UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 2
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 2005
Commission file number 0-13215
ROAMING MESSENGER, INC.
-----------------------
(Exact name of Registrant as Specified in its Charter)
Nevada 30-0050402
-------------- --------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
50 Castilian Dr. Suite A, Santa Barbara, California 93117
(Address of principal executive offices) (Zip Code)
(805) 683-7626
--------------
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(B) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
-------------------- -------------------------
COMMON STOCK OTC
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
during the proceeding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
As of May 1, 2005 the number of shares outstanding of the registrant's only
class of common stock was 180,337,092.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
Table of Contents
Page
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Balance Sheets as of March 31, 2005 (unaudited)
and June 30, 2004....................................................3
Statements of Operations for the Three Months and
Nine Months ended March 31, 2005 and 2004 (unaudited)................4
Statements of Cash Flows for the Nine Months ended
March 31, 2005 and 2004 (unaudited)..................................5
Notes to Condensed Consolidated Financial Statements
(unaudited)..........................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................8
Item 3 Controls and Procedures.............................................10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ..................................................10
Item 2. Changes in Securities...............................................11
Item 3. Defaults upon Senior Securities.....................................11
Item 4. Submission of Matters to a Vote of Security Holders.................11
Item 5. Other Information...................................................11
Item 6. Exhibits and Reports on Form 8-K....................................11
Signatures...................................................................12
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ROAMING MESSENGER, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
March 31,2005 June 30, 2004
---------------- ----------------
CURRENT ASSETs
Cash $ 636,678 $ 1,495,102
Accounts receivable, net of allowance for doubtful
accounts of $30,000 and $20,000 respective1y 172,355 116,407
Prepaid expenses 24,624 9,944
---------------- ----------------
TOTAL CURRENT ASSETS 833,657 1,621,453
---------------- ----------------
PROPERTY & EQUIPMENT
Furniture, Fixtures & Equipment 87,811 83,225
Computer Equipment 429,729 278,715
Commerce Server 50,000 50,048
Computer Software 4,998 3,535
Tenant Improvements 42,194 42,194
---------------- ----------------
614,732 457,717
Less: Accumulated depreciation & amortization (325,193) (261,370)
---------------- ----------------
NET PROPERTY & EQUIPMENT 289,539 196,347
---------------- ----------------
OTHER ASSETS
Lease deposit 10,237 7,029
Other assets 4,260 2,503
---------------- ----------------
TOTAL OTHER ASSETS 14,497 9,532
---------------- ----------------
TOTAL ASSETS $ 1,137,693 $ 1,827,332
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 91,855 $ 24,892
Accrued liabilities 81,573 42,093
Officer salaries payable 237,981 243,730
Staff salaries payable 49,813 46,499
Note payable 30,000 39,500
Current portion - obligations under capitalized leases 50,661 33,631
---------------- ----------------
TOTAL CURRENT LIABILITIES 541,883 430,345
---------------- ----------------
LONG TERM LIABILITIES
Obligations under capitalized leases 100,987 45,059
Deposit - shareholder 19,875 --
---------------- ----------------
TOTAL LONG TERM LIABILITIES 120,862 45,059
---------------- ----------------
TOTAL LIABILITIES 662,745 475,404
---------------- ----------------
SHAREHOLDERS' EQUITY
Capital Stock 178,736 172,400
Additional Paid-in Capital 4,705,026 3,871,738
Accumulated deficit (4,408,814) (2,692,210)
---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 474,948 1,351,928
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,137,693 $ 1,827,332
================ ================
Prepared without audit
3
ROAMING MESSENGER, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Three Nine Three Nine
months ended months ended months ended months ended
March 31, 2005 March 31, 2005 March 31, 2004 March 31, 2004
---------------- ---------------- ---------------- ----------------
REVENUE $ 295,925 $ 912,857 $ 234,701 $ 688,827
COST OF REVENUE (92,593) (331,181) (25,088) (85,039)
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 203,332 581,676 209,613 603,788
OPERATING EXPENSES
Selling, general and administrative
expenses 806,280 1,936,967 443,351 953,219
Research and development 98,399 287,151 109,492 194,892
Depreciation and amortization 22,889 63,361 15,153 41,946
---------------- ---------------- ---------------- ----------------
TOTAL OPERATING EXPENSES 927,568 2,287,479 567,996 1,190,057
---------------- ---------------- ---------------- ----------------
OPERATING LOSS (724,236) (1,705,803) (358,383) (586,269)
---------------- ---------------- ---------------- ----------------
OTHER INCOME (EXPENSES)
Interest income 1,257 7,867 2,194 4,026
Interest expense (7,473) (18,580) (3,433) (12,589)
---------------- ---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSES) (6,216) (10,713) (1,239) (8,563)
---------------- ---------------- ---------------- ----------------
NET LOSS $ (730,452) $ (1,716,516) $ (359,622) $ (594,832)
================ ================ ================ ================
BASIC AND DILUTED LOSS
PER SHARE $ (0.00) $ (0.01) $ (0.00) $ (0.00)
================ ================ ================ ================
WEIGHTED AVERAGE
NUMBER OF SHARES 173,305,432 172,756,708 167,747,115 157,989,963
================ ================ ================ ================
Prepared without audit
4
ROAMING MESSENGER, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Nine
months ended months ended
March 31, 2005 March 31, 2004
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,716,516) $ (594,832)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 63,823 41,946
Warrants issued for services 102,026
Common stock issued for services 259,173 40,000
Decrease (increase) in account receivable (55,948) (25,261)
Decrease (increase) in prepaid and other assets (14,680) (40,065)
(Decrease) increase in accounts payable 66,962 (6,245)
(Decrease) increase in officer salaries payable (5,749) (63,635)
(Decrease) increase in staff salaries payable 3,314
(Decrease) increase in other liabilities 34,515 (7,433)
---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (1,263,080) (655,525)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property & equipment (49,548) (25,507)
---------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (49,548) (25,507)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 478,338 2,312,047
Deposit for shares of common stock 19,875 --
Payment on note payable (9,500) (4,500)
Payments on capitalized lease obligations (34,509) (20,909)
---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 454,204 2,286,638
---------------- ----------------
NET INCREASE (DECREASE) IN CASH (858,424) 1,605,606
CASH AT BEGINNING OF PERIOD 1,495,102 57,408
---------------- ----------------
CASH AT END OF PERIOD $ 636,678 $ 1,663,014
================ ================
Supplementary disclosures:
Interest paid $ 18,580 $ 12,589
================ ================
Capitalized leases contracted: $ 107,467 $ 12,125
================ ================
Prepared without audit
5
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
1. BASIS OF PRESENTATION AND GOING CONCERN
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal recurring adjustments considered necessary for a fair
presentation have been included. Operating results for the three-month
period ended March 31, 2005 are not necessarily indicative of the results
that may be expected for the year ending June 30, 2005. For further
information refer to the financial statements and footnotes thereto
included in the Company's Form 10K-SB for the year ended June 30, 2004.
The accompanying financial statements have been prepared on a going concern
basis of accounting, which contemplates continuity of operations,
realization of assets and liabilities and commitments in the normal course
of business. The accompanying financial statements do not reflect any
adjustments that might result if the Company is unable to continue as a
going concern. The Company's losses and negative cash flows from operations
raise substantial doubt about the Company's ability to continue as a going
concern. The ability of the Company to continue as a going concern and
appropriateness of using the going concern basis is dependent upon, among
other things, additional cash infusion.
2. STOCK OPTIONS AND WARRANTS
Stock-Based Compensation
The Company accounts for employee stock option grants in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations (APB 25), and has adopted the
"disclosure only" alternative described in Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation, amended by SFAS No. 148 Accounting for Stock-Based
Compensation-Transition and Disclosure.
SFAS No. 123, Accounting for Stock-Based Compensation, requires pro forma
information regarding net income (loss) using compensation that would have
been incurred if the Company had accounted for its employee stock options
under the fair value method of that statement. Options to purchase
1,200,000 and 2,465,994 shares of Roaming Messenger, Inc. were granted
during the nine months ended March 31, 2005 and 2004, respectively. The
fair value of options granted, which have been estimated at $65,030 and
$60,982, respectively, at the date of grant were determined using the
Black-Scholes Option pricing model with the following assumptions:
2005 2004
---------- ----------
Risk free interest rate 3.36-4.17% 3.18-3.83%
Stock volatility factor 0.32-0.70 0.01
Weighted average expected option life 4 years 4 years
Expected dividend yield None None
6
ROAMING MESSENGER, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
2. STOCK OPTIONS AND WARRANTS (Continued)
The pro forma net loss and loss per share had the Company accounted for the
options using FAS 123 would have been as follows:
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
March 31, 2005 March 31, 2005 March 31, 2004 March 31, 2004
--------------- --------------- --------------- ---------------
Net loss as reported $ (730,452) (1,716,516) $ (359,622) $ (594,832)
Basic and diluted net loss per
share as reported (0.00) (0.01) (0.00) (0.00)
Add: Stock based employee compensation -- --
expense included in net reported loss,
net of related taxes
compensation expense determined under
fair value based method for
all awards, net of related taxes (4,456) (13,368) (14,402) $ (22,832)
--------------- --------------- --------------- ---------------
Pro forma net loss $ (734,908) $ (1,729,884) $ (374,024) $ (617,664)
=============== =============== =============== ===============
Basic and diluted pro forma loss per share $ (0.00) $ (0.01) $ (0.00) $ (0.00)
=============== =============== =============== ===============
During the nine month period ended March 31, 2005 (ii) 1,200,000 options
were granted at an exercise price of $0.17 per share, (ii) 6,787,500
previously granted options were cancelled and/or forfeited. As of March 31,
2005, total outstanding unexercised options are 1,934,994.
Warrants
On March 31, 2005, the Company granted warrants to purchase 201,000 shares
of common stocks at $0.10 per share for consulting services. These warrants
expire on March 31, 2007, and were valued at $20,964 using the
Black-Scholes model.
3. SUBSEQUENT EVENTS
In connection with the Periodic Investment Agreement with Wing Fund, Inc.,
we also entered into a registration rights agreement pursuant to which we
agreed to register the shares issuable upon purchases under the Periodic
Investment Agreement. The registration rights agreement contained a
liquidated damages provision providing for the issuance to Wings Fund of
200,000 shares of our common stock in the event that we are late in the
filing of the registration statement. Although we filed the registration
statement on May 3, 2005, as a result of which we missed the deadline for
the filing by six days, Wing Fund has waived its right to the issuance of
these shares.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENTS
This Form 10-QSB may contain "forward-looking statements," as that term is used
in federal securities laws, about Roaming Messenger, Inc.'s financial condition,
results of operations and business. These statements include, among others:
o statements concerning the potential benefits that Roaming Messenger, Inc.
("RMI" or the "Company") may experience from its business activities and
certain transactions it contemplates or has completed; and
o statements of RMI's expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts.
These statements may be made expressly in this Form 10-QSB. You can find
many of these statements by looking for words such as "believes,"
"expects," "anticipates," "estimates," "opines," or similar expressions
used in this Form 10-QSB. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties that may cause RMI's actual
results to be materially different from any future results expressed or
implied by RMI in those statements. The most important facts that could
prevent RMI from achieving its stated goals include, but are not limited
to, the following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability to raise
additional capital or financing to implement its business plans;
(e) failure to commercialize its technology or to make sales;
(f) changes in demand for the Company's products and services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by outside parties;
(i) insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and technology
personnel, the Company may not be able to obtain customers for its products or
services, the Company's products and services may become obsolete, government
regulation may hinder the Company's business, additional dilution in outstanding
stock ownership may be incurred due to the issuance of more shares, warrants and
stock options, or the exercise of outstanding warrants and stock options, and
other risks inherent in the Company's businesses.
Because the statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. RMI cautions you not to place undue reliance on the statements,
which speak only as of the date of this Form 10-QSB. The cautionary statements
contained or referred to in this section should be considered in connection with
any subsequent written or oral forward-looking statements that RMI or persons
acting on its behalf may issue. The Company does not undertake any obligation to
review or confirm analysts' expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date of this Form 10-QSB, or to reflect the occurrence of
unanticipated events.
CURRENT OVERVIEW
We are a software company and have developed a proprietary system that enables
software programs and other business applications to connect to wired and
wireless devices, such as cellular phones, computers and personal digital
assistants. This system, known as the Roaming Messenger Platform, serves as a
gateway to the mobile world for a variety of software programs and other
business applications such as those used in emergency response, homeland
security, logistics, healthcare and financial services.
We have recently rolled out an improved version of the Roaming Messenger
Platform which is being offered as a standalone server product or a hosted
service. We expect to sell and license the Roaming Messenger product to system
integrators and application developers in markets such as emergency response
services, the military and private businesses. For example, we might sell a
Roaming Messenger Gateway server to a systems integrator that is designing an
emergency alert and notification system. We plan to sell Roaming Messenger
through channel partners and value-added resellers (VARs) who are established in
their respective vertical markets.
8
For the year ended June 30, 2004, we focused our efforts primarily on product
refinement and market development of the Roaming Messenger product. We have
forged a number of partnerships with small to medium sized companies in the
Homeland Security and Public Safety sector. While we have validated the need for
the unique capabilities of Roaming Messenger in these markets, significant
revenue has yet to be derived, due to minimal sales and marketing efforts. Also,
it took much longer than anticipated for federal funds to flow into the
information technology procurement departments of government and public safety
agencies to which most of our channel partners sell.
A large part of our investment capital was used for product development and
infrastructure build-out during the year ended June 30, 2004. However, this will
shift more towards sales, marketing and business development for the upcoming
fiscal year ending June 30, 2005. The homeland security and public safety
markets are still our primary markets as we are beginning to see increased
information technology spending at the state and local government level. While
Roaming Messenger is a horizontal product with application in many markets, our
primary sales and marketing strategy continues to be vertically focused. We will
execute various low-cost horizontal marketing programs, concurrently, to
identify new opportunities in non-primary vertical markets - such as healthcare
or enterprise markets.
Our growth strategy consists of three phases:
o During Phase I we will focus our marketing efforts on the Homeland
Security and Public Safety markets
o During Phase II we will focus on the enterprise markets for business
process management and communication applications.
o During Phase III we will focus on the consumer markets for
application such as mobile commerce and mobile gaming.
In executing our growth strategy, strategic acquisition of synergistic companies
may be explored. When decide on potential acquisition candidates, we will
consider whether the candidate offers (i) access to customers and (ii)
complementary products or services.
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2005 COMPARED
TO THE SAME PERIOD IN 2004
Total revenue for the three-month period ending March 31, 2005 was $295,925 as
compared to $234,701 for the three-month period ending March 31, 2004. The
increase of $61,224 was primarily due to the reselling of third party online
marketing services.
The cost of revenue, in terms of percentage of revenue, for the three-month
period ending March 31, 2005 was 31% as compared to 11% for the three-month
period ending March 31, 2004. This increase in cost of revenue was primarily due
to the reselling of third party online marketing services.
Research and development expenses were $98,399 for the three months ending March
31, 2005 as compared to $109,492 for the three month period ended March 31,
2004.
Operating expenses increased from $567,996 for the three months ended March 31,
2004 to $927,568 for the three months ended March 31, 2005. The increase in
operating expenses between the two periods is primarily due to $263,137 in
non-cash expenses for sales, marketing and advisory services.
The non-cash charges include (i) $242,173 of unregistered stock for business
development and advisory services, and (ii) $20,964 expense for the issuance of
warrants to business development contractors in lieu of cash payment for their
services. The value of the warrants was determined using the Black Scholes
model.
Operating costs are expected to exceed revenue in the foreseeable future as the
Company continues to increase sales and marketing efforts as well as increasing
staff.
For the three months ended March 31, 2005, the Company's consolidated net loss
was ($730,452) as compared to a consolidated net loss of ($359,622) for the
three months ended March 31, 2004.
Nine-Month Period Ended March 31, 2005 and in 2004
Total revenue for the nine-month period ending March 31, 2005 was $912,857 as
compared to $688,827 for the nine-month period ending March 31, 2004. Almost all
of the increase of was due to the reselling of third party online marketing
services.
The cost of revenue, in terms of percentage of revenue, for the nine-month
period ending March 31, 2005 was 36% as compared to 12% for the nine-month
period ending March 31, 2004. This increase in cost of revenue was primarily due
to the reselling of third party online marketing services.
Research and development expenses increased from $193,292 for the nine months
ended March 31, 2004 to $289,664 for the nine months ended March 31, 2005 due to
increase in Roaming Messenger engineering staff.
Operating expenses increased from $1,190,057 for the nine months ended March 31,
2004 to $2,287,479 for the nine months ended March 31, 2005. The increase in
operating expenses between the two periods is primarily due to (i) $226,537
increase in non-cash stock based compensation to various business and financial
consultants (ii) $291,709 increase in sales and marketing salaries and expenses
(iii) $302,380 increase in administrative, support and production salaries.
The $2,287,479 operating expenses for the nine month ended March 31, 2005
includes non-cash charges of (i) $259,173 of unregistered common stock for
business development and advisory services, and (ii) $102,026 for the issuance
of warrants to business development contractors. The value of the warrants was
determined using the Black Scholes model.
Operating costs are expected to exceed revenue in the foreseeable future as the
Company continues to increase sales and marketing efforts as well as increasing
staff.
For the nine months ended March 31, 2005, the Company's consolidated net loss
was ($1,716,516) as compared to a consolidated net loss of ($594,832) for the
nine months ended March 31, 2004.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash at March 31, 2005 of $636,678 as compared to cash of
$1,495,102 as of June 30, 2004. The Company had net working capital (i.e. the
difference between current assets and current liabilities) of $291,774 at March
31, 2005 as compared to a net working capital of $1,191,108 at June 30, 2004.
Cash flow utilized by operating activities was ($1,263,080) for the nine months
ended March 31, 2005 as compared to cash utilized for operating activities of
($655,525) during the nine months ended March 31, 2004. Cash flow used in
investing activities was ($49,548) for the nine months ended March 31, 2005 as
compared to cash used in investing activities of ($25,507) during the nine
months ended March 31, 2004. Cash flow provided by financing activities was
$454,204 for the nine months ended March 31, 2005 as compared to cash provided
by financing activities of $2,286,638 for the nine months ended March 31, 2004.
On March 28, 2005, we entered into a Periodic Equity Investment Agreement with
Wings Fund, Inc. Pursuant to the Periodic Equity Investment Agreement, we may,
on a monthly basis commencing after the effective date of the registration
statement to be filed by us in connection with that agreement, periodically sell
to Wings Fund, Inc. shares of common stock for a total purchase price of up to
$3,000,000. Such monthly sales are limited to a maximum aggregate of $250,000.
Further, upon execution of the Periodic Equity Investment Agreement, we issued
to Wings Fund, Inc. an aggregate of 5,000,000 shares of our common stock at a
price of $0.10 per share for gross proceeds of $500,000.
9
We believe that the funds to be received from Wings will be sufficient to fund
and expand our business over the next 24 months. The issuance and sale of shares
pursuant to the periodic equity investment agreement is likely to result in
substantial dilution to the interests of our other stockholders. The number of
shares issuable pursuant to the Periodic Equity Investment Agreement will
increase if the market price of our stock decreases. There is no upper limit on
the number of shares that we may be required to issue under the agreement with
Wings. The continuously adjustable price feature of our periodic equity
investment agreement could require us to issue a substantially greater number of
shares, which will cause dilution to our existing stockholders. A larger number
of shares issuable at a discount to a continuously declining stock price will
expose our shareholders to greater dilution and a reduction of the value of
their investment. Our agreement with Wings contains a provision that limits its
interest in our common stock to 4.99% of the outstanding shares. Although Wings
may waive this provision, there can be no assurance that it will do so.
Therefore, we may never receive the entire amount contemplated under the
agreement.
If we are not able to draw down the entire $3,000,000 for the reason set forth
above or for any other reason, we may have to obtain additional operating
capital from other sources to enable us to execute our business plan. We
anticipate that we will obtain any additional required working capital through
the private placement of Common Stock to domestic accredited investors pursuant
to Regulation D of the Securities Act of 1933, as amended (the "Act"), or to
offshore investors pursuant to Regulation S of the Act. There is no assurance
that we will obtain the additional working capital that we need through the
private placement of Common Stock. In addition, such financing may not be
available in sufficient amounts or on terms acceptable to us. The agreement with
Wings precludes us, without the consent of Wings, from raising capital in
transactions that would be integrated with the offering of the shares included
in this prospectus thereby requiring the registration under the Act of those
securities. Therefore, we may be hampered in our ability to raise additional
capital. If we are unable to draw down under the agreement with Wings the
amounts of capital required to execute our business plan and we are unable to
obtain sufficient financing from other sources on acceptable terms, we may have
to curtail our activities.
Item 3. CONTROLS AND PROCEDURES
The Company's Chairman, Chief Executive Officer, and Chief Financial Officer has
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended) as of the end of the period covered by this quarterly
report and, based on this evaluation, has concluded that the disclosure controls
and procedures are effective.
There have been no changes in the Company's internal control over financial
reporting that occurred during the Company's third fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On June 21, 2004, one of our shareholders filed a lawsuit against us in
California Superior Court in Santa Barbara, California, alleging that we did not
process the shareholder's request for the removal of the restrictive transfer
legend on the shareholder's stock pursuant to Rule 144 of the Securities Act of
1933, as amended. We answered the complaint, asserting that we did not in any
way impair the processing of the shareholder's request for legend removal and
that we did not violate any of our duties. We never objected or interfered with
his request or its processing by the transfer agent, and did not believe that
his case had any merit. In March 2005, the plaintiff dismissed the lawsuit with
prejudice. In consideration for the dismissal, a general release of all claims
by both parties, and as a resolution to a separate dispute regarding a
consulting agreement between the Company and the shareholder, we agreed to (i)
pay the plaintiff $18,000, $3,000 in cash upon settlement, and issuance of an
unsecured promissory note in the principal amount of $15,000, payable $1,000 per
month until maturity and (ii) issued 424,000 shares of our common stock to the
plaintiff.
Item 2. CHANGES IN SECURITIES
During the quarter ended March 31,2005, the Company issued 1,051,589 shares to 4
individuals as compensation for services rendered to the Company. The shares
were valued at the market price of the Company's common stock at the time of
issuance ranging from $0.20 to $0.30 per share.
On or about March 28, 2005, the Company ("RMI") entered into a Securities
Purchase Agreement, Periodic Investment Agreement, and Registration Rights
Agreement (collectively, the "Agreement") with Wings Fund, Inc. pursuant to
which Wings Fund, Inc. agreed to purchase up to $3,500,000 worth of the common
stock of RMI (the "Common Stock"). At the closing on March 28, 2005 (the
"Closing Date"), Wings Fund, Inc. purchased 5,000,000 shares of Common Stock for
a purchase price of $500,000. The remaining $3,000,000 will be funded by Wings
Fund, Inc. at RMI's discretion in monthly increments of up to $250,000 (the
"Monthly Purchases") within twelve months after a Registration Statement on Form
SB-2 or other appropriate form (the "Registration Statement") covering the
Common Stock purchased and to be purchased by Wings Fund, Inc. pursuant to the
Agreement is declared effective by the Securities and Exchange Commission. The
price per share of the Common Stock for the Monthly Purchases will be 60% of the
volume weighted average price ("VWAP") of the Common Stock as quoted by
Bloomberg, LP over the twenty (20) trading days prior to the date of each
Monthly Purchase. VWAP will be calculated by adding the dollar value of each
transaction in RMI's Common Stock (price times number of shares traded), divided
by the total volume of shares of Common Stock traded for the trading day. There
will be a minimum of twenty (20) trading days between Monthly Purchases. RMI
filed the Registration Statement (the "Filing Date"). RMI will use its best
efforts to cause the Registration Statement to become effective within one
hundred twenty (120) days from the Filing Date (the "Effective Date"). If the
Registration Statement has not been declared effective by the Effective Date,
RMI will be liable to Wings Fund, Inc. for liquidated damages in the amount of
200,000 shares of Common Stock for every thirty (30) day period the Registration
Statement has not been filed or declared effective, as the case may be.
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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 AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO. DESCRIPTION
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Specimen Certificate for Common Stock (1)
4.2 Non-Qualified Employee Stock Option Plan (2)
10.1 First Agreement and Plan of Reorganization between Latinocare Management
Corporation, a Nevada corporation, and Warp 9, Inc., a Delaware
corporation (3)
10.2 Second Agreement and Plan of Reorganization between Latinocare Management
Corporation, a Nevada corporation, and Warp 9, Inc., a Delaware
corporation (4)
10.3 Exchange Agreement and Representations for Shareholders of Warp 9, Inc.(3)
31.1 Section 302 Certification
32.1 Section 906 Certification
(1) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 10-KSB filed with the Securities and Exchange
Commission, dated March 31, 2002.
(2) Incorporated by reference from the exhibits included in the Company's
Information Statement filed with the Securities and Exchange Commission,
dated August 1, 2003.
(3) Incorporated by reference from the exhibits included with the Company's
prior Report on Form SC 14F1 filed with the Securities and Exchange
Commission, dated April 8, 2003.
(4) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 8K filed with the Securities and Exchange Commission,
dated May 30, 2003.
(b) The following is a list of Current Reports on Form 8-K filed by the
Company during and subsequent to the quarter for which this report is
filed.
Form 8-K Report filed on March 30, 2005.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: August 9, 2005 ROAMING MESSENGER, INC.
By: /s/ Jonathan Lei
--------------------------------------
Jonathan Lei, Chairman of the Board,
Chief Executive Officer, President
Chief Financial Officer, and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
12