing), Internet Service Provider
(providing national Internet access dial-up service, wireless high speed
Internet, and Internet web design and hosting), E. Commerce (providing Auction
sites), and Direct Marketing (providing direct marketing of long distance phone
service, computers with Internet access, and Internet web design hosting). The
Company ceased operations during the fiscal year ended June 30, 2003. During the
fiscal year ended June 30, 2004, the Company changed its name to Alpha Wireless
Broadband, Inc, and started a new wireless operation through it's wholly owned
subsidiary Skyy-Fi, Inc a Nevada Corporation. Skyy-Fi began providing access to
the Internet, by installing equipment in locations such as hotels and coffee
shops for use by their patrons for a fee or free basis. These locations are
commonly known as Wi-Fi Hotspots. The Company has 36 Wi-Fi locations.
In January 2005, the Company acquired the assets of Seamless P2P, LLC and
contributed these assets to its 80% owned subsidiary Seamless Peer to Peer,
Inc., which is a developer and provider of a patent pending software program
Phenom Encryption Software that encrypts Wi-Fi transmissions based upon RSA's
government certified 256 bit AES encryption coupled with RSA's Public Key
Infrastracture flexible telecom data and voice transport solutions.
In May 2005, the Company changed its name from Alpha Wireless Broadband, Inc. to
Seamless Wi-Fi, Inc, which was approved by the Board of Directors and its
subsidiary from Skyy-Fi, Inc. to Seamless Skyy-Fi, Inc.
In December 2005, the Company started a hosting company Alpha Internet offering
Seamless clients a high-security hosting facility.
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the Company and its wholly
owned subsidiaries and majority-owned subsidiary. All significant intercompany
accounts and transactions have been eliminated in consolidation.
7
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 reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates include allowances for doubtful accounts and notes and
mortgage loans receivable. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all short-term, highly liquid investments with an original
maturity date of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciated using the straight-line
method over the estimated useful life of the assets, which is generally three to
five years for computers and computer related equipment and five to seven years
for furniture and other non-computer equipment. Leasehold improvements are
amortized using the straight-line method over the shorter of their estimated
useful lives or the term of the lease, ranging from one to five years.
INVESTMENTS
Investments are stated at the lower of cost or market value.
PROPRIETARY SOFTWARE IN DEVELOPMENT
In accordance with SFAS No. 86, accounting for the Cost of Computer Software to
be Sold, Leased, or Otherwise Marketed Software ("FAS 86"), the Company has
capitalized certain computer software development costs upon the establishment
of technological feasibility. Technological feasibility is considered to have
occurred upon completion of a detailed program design which has been confirmed
by documenting and tracing the detailed program design is not pursued, upon
completion of a working model that has been confirmed by testing to be
consistent with the product design. Amortization is provided based on the
greater of the ratios that current gross revenues for a product bear to the
total of current and anticipated future gross revenues for that product. The
estimated useful life for the straight-line method is determined to be 2 to 5
years.
The unamortized computer software and computer software development costs were
$1,570,000 at September 30, 2005. During the quarter ended December 31, 2005 the
computer software development team failed to deliver the completed software
program as per agreement. The unamortized development cost was expensed and on
January 2006, a new computer software development team was contracted and the
costs related to the development will be expensed until the development of the
computer software program is completed. As of the first quarter ended September
30, 2006 for the fiscal year end June 30, 2007, there were no software
development expenses.
REVENUE RECOGNITION
For current Company operations, providing wireless Internet access, fees are
charged either to the proprietor of the WI-Fi hotspot location or the customer
using the services. The fees paid by a proprietor for services provided on a
month-to-month basis are billed at the end of each month for which the service
is contracted. The fees paid by customers using the wireless Internet access are
paid at the time service is provided and therefore recorded as revenue at that
time.
8
ADVERTISING EXPENSE
All advertising costs are expensed when incurred.
CONCENTRATION OF CREDIT RISK
The Company is subject to credit risk through trade receivables. Monthly
Internet access fees and web hosting are generally billed to the customer's
credit card, thus reducing the credit risk. The Company routinely assesses the
financial strength of significant customers and this assessment, combined with
the large number and geographic diversity of its customers, limits the Company's
concentration of risk with respect to trade accounts receivable.
INCOME TAXES
The Company accounts for income taxes under the asset and liability approach of
reporting for income taxes. Deferred taxes are recorded based upon the tax
impact of items affecting financial reporting and tax filings in different
periods. A valuation allowance is provided against net deferred tax assets where
the Company determines realization is not currently judged to be more likely
than not. The Company and its 80% of more owned U.S. subsidiaries file a
consolidated federal income tax return. The Company has no material tax
liability due to its losses.
EARNINGS (LOSS) PER SHARE ("EPS")
Basic EPS is computed by dividing income (loss) by the weighted average number
of common shares outstanding for the period. Diluted EPS is computed giving
effect to all dilutive potential common shares that were outstanding during the
period. Dilutive potential common shares consist of incremental shares issuable
upon conversion of preferred stock outstanding.
STOCK BASED COMPENSATION
The Company has elected SFAS 123R which requires all share based payments to
officers, directors, and employees, including stock options, be recognized as a
cost in the financial statements based on their fair values. The Company
accounts for stock based grants issued to non-employees at fair value in
accordance with SFAS 123 and ETIF 96-18 "Accounting for Equity Instruments That
are Issued to Other Than Employees for Acquiring, or In Conjunction with
Selling, Goods, or Services".
REVERSE STOCK SPLIT
The Company's Board of Directors effected a 1 for 1,000 reverse stock split of
its common stock $.001 par value on June 3, 2005. Accordingly all shares
information included in the consolidated financial statements has been adjusted
to reflect the reverse stock split. The reverse stock split did not change the
ratio for the conversion of the preferred stock which remained at 1 share of
Series A preferred stock converts into 10,000 shares of common stock.
9
NEW ACCOUNTING PRONOUNCEMENTS
In July 2006, the FASB issued FASB Interpretation ("FIN") No. 48,
"Accounting for Uncertainty in Income Taxes," which prescribes a comprehensive
model for how a company should recognize, measure, present and disclose in its
financial statements uncertain tax positions that the company has taken or
expects to take on a tax return (including a decision whether to file or not to
file a return in a particular jurisdiction). The accounting provisions of FIN
No. 48 are effective for fiscal years beginning after December 15, 2006. The
Company is currently assessing whether adoption of this Interpretation will have
an impact on it's financial position or results of operations.
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements", which establishes a
framework for reporting fair value and expands disclosures about fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The Company is currently assessing the impact of the adoption of
this standard on its financial statements.
NOTE 2: GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
company as a going concern. The Company has experienced significant losses in
recent years. As of the first quarter ended September 30, 2006 for fiscal year
end June 30, 2007 the stockholders' deficiency is $2,148,399 and working capital
deficiency is $1,928,952.
The Company is actively pursuing additional equity financing through discussions
with investment bankers and private investors. There can be no assurance the
Company will be successful in its effort to secure additional equity financing.
The Company's ability to continue as a going concern is contingent upon its
ability to secure financing and attain profitable operations. The financial
statements do not include any adjustment to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
NOTE 3: NOTE PAYABLE
The note payable bears interest at prime plus 4% and was due May 14, 2006. The
remaining notes were assigned to Ayuda Funding LLC. These notes are secured by
Series A convertible preferred stock, (See Note 7: Preferred Stock). These notes
allow the note holder to convert the preferred stock to common stock to pay off
the note and interest due in case of a default in the quarterly interest
payments for the loan. (See Note 6: Related Party Transaction). On December 31,
2005, the Company made an offer to settle the debt of $66,833 with Blue Bear
Funding, which is currently in Chapter 11 Bankruptcy. As of this filing the
Company has not received a response to its offer. The balance due at first
quarter ended September 30, 2006 for the fiscal year end June 30, 2007 amounted
to $66,833.
NOTE 4: LONG TERM DEBT
During the fiscal year ended of June 30, 2006, the Company borrowed $4,600,000
under two loan agreements with Ayuda Funding LLC for which 184,000 previously
issued Series A convertible preferred shares are held as collateral. These notes
were in default which allowed the note holder to convert the preferred stock to
common stock. Proceeds from the converted stock paid off some of the notes.
Interest on the unpaid principal amount is 6.5% per annum due and payable
quarterly commencing June 21, August 1, and August 15, 2006, until such loan is
paid in full. The total loan balance of $2,000,000 at September 30, 2006 is due
and payable on June 16, 2009 with accrued interest of $81,252.
10
NOTE 5: OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
Credit cards payable $ 353,611 (1)
Payable to Integrated Communication 214,933 (2)
Various liabilities assumed from
Alpha Tooling acquisition 276,187
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$ 844,731
=========
(1) Payments in varying amounts are due monthly with interest at 18% per
annum.
(2) Results from contract cancellation.
NOTE 6: RELATED PARTY TRANSACTIONS
The Company has made the following loans and advances to related parties as of
September 30, 2006:
Allowance for
Loan/Advance for uncollectible Balance
Balance loans/advances Net
-------------- ------------------- ----------------
Accepted Sales (A) $ 298,544 $ 298,544
Carbon Jungle, Inc. (B) 148,105 $ 148,105 -
DK Corp. (C) 98,160 98,160 -
DLR Funding (D) 81,476 81,476
1st Global Financial Service (E,F) 1,138,202 1,138,202
-------------- ------------------- ----------------
Total: $ 1,764,487 $ 246,265 $ 1,518,222
============== =================== ================
The above interest at annual rates ranges from 6% to 12%. The net balance at
September 30, 2006 of the fiscal year end of June 30, 2007 in the amount of
$1,518,222 matures in the fiscal years ended June 30 as follows:
2007 $ 325,877
2008 331,599
2009 860,746
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$ 1,518,222
============
(A) Accepted Sales is a division of 1st Global Financial Services noted
below.
(B) The President of the Company is a Director of the Company; the Secretary
of the Company is an officer of this Company. During the subsequent
three months ended September 30, 2006, the Company has lent Carbon
Jungle an additional $ 17,000.
(C) DK Corp is a business held by David Karst. See Creditor Trust below.
(D) The President of the Company is a stockholder and director of this
Company. The Secretary of the Company is an officer and stockholder of
this Company. During the subsequent three months ended September 30,
2006, the Company has lent DLR Funding an additional $5,377 and received
$30,000.
11
(E) The President of the Company is a stockholder and director of this
Company. The Secretary of the Company is an officer and stockholder of
this Company. A director of 1st Global is paid $10,000 per month by the
Company, which is recorded as a loan receivable by the Company. During
the three months ended September 30, 2006, the Company has lent 1st
Global an additional $413,321.
(F) The President of the Company is an officer of this Company.
The Company has recorded interest income on the above for the quarter ended
September 30, 2006 of fiscal year end June 30, 2007 in the amount of $ 138,629.
The Company owns 19% of the common stock of 1st Global Financial Services, Inc.
(1st Global). Accepted Sales is a wholly owned subsidiary of 1st Global. Albert
Reda, the Company's CEO, is a director of 1st Global. 1st Global is in the
debit/credit card processing business and is in the process of becoming a credit
card processor. 1st Global will also collaborate with the Company to market
Seamless Skyy-Fi services to its merchants. Accordingly, the Company has made
advances to 1st Global until they can obtain permanent financing from other
sources.
Creditor Trust
As of September 30, 2005, the Company appointed Financial Services LLC as the
Trust Protector for the Creditor Trust. The Trust is currently managed by
Mildred Carroll who is also the Trustee and is also the Company's Secretary. The
Company's previous Creditor Trust had appointed KFG LLC as Trust Protector which
was managed by David Karst as the Trustee for the Creditor Trust.
The Company established a creditor trust pursuant to the terms and conditions of
the trust agreement, whereby shares of the Company's common stock were to be
transferred in trust to KFG LLC, which had accepted the appointment as trustee.
The Company's creditor trust had been established to return the maximum amount
to beneficiaries and to allow the Company to continue to operate without
interruption.
Following the submission of claims and validation of such claims, the trustee
was to liquidate the trust property and distribute the proceeds to the trust
beneficiaries in a manner deemed most beneficial by the trustee.
NOTE 7: STOCKHOLDER'S EQUITY
ISSUANCE OF COMMON STOCK AND PREFERRED STOCK
The Board of Directors of the Corporation may from time to time
authorize by resolution the issuance of any or all shares of the Common Stock
and the Preferred Stock herein authorized in accordance with the terms and
conditions set forth in the Articles of Incorporation for such purposes, in such
amounts to such persons, corporations, or entities, for such consideration and
in the case of the Preferred Stock, in one or more series, all as the Board of
Directors in its discretion may determine and without any vote or either action
by the stockholders, except as otherwise required by law. The Board of
Directors, from time to time also may authorize by resolution, options, warrants
and other rights convertible into Common or Preferred stock (collectively
"securities". The securities must be issued for such consideration, including
cash, property, or services, as the Board of Directors may deem appropriate,
subject to the requirement that the value of such consideration be less than the
par value of the shares issued. Any shares issued for which the consideration so
fixed paid or delivered shall be fully paid stock and the holder of such shares
shall not be liable for any further call assessment or any other payment
thereon, provided that the actual value of such consideration is not less than
the par value of the shares so issued. The Board of Directors may issue shares
of Common Stock in the form of a distribution or distributions pursuant to a
stock dividend or split-up of the shares of the Common Stock only to ten holders
of the outstanding shares of the Common stock.
12
Preferred A shares converts as follows: 1 share of Preferred converts into
10,000 shares of common.
Preferred C shares converts as follows: one share of C which has a par value of
$1.00 converts into $1.00 worth of common shares.
Examples:
1. If the common stock 10 day average prior to the date of conversion was at
$.10 per share, one share of preferred C would convert into 10 shares of common.
2. If the common stock 10 day average prior to the date of conversion was at
$.001 per share, one share of preferred C would convert into 1,000 shares of
common.
STOCK ISSUANCE
During the first quarter ended September 30, 2006 for the fiscal year end June
30, 2007:
Ayuda Funding, LLC converted 76,027 shares of Series A Preferred Stock into
760,270,000 shares of common stock to repay Ayuda in the amount of $2,392,991.
Global Debit Card Ltd. converted 100 shares of Series A Preferred Stock valued
at $ 0.10 into 1,000,000 shares of common stock valued at $1,000.
500 shares of Series A Preferred Stock were converted into 5,000,000 shares of
common stock for consulting services and expensed at $24,000.
8,100,000 shares of common stock were issued for services and expensed for
officer's compensation at $81,000.
190,000,000 shares of common stock were issued to Ayuda Funding, LLC valued at
$190,000.
NOTE 8: INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as a result of the Company's net operating losses. The Company has
unused tax loss carry forwards of approximately $23,000,000 to offset future
taxable income. Such carry forwards expire in the years beginning 2021. The
deferred tax asset recorded by the Company as a result of these tax loss carry
forwards is approximately $8,000,000 at September 30, 2006. The Company has
reduced the deferred tax asset resulting from its tax loss carry forwards by a
valuation allowance of an equal amount as the realization of the deferred tax
asset is uncertain. There was no net change in the deferred tax asset and
valuation allowance from July 1, 2006 to September 30, 2006.
NOTE 9: COMMITMENTS AND CONTINGENCIES
LEASE
The Company, through its Alpha Tooling Inc. subsidiary has entered into lease
agreements for an office space and an automobile which will expire on June 14,
2007 and October 8, 2007, respectively. The Company rents additional office
space in Nevada, on a month to month basis. Rent expense under these leases for
the quarter ended September 30, 2006 and 2005 is $9,646 and $6,387,
respectively.
13
LEGAL PROCEEDINGS
The Company is a party to the following legal proceedings:
GLOBALIST V. INTERNET BUSINESS'S INTERNATIONAL, INC. ET AL
In July 2003, Globalist sued the Company and was awarded a judgment plus
interest in the amount of approximately $301,000. The Company appealed the
Court's decision and the award amount. In February 2005 the Company reached a
tentative settlement with Globalist, which required the payment of $75,000 by
March 2005, subject to Court approval. On March 8, 2005 the Company put $75,000
in its lawyer escrow account to satisfy the settlement. This cash is classified
as restricted cash on the company's balance sheet. The Company is still waiting
for Court approval regarding the final settlement, at which time the funds will
be paid as per agreement. However, Globalist is contesting the settlement
agreement and further court action is contemplated.
EMPLOYMENT CONTRACT
The Company has an employment contract with their Chief Executive Officer,
Albert Reda, that calls for a base salary of $240,000 for the year ended June
30, 2006 and an increase $1,000 a month from July, 2006 until its expiration
date in January, 2007. In addition, the contract includes a performance bonus
based on the Company's sales levels from $2,000,000 to $12,000,000, with a bonus
ranging from 500,000 to 3,000,000 shares of common stock.
NOTE 10: SEGMENT INFORMATION
In accordance with SFAS No. 131 "Disclosure about Segments of an Enterprise and
Related Information", management has determined that there are three reportable
segments based on the customers served by each segment: Such determination was
based on the level at which executive management reviews the results of
operations in order to make decisions regarding performance assessment and
resource allocation.
The Company is currently a start up business that is providing "Wireless
Internet" access at business locations and a developer and provider of a patent
pending software. In December 2005 the Company started a hosting company Alpha
Internet offering Seamless clients a high-security hosting facility (See Note 1:
Organization and Operations).
Certain general expenses related to advertising and marketing, information
systems, finance and administrative groups are not allocated to the operating
segments and are included in "other" in the reconciliation of operating income
reported below.
Information on reportable segments is as follows:
First quarter ended September 30,
2006 2005
----------------- -----------------
Wi-Fi ISP net sales $ 10,746 $ 6,408
Cost of Wi-Fi sales (39,638) (33,323)
Cost and expenses (818,348) (1,950,865)
Other net income 34,067 37,176
Minority interest - 33,527
----------------- -----------------
Net loss $ (813,173) $ (1,907,077)
================= =================
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The following discussion and analysis of the Company's financial condition and
results of operations should be read with the consolidated financial statements
and related notes included elsewhere in this Report.
When the words used in this Report, such as; "expects," "anticipates,"
"believes," "plans," "will" and similar expressions are intended to identify
forward-looking statements. These are statements that relate to future periods
and include, but are not limited to statements; as to statements regarding our
critical accounting policies, adequacy of cash, expectations regarding net
losses and cash flow, statements regarding growth and profitability, need for
future financing, dependence on personnel, operating expenses, ability to
respond to rapid technological change and statements regarding the issuance of
common stock to the Company's executive officers. Forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. These risks and uncertainties include,
but are not limited to, those discussed below, as well as risks related to our
ability to develop and timely introduce products that address market demand, the
impact of alternative technological advances and competitive products, market
fluctuations, the Company's ability to obtain future financing, and the risks
set forth below under "Factors That May Affect the Company's Results." These
forward-looking statements speak only as of the date hereof. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
OVERVIEW
SEAMLESS WI-FI, INC. ("Company") is currently a start up business with an
informational website at WWW.SLWF.NET which is currently operating three
subsidiaries as follows:
SEAMLESS SKYY-FI, INC., is providing "Wireless Internet" access at 30 business
locations. This service is referred to as Wireless Fidelity or Wi-Fi, for short.
Wi-Fi also refers to wireless equipment that meets published 802.11(x)
standards. Wi-Fi equipment operates in 2.4 and 5.8 GHz which are unlicensed
frequencies. There are many wireless Internet systems available but they all
have universal compatibility. The Wi-Fi POP is commonly referred to as a "Wi-Fi
Hotspot". Wireless Internet refers to radio frequencies that may either be
licensed (which is above 5.8 GHz "gigahertz") and or unlicensed frequency (which
is between 2.4 to 5.8 GHz). Seamless is currently developing its own patent
pending Wi-Fi encryption software, "SIB" (SECURE INTERNET BROWSING) that is
based upon the RSA's government certified 256 bit AES encryption coupled with
RSA's Public Key. The company's web site is WWW.SKYYFI.COM .
SEAMLESS PEER 2 PEER, INC., is a developer and provider of a patent pending
software program called "Phenom TM " that encrypts internet communications based
upon RSA's government certified 256 bit AES encryption coupled with RSA's Public
Key Infrastructure. Phenom provides flexible telecom data and voice transport
solutions. It also is a Virtual Private network that provides SOX and
HIPAA-compliant secure peer mail, chat, file transfer, remote PC access, secure
VoIP, video conferencing and white boarding in a two Mb client download.
Seamless is also a developer of a software program for a Peer 2 Peer social
network that will offer the highest levels of security, user verification and
safety because its backbone is based upon Seamless Peer 2 Peer's Phenom Secure
Private Network layer technology, which allows transmission of data to peers in
a transparent manner over conventional IP networks in such a way that
information can be shared among peers even if one or more are behind proxies,
Firewalls, or NATs. Seamless' "Freek2Freek" social network will be a truly
"safe" online community where everyone who interacts on it will be authenticated
and all communications will be encrypted. The company web site is
WWW.SEAMLESSP2P.NET .
SEAMLESS INTERNET, INC,. offers high security hosting services for SEAMLESS's
Peer 2 Peer and Skyy-Fi clients and is not available for general public hosting
services. Seamless Internet is also manufacturing and marketing its own version
of the "UMPC" (Ultra Mobile Personal Computer) named the S-XGen for Seamless
neXt GENeration . The S-XGen is a full-fledged computing and communications
device measuring only 6.5" x 3.8" x 1.25" and weighing 14 ounces that includes
an MP3 player, gaming console and a near full size integrated keyboard which
unfolds. The S-XGen also offers wireless internet and voice communications. Its
web site is WWW.SEAMLESSINTERNET.COM.
(A) PLAN OF OPERATION
The Company's current plan of operation is as follows:
Seamless Skyy-Fi, Inc., currently operates 30 Wi-Fi locations and provides 24/7
tech support for clients accessing the internet; Skyy-Fi is also developing the
first available patent pending "SIB" (Secure Internet Browsing), for its Skyy-Fi
clients and resellers. This program will be available for sale before December
2007.
15
Seamless Peer 2 Peer, Inc. is developing a secure patent pending Peer 2 Peer
software program called PhenomTM and secure social networking software. Phenom
Version 3.0 will be available for sale by March 2007 for business and government
agencies that require secure Peer 2 Peer virtual private network(s). The social
network secure software program is being launched at the 2007 International
Consumer Electronic Show in January 2007 and will be available for general
retail sales before the end of January 2007.
Seamless Internet, Inc. provides the hosting services for the Company and its
clients; Starting July 1st, 2007, the clients will begin to pay for the hosting
and technical support that, the Company is currently providing to its clients.
Internet has also acquired the patents and will produce the worlds first
personal pocket computer that has an almost full-sized keyboard. The S-XGen is
being launched at the 2007 International Consumer Electronic Show in January
2007 and will be available for general retail sales before the end of February
2007.
The Company has 3 employees and 7 independent contractor employees excluding
Officers and Directors. The Company will use independent contractors for sales
personnel, technical support and installation expertise as required.
(B) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
It is important to note that the following discussion and analysis of the
Company's financial condition and results of operations should be read with the
consolidated financial statements and related notes included elsewhere in this
Report.
The selected financial data for the first quarter of fiscal years ended June 30,
2007 and June 30 2006, is derived from the financial statements of the Company
and should be read in conjunction with the audited financial statements included
in the June 30, 2006 and 2005 10K/SB.
RESULTS OF OPERATIONS
In accordance with SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," management had determined that there are three reportable
segments: Seamless Skyy-Fi, Inc., a software developer for secure Wi-Fi services
and a wireless internet service provider; Seamless Peer 2 Peer, Inc., developer
of Phenom, a secure peer 2 peer software program for secure internet government
and business communications and a secure virtual private social network; and
Seamless Internet, Inc. which provides hosting for clients and has developed and
is launching a new Ultra Mobile Personal Computer (UMPC). Such determination was
based on the level at which executive management reviews the results of
operations in order to make decisions regarding performance assessment and
resource allocation.
Certain general expenses related to advertising and marketing, information
systems, finance and administrative groups are not allocated to the operating
segments and are included in "other" in the reconciliation of operating income
reported below. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies (Note 1).
ANALYSIS OF FINANCIAL CONDITION
REVENUES for the three months ended September 30, 2006 and 2005 were $10,746 and
$6,408, respectively which is an increase of $4,338.
THE TOTAL COSTS AND EXPENSES WHICH INCLUDES SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES for the three months ended September 30, 2006 and 2005 were $847,240
and $1,997,780, respectively which represents an decrease of $1,150,540.
The continued high cost of the selling, general and administrative expenses
reflect the fact that the Company is still in its development stage. These
expenditures are expected to remain at current levels until the Company's
products are brought to market.
OTHER INCOME includes interest earned. Since there are no expectations that
further activities will occur and because the revenues from previous operations
are dissimilar, there will be no comparison of the quarters.
NET LOSSES for the three months ended September 30, 2006 and 2005 were $813,173
and $1,907,077 respectively and loses are expected to remain at this level
through the end of 2007.
16
Management believes these results are due to the continued expansion of the
business and developmental cost of the software program and its related
expenses. These expenses are expected to remain high until the Wi-Fi and
software programs are offered for sale, at which time there will be a decrease
in the net operating loss.
FIRST QUARTER ENDED SEPTEMBER 30, OF FISCAL YEAR ENDED
JUNE 30, 2007 JUNE 30, 2006
------------- -------------
WI-FI ISP NET SALES $ 10,746 $ 6,408
COST OF WI-FI SALES (39,892) (33,322)
SOFTWARE NET SALES 0 0
COST OF SOFTWARE SALES 0 0
SOFTWARE NET SALES 0 0
COST OF SOFTWARE SALES 0 0
NET LOSS $ (818,348) $ (1,977,780)
OTHER INCOME (EXPENSES) 34,067 37,176
NET LOSS $ (813,173) $ (1,907,077)
The following discussion should be read in conjunction with the financial
statements of the Company and notes thereto contained elsewhere in this report.
INFORMATION ON REPORTABLE SEGMENTS IS AS FOLLOWS:
(1) WISP: The resultant losses from operations for the Wi-Fi ISP segment,
including the first quarter of fiscal year ended June 30, 2007 and 2006
are $29,146 and $26,914 respectively. These losses are expected to
continue because of the expenses related to the startup of this
operation.
(2) SOFTWARE: The expenditures for the Software encryption program segment
for the first quarter of fiscal year ended June 30, 2007, are expected
to continue related to the startup of this operation.
(3 INTERNET The expenditures for the development of the mini personal
computer (UMPC) segment for the first quarter of fiscal year ended June
30, 2007, are expected to continue because of the expenses related to
the startup of this operation.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities at the end of the third quarter of fiscal
year ended June 30, 2006, decreased by ($2,149,974) due to the use of stock for
services which is an increase compared to the results for the same period ended
2005 of ($476,566). The Company has a source for capital so the Company can
expand its Internet operations of establishing wireless Internet locations
commonly referred to as Wi-Fi hotspots and to allow the continued development of
its Phenom Software program, the Wi-Fi inception software, the social networking
software and the production of S-XGen UMPC.
CAPITAL EXPENDITURES
Net cash used by operations activities of $739,911 for the first quarter period
of fiscal year ended June 30, 2007 decreased by $2,452,409 compared to the net
cash used in operational activities of $3,192,320 for the first quarter of
fiscal year ended June 30, 2006. The decrease is due primarily to the decrease
in development costs of its subsidiaries products and services and operations.
ACQUISITIONS
During the third quarter of fiscal year ended June 30, 2006 the Company acquired
the patent rights to the ED-1 pocket personal computer for $500,000 cash and a
capital investment of $500,000 over an 8 month period of time from the date of
acquisition. This asset was transferred to Seamless Internet, Inc a subsidiary
of Seamless Wi-Fi, Inc.
In January 2005 the Company acquired the assets of Seamless P2P LLC for 700,000
shares of Preferred Class "C" Shares and 300,000,000 shares of the Company's
Common stock valued at $1,000,000 and 20% interest in the new subsidiary of the
Company "Seamless Peer 2 Peer, Inc" a Nevada Corporation. These assets were
transferred to the new subsidiary of the Company Seamless Peer 2 Peer, Inc.
17
In August 2003 the Company acquired Alpha Tooling, Inc. with 190,000 shares of
DCM Enterprises, Inc. common stock, as per an agreement with DCM Enterprises,
Inc. The Company then transferred Alpha Tooling, Inc. to DCM Enterprises, Inc.
for credit towards the debit it had with DCM Enterprises, Inc. After October 1,
2003 the transaction was changed by agreement to an Asset Assignment. The
Company assigned certain assets of Alpha Tooling for credit of $311,639 which
reduced the debt owed to DCM Enterprises, Inc. from $760,000 to $448,361. The
Company retained the Alpha Tooling Corporation which had assets of $42,050
(which were not assigned to DCM Enterprises, Inc.), and debt of $351,306.
In September 2003 the Company, through its wholly owned subsidiary Global Debit
Cash Card, Inc., a Nevada Corporation ("GLCD") agreed to purchase from DCM the
Colorado and Utah territories for marketing the CARDS as per the USA Territory
Marketing Representative Agreement. Pursuant to the terms of the agreement GLCD
will operate as the Territory Marketing Representative ("TMR") in Colorado and
Utah and license resellers of the CARDS. The Licensed Activated Resellers
("LAR") will be licensed through GLCD, the TMR.
In December 2003 GLCD acquired the assets of DCM for 60,000,000 common shares of
GLCD which included reduction of the note owed by the Company to $515,000, which
was transferred as an asset to GLCD. GLCD is traded over the counter (OTC) on
the Pink Sheets LLC quotation service under the symbol "GLCD".
In April 2005 GLCD reversed its stock 1,000 shares of GLCD for 1 of GBCD (the
new stock symbol) GBCD recently traded at $1.01 per share in low volume.
CRITICAL ACCOUNTING POLICIES
The Securities and Exchange Commission issued Financial Reporting Release No.
60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies,"
or FRR 60, suggesting that companies provide additional disclosure and
commentary on their most critical accounting policies. The most critical
accounting policies are the ones that are most important to the portrayal of a
company's financial condition and operating results, and require management to
make its most difficult and subjective judgments, often as a result of the need
to make estimates of matters that are inherently uncertain. The Company believes
that of the significant accounting policies used in the preparation of the
consolidated financial statements (see Note B to the Financial Statements), the
following are critical accounting policies, which may involve a higher degree of
judgment, complexity and estimates. The methods, estimates and judgments the
Company uses in applying these most critical accounting policies have a
significant impact on the results reported in the Company's financial
statements.
OFF BALANCE SHEET
The Company has not entered into any off balance sheet arrangements that have,
or are reasonably likely to have a current or future effect on the company's
financial condition, changes in financial condition, revenues or expenses,
result of operations, liquidity, capital expenditure, or capital resources which
would be considered material to investors.
USE OF ESTIMATES
The preparation of the consolidated financial statements are in conformity with
United States generally accepted accounting principles which require the Company
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
STOCK-BASED COMPENSATION ARRANGEMENTS
The Company issues shares of common stock to various individuals and entities
for certain management, legal, consulting and marketing services. These
issuances are valued at the fair market value of the service provided and the
number of shares issued is determined, based upon the closing price of the
Company's common stock on the date of each respective transaction. These
transactions are reflected as a component of general and administrative expenses
in the accompanying statement of operations.
18
INFLATION
The moderate rate of inflation over the past few years has had an insignificant
impact on the Company's sales and results of operations during the period.
NET OPERATING LOSS CARRY FORWARDS
No provision for income taxes has been recorded in the accompanying financial
statements as a result of the Company's net operating losses. The Company has
unused tax loss carry forwards of approximately $22,000,000 to offset future
taxable income. Such carry forwards expire in the years beginning 2021.
The deferred tax asset recorded by the Company as a result of these tax loss
carry forwards is approximately $7,000,000 as of June 30, 2006. The Company has
reduced the deferred tax asset resulting from its tax loss carry forwards by a
valuation allowance of an equal amount as the realization of the deferred tax
asset is uncertain. The net change in the deferred tax asset and valuation
allowance from July 1, 2005 to June 30, 2006 was an increase of approximately
$2,000,000.
FORWARD LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations contains "forward looking statements" within the meaning
of Rule 175 under the Securities Act of 1933, as amended, and Rule 3b-6 under
the Securities Act of 1934, as amended, including statements regarding, among
other items, the Company's business strategies, continued growth in the
Company's markets, projections, and anticipated trends in the Company's business
and the industry in which it operates. The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar expressions identify
forward-looking statements. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. The Company
cautions that these statements are further qualified by important factors that
could cause actual results to differ materially from those in the forward
looking statements, including, among others, the following: reduced or lack of
increase in demand for the Company's products, competitive pricing pressures,
changes in the market price of ingredients used in the Company's products and
the level of expenses incurred in the Company's operations. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained herein will in fact transpire or prove to be accurate. The
Company disclaims any intent or obligation to update "forward looking
statements."
ITEM 3. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. We maintain "disclosure
controls and procedures," as such term is defined in Rule 13a-14(c) under the
Securities Exchange Act of 1934, or the Exchange Act, that are designed to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
our management, including our Chief Executive Officer and Treasurer, as
appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating our disclosure controls and procedures, management
recognized that disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met. Additionally, in
designing disclosure controls and procedures, our management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures. The design of any disclosure
controls and procedures also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving our stated goals under all potential future conditions. The
evaluation revealed certain weaknesses in disclosure controls and procedures.
Based on their evaluation as of a date within 90 days prior to the filing date
of this Quarterly Report, our Chief Executive Officer and Treasurer have
concluded that, subject to the limitations noted above, and except for the
weaknesses noted above, our disclosure controls and procedures were effective to
ensure that material information relating to us, including our consolidated
subsidiaries, is made known to them by others within those entities,
particularly during the period in which this Quarterly Report was being
prepared.
(b) CHANGES IN INTERNAL CONTROLS. We plan to institute greater controls by
adding additional staff to allow for greater third person review and
verification of all transactions thereby enhancing the accuracy of all records.
We are also looking to implement many of the new requirements required under the
Sarbanes-Oxley Act of 2002 during the coming year. However, we believe that
there were no significant changes in our internal controls or, to our knowledge,
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
19
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GLOBALIST V. INTERNET BUSINESS'S INTERNATIONAL, INC. ET AL
In July 2003 Globalist sued the Company and was awarded a judgment plus interest
in the amount of approximately $301,000. The Company appealed the Court's
decision and the award amount. In February 2005 the Company reached a tentative
settlement with Globalist which required the payment of $75,000 by March 2005,
subject to Court approval. On March 8, 2005 the Company put $75,000 in its
lawyer's escrow account to satisfy the settlement. This cash is classified as
restricted cash on its balance sheet. The Company is still waiting for Court
approval regarding the final settlement, at which time the funds will be paid as
per agreement. However Globalist is contesting the settlement agreement and
further court action is contemplated.
ITEM 2. CHANGES IN SECURITIES
ISSUANCE OF COMMON STOCK AND PREFERRED STOCK
The Board of Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of the Common Stock and the
Preferred Stock herein authorized in accordance with the terms and conditions
set forth in the Articles of Incorporation for such purposes, in such amounts,
to such persons, corporations, or entities, for such consideration and in the
case of the Preferred Stock, in one or more series, all as the Board of
Directors in its discretion may determine and without any vote or either action
by the stockholders, except as otherwise required by law. The Board of
Directors, from time to time also may authorize by resolution, options, warrants
and other rights convertible into Common or Preferred stock (collectively
"securities"). The securities must be issued for such consideration, including
cash, property, or services, as the Board of Directors may deem appropriate,
subject to the requirement that the value of such consideration be less than the
par value if the shares issued. Any shares issued for which the consideration so
fixed paid or delivered shall be fully paid stock and the holder of such shares
shall not be liable for any further call of assessment or any other payment
thereon, provided that the actual value of such consideration is not less that
the par value of the shares so issued. The Board of Directors may issue shares
Common Stock in the form of a distribution or distributions pursuant to a stock
dividend or split-up of the shares of the Common Stock only to ten holders of
the outstanding shares of the Common Stock.
All shares issued by the Company for services through the period ended March 31,
2005, were issued at below par value.
AUTHORIZED SHARES
During November 2004 the board of directors amended the articles of
incorporation to increase the authorized to 20,000,000,000 shares (par value of
$.001) of which 19,990,000,000 are common shares and 10,000,000 are preferred.
There are three classes of preferred stock which are as follows; Class A
Preferred of 5,000,000 shares of which one (1) share of preferred converts to
10,000 shares of common stock, Class B Preferred of 3,000,000 shares of which
(1) share of preferred converts to 1,000 shares of common stock, and Class C
Preferred of 2,000,000 shares. As of this date the Company has not updated its
articles of incorporation with the state of Nevada, which shows only
11,000,000,000 shares authorized.
The company plans to amend the previous resolution decreasing the authorized to
11,000,000 shares so no amendment to the Articles of Incorporation will have to
be filed with the state of Nevada.
On September 30, 2004 the Company amended its Certificate of Incorporation and
authorized 5,000,000 shares of Class C Preferred stock, $0.001 par value,
convertible, with a stated value of $1.00 per share for conversion purposes. The
Class C Preferred stock is convertible at the option of the holder into common
shares of the Company at the end of 12 months from the date of its issuance into
based upon the ten day average trading price of the common stock just prior to
the end of the 12 month holding period. Therefore One Dollar ($1.00) of
Preferred Stock (which is one share of Class C Preferred) will be converted into
$1.00 worth of common stock. For example if the price per share of the common
stock on the date of conversion is $.10 per share the holder of the Preferred
stock will receive 10 shares of common stock for every shares of Class C
Preferred stock that is converted into common.
20
During April 2003 the board of directors amended the articles of incorporation
to increase the authorized to 10,000,000,000 shares of which 9,990,000,000 are
common shares and 10,000,000 are preferred. The shares were initially increased
in April 2003 to 2,000,000, and the balance was issued in April 2004.
STOCK ISSUANCE
DURING THE FIRST QUARTER ENDED SEPTEMBER 30, 2006 FOR THE FISCAL YEAR END JUNE
30, 2007:
Ayuda Funding, LLC converted 76,027 shares of Series A Preferred Stock into
760,270,000 shares of common stock to repay Ayuda in the amount of $2,392,991.
Global Debit Card Ltd. converted 100 shares of Series A Preferred Stock valued
at $ 0.10 into 1,000,000 shares of common stock valued at $1,000.
500 shares of Series A Preferred Stock were converted into 5,000,000 shares of
common stock for consulting services and expensed at $24,000.
8,100,000 shares of common stock were issued for services and expensed for
officer's compensation at $81,000.
190,000,000 shares of common stock were issued to Ayuda Funding, LLC valued at
$190,000.
DURING THE FISCAL YEAR ENDED JUNE 30, 2006 THE FOLLOWING STOCK WAS ISSUED.
2,022,500 shares of common stock were issued for operational services valued at
$648,775.
Ayuda Funding LLC converted 24,703 shares of Series A preferred stock into
247,030,520 shares of common stock, of which $773,145 was used to pay judgments,
and payback Ayuda Funding LLC in the amount of $617,575.
Adobe Oil acquired 400,000 shares of Series C preferred stock from Seamless P2P
valued at $400,000, which 300,000 shares were converted into 5,656,537 shares of
common stock and 100,000 shares were returned to Treasury. See Note 6: Related
Party Transaction.
Windsor Professional Plaza LLC converted 6,575 shares of Series A preferred
stock into 65,750,000 shares of common stock of which 10,000,000 shares of
common stock were issued for consulting services and expensed at $473,000.
DURING FISCAL YEAR ENDED JUNE 30, 2005 THE FOLLOWING STOCK WAS ISSUED. .
300,000 shares of common stock, valued at $300,000, as partial payment for the
acquisition of the assets of Seamless P2P, LLC, the balance of the payments was
issued as 700,000 shares of Class C Preferred Stock valued at $700,000.
3,558,642 shares of common stock were issued for operational services valued at
$784,312.
1,109,435 shares were issued for officer's compensation valued at $347,484.
600,000 share of common stock valued at $300,000 were issued to pay Windsor
Professional Plaza LLC for $300,000 worth of debt.
220,000 shares were issued to acquire 22,000 shares of Save the World valued at
$110,000 for $5.00 per share.
The company complies with the provisions of Emerging Issues Task Force Issue No.
96-18, Accounting for Equity Instruments Issued to Other Than Employees for
Acquiring, or in Conjunction with, Selling Goods or Services ("EITF 96-18"),
with respect to stock issuances to such non-employees, whereby the value of the
services was determined as a reliable measurement of fair value.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
-------------- --------------------------------------------------------------------------------------------------
NUMBER DESCRIPTION
-------------- --------------------------------------------------------------------------------------------------
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
-------------- --------------------------------------------------------------------------------------------------
32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes Oxley Act of 2002 (filed herewith).
-------------- --------------------------------------------------------------------------------------------------
REPORTS ON FORM 8-K
May 26, 2006 Disclosure of conversion of Preferred A shares into common shares.
March 20, 2006 Disclosure of an "Asset Purchase and Investment Agreement" acquiring the patents
to a mini computer
February 21, 2006 Response to SEC questions regarding the Registrants "Preliminary Proxy Statement".
February 21, 2006 Refiled name change from Alpha Wireless Broadband, Inc. to Seamless Wi-Fi, Inc.
January 26,2006 Disclosure of contract with Orion's Wave, Inc to complete the development of the
software
program for Seamless Peer 2
January 26, 2006 Disclosure of name change from Alpha Wireless Broadband, In. to Seamless Wi-Fi, Inc
January 26, 2006 Notice of Default was sent on December 23, 2005 to Software Technology and
Consulting, Inc.
October 28, 2005 Disclosure entered into a non-binding Letter of Intent (the "LOI") with Intent Media
Works, Inc
October 20, 2005 Disclosure of an Asset Purchase Agreement with Indigo Technology Services, Inc.
June 28, 2005 Disclosure of name change to Seamless Wi-Fi, Inc.
April 6, 2005 Disclosure of stock issuance
March 17, 2005 Disclosure of appointments to the board of directors
January 19, 2005 Disclosure of Asset Purchase agreement with Seamless P2P,LLC and Seamless Peer 2 Peer,
Inc
December 21, 2004 Disclosure of issuance of Class A preferred stock in consideration of services rendered.
November 3, 2004 Disclosure of Creditor Trust
October 7, 2004 Disclosure of Location Provider Agreement
October 7, 2004 Disclosure of Location Provider Agreement
October 6, 2004 Disclosure of Letter of Intent dated September 29, 2004 entered into by and between
Alpha Wire Broadband, Inc., and Seamless P2P, LLC.
October 4, 2004 Disclosure of Certificate of Designation for Preferred Stock fro Alpha Wireless
Broadband, Inc.
September 21, 2004 Disclosure of name change from Internet Business's International, Inc. to Alpha
Wireless Broadband, Inc.
July 7, 2004 Disclosure that a Creditor Trust has been established
June 30, 2004 Disclosure of Factoring and Security Agreement with First American Factoring
April 27, 2004 Disclosure of Change of Accountants
March 5, 2004 Disclosure of Asset Purchase Agreement entered into between the Company and Debit Card
Marketing, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEAMLESS WI-FI, INC.
F/K/A ALPHA WIRELESS BROADBAND, INC.
Date: November 20, 2006
/s/ Albert R. Reda
-------------------
Albert R. Reda
Chief Executive Officer,
Chief Financial Officer
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