UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2008
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-20259
SEAMLESS CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 33-0845463
------ ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
800 N. RAINBOW BLVD., STE. 208, LAS VEGAS, NV 89109
(Address of principal executive offices)
(702) 448-1861
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of February 19, 2009, the number of shares of common stock issued and
outstanding was 3,294,580,963
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
The Form 10-Q for the quarterly period ended December 31, 2008 is being amended
to make changes in to delineate between continuing operations and the
discontinued operations that ceased July 2008 which consisted of providing Wi-Fi
to the hospitality providers. The Financial statements, notes and Management
Discuss and Analysis were changed to reflect that change
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet - December 31, 2008(Unaudited) and June 30, 2008 (audited) 2
Statements of Operations -
For the three months and six months ended
December 31, 2008 and 2007 3
Statements of Cash Flow -
For the six months ended December 31, 2008 and 2007 4
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits 14
SIGNATURES 15
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEAMLESS CORPORATION
f/k/a/ SEAMLESS WI-FI, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, 2008 June 30, 2008
(unaudited) (audited)
------------ ------------
Current assets
Inventory -- 150,000
Prepaid license fees -- 490,000
Other current assets 5,956 6,800
Current assets of discontinued operations -- 2,996,512
------------ ------------
Total current assets 5,956 3,643,312
Property and equipment (net of accumulated depreciation of $47,425 and
$76,169 at December 31, 2008 and June 30, 2008, respectively) 2,082,669 2,227,036
Security deposit 13,910 21,561
------------ ------------
TOTAL ASSETS $ 2,102,535 $ 5,891,909
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank overdraft 7,083 2,930
Accounts payable and accrued expenses 999,341 1,394,707
Other current liabilities 135,698 55,456
Payable to officer 274,729 174,874
Current liabilities of discontinued operations 361,054 361,054
------------ ------------
Total current liabilities 1,777,905 1,989,021
------------ ------------
Commitments and contingencies (See Note 9)
Stockholders' equity
Preferred A stock, par value $0.001, 4,000,000 shares and 10,000,000 454 692
shares authorized at December 31, 2008 and June 30, 2008,
454,912 shares and 692,312 shares issued and outstanding at
December 31, 2008 and June 30, 2008
Preferred B stock, par value $0.001, 1,000,000 and 10,000,000 shares -- --
authorized at December 31, 2008 and June 30, 2008
0 shares issued and outstanding
Preferred C stock, par value $0.001, 5,000,000 shares authorized at 2,595 2,700
December 31, 2008 and June 30, 2008, 2,595,000 shares and
2,700,000 shares issued and outstanding at December 31, 2008 and
June 30, 2008
Common stock, par value $0.001, 10,990,000,000 shares and 11,000,000 2,761,891 227,891
shares authorized at December 31, 2008 and June 30, 2008,
2,761,890,963 shares and 227,890,963 shares issued and outstanding
at December 31, 2008 and June 30, 2008
Additional paid-in capital 23,416,478 25,793,219
Stock subscription receivable (540,750) (1,340,750)
Accumulated deficit (25,216,038) (20,680,864)
------------ ------------
Total stockholders' equity 424,630 4,002,888
Less: Treasury stock at cost (100,000) (100,000)
------------ ------------
Stockholders' equity 324,630 3,902,888
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,102,535 $ 5,891,909
============ ============
The accompanying notes are an integral part of these financial statements.
2
SEAMLESS CORPORATION
f/k/a/ SEAMLESS WI-FI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31,
(unaudited)
3 MONTHS 6 MONTHS
------------------------------ -------------------------------
2008 2007 2008 2007
------------- ----------- -------------- -----------
Revenues $ 0 $ 0 $ 473 $ 0
Cost of revenues 3,470 574 8,919 5,390
------------- ----------- -------------- -----------
Gross Income (Loss) (3,470) (574) (8,446) (5,390)
------------- ----------- -------------- -----------
Expenses:
Selling, general and admin. 303,466 100,779 558,363 143,518
Consulting 0 28,045 10,000 41,224
Interest 0 0 21 2,406
Legal 6,392 20,269 6,392 44,894
Officer Payroll 75,000 155,151 150,000 114,271
Settlement fee 169,261 0 169,261 0
License fee write off 239,146 0 239,146 0
Depreciation and amortization 3,794 4,740 15,867 5,610
------------- ----------- -------------- -----------
Total Expenses 797,059 303,984 1,149,050 351,922
------------- ----------- -------------- -----------
Loss from continuing operations
Before interest and other items (800,529) (309,558) (1,157,496) (357,312)
Other income
Cancellation of indebtedness 12,119 12,119 24,238 24,238
Other (60) 1,440
------------- ----------- -------------- -----------
Loss from continuing operations (788,410) (297,499) (1,133,258) (331,634)
------------- ----------- -------------- -----------
Loss from continuing operations (788,410) (297,499) (1,133,258) (331,634)
Income (loss) from discontinued operations (2,982,852) (130,523) (2,996,512) 343,908
------------- ----------- -------------- -----------
Total discontinued operations (2,982,852) (130,523) (2,996,512) 343,908
------------- ----------- -------------- -----------
Net Income (loss) $ (3,771,262) $ (428,022) $ (4,129,770) $ 12,274
============= =========== ============== ===========
Preferred C stock dividends-deemed -- (500,000) (405,400) (500,000)
------------- ----------- -------------- -----------
Net loss available to common stockholders $ (3,771,262) $ (928,022) $ (4,535,170) $ (487,726)
============= =========== ============== ===========
Basic and Diluted income (loss)
per common share
Loss from continuing operations, after
preferred dividends $ (0.00) $ (0.10) $ (0.00) $ (0.12)
Income (loss) from discontinued operations (0.00) (0.02) (0.00) 0.05
============= =========== ============== ===========
Net income (loss) per share available to
common stockholders $ (0.00) $ (0.12) $ (0.00) $ (0.07)
Weighted average basic and diluted common 1,551,983,354 7,962,803 1,067,067,593 6,948,095
============= =========== ============== ===========
The accompanying notes are an integral part of these financial statements.
3
SEAMLESS CORPORATION
f/k/a SEAMLESS WI-FI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31,
(unaudited)
2008 2007
----------- -----------
Cash flows used in operating activities
Net income (loss) from continuing operations $(1,133,258) $ (331,634)
Adjustments to reconcile net loss to
used by operating activities:
Depreciation and amortization 15,867 16,005
Cancellation of indebtedness (24,238) (24,238)
Issuance of common stock for services 10,000 218,750
Issuance of preferred C stock for payment of expense - 2,485
Interest expense - 6,864
License write off 239,146 -
Settlement fee 19,261 -
Changes in operating assets and liabilities
Other current assets 845
Security deposits 7,651 (14,961)
Accounts payable 157,460 21,254
Payroll taxes payable (15,000)
Other current liabilities (20,952) 19,783
Payable to officer 99,855 60,488
Restricted cash - Escrow - 75,000
Discontinued operations - (637,567)
----------- -----------
Net cash used by operating activities (628,363) (602,771)
----------- -----------
Cash flows used in investing activities:
Technology -- (165,619)
Investments -- (2,750)
Discontinued operations -- (161,584)
----------- -----------
Net cash used in investing activities -- (329,953)
----------- -----------
Cash flows from financing activities
Proceeds for additional paid in capital 23,750
Proceeds from sale of common stock 28,416 -
Proceeds from sale of preferred A stock 100,000 -
Proceeds from sale of preferred C stock 394,600 890,000
Increase in short term debt 101,194 -
Bank overdraft 4,153 3,793
----------- -----------
Net cash provided by financing activities 628,363 917,543
----------- -----------
Increase (decrease) in cash - (15,181)
Cash at beginning of period - 15,181
----------- -----------
Cash at end of period $ -- $ --
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
SEAMLESS CORPORATION
f/k/a SEAMLESS WI-FI, INC.
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31,
(unaudited)
2008 2007
---------- ----------
Cash paid for:
Interest $ 21 $ --
Taxes $ -- $ --
Noncash investing, and financing activities
Machinery and equipment write off $ 44,611 $ --
Tooling transferred to manufacturer in leiu of cash payment $ 128,500 $ --
Inventory transferred to manufacturer in leiu of cash payment $ 150,000 $ --
Deemed dividends recorded for Preferred C stock $ 405,400 $ --
Common stock issued for services $ 83,342
Preferred C stock issued for officer's compensation $ 200,000
Preferred A stock issued for conversion of preferred C stock $ 50,000
Preferred C stock issued for stock subscription receivable $ 200,000
Preferred C stock issued for deemed dividend $ -- $ 500,000
Common stock and preferred A stock issued for conversion
of preferred C stock $ 50,000
Common stock issued for conversion of preferred C stock $ 5,000
Common stock issued for deferred compensation $ 120,000
Common stock issued for conversion of preferred A stock $1,375,400 $1,416,206
The accompanying notes are an integral part of these financial statements.
5
SEAMLESS CORPORATION
F/K/A SEAMLESS WI-FI INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: ORGANIZATION AND OPERATIONS
Prior to December 31, 1997, Seamless Corporation ("The Company") formerly known
as Seamless Wi-Fi, 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 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. As of June 30, 2008, Skyy-Fi closed the
internet service and tech support for these 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
Infrastructure 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 Seamless Internet
offering Seamless clients a high-security hosting facility.
In July 2008, the Company changed the name of its subsidiary, Seamless Skyy-Fi,
Inc. to Seamless Tek Labs, Inc. The Company's subsidiary, Seamless Peer 2 Peer
Inc. became a subsidiary of Seamless Tek Labs, Inc. Both Tek Labs and Peer 2
Peer will concentrate on software development.
In July 2008, the Company started a marketing company, Seamless Sales, LLC for
all of the products the Company and its subsidiaries produce.
In July 2008, the Company changed its name from Seamless Wi-Fi, Inc. to Seamless
Corporation which was approved by the Board of Directors. The Company will
concentrate on production of the S-Gen a Pocket Personal Computer, the SNBK-1 a
Mini Note Book, and MP3-4 players.
In July 2008 Seamless discontinued its operations of providing Wi-Fi to
hospitality providers. The incomes from those operations were from fees paid by
the hotels and businesses and the cost associated from those operations include
customer support and providing Internet Bandwidth. Therefore the Assets,
Liabilities, Income and Expenses associated with those operations are delineated
on the financials statements.
6
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the Company and its wholly
owned subsidiaries and majority-owned subsidiary. They have been prepared in
conformity with (i) accounting principles generally accepted in the United
States of America; and (ii) the rules and regulations of the United States
Securities and Exchange Commission. All significant intercompany accounts and
transactions between the Company and its subsidiaries have been eliminated in
consolidation.
UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of Seamless
Corporation. and its Subsidiaries (the Company) have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information, pursuant to the rules and regulations of the
Securities and Exchange Commission. Pursuant to such rules and regulations,
certain financial information and footnote disclosures normally included in the
consolidated financial statements have been condensed or omitted. The results
for the periods indicated are unaudited, but reflect all adjustments (consisting
only of normally recurring adjustments) which management considers necessary for
a fair presentation of operating results.
The operating results for the six-month period ended December 31, 2008 are not
necessarily indicative of the results that may be expected for the year ended
June 30, 2009. These unaudited consolidated financial statements should be read
in conjunction with the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended June
30, 2008.
RECLASSIFICATIONS
Certain reclassifications have been made in the 2008 financial statements to
conform to the 2007 presentation. These reclassifications did not have any
effect on net income (loss) or shareholders' equity.
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
loans receivable. Actual results could differ from those estimates.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
On July 1, 2008, we adopted Financial Accounting Standards Board ("FASB")
Statement No. 157, Fair Value Measurements ("SFAS No. 157") for all financial
assets and liabilities and nonfinancial assets and liabilities that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements, This statement does not
require any new fair value measurements, but provides guidelines on how to
measure fair value by providing a fair value hierarchy used to classify the
source of the information.
Statement of Financial Accounting Standard ("SFAS") No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities- Including an amendment of
FASB Statement No. 115, became effective for us on July 1, 2008. SFAS No. 159
gives us the irrevocable option to elect fair value for the initial and
subsequent measurement for certain financial assets and liabilities on a
contract-by-contract basis with the difference between the carrying value before
election of the fair value option and the fair value recorded upon election as
an adjustment to beginning retained earnings. We chose not to elect the fair
value option.
NOTE 3: OPERATIONS AND LIQUIDITY
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. At December 31, 2008 the Company had an accumulated deficit of
$25,216,038.
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 efforts 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
7
NOTE 4: INVENTORY
Inventory consisted of parts and materials held by a manufacturer in China. The
Company transferred the ownership of the inventory in the amount of $150,000 to
Kelly's Inc. according to the settlement agreement with them during the quarter
of ending December 31, 2008.
NOTE 5: PROPERTY AND EQUIPMENT, AT COST
Property and equipment consists of the following:
December 31, 2008 June 30, 2008
----------------- -------------
Machinery and Equipment $ 53,390 $ 98,001
Technology 2,076,704 2,076,704
Tooling 0 128,500
----------- -----------
2,130,094 2,303,205
Less: Accumulated Depreciation 47,425 76,169
----------- -----------
2,082,669 2,227,036
=========== ===========
Estimated useful life for machinery and equipment is 5 years. The production for
tooling and technology is not completed and the estimated useful life is not
determined yet.
Depreciation expense for the years ended December 31, 2008 and 2007 was $15,867
and $16,005 respectively.
No amortization has been taken on technology as the production of inventory has
not commenced as of December 31 2008.
$44,611 of fixed assets was written off as idle equipment during the quarter
ended September 30, 2008.
The Company transferred the ownership of the tooling in the amount of $128,500
to Kelly's Inc. according to the settlement agreement with them during the
quarter of ending December 31, 2008.
Note 6: Related Party Transactions
During the quarter ended September 30, 2008, the Company wrote off $100,000
against DLR Funding's loan as uncollectible. During the quarter ended December
31, 2008, the Company wrote off $1,442,847 against 1st Global Financial
Service's loan and $900,152 against DLR Funding's loan as uncollectible. At June
30, 2008 Carbon Jungle's loan of $243,332 was fully reserved and during the
quarter ended December 2008, the notes receivable and the allowance were both
removed. At December 31, 2008, there was no notes receivable from related
parties.
The Company recorded interest income on the above for the six months ended
December 2007 in the amount of $159,548. The interest at annual rate is 12% for
the six months ended December 31, 2007. As all of the notes receivable and the
accrued interest receivable were written off in the second quarter, the interest
income was not recorded for the six months ended December 31, 2008.
During the quarter ended December 31, 2008, the Company wrote off the accrued
interest receivable of $553,512. At December 31, 2008, there was no accrued
interest receivable.
At June 30, 2008 the accrued interest is $553,512 and the total of the loans is
$2,443,000. The total of the loans and the accrued interest is $2,996,512 at
June 30, 2008 and they are classified as current assets of discontinued
operations.
Note 7: Stockholder's Equity
During the quarter ended September 30, 2008, the following securities were
issued.
77,500 shares of Series A Preferred Stock were converted to 775,000,000 shares
of common stock.
50,000 shares of Series C Preferred Stock were converted into 10,000,000 shares
of common stock and 4000 shares of Series A Preferred Stock.
50,000 shares of Series C Preferred Stock were converted into 5,000 shares of
Series A Preferred Stock.
MAKR's stock subscription receivable was $800,000 at June 30, 2008 and the
payment of $296,744 was received in the quarter ended September 30, 2008. At
September 30, 2008 the remaining $97,856 was receivable and $405,400 was
recorded as deemed dividend during the quarter ended September 30, 2008.
During the quarter ended September 30, 2008, Antigua LLC paid $100,000 for
500,000 shares of Series A Preferred Stock which were issued in the year ended
June 30, 2008.
8
During the quarter ended December 31, 2008, the following securities were
issued.
5,000 shares of Series C Preferred Stock were converted to 50,000,000 shares of
common stock.
168,900 shares of Series A Preferred Stock were converted to 1,689,000,000
shares of common stock.
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 $20,000,000 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 for both years ended June 30, 2008 and
2007. 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 is no net change in the deferred tax
asset and valuation allowance from July 1, 2008 to December 31, 2008.
NOTE 9: COMMITMENTS AND CONTINGENCIES
LEASE
The Company entered into lease agreements for an office space which expires on
August 31, 2010 and a server co-location facility which expires on November 2,
2010. The Company rents additional office space in Nevada, on a month to month
basis. Rent expense under these leases for the quarters ended December 31, 2008
and 2007 were $87,561 and $23,766, respectively. The annual minimum future lease
payments required under the Company's operating leases are as follows.
December 31, 2009 $168,840
December 31, 2010 $132,310
--------
Total $301,150
========
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 current adjusted amount of
$361,054 reflects the current liability of discontinued operations in the
accompanying financial statements.
EMPLOYMENT CONTRACT
The Company has an employment contract with their Chief Executive Officer,
Albert Reda that calls for a base salary of $300,000 for the year ended June 30,
2008 and thereafter, a base salary of $25,000 a month from July 2007 until its
expiration date in June 2012. In the event that the company becomes profitable
according to generally accepted accounting principles, the employee's monthly
salary shall be increased to $30,000 for the remainder of the employment term.
In addition, the contract includes a bonus that will be determined by the
company's Board of Directors.
NOTE 10: SEGMENT INFORMATION
The Company had three segments and was providing "Wireless Internet" access at
business locations and a developer and provider of a patent pending software,
but in July 2008 the Company closed the internet service and tech support.
Currently the Company operates in one reportable segment. The Company will
concentrate on production of the S-Gen a Pocket Personal Computer, the SNBK-1 a
Mini Note Book, and MP3-4 players. The Company did not start commercial
production in the second quarter of this fiscal year yet.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
financial statements, including the notes thereto, appearing elsewhere in this
Report.
FORWARD-LOOKING STATEMENTS
The following information contains certain forward-looking statements of our
management. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
"may," "could," "expect," "estimate," "anticipate," "plan," "predict,"
"probable," "possible," "should," "continue," or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. Our future operating results, however, are impossible to predict and
no representation, guaranty, or warranty is to be inferred from those
forward-looking statements.
OVERVIEW
SEAMLESS CORPORATION is the parent company operating through its subsidiary
companies Seamless TEK LABS Incorporated, Seamless TEK WARE Incorporated and
Seamless Sales LLC that develop and sell cutting edge technologies:
In July 2008 Seamless discontinued its operations of providing Wi-Fi to
hospitality providers. The incomes from those operations were from fees paid by
the hotels and businesses and the cost associated from those operations include
customer support and providing Internet Bandwidth. Therefore the Assets,
Liabilities, Income and Expenses associated with those operations are delineated
on the financials statements
SEAMLESS TEK LABS, INC., develops secure networking, data communication and
transfer solutions, with a focus on Internet Based Communication and Network
Security. Seamless new S-SIB(TM) product enables the user to seamlessly,
securely, and simply surf the Internet at any secured or unsecured Wi-Fi Hot
Spot in the world. Seamless Phenom software assures secure wireless connectivity
with its Phenom Virtual Internet Extranet software and Secure Private Network
(SPN) technology and its integration into unique and secure P2P services and its
implementation into other Seamless offerings.
SEAMLESS TEK WARE, INC.: has developed and is bringing to market the S-Gen(TM)
Mobile Computing and Communications Device, the newest contender in the rapidly
expanding Ultra Mobile Personal Computer (UMPC) class of minicomputers. The
S-Gen takes connectivity to the next level with integrated Cellular, Wi-Fi and
Bluetooth connectivity. Seamless has also developed a 10" Mini-Notebook computer
possessing a 120 GB Hard Drive and 1GB of ram, high portability combined with
true desk top functionality makes the SNBK1 a powerful tool for the mobile
workforce.
SEAMLESS SALES, LLC: will be establishing distributors, wholesalers, store
fronts, channel partners and etailors to sell Seamless products to businesses
and consumers.
10
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, our selected
financial information:
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
(Unaudited) (Unaudited)
--------------- ---------------
(Unaudited)
Revenues $ 0 $ 0
Cost of Revenues 3,470 574
--------------- ---------------
Gross (Loss) (3,470) (574)
Expenses 797,059 308,984
Loss from continuing operations before
interest and other items (800,529) (309,588)
Other Income 12,119 12,049
Loss from continuing operations
before income taxes $ (788,410) $ (297,499)
Loss from continuing operations $ (788,410) $ (297,499)
Loss from discontinued operations $ (2,982,852) $ (130,523)
Preferred C stock dividends-deemed -- (500,000)
--------------- ---------------
Net Loss available to common stockholders $ (3,771,262) $ (928,022)
Basic and Diluted income (loss) per share
Loss from continuing operations, after
preferred dividends $ (0.00) $ (0.10)
Income (Loss) from discontinued operations $ (0.00) $ (0.02)
--------------- ---------------
Net Income (loss) per share available to common
Stockholders $ (0.00) $ (0.12)
Weighted Average Common Shares Outstanding 1,551,983,354 7,962,803
--------------- ---------------
Six Months Ended Six Months Ended
December 31, 2008 December 31, 2007
(Unaudited) (Unaudited)
--------------- ---------------
Revenues $ 473 $ --
Cost of Revenues 8,916 5,390
--------------- ---------------
Gross (Loss) (8,446) (5,390)
Expenses 1,149,050 351,922
Loss from continuing operations before
interest and other items (1,157,496) (357,312)
Other Income 24,238 25,678
Loss from continuing operations
before income taxes $ (1,133,258) $ (331,634)
Loss from continuing operations $ (1,133,238) $ (331,634)
Income (loss) from discontinued operations $ (2,996,512) $ 343,908
Preferred C stock dividends-deemed $ (405,400) (500,000)
--------------- ---------------
Net Income (Loss) available to common
stockholders $ (4,535,170) $ (487,726)
Basic and Diluted income (loss) per share
Loss from continuing operations, after
preferred dividends $ (0.00) $ (0.12)
Income (Loss) from discontinued operations $ (0.00) $ 0.05
--------------- ---------------
Net Income (loss) per share available to common
Stockholders $ (0.00) $ (0.07)
Weighted Average Common Shares Outstanding 1,067,067,593 6,948,095
--------------- ---------------
11
THREE AND SIX MONTHS ENDED DECEMBER 31, 2008 (UNAUDITED) COMPARED TO THREE AND
SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED)
REVENUES
Revenues for the three and six months ended December 31, 2008 were $0 and $473
are not compared to the same periods in 2007, because of the discontinued
operations of all the Wi-Fi locations and inability to market the S-SIB software
successfully.
COST OF REVENUES
The cost of revenues for the three and six months ended December 31, 2008 was
$3,470 and $574 compared to $8,919 and $5,390 for the three and six months
periods ended December 31, 2007, an increase of approximately 600% for the three
months and an increase of approximately 165% for six months respective. The
three months and six increase in the cost of revenue is due to marketing the
S-SIB product and the 1ncrease in cost of band width cost.
OPERATING EXPENSES
The continuing operating expenses for the three and six months ended December
31, 2008 of $797,059 and $1,149,050 as compared to the three and six months
ended December 31, 2007 of $308,984 and $351,922 represents an increase of
approximately 259% for the three months ended and an increase of approximately
327% for the six months ended December 31. The increase is due to three expenses
the first is a major increase in selling expenses trying to market our products
and the other two being the affect of the writing off of the license fee of
$239,146 and the cost of settlement of $169,261.
OTHER INCOME
Other income for the for the three and six months ended December 31, 2008 of
$12,119 and $24,238 as compared to the other income of $12,049 and $25,678 for
the same periods ended in 2007. This represents a increase of approximately 1%
for three months and a decrease of 6% respectively. Other income consists
primarily of debt forgiveness from prior operations due to the fact that certain
debts were not paid within the prescribed time as required by law and the
Company now has to report that debt as income.
INCOME TAX
No provision for income taxes has been recorded in the accompanying financial
statements as a result of our net operating losses. We have unused tax loss
carry forwards of approximately $25,000,000 to offset future taxable income.
Such carry forwards begin to expire in the year 2023.
NET INCOME/LOSS FROM CONTINUING OPERATIONS
The Company has experienced an increase in the net loss of $(788,410) and
$(1,133,258) from continuing operations for the three months and six months
ended December 31, 2008 as compared to a net loss of $(297,499) and
$(331,634)for the three months and six months ended December 31, 2007. The
increased net loss is primarily from increase selling and admin expenses.
The net loss from discontinued operations of $(2,996,512) for the six months
ended December 31, 2008 and the net income from discontinued operation of
$343,908 for six months ended December 31, 2007 will not be compared because
they are not indicative of continuing operations.
The net loss of $(3,771,262) and $(4,535,170) for three months and six months
ended December 31, 2008 as compared to the net loss of $(928,022) and income
$(487,726) for December 31, 2007 respective where affected by the discontinued
operations.
The affect of the discontinued operation was an increase in the net loss
available to common shareholders. The net loss per shareholder was offset
because of the corresponding increase in the number of shares issued and
outstanding which increased the weighted average number shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company had no cash and or cash equivalents for six month period ended
December 31, 2008. Net loss from continuing operations was $(1,133,238) for the
period ended December 31, 2008 compared to net loss from continuing operations
of $(331,634) for the comparable period ended December 31, 2007.
As a result of our increases in net operation losses, our working capital
increased. We have funded our losses through an equity line of credit secured by
preferred stock. Repayments of certain loans occurred by the lender taking
possession of the collateral. We anticipate these losses to continue through
2009.
12
We have a working capital deficit of $(1,771,949) as of December 31, 2008
compared to a working capital deficit of $(774,056) as of December 31, 2007.
This is a increase in the working capital due to the impact of discontinued
operations
As shown in the accompanying financial statements, we have incurred an
accumulated deficit of $(25,216,038) and a working capital deficit of
$(1,771,949) as of December 31, 2008. Our ability to continue as a going concern
is dependent on obtaining additional capital and financing and operating at a
profitable level. We intend to seek additional capital either through debt or
equity offerings and to increase sales volume and operating margins to achieve
profitability.
We will consider both the public and private sale of securities and/or debt
instruments for expansion of our operations if such expansion would benefit our
overall growth and income objectives. Should sales growth not materialize, we
may look to these public and private sources of financing. There can be no
assurance, however, that we can obtain sufficient capital on acceptable terms,
if at all. Under such conditions, failure to obtain such capital likely would at
a minimum negatively impact our ability to timely meet our business objectives.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our financial statements in conformity with accounting
principles generally accepted in the United States requires our management to
make certain 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 reporting period. As such, in accordance with the use of
accounting principles generally accepted in the United States, our actual
realized results may differ from management's initial estimates as reported. A
summary of our significant accounting policies appears in the notes to the
financial statements which are an integral component of this Report.
USE OF ESTIMATES
The preparation of our consolidated financial statements are in conformity with
United States generally accepted accounting principles which require us 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
We issue 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
as determined, based upon the closing price of our 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.
INFLATION
The moderate rate of inflation over the past few years has had an insignificant
impact on our sales and results of operations during the period.
NET OPERATING LOSS CARRY FORWARD
No provision for income taxes has been recorded in the accompanying financial
statements as a result of our net operating losses. We have unused tax loss
carry forwards of approximately $(25,000,000) to offset future taxable income.
Such carry forwards expire in the years beginning 2023.
The deferred tax asset we recorded as a result of these tax loss carry forwards
is approximately $(25,000,000) as of December 31, 2008. We have reduced the
deferred tax asset resulting from our 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
which was $(20,660,864) as of June 30, 2008 to December 31, 2008 of
($25,216,038) is an increase in the Net Operating Loss Carry Forward of
($4,551,174).
OFF BALANCE SHEET ARRANGEMENTS
We have not entered into any off balance sheet arrangements that have, or are
reasonably likely to have a current or future effect on our 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.
13
ITEM 3. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer (the "Certifying
Officers") are responsible for establishing and maintaining disclosure controls
and procedures for the Company. The Certifying Officers have designed such
disclosure controls and procedures to ensure that material information is made
known to them, particularly during the period in which this report was prepared.
The Certifying Officers have evaluated the effectiveness of the Company's
disclosure controls and procedures within 90 days of the date of this report and
believe that the Company's disclosure controls and procedures are effective
based on the required evaluation. There have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In July 2003, Globalist sued the Company and was awarded a judgment plus
interest in the amount of approximately $301,000. The current adjusted amount of
$361,054 reflects the current liability of discontinued operations in the
accompanying financial statements.
To the best knowledge of management, there are no other legal proceedings
pending or threatened against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following Exhibits are filed herein:
NO. TITLE
31.1 Certification of Chief Executive Officer Pursuant to the
Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
31.2 Certification of Chief Financial Officer Pursuant to the
Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
14
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, duly authorized.
DATED: July 14, 2009 SEAMLESS CORPORTION
/s/ Albert Reda
-----------------------------------
By: Albert Reda
Its: Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer,
Principal Financial Officer
and Principal Accounting Officer)
15