Filed by the Registrant þ | ||
Filed by a Party other than the Registrant o |
þ | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to § 240.14a-12 |
ROOMLINX, INC. | ||
(Name of Registrant As Specified In Its Charter) |
þ | No fee required. | ||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
1) | Title of each class of securities to which transaction applies: | ||
2) | Aggregate number of securities to which transaction applies: | ||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
4) | Proposed maximum aggregate value of transaction: | ||
5) | Total fee paid: |
o | Fee paid previously with preliminary materials. | ||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||
1) | Amount Previously Paid: | ||
2) | Form, Schedule or Registration Statement No.: | ||
3) | Filing Party: | ||
4) | Date Filed: |
(1) | To approve and adopt an amendment to the Company’s existing articles of incorporation (the “Existing Articles”) to change the name of the Company to “SignalShare Media, Inc.” (the “Name Change”); |
(2) | To approve and adopt an amendment to the Existing Articles to effectareverse stock split (pro-rata reduction of outstanding shares)of the Company’s common stock at a ratio of approximately 1-for-10(the “Reverse Stock Split”), which specific ratio will be equal to the ratio necessary to result in 600,000 shares of the Company’s outstanding common stock following the Reverse Stock Split; |
(3) | To approve and adopt an amendment to the Existing Articles todesignate and authorize two series of preferred stock, “Series A Preferred Stock” and “Series B Preferred Stock,” for exchange in connection with the transactions contemplated by the Merger Agreement (as defined below) (the “Preferred Stock Designation”); |
(4) | To approve and adopt an amendment and restatement of the Existing Articles in the form of the Amended and Restated Articles of Incorporation of the Company attached to the attached Proxy Statement as Appendix A;and |
(5) | To approve and adopt the Agreement and Plan of Merger by and among the Company, Signal Point Holdings Corp. and Roomlinx Merger Corp., a wholly-owned subsidiary of the Company (as amended, including the exhibits and schedules attached thereto, the “Merger Agreement”), and the transactions contemplated thereby, including the merger of Roomlinx Merger Corp. with and into Signal Point Holdings Corp. (the “Merger”). |
By order of the board of directors, | ||
/s/ Michael Wasik | ||
Michael S. Wasik | ||
Chairman of the Board and Chief Executive Officer | ||
Dated: *, 2014 |
PROPOSAL 1: | To approve and adopt an amendment to the Company’s existing articles of incorporation (the “Existing Articles”) to change the name of the Company to “SignalShare Media, Inc.” (the “Name Change”); |
PROPOSAL 2: | To approve and adopt an amendment to the Existing Articles to effectareverse stock split (pro-rata reduction of outstanding shares)of the Company’s common stock (“Common Stock”) at a ratio of approximately 1-for-10(the “Reverse Stock Split”), which specific ratio will be equal to the ratio necessary to result in 600,000 shares of the Company’s outstanding Common Stock following the Reverse Stock Split; |
PROPOSAL 3: | To approve and adopt an amendment to the Existing Articles todesignate and authorize two series of preferred stock, “Series A Preferred Stock” and “Series B Preferred Stock,” for exchange in connection with the transactions contemplated by the Merger Agreement (the “Preferred Stock Designation,” and together with the Name Change and the Reverse Stock Split, the “Charter Amendments”); |
PROPOSAL 4: | To approve and adopt the amendment and restatement of the Existing Articles in the form of the Amended and Restated Articles of Incorporation of the Company attached to this Proxy Statement as Appendix A(the “Restated Articles”); and |
PROPOSAL 5: | To approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger. |
Name of Stockholder | Number of Shares of Common Stock | Percentage of Shares of Common Stock | |||||||||
Michael Wasik | 266,836 | 4.15% | |||||||||
Matthew Hulsizer | 533,511 | 8.30% | |||||||||
Jennifer Just | 535,011 | 8.32% | |||||||||
Cenfin, LLC | 424,000 | 6.59% | |||||||||
Verition Multi-Strategy Master Fund Ltd. | 694,993 | 10.81% | |||||||||
Lewis Opportunity Fund | 604,380 | 9.40% | |||||||||
Vic Samuels | 212,500 | 3.31% | |||||||||
TOTAL | 3,271,231 | 50.88 % |
2 |
● | all shares of SP common stock issued and outstanding immediately prior to the Effective Time will be converted on a one-for-one basis into an aggregate of 105,544,268 restricted shares of Common Stock of the Company. Accordingly, the holders of SP common stock immediately prior to the Effective Time will hold, when taken together with shares of Common Stock (i) issuable at the Effective Time to The Robert DePalo Special Opportunity Fund, LLC upon conversion of approximately $3,200,000 of indebtedness at $1.20 per share of SP common stock (the “DePalo Debt Conversion”) and (ii) issuable pursuant to any equity offering consummated by any party to the Merger Agreement prior to the Effective Time, shares representing in the aggregate 86% of the outstanding shares of the Company’s Common Stock immediately following the Effective Time; |
● | the shares of SP’s Series A Preferred Stock and Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be exchanged for an identical number of shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, of the Company, having substantially identical terms to SP’s current Series A Preferred Stock and Series B Preferred Stock; |
● | all options to purchase SP common stock, share appreciation rights (“SARS”) and restricted stock awards issued and outstanding immediately prior to the Effective Time under the current SP Employee Incentive Plan will be exchanged for options, SARS and awards to purchase an identical number of shares of Common Stock on the same terms and conditions; |
● | the shares of the Company’s Common Stock issued and outstanding immediately prior to the Effective Time, after giving effect to the Reverse Stock Split, will remain outstanding and the holders thereof shall receive an additional 11,045,330 restricted shares of Common Stock of the Company (the “Nominee Shares”) pursuant to the Merger Agreement. Such Nominee Shares will be issued in a single stock certificate to the Company’s corporate counsel, as nominee (the “Nominee”), for the pro-rata benefit of the holders thereof, and will be subject to certain lockup and registration provisions described below (see the section of this Proxy Statement entitled,” The Merger –Lockup, Leak-out and Registration Provisions”). Accordingly, (i) the shares of Common Stock held by the Company’s stockholders, (ii) the shares of Common Stock issuable upon the exercise of the Company’s warrants outstanding immediately prior to the Effective Time (not including out-of-the-money warrants) and (iii) the 6,136,295 restricted shares of Common Stock to be issued to Cenfin, LLC (“Cenfin”), a secured lender of the Company, in exchange for its agreement to restructure indebtedness owed to it by the Company pursuant to the Debt Restructuring Agreement (as defined herein;see the section of this Proxy Statement entitled “The Merger – Debt Restructuring Agreement”), will represent in the aggregate 14% of the outstanding shares of the Company’s Common Stock immediately following the Effective Time; |
3 |
● | holders of the existing preferred stock of the Company will receive their liquidation preference and accrued but unpaid dividends with respect to such shares, the Company’s existing preferred stock will be cancelled and there will be no outstanding shares of the Company’s existing preferred stock outstanding following the Merger, except as described above; and |
● | all outstanding options to purchase Company capital stock issued under the Company’s Stock Option Plan will terminate in accordance with the terms thereof. |
Aaron Dobrinsky | Chief Executive Officer and Director | |
Christopher Broderick | Chief Operating Officer and Director |
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● | Authorized: 1,000 shares authorized for issuance. |
● | Ranking on distributions: The Series A Preferred Stock is senior to common stock and other securities designated as junior to the Series A Preferred Stock; pari passu with securities designated as being on parity with the Series A Preferred Stock. |
● | Dividends: Holders of Series A Preferred Stock are entitled to monthly dividends through December 31, 2021 in an aggregate amount equal to greater of $50,000 or 1% of the aggregate consolidated Gross Revenues (as defined below) of the Company, excluding up to $12,000,000 in revenues of the Company and Roomlinx Sub until Roomlinx Sub’s indebtedness to Cenfin is either paid in full, converted or otherwise cancelled. “Gross Revenues” of the Company is defined as (i) revenues in excess of $12,000,000 relating to the operations of Roomlinx Sub, as well as revenues derived from any contracts not transferred to Roomlinx Sub in connection with the Merger which contracts remain with the Company, but under no circumstances to exceed $12,000,000, and (ii) all revenues arising from the Company and any of its consolidated subsidiaries (except with respect to Roomlinx Sub and contracts existing with the Roomlinx Sub which remain with the Company following the Merger), joint ventures, partnerships, licensing arrangements, including, but not limited to, all realized and recorded revenue. |
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● | Conversion: Shares of Series A Preferred Stock shall not be convertible. |
● | Liquidation Preference: $5,000 per share upon any liquidation, dissolution or winding up of the Company (including in connection with a change of control). On liquidation, the Series A Preferred Stock shall rank in preference senior to common stock and other securities designated as junior to the Series A Preferred Stock, and pari passu with securities designated as being on parity with the Series A Preferred Stock. After receipt of their full liquidation preference, holders of the Series A Preferred Stock will not be entitled to further participation in distributions. |
● | Voting: The Series A Preferred Stock shall not have voting rights, except that amendments to the Restated Articles that adversely affect the Series A Preferred Stock shall require the consent of the Series A Preferred Stock. |
● | Redemption/Cancellation: The Series A Preferred Stock shall not be redeemable. Following December 31, 2021, the Series A Preferred Stock shall be deemed cancelled and no longer outstanding. |
● | Authorized: 10 shares authorized for issuance. |
● | Ranking on distributions: The Series B Preferred Stock shall be junior to the Series A Preferred Stock; senior to common stock and other securities designated as junior to the Series B Preferred Stock; and pari passu with securities designated as being on parity with the Series B Preferred Stock. |
● | Dividends: Holders of Series B Preferred Stock shall not be entitled to receive dividends. |
● | Conversion: Shares of Series B Preferred Stock shall not be convertible. |
● | Liquidation Preference: Upon any liquidation, dissolution or winding up of the Company (including a change of control), holders of Series B Preferred Stock shall not be entitled to receive any distributions. |
● | Redemption/Cancellation: The Series B Preferred Stock shall not be redeemable. Following December 31, 2021, the Series B Preferred Stock shall be deemed cancelled and no longer outstanding. |
● | Voting/Veto Rights: Holders of Series B Preferred Stock shall have no voting rights other than the following veto rights. Until December 31, 2021, the affirmative vote of holders representing at least 75% of the outstanding shares of Series B Preferred Stock is required for the Company to take any of the following actions: |
(i) | create or assume any debt, liability, obligation or commitment outside the ordinary course of business; |
(ii) | create, assume or suffer to exist any mortgage, pledge or other encumbrance upon any of its properties or assets now owned or hereafter acquired by the Company; |
(iii) | assume, guarantee, endorse or otherwise become liable upon the obligation of any person, firm or corporation (other than wholly-owned subsidiaries of the Company), except by the endorsement of negotiable instruments for deposit or collection in the ordinary course of business; |
(iv) | amend or change the Restated Articles; |
(v) | dissolve or liquidate, or merge or consolidate with or into any other corporations; |
(vi) | sell, lease, transfer or otherwise dispose of all or substantially all of its assets; |
(vii) | enter into any agreement that provides a party with the right to purchase from the Company any shares of any class of capital stock of the Company; |
(viii) | offer or contemplate offering any transaction pursuant to which the Company shall issue or sell to any person any shares of any class of capital preferred stock or any other equity interests of the Company (including, but not limited to, any instrument that is convertible into common stock or preferred stock of the Company); |
(ix) | obtain any line of credit of the Company or transactions related thereto; |
(x) | issue any additional shares of common stock or other classes of capital stock of the Company; or |
(xi) | appoint, elect or otherwise engage any officer or director of the Company. |
· | Authorization: Until December 31, 2021, the Board of Directors of the Company, in conjunction with the approval of all of the holders of Series B Preferred Stock, shall be authorized to take the following actions: |
(i) | create or assume any debt, liability, obligation or commitment outside the ordinary course of business; |
(ii) | create, assume or suffer to exist any mortgage, pledge or other encumbrance upon any of its properties or assets now owned or hereafter acquired by the Company; |
(iii) | to borrow money, incur credit related obligations and/or indebtedness and issue evidences of indebtedness and other obligations, to guaranty indebtedness, liabilities and obligations of others, whether direct or indirect subsidiaries, affiliates, shareholders or others, and to secure any or all of the foregoing by one or more mortgages, pledges, security interests or other liens on, of or in the assets, rights and interests of the Company, and to enter into and perform, and to modify, amend, restate, refinance and restructure, credit, loan, guaranty, security, pledge and other agreements, notes and instruments; |
(iv) | amend or change the Amended and Restated Articles of Incorporation or the By-laws of the Company; |
(v) | the offering or contemplation of any transaction pursuant to which the Company shall issue or sell to any person any shares of any class of capital stock or any other equity interests of the Company (including, but not limited to, any instrument that is convertible into common stock or preferred stock of the Company); |
(vi) | issue any additional shares of common stock or other classes of capital stock of the Company; or |
(vii) appoint, elect or otherwise engage any officer, employee or consultant of theCompany.
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THE ARTICLES OF INCORPORATION OF THE COMPANY
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● | all shares of SP common stock issued and outstanding immediately prior to the Effective Time will be converted on a one-for-one basis into an aggregate of 105,544,268 restricted shares of Common Stock of the Company. Accordingly, the holders of SP common stock immediately prior to the Effective Time will hold, when taken together with shares of Common Stock (i) issuable at the Effective Time to The Robert DePalo Special Opportunity Fund, LLC in connection with the DePalo Debt Conversion and (ii) issuable pursuant to any equity offering consummated by any party to the Merger Agreement prior to the Effective Time, shares representing in the aggregate 86% of the outstanding shares of the Company’s Common Stock immediately following the Effective Time; |
● | the shares of SP’s Series A Preferred Stock and Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be exchanged for an identical number of shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, of the Company, having substantially identical terms to SP’s current Series A Preferred Stock and Series B Preferred Stock; |
● | all options to purchase SP common stock, SARS and restricted stock awards issued and outstanding immediately prior to the Effective Time under the current SP Employee Incentive Plan will be exchanged for options, SARS and awards to purchase an identical number of shares of Common Stock on the same terms and conditions; |
● | the shares of the Company’s Common Stock issued and outstanding immediately prior to the Effective Time, after giving effect to the Reverse Stock Split, will remain outstanding and the holders thereof shall receive an additional 11,045,330 restricted shares of Common Stock of the Company pursuant to the Merger Agreement. Such Nominee Shares will be issued in a single stock certificate to the Company’s corporate counsel, as Nominee, for the pro-rata benefit of the holders thereof, and will be subject to certain lockup and registration provisions described below (see the section entitled, “Lockup, Leak-out and Registration Provisions”). Accordingly, (i) the shares of Common Stock held by the Company’s stockholders, (ii) the shares of Common Stock issuable upon the exercise of the Company’s warrants outstanding immediately prior to the Effective Time (not including out-of-the-money warrants) and (iii) the shares of Common Stock to be issued to Cenfin in exchange for its agreement to restructure indebtedness owed to it by the Company pursuant to the Debt Restructuring Agreement, will represent in the aggregate 14% of the outstanding shares of the Company’s Common Stock immediately following the Effective Time; |
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● | holders of the existing preferred stock of the Company will receive their liquidation preference and accrued but unpaid dividends with respect to such shares, the Company’s existing preferred stock will be cancelled and there will be no outstanding shares of the Company’s existing preferred stock outstanding following the Merger, except as described above; and |
● | all outstanding options to purchase Company capital stock issued under the Company’s Stock Option Plan will terminate in accordance with the terms thereof. |
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Name | Age | Position | ||
Aaron Dobrinsky | 47 | Chief Executive Officer and Director | ||
Christopher Broderick | 52 | Chief Operating Officer and Director |
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● | For information regarding the Company, information contained in the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2013 filed with the SEC on March 31, 2014, and the Company’s Quarterly Report on Form 10-Q for the Fiscal Quarter Ended June 30, 2014 filed with the SEC on August 13, 2014; and |
● | For information regarding SP, information contained in the Report of Signal Point Holdings Corp. dated August 12, 2014, attached to this Proxy Statement asAppendix C(the “SP Report”). |
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● | Internet Apps including Netflix, Pandora, Hulu, YouTube, Facebook, and many more; |
● | International and U.S. television programming on demand; |
● | Click and Go TV program guide or Interactive Program Guide (“IPG”); |
● | Web Games; |
● | MP3 player and thumb drive access; and |
● | Ability to send directions from the iTV system to a mobile device. |
● | On-going connectivity service and support contracts; |
● | Network design and installation services; |
● | Delivery of content and advertising; |
● | Delivery of business and entertainment applications; |
● | E-commerce; |
● | The customization of its software; |
● | Software licensing; |
● | Delivery of pay-per-view content; and |
● | Sale of video-on-demand systems |
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● | Network design and installation services; |
● | Delivery of telephone service (billed monthly); |
● | Delivery of Internet service (billed monthly); |
● | Delivery of television service (billed by the satellite provider with monthly commissions paid to the Company); and |
● | Management fees for the management of affiliated communication systems. |
● | Low cost installation option for hotels, which allows for a disruptive business model; |
● | Significantly lower cost for Roomlinx to service and support; |
● | Expanded market opportunity to attract limited service hotels with a lower cost installation; |
● | Rapid installation ensures less “down time” for hotel rooms to be offline; |
● | Opportunity to license software allowing for accelerated market penetration; |
● | Guest will appreciate multiple options to access media and entertainment through personal devices; |
● | Strong recurring revenue model for the Company; and |
● | Provides for a new service offering and revenue stream for hotels. |
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● | We are seeking to grow the number of rooms installed with our Interactive TV platform; |
● | We are seeking to grow the number of RGUs under management; |
● | We are seeking to attain preferred vendor status or become a brand standard with additional premier hotel brands; |
● | We aspire to increase our advertising revenue by leveraging our portfolio of iTV installations; |
● | We plan to forge strong business partnerships with Fortune 500 companies that create operational efficiencies and product enhancements; |
● | We are seeking to leverage our core competencies by expanding the markets we serve beyond the United States, Canada, Mexico and Aruba into the Middle-East, Africa, Central America and the Caribbean; |
● | We anticipate expanding the IP-based services and Interactive TV platform that we offer to include: |
Ø | Integration with new and ever increasing consumer web applications, |
Ø | Continued custom integration with the Hotel’s back office applications, |
Ø | Expanded IP-based advertising through the television and personal devices, |
Ø | Expanded IP-based E-Commerce through the television and personal devices, and |
Ø | Growth in our custom software development and professional services revenues; |
● | Through acquisition or organic growth we plan to: |
Ø | Increase our media and entertainment base of customers, |
Ø | Increase our high speed Internet base of customers, |
Ø | Explore leveraging our current networks for use by mobile carriers, and |
Ø | Offer additional synergistic technologies or services that allow us to sell more of our Interactive TV product; and |
● | Our longer term strategies include expansion into the European and Asian hotel markets and expansion into additional vertical markets, such as healthcare and high end retirement homes. |
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● | Public Relations Programs. Communicate key initiatives, positive results, points of differentiation and promotions through press releases, industry events and key affiliations such as HTNG (Hotel Technology Next Generation) and AHLA (American Hotel and Lodging Association); |
● | Direct Marketing Campaigns. Including digital, print and video delivery; and |
● | Product Development. Keeping a pulse on industry needs and wants through continual user research and development projects that result in differentiated products and services that provide financial and brand value to clients. |
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SYMBOL | TIME PERIOD | LOW | HIGH | |||||||
RMLX | January 1, - March 31, 2012 | $ | 2.25 | $ | 4.80 | |||||
April 1, - June 30, 2012 | $ | 2.15 | $ | 3.50 | ||||||
July 1, - September 30, 2012 | $ | 2.30 | $ | 3.98 | ||||||
October 1, - December 31, 2012 | $ | 1.80 | $ | 2.75 | ||||||
January 1, - March 31, 2013 | $ | 1.15 | $ | 2.39 | ||||||
April 1, - June 30, 2013 | $ | 0.52 | $ | 1.90 | ||||||
July 1, - September 30, 2013 | $ | 0.11 | $ | 0.65 | ||||||
October 1, - December 31, 2013 | $ | 0.03 | $ | 0.34 | ||||||
January 1, - March 31, 2014 | $ | 0.09 | $ | 0.40 | ||||||
April 1, - June 30, 2014 | $ | 0.20 | $ | 0.30 | ||||||
RMLXP | January 1, - March 31, 2012 | $ | 0.10 | $ | 0.10 | |||||
April 1, - June 30, 2012 | $ | 0.10 | $ | 0.10 | ||||||
July 1, - September 30, 2012 | $ | 0.10 | $ | 0.12 | ||||||
October 1, - December 31, 2012 | $ | 0.05 | $ | 0.12 | ||||||
January 1, - March 31, 2013 | $ | 0.10 | $ | 0.20 | ||||||
April 1, - June 30, 2013 | $ | 0.10 | $ | 0.20 | ||||||
July 1, - September 30, 2013 | $ | 0.10 | $ | 0.11 | ||||||
October 1, - December 31, 2013 | $ | 0.10 | $ | 0.10 | ||||||
January 1, - March 31, 2014 | $ | 0.10 | $ | 0.14 | ||||||
April 1, - June 30, 2014 | $ | 0.21 | $ | 0.26 |
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● | the failure of the Company to consummate the Merger; |
● | the continued suspension of certain obligations of the Company and Hyatt pursuant to the MSA or the removal of such obligations from the MSA and the restructure or release of the obligations of certain Hyatt hotels to install the Company’s iTV product; |
● | the Company’s successful implementation of new products and services (either generally or with specific key customers); |
● | the Company’s ability to satisfy the contractual terms of key customer contracts; |
● | the risk that we will not achieve the strategic benefits of the acquisition of Canadian Communications; |
● | demand for the new products and services, the volume and timing of systems sales and installations, the length of sales cycles and the installation process and the possibility that our products will not achieve or sustain market acceptance; |
● | unexpected changes in technologies and technological advances and ability to commercialize and manufacture products; |
● | the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; |
● | the Company’s ability to successfully compete against competitors offering similar products and services; |
● | the ability to obtain adequate financing in the future; |
● | the Company’s ability to establish and maintain strategic relationships, including the risk that key customer contracts may be terminated before their full term; |
● | general economic and business conditions; |
● | errors or similar problems in our products, including product liabilities; |
● | the outcome of any legal proceeding that has been or may be instituted against us and others and changes in, or failure to comply with, governmental regulations; |
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● | our ability to attract and retain qualified personnel; |
● | maintaining our intellectual property rights and litigation involving intellectual property rights; |
● | legislative, regulatory and economic developments; |
● | risks related to third-party suppliers and our ability to obtain, use or successfully integrate third-party licensed technology; |
● | breach of our security by third parties; and |
● | those factors discussed in “Risk Factors” in our periodic filings with the SEC. |
● | Site-specific determination of needs and requirements; |
● | Design and installation of the wireless or wired network; |
● | Customized development, design and installation of a media and entertainment system; |
● | IP-based delivery of on-demand high-definition and standard-definition programming including Hollywood, Adult, and specialty content; |
● | Delivery of free-to-guest (“FTG”) television programming via satellite; |
● | Delivery of an interactive (“click and go”) programming guide; |
● | Full maintenance and support of the network and Interactive TV product; |
● | Technical support to assist guests, hotel staff, and residential and business customers, 24 hours a day, 7 days a week, 365 days a year; |
● | Delivery of an advertising and E-commerce platform through iTV. |
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Twelve Months | Line of | Notes | Lease Obligations | Minimum | ||||||||||||||||
Ended June 30, | Credit | Payable | Capital | Operating | Payments | |||||||||||||||
2015 | $ | 124,000 | $ | 11,688 | $ | 105,607 | $ | 151,210 | $ | 392,505 | ||||||||||
2016 | 1,942,000 | 13,040 | - | 38,021 | 1,993,061 | |||||||||||||||
2017 | 2,770,000 | 1,152 | - | - | 2,771,152 | |||||||||||||||
$ | 4,836,000 | $ | 25,880 | $ | 105,607 | $ | 189,231 | $ | 5,156,718 |
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(1) | To approve and adopt an amendment to the Company’s existing articles of incorporation to change the name of the Company to “SignalShare Media, Inc.” (the “Name Change”): |
o FOR | o AGAINST | o WITHHOLD AUTHORITY (ABSTAIN) |
(2) | To approve and adopt an amendment to the Company’s existing articles of incorporation to effectareverse stock split (pro-rata reduction of outstanding shares)of the Company’s common stock at a ratio of approximately 1-for-10, which specific ratio will be equal to the ratio necessary to result in 600,000 shares of the Company’s outstanding common stock (the “Reverse Stock Split”): |
o FOR | o AGAINST | o WITHHOLD AUTHORITY (ABSTAIN) |
(3) | To approve and adopt an amendment to the Company’s existing articles of incorporation todesignate and authorize two series of preferred stock, “Series A Preferred Stock” and “Series B Preferred Stock”(the “Preferred Stock Designation”): |
o FOR | o AGAINST | o WITHHOLD AUTHORITY (ABSTAIN) |
(4) | To approve and adopt the Amended and Restated Articles of Incorporation of the Company: |
o FOR | o AGAINST | o WITHHOLD AUTHORITY (ABSTAIN) |
(5) | Toapprove and adopt the Agreement and Plan of Merger by and among the Company, Signal Point Holdings Corp. and Roomlinx Merger Corp., and the transactions contemplated thereby: |
o FOR | o AGAINST | o WITHHOLD AUTHORITY (ABSTAIN) |
Individual: | Entity: | ||||||
By: | or | By: | |||||
Name: | |||||||
Title: |
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(c) | Conversion. The Series A Preferred Stock is not convertible into any shares of capital stock or other equity interests of the Corporation. |
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(f) | Redemption, Cancellation. The Series A Preferred Stock shall not be redeemable. If at any time prior to December 31, 2021, the Corporation shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Corporation is not the surviving corporation) or sell, transfer or otherwise dispose all or substantially all of its property, assets or business to another corporation (“Extraordinary Transaction”), the successor or acquiring corporation (if other than the Corporation) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of the Series A Preferred Stock to be performed and observed by the Corporation and all the obligations and liabilities hereunder, including, but not limited to the payment of dividends as set forth in Section (b). As soon as commercially practicable following the Extraordinary Transaction, the successor or acquiring corporation (if other than the Corporation), shall deliver to the holder of the Series A Preferred Stock a new certificate in replacement of the Series A Preferred Stock consistent with the provisions referenced in the immediately preceding sentence against receipt by such successor or acquiring corporation of the original certificate for the Series A Preferred Stock. |
6 |
Upon expiration of the Dividend Period, the Series A Preferred Stock shall be deemed cancelled and no shares of Series A Preferred Stock shall be deemed issued and outstanding as of such date. Upon written request of the Corporation, the holder of the shares and the Series A Preferred Stock shall return any certificates evidencing such shares to the Corporation or shall deliver to the Corporation a lost certificate affidavit in lieu thereof. |
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(f) Authorization. For the period commencing on the filing date of these Amended and Restated Articles of Incorporation through December 31, 2021 (the “Series B Authority Period”), the Corporation agrees that the Board of Directors of the Corporation in conjunction with the approval of all of the holders of Series B Preferred Stock shall be authorized to take the following actions:
(i) create or assume any debt, liability, obligation or commitment outside the ordinary course of business of the Corporation;
(ii) create, assume or suffer to exist any mortgage, pledge or other encumbrance upon any of its properties or assets now owned or hereafter acquired by the Corporation;
(iii) to borrow money, incur credit related obligations and/or indebtedness and issue evidences of indebtedness and other obligations, to guaranty indebtedness, liabilities and obligations of others, whether direct or indirect subsidiaries, affiliates, shareholders or others, and to secure any or all of the foregoing by one or more mortgages, pledges, security interests or other liens on, of or in the assets, rights and interests of the Corporation, and to enter into and perform, and to modify, amend, restate, refinance and restructure, credit, loan, guaranty, security, pledge and other agreements, notes and instruments;
(iv) amend or change these Amended and Restated Articles of Incorporation or the By-laws of the Corporation;
(v) the offering or contemplation of any transaction pursuant to which the Corporation shall issue or sell to any person any shares of any class of capital stock or any other equity interests of the Corporation (including, but not limited to, any instrument that is convertible into common stock or preferred stock of the corporation);
(vi) issue any additional shares of Common Stock or other classes of capital stock of the Corporation; and
(vii) appoint, elect or otherwise engage any officer, employee or consultant of the Corporation.
10 |
11 |
ROOMLINX, INC. | ||
By: | ||
Name: | ||
Title: |
12 |
Page | |||||
ARTICLE I | DEFINITIONS | 1 | |||
ARTICLE II | MERGER | 8 | |||
Section 2.1 | Merger | 8 | |||
Section 2.2 | Closing | 9 | |||
Section 2.3 | Effective Time | 9 | |||
Section 2.4 | Articles of Incorporation; Bylaws; and Shareholders Agreement | 9 | |||
Section 2.5 | Directors and Officers | 9 | |||
Section 2.6 | SEC Filings | 10 | |||
Section 2.7 | Reverse Split | 10 | |||
Section 2.8 | Name Change | 10 | |||
Section 2.9 | Restated Roomlinx Articles of Incorporation | 10 | |||
Section 2.10 | Roomlinx Subsidiary | 10 | |||
Section 2.11 | [Intentionally Omitted] | 10 | |||
Section 2.12 | Tax Consequences | 10 | |||
Section 2.13 | Exchange of Preferred Stock | 10 | |||
Section 2.14 | SP Options | 10 | |||
Section 2.15 | Escrow Agreement | 11 | |||
Section 2.16 | Transitional Services Agreement | 11 | |||
ARTICLE III | TREATMENT OF SECURITIES | 11 | |||
Section 3.1 | Treatment of SP Common Stock | 11 | |||
Section 3.2 | Treatment of Roomlinx Common Stock | 11 | |||
Section 3.3 | Treatment of Roomlinx Preferred Stock | 11 | |||
Section 3.4 | Treatment of Roomlinx Options and Warrants | 12 | |||
Section 3.5 | No Fractional Shares | 12 | |||
Section 3.6 | Lost, Stolen or Destroyed Stock Certificates | 12 | |||
Section 3.7 | Stock Transfer Books | 12 | |||
ARTICLE IV | CLOSING DELIVERABLES | 12 | |||
Section 4.1 | Roomlinx | 12 | |||
Section 4.2 | SP | 13 | |||
Section 4.3 | Roomlinx & SP | 14 | |||
ARTICLE V | REPRESENTATIONS AND WARRANTIES RELATING TO ROOMLINX | 14 | |||
Section 5.1 | Organization; Good Standing | 14 | |||
Section 5.2 | Authorization; Enforceability; Board Action | 14 | |||
Section 5.3 | Consents | 15 | |||
Section 5.4 | No Conflict | 15 | |||
Section 5.5 | Capitalization | 15 | |||
Section 5.6 | Required Vote of Roomlinx Stockholders | 16 | |||
Section 5.7 | SEC Reports; Financial Statements | 16 | |||
Section 5.8 | Absence of Undisclosed Liabilities | 16 | |||
Section 5.9 | Absence of Certain Changes | 16 | |||
Section 5.10 | Compliance with Laws | 16 | |||
Section 5.11 | Related Party Transactions | 16 |
ARTICLE VI | REPRESENTATIONS AND WARRANTIES RELATING TO SP | 17 | |||
Section 6.1 | Organization | 17 | |||
Section 6.2 | Authorization; Enforceability; Board Action | 17 | |||
Section 6.3 | Consents | 17 | |||
Section 6.4 | No Conflict | 18 | |||
Section 6.5 | Capitalization | 18 | |||
Section 6.6 | Subsidiaries | 18 | |||
Section 6.7 | Financial Statements | 18 | |||
Section 6.8 | Absence of Undisclosed Material Liabilities | 19 | |||
Section 6.9 | Absence of Certain Changes | 19 | |||
Section 6.10 | Litigation | 19 | |||
Section 6.11 | Communications Laws | 19 | |||
Section 6.12 | Compliance with Laws | 20 | |||
Section 6.13 | Contracts | 20 | |||
Section 6.14 | Intellectual Property | 21 | |||
Section 6.15 | Employee Benefits | 21 | |||
Section 6.16 | Taxes | 22 | |||
Section 6.17 | Environmental Matters | 24 | |||
Section 6.18 | Real Property | 24 | |||
Section 6.19 | Labor Matters | 24 | |||
Section 6.20 | Insurance | 25 | |||
Section 6.21 | Sufficiency of Assets; No Encumbrances; Title | 25 | |||
Section 6.22 | Related Party Transactions | 25 | |||
Section 6.23 | Brokers | 25 | |||
Section 6.24 | Required Vote of SP Stockholders | 25 | |||
ARTICLE VII | COVENANTS | 26 | |||
Section 7.1 | Conduct of Business | 26 | |||
Section 7.2 | Access to Information | 27 | |||
Section 7.3 | Requisite Roomlinx Stockholder Vote, Requisite SP Stockholder Vote; ProxyStatement and Other Filings | 27 | |||
Section 7.4 | Expenses | 28 | |||
Section 7.5 | Tax Returns | 28 | |||
Section 7.6 | Supplements to Disclosure Schedules | 29 | |||
Section 7.7 | Notice of Certain Events | 29 | |||
Section 7.8 | Indemnification of Roomlinx Officers and Directors | 29 | |||
Section 7.9 | Required Governmental Consents | 30 | |||
Section 7.10 | Employment Matters | 30 | |||
Section 7.11 | Reasonable Best Efforts; Further Assurances | 31 | |||
Section 7.12 | No Going Concern Qualification | 31 | |||
Section 7.13 | Form 211 | 31 | |||
Section 7.14 | Form 8-K | 31 | |||
Section 7.15 | Audited SP Financial Statements | 31 | |||
Section 7.16 | Transitional Services Agreement | 31 | |||
Section 7.17 | Regulatory Approvals | 31 | |||
Section 7.18 | Roomlinx Sub Working Capital | 31 | |||
ARTICLE VIII | CONDITIONS TO CLOSING | 32 | |||
Section 8.1 | Conditions to Each Party’s Obligation | 32 | |||
Section 8.2 | Conditions to Obligation of SP | 32 |
ii |
Section 8.3 | Condition to Obligation of Roomlinx | 33 | |||
ARTICLE IX | TERMINATION, AMENDMENT AND WAIVER | 34 | |||
Section 9.1 | Termination | 34 | |||
Section 9.2 | Amendments and Waivers | 35 | |||
ARTICLE X | SURVIVAL AND INDEMNIFICATION | 36 | |||
Section 10.1 | Survival | 36 | |||
Section 10.2 | Indemnification by Roomlinx | 36 | |||
Section 10.3 | Indemnification by the Surviving Entity | 37 | |||
Section 10.4 | Indemnification Procedures | 38 | |||
Section 10.5 | Exclusive Remedy | 39 | |||
Section 10.6 | Certain Rules | 39 | |||
ARTICLE XI | MISCELLANEOUS | 40 | |||
Section 11.1 | Notices | 40 | |||
Section 11.2 | Severability | 40 | |||
Section 11.3 | Counterparts | 41 | |||
Section 11.4 | Entire Agreement; No Third Party Beneficiaries | 41 | |||
Section 11.5 | Governing Law | 41 | |||
Section 11.6 | Consent to Jurisdiction | 41 | |||
Section 11.7 | Waiver of Jury Trial | 41 | |||
Section 11.8 | Specific Performance | 41 | |||
Section 11.9 | Publicity | 41 | |||
Section 11.10 | Assignment | 42 | |||
Section 11.11 | Construction | 42 | |||
Section 11.12 | Time of Essence | 42 | |||
Section 11.13 | Extension; Waiver | 42 | |||
Section 11.14 | Election of Remedies | 42 | |||
Section 11.15 | Further Assurances | 42 | |||
Section 11.16 | Post-Effective Time Access | 43 | |||
Section 11.17 | Stockholder Representative | 43 |
EXHIBITS: | |
Exhibit A | Amended and Restated Articles of Incorporation of SignalShare, Inc. |
Exhibit B | Amended and Restated Bylaws of SignalShare, Inc. |
Exhibit C | Post-Closing Capitalization |
Exhibit D | Terms of Debt Restructuring Agreement |
Exhibit E | Employment Agreement – Michael Wasik |
Exhibit F | Employment Agreement – Robert Wagener |
Exhibit G | Consulting Agreement – Robert DePalo |
Exhibit H | Employment Agreement – Aaron Dobrinsky |
Exhibit I | Employment Agreement – Chris Broderick |
Exhibit J | Employment Agreement – Andrew Bressman |
Exhibit K | Consulting Agreement – SAB Management LLC |
Exhibit L | Amended Shareholders Agreement |
Exhibit M | Transitional Services Agreement |
Exhibit N | Escrow Agreement |
Exhibit O | TIG Settlement Agreement |
iii |
Schedule 5.3 | Required Consents of Roomlinx (“RMLX”). |
Schedule 6.3 | Signal Point Holding Corp. (“SPHC”) Required Consents. |
Schedule 6.4 | SPHC Conflicts |
Schedule 6.5 | SPHC securities rights. |
Schedule 6.6 | SPHC Subsidiaries. |
Schedule 6.7 | SPHC Unaudited Financial Statements. |
Schedule 6.8 | Undisclosed Liabilities of SPHC from the Audited Financial Statements. |
Schedule 6.9 | Transaction and changes of SPHC since December 31, 2012. |
Schedule 6.10 | SPHC Litigation. |
Schedule 6.11(a) | SPHC FCC Compliance disclosures. |
Schedule 6.11(b) | Description of SPHC FCC and State Public Utility commissions correspondence and orders. |
Schedule 6.11(c) | SPHC disclosure of claims with the FCC or a State Public Utility. |
Schedule 6.12 | SPHC Compliance disclosure. |
Schedule 6.13 | A list of all material contracts of SPHC. |
Schedule 6.14 | Disclosure of SPHC IP claims. |
Schedule 6.15(a) | A list of all SPHC Employees. |
Schedule 6.15(c) | None |
Schedule 6.15(d) | Disclosure SPHC employment/labor claims. |
Schedule 6.15(f) | None |
Schedule 6.15(g) | None |
Schedule 6.16 | SPHC Tax filings exceptions. |
Schedule 6.17 | None |
Schedule 6.18 | A description of SPHC’s Real Property interests. |
Schedule 6.18(b) | None |
Schedule 6.20 | Copies of SPHC insurance policies. |
Schedule 6.21 | Disclosure of SPHC encumbrances. |
Schedule 6.22 | A description of SPHC related party transactions. |
iv |
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SP: | ROOMLINX: | |||
Signal Point Holdings Corp. | Roomlinx, Inc. | |||
By: /s/ Robert DePalo | By: /s/ Michael Wasik | |||
Name: Robert DePalo | Name: Michael Wasik | |||
Title: Chief Executive Officer | Title: Chief Executive Officer | |||
ROOMLINX MERGER CORP. | ||||
By: /s/ Michael Wasik | ||||
Name: Michael Wasik | ||||
Title: Chief Executive Officer |
2 |
3 |
4 |
5 |
SP: | ROOMLINX: | |||||
Signal Point Holdings Corp. | Roomlinx, Inc. | |||||
By: | /s/ Robert DePalo | By: | /s/ Michael Wasik | |||
Name: Robert DePalo | Name: Michael Wasik | |||||
Title: Chief Executive Officer | Title: Chief Executive Officer |
MERGERSUB: | ||||||
Roomlinx Merger Corp. | ||||||
By: | /s/ Michael Wasik | |||||
Name: Michael Wasik | ||||||
Title: Chief Executive Officer |
APPENDIX C
REPORT OF SIGNAL POINT HOLDINGS CORP.
DATED AUGUST 12, 2014
IS A PRIVATELY OWNED COMPANY
AND NOT AN AFFILIATE
OF ROOMLINX, INC.
ROOMLINX, INC.
Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
New York, New York 10022
(212) 755-0289
August 12, 2014
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1 |
- Wi-Fi networking;
- Wi-Fi for Stadiums and Arena’s
- Wi-Fi network engineering
- Wi-Fi temporary and permanent installations
- Wi-Fi for concerts and corporate events
- Wi-Fi offloading for cellular carriers
- Wi-Fi for hotels and convention centers
- Enterprise Broadband
- Voice and Data services for small to mid-sized businesses in the Northeast and Midwest United States;
- Wireless Point-to-Point and Multi Point connections
- Professional IT services
- Media
- Data Analytics
- Media Content for events and hospitality customers
- Sponsorship partnerships and advertising opportunities.
- a substantial portion of our cash flow from operations will be dedicated to debt service and may not be available for other purposes;
- limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we will operate;
- limiting our ability to obtain financing in the future for working capital, capital expenditures and general corporate purposes, including acquisitions, and may impede our ability to secure favorable terms;
- making us more vulnerable to economic and industry downturns and may limit our ability to withstand competitive pressures;
- placing us at a competitive disadvantage to our competitors with less indebtedness;
- limiting our ability to fund working capital, capital expenditures, and other general corporate purposes; and
- reducing our flexibility in responding to changing business and economic conditions.
- incur or guarantee additional indebtedness;
- create liens on our assets;
- make investments;
- engage in mergers and acquisitions;
- redeem capital stock
- make capital expenditures;
- sell any of our assets;
- maintain certain leverage ratios on a quarterly basis; and
- declare any dividends.
- our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions or general corporate purposes may be impaired in the future;
- if new debt is added to our debt levels, the related risks that we will face would increase and we may not be able to meet all of our debt obligations;
- a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our indebtedness, thereby reducing the funds available to us for other purposes, and there can be no assurance that our operations will generate sufficient cash flow to service this indebtedness;
- it may be more difficult for us to satisfy our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness;
- we may be more vulnerable to general adverse economic and industry conditions;
- we may be at a competitive disadvantage compared to our competitors with less debt or comparable debt at more favorable interest rates;
- our ability to refinance indebtedness may be limited or the associated costs may increase; and
- our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be prevented from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins or our business.
- actual or anticipated variations in our operating results;
- announcements of developments by us or our competitors;
- regulatory actions regarding our products
- announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
- adoption of new accounting standards affecting the our industry;
- additions or departures of key personnel;
- introduction of new products by us or our competitors;
- sales of the our Common Stock or other securities in the open market; and
- other events or factors, many of which are beyond our control.
- introduction of technological innovations or new commercial products by us or our competitors;
- regulatory developments or enforcement in the United States and foreign countries;
- development or disputes concerning patents or other proprietary rights;
- litigation;
- future sales of our common stock;
- general market conditions;
- economic, political and other external factors or other disasters or crisis; and
- overall fluctuation in U.S. equity markets.
- delaying, deferring or preventing a change in control;
- entrenching our management or our Board of Directors;
- impeding a merger, consolidation, takeover or other potential transaction affecting our business or the control of our Company.
- allow the authorized number of directors to be changed only by resolution of our board of directors;
- authorize our board of directors to issue without shareholder approval blank check preferred stock that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;
- establish advance notice requirements for shareholder nominations to our board of directors or for shareholder proposals that can be acted on at shareholder meetings;
- authorize the Board of Directors to amend the By-laws;
- limit who may call shareholder meetings; and
- require the approval of the holders of a majority of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our certificate of incorporation.
- conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and
- in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
| Name: | | | Age: | | | Position: | |
---|---|---|---|---|---|---|---|---|
| Robert DePalo | | | 59 | | | Chairmen and CEO | |
| Aaron Dobrinsky | | | 50 | | | President | |
| Chris Broderick | | | 53 | | | Chief Operating Officer | |
| Steven Vella | | | 51 | | | Chief Financial Officer | |
| | | | | |
MANAGING DIRECTOR OF WAVE2WAVE AND HEAD OF THE COMPANY’S
(SIGNAL POINT HOLDINGS CORP.) BUSINESS DEVELOPMENT.
| Name and Position | | | Year | | | Salary | | | Bonus | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Robert DePalo Chief Executive Officer | | | | | 2014 | | | | | $ | 210,000 | (1) | | | | | | -0- | | | ||
| Aaron Dobrinsky President | | | | | 2013 | | | | | $ | 250,000 | | | | | $ | 25.000 | | | |||
| Chris Broderick Chief Operating Officer | | | | | 2013 | | | | | $ | 225,000 | | | | | $ | 25,000 | | | |||
| Andrew Bressman | | | | | 2014 | | | | | $ | 75,000 | | | | | $ | 225,000 | (2) | | | ||
| | | | | | | | | | |
- Pursuant to the terms of a Consulting Agreement, dated as of January 9, 2014.
- Paid in 2014 to an affiliated entity of Mr. Bressman who is the Company’s Managing Director and Head of Business Development.
- settlement and assignment of certain claims and existing debts in the amount of approximately $38,700,000 held by George Mennen and the Wilmington Trust and George Jeff Mennen as Co-Trustees U/A/D November 25, 1970, as Amended for the Benefit of John Henry Mennen (“Mennen Trust”), Mr. DePalo transferred 10,000,000 shares of Company Common Stock from his personal holdings to the Mennen Trust;
- In connection with the January 2013 Private Placement, Robert DePalo sold 7,026,636 shares of Common Stock for the benefit of the Company and its shareholders for net proceeds of $7,184,953 paid to the Company and its affiliates (including $70,000 paid to Robert DePalo) in accordance with the terms of the January 2013 Offering.
- In connection with the January 2014 Private Placement, Robert DePalo purchased 694,444 shares of the Company’s common stock from Argent Limited (UK) at $1.80 per share and sold 1,611,111 shares of Common Stock at $1.80 per share. Robert DePalo sold 4,333,333 shares for the benefit of the Company and its shareholders for net proceeds of $5,583,500 paid to the Company and its affiliates in accordance with the terms of the January 2014 Offering.
- The Robert DePalo Special Opportunity Fund LLC, the Debtor in Possession lender to Wave2Wave, converted all of the outstanding debt (described below) into 2,544,268 shares of Common Stock of the Company at a $120,000,000 valuation under the terms of the loan agreement, effective upon the execution of the Merger Agreement for the Roomlinx Transaction.
- On June 10, 2014, Mr. DePalo commenced a private placement of $2,500,000 of shares of Common Stock for $1.80 per share owned by Mr. DePalo for the benefit of the Company and its shareholders. The gross proceeds of the offering shall be used as follows: $1,000,000 allocated to payment to Arjent Limited (U.K.), an entity, in consideration of its international marketing efforts conducted by the company, including, but not limited to, introduction made to Bet 365 and other gaming sites; offering expenses consisting of 10% sales commissions, and offering expenses of approximately $60,000 (legal, printing and miscellaneous filing fees); and the balance of the proceeds of approximately $1,250,000 will be available for general and administrative expenses, including working capital of the Company.
- By each person or entity known by us to beneficially own more than 5% of the outstanding shares of our common stock;
- By each of our executive officers and directors; and
- By all of our executive officers and directors as a group.
| Name and Address of Beneficial Owner | | | Number of Shares | | | Percentage of Beneficially Owned Shares | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Robert DePalo | | | | | 47,307,865 | (2)(3) | | | | | | 41.4 | % | | |
| Mennen Trust | | | | | 10,000,000 | | | | | | 8.8 | % | | | |
| All Directors and Executive Officersas a Group (4 person) | | | | | 47,307,865 | | | | | | 41.4 | % | | | |
| | | | | | | | |
- Based on 114,282,138 shares issued and outstanding as of the date of this Report.
- Mr. DePalo may grant, option, transfer or otherwise issue shares from his holdings to Arjent (LLC and UK) employees including, but not limited to, Gary Schonwald, Gregg Lerman, Robert DePalo Jr., Todd Rosenzweig, Joshua Gladtke, Patrick Haggerty and Francis Aylward.
- Does not include ten (10) shares of non-redeemable Series B Preferred Stock held by Mr. DePalo. See “Description of Securities” below.
| Description | | | Period from September 29, 2012 Through December 31, 2012 | | | Period from January 1, 2012 Through September 28, 2012 | | | Combined | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | | | | $ | 3,456,468 | | | | | $ | 11,471,856 | | | | | $ | 14,928,324 | | | |||
| Cost of sales | | | | | 2,096,528 | | | | | | 7,155,032 | | | | | | 9,251,560 | | | |||
| Gross margin | | | | | 1,359,940 | | | | | | 4,316,824 | | | | | | 5,676,764 | | | |||
| Selling, general and Administrative expense | | | | | 1,932,850 | | | | | | 11,393,025 | | | | | | 13,325,875 | | | |||
| Impairment of goodwill | | | | | 24,190,857 | | | | | | — | | | | | | 24,190,857 | | | |||
| Operating loss | | | | | (24,763,767 | ) | | | | | | (7,076,201 | ) | | | | | | (31,839,968 | ) | | |
| Other (expense) income | | | | | | | | | | | | | | | | | | | | | | |
| Interest expense, net | | | | | (1,526,515 | ) | | | | | | (2,950,764 | ) | | | | | | (4,477,279 | ) | | |
| Other (expense) income, net | | | | | (375,468 | ) | | | | | | 11,493,809 | | | | | | 11,118,341 | | | ||
| (Loss) income from continuing operations before income taxes | | | | | (26,665,750 | ) | | | | | | 1,466,844 | | | | | | (25,198,906 | ) | | | |
| Income tax expense (benefit) | | | | | — | | | | | | — | | | | | | — | | | |||
| (Loss) income from continuing operations | | | | | (26,665,750 | ) | | | | | | 1,466,844 | | | | | | (25,198,906 | ) | | | |
| (Loss) income from discontinued operations, net of tax | | | | | (2,476,932 | ) | | | | | | 207,274 | | | | | | (2,269,658 | ) | | | |
| Net (loss) income | | | | | (29,142,682 | ) | | | | | | 1,674,118 | | | | | | (27,468,564 | ) | | | |
| Less: Dividends on preferred Stock | | | | | 150,000 | | | | | | — | | | | | | 150,000 | | | |||
| Net (loss) income attributable To common shareholders | | | | $ | (29,292,682 | ) | | | | | $ | 1,674,118 | | | | | $ | (27,618,564 | ) | | | |
| | | | | | | | | | | |
- The sustained period of operations in 2012 in which the Predecessor Company was operating under Chapter 11 bankruptcy protection,
- The fact that only certain of the assets were purchased and certain liabilities were assumed as part of the Section 363 Sale that created Holdings,
- The presentation of Signal Point Corp. as a discontinued operations in all periods presented,
- The combination of the results of operations for the Successor and Predecessor Companies during 2012 without adjustment and
- The acquisition of Signal Share LLC on January 14, 2013.
| | | | Balance at | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | December 31, 2013 | | | December 31, 2012 | | ||||||||
| Brookville Special Purpose Fund, net of $0 and $93,843 unamortized debt discount at December 31, 2013 and 2012, respectively | | | | $ | 5,477,950 | | | | | $ | 5,373,767 | | | ||
| Veritas High Yield Fund, net of $160,966 and $245,615 unamortized debt discount at December 31, 2013 and 2012, respectively | | | | | 1,611,623 | | | | | | 1,564,523 | | | ||
| Robert DePalo Special Opportunity Fund | | | | | 3,053,121 | | | | | | 3,500,000 | | | ||
| Total notes payable – related parties | | | | | 10,142,694 | | | | | | 10,438,290 | | | ||
| Less: current portion of notes payable – related parties | | | | | (7,364,110 | ) | | | | | | (10,438,290 | ) | | |
| Long-term portion of notes payable – related parties | | | | $ | 2,778,584 | | | | | $ | — | | | ||
| | | | | | | | |
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Three Months Ended March 31, 2014
| | | | Balance at | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
| Brookville Special Purpose Fund | | | | $ | 2,474,497 | | | | | $ | 5,477,950 | | | ||
| Veritas High Yield Fund, net of $78,982 and $160,966 unamortized debt discount at March 31, 2014 and December 31, 2013, respectively | | | | | 888,783 | | | | | | 1,611,623 | | | ||
| Robert DePalo Special Opportunity Fund | | | | | — | | | | | | 3,053,121 | | | ||
| Total notes payable – related parties | | | | | 3,363,280 | | | | | | 10,142,694 | | | ||
| Less: current portion of notes payable – related parties | | | | | (754,777 | ) | | | | | | (7,364,110 | ) | | |
| Long-term portion of notes payable – related parties | | | | $ | 2,608,503 | | | | | $ | 2,778,584 | | | ||
| | | | | | | | |
The Period From September 29, 2012 Through December 31, 2012,
And
The Period From January 1, 2012 Through September 28, 2012
| Report of Independent Registered Public Accounting Firm | | | | | F-2 | | | |
| Consolidated Balance Sheets of Signal Point Holdings Corp. and Subsidiaries (Successor) as of December 31, 2013 and 2012 | | | | | F-3 | | | |
| Consolidated Statements of Operations of Signal Point Holdings Corp. and Subsidiaries (Successor) for the Year Ended December 31, 2013 and the Period from September 29, 2012 through December 31, 2012 and Wave2Wave Communications, Inc. and Subsidiaries (Predecessor) for the Period from January 1, 2012 through September 28, 2012 | | | | | F-4 | | | |
| Consolidated Statements of Changes in Stockholders’ Deficit of Signal Point Holdings Corp. and Subsidiaries (Successor) for the Year Ended December 31, 2013 and the Period from September 29, 2012 through December 31, 2012 and Wave2Wave Communications, Inc. and Subsidiaries (Predecessor) for the Period from January 1, 2012 through September 28, 2012 | | | | | F-5 | | | |
| Consolidated Statements of Cash Flows of Signal Point Holdings Corp. and Subsidiaries (Successor) for the Year Ended December 31, 2013 and the Period from September 29, 2012 through December 31, 2012 and Wave2Wave Communications, Inc. and Subsidiaries (Predecessor) for the Period from January 1, 2012 through September 28, 2012 | | | | | F-6 | | | |
| Notes to the Consolidated Financial Statements | | | | | F-8 | | | |
| | | | | |
Signal Point Holdings Corp.
Hackensack, New Jersey
New York, New York
August 1, 2014
| | | | Successor | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | December 31, 2013 | | | December 31, 2012 | | ||||||||
| Assets | | | | | | | | | | | | | | ||
| Current assets | | | | | | | | | | | | | | ||
| Cash | | | | $ | 152,520 | | | | | $ | 376,626 | | | ||
| Accounts receivable | | | | | 594,873 | | | | | | 452,654 | | | ||
| Prepaid expenses | | | | | 480,764 | | | | | | 242,574 | | | ||
| Equipment purchased for resale | | | | | 520,983 | | | | | | — | | | ||
| Other current assets | | | | | 15,740 | | | | | | 71,095 | | | ||
| Current assets of discontinued operations | | | | | 27,750 | | | | | | 802,448 | | | ||
| Total current assets | | | | | 1,792,630 | | | | | | 1,945,397 | | | ||
| Property, plant and equipment, net | | | | | 461,171 | | | | | | 255,602 | | | ||
| Intangible assets | | | | | 404,167 | | | | | | — | | | ||
| Goodwill | | | | | 4,121,284 | | | | | | — | | | ||
| Security Deposits | | | | | 777,230 | | | | | | 440,853 | | | ||
| Other assets | | | | | 474,601 | | | | | | 125,518 | | | ||
| Assets held for sale | | | | | 102,988 | | | | | | 100,000 | | | ||
| Assets of discontinued operations | | | | | 50,000 | | | | | | 649,634 | | | ||
| Total Assets | | | | $ | 8,184,071 | | | | | $ | 3,517,004 | | | ||
| Liabilities and Stockholders’ Deficit | | | | | | | | | | | | | | ||
| Current liabilities | | | | | | | | | | | | | | ||
| Accounts payable | | | | $ | 5,002,973 | | | | | $ | 2,783,074 | | | ||
| Current maturities of notes payable, related parties | | | | | 7,364,110 | | | | | | 10,438,290 | | | ||
| Accrued expenses | | | | | 524,136 | | | | | | 376,369 | | | ||
| Leases payable | | | | | 383,157 | | | | | | 139,097 | | | ||
| Loans payable, related parties | | | | | 183,457 | | | | | | — | | | ||
| Deferred revenue and customer prepayments | | | | | 1,013,035 | | | | | | 491,809 | | | ||
| Other current liabilities | | | | | 105,077 | | | | | | — | | | ||
| Current liabilities of discontinued operations | | | | | 3,495,688 | | | | | | 3,416,257 | | | ||
| Total current liabilities | | | | | 18,071,633 | | | | | | 17,644,896 | | | ||
| Long-term portion of notes payable, related parties | | | | | 2,778,584 | | | | | | — | | | ||
| Non-current liabilities | | | | | — | | | | | | 39,420 | | | ||
| Non-current lease obligations | | | | | 909,370 | | | | | | — | | | ||
| Nonconvertible Series A preferred stock related party | | | | | 10 | | | | | | 10 | | | ||
| Total liabilities | | | | | 21,759,597 | | | | | | 17,684,326 | | | ||
| Commitments and contingencies | | | | | — | | | | | | — | | | ||
| Stockholders’ Deficit | | | | | | | | | | | | | | ||
| Preferred stock, par value $0.01 per share, 10,000,000 shares authorized and 1,010 shares and 1,000 shares designated at December 31, 2013 and 2012, respectively | | | | | — | | | | | | — | | | ||
| Series A preferred stock, par value $0.01 per share; 1,000 shares designated, 1,000 shares issued and outstanding at December 31, 2013 and 2012, respectively | | | | | — | | | | | | — | | | ||
| Series B preferred stock, par value $0.01 per share; 10 shares designated, 10 shares and no shares issued and outstanding at December 31, 2013 and 2012, respectively | | | | | — | | | | | | — | | | ||
| Common stock, par value $0.001 per share; 150,000,000 shares authorized, 109,156,213 and 106,156,213 shares issued and outstanding at December 31, 2013 and 2012, respectively | | | | | 109,157 | | | | | | 106,157 | | | ||
| Additional paid-in capital | | | | | 26,701,156 | | | | | | 15,019,203 | | | ||
| Accumulated deficit | | | | | (40,385,839 | ) | | | | | | (29,292,682 | ) | | |
| Total stockholders’ deficit | | | | | (13,575,526 | ) | | | | | | (14,167,322 | ) | | |
| Total Liabilities and Stockholders’ Deficit | | | | $ | 8,184,071 | | | | | $ | 3,517,004 | | | ||
| | | | | | | | |
| | | | Successor | | | Predecessor | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Year Ended December 31, 2013 | | | Period from September 29, 2012 Through December 31, 2012 | | | Period from January 1, 2012 Through September 28, 2012 | | ||||||||||||
| Revenues | | | | $ | 14,666,968 | | | | | $ | 3,456,468 | | | | | $ | 11,471,856 | | | |||
| Cost of sales, excluding depreciation and amortization which is included in selling, general and administrative expense below | | | | | 9,968,364 | | | | | | 2,096,528 | | | | | | 7,155,032 | | | |||
| Net margin | | | | | 4,698,604 | | | | | | 1,359,940 | | | | | | 4,316,824 | | | |||
| Selling, general and administrative expense | | | | | 10,587,155 | | | | | | 1,932,850 | | | | | | 11,393,025 | | | |||
| Impairment of goodwill | | | | | — | | | | | | 24,190,857 | | | | | | — | | | |||
| Operating loss | | | | | (5,888,551 | ) | | | | | | (24,763,767 | ) | | | | | | (7,076,201 | ) | | |
| Other (expense) income: | | | | | | | | | | | | | | | | | | | | |||
| Interest expense, net | | | | | (1,689,344 | ) | | | | | | (1,526,515 | ) | | | | | | (2,950,764 | ) | | |
| Other (expense) income, net | | | | | 207,439 | | | | | | (375,468 | ) | | | | | | 11,493,809 | | | ||
| (Loss) income from continuing operations before income taxes | | | | | (7,370,456 | ) | | | | | | (26,665,750 | ) | | | | | | 1,466,844 | | | |
| Income tax expense (benefit) | | | | | — | | | | | | — | | | | | | — | | | |||
| (Loss) income from continuing operations | | | | | (7,370,456 | ) | | | | | | (26,665,750 | ) | | | | | | 1,466,844 | | | |
| (Loss) income from discontinued operations, net of tax | | | | | (3,122,701 | ) | | | | | | (2,476,932 | ) | | | | | | 207,274 | | | |
| Net (loss) income | | | | | (10,493,157 | ) | | | | | | (29,142,682 | ) | | | | | | 1,674,118 | | | |
| Less: Dividends on preferred stock | | | | | 600,000 | | | | | | 150,000 | | | | | | — | | | |||
| Net (loss) income attributable to common shareholders | | | | $ | (11,093,157 | ) | | | | | $ | (29,292,682 | ) | | | | | $ | 1,674,118 | | | |
| (Loss) earnings per share: | | | | | | | | | | | | | | | | | | | | |||
| Basic and diluted (loss) earnings per common share from | | | | | | | | | | | | | | | | | | | | |||
| Continuing operations, attributable to common shareholders | | | | $ | (0.07 | ) | | | | | $ | (0.27 | ) | | | | | $ | 0.16 | | | |
| Discontinued operations, attributable to common shareholders | | | | | (0.03 | ) | | | | | | (0.03 | ) | | | | | | 0.02 | | | |
| Net (loss) income attributable to common shareholders | | | | $ | (0.10 | ) | | | | | $ | (0.30 | ) | | | | | $ | 0.18 | | | |
| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | |||
| Basic and diluted | | | | | 109,008,268 | | | | | | 100,065,492 | | | | | | 9,269,828 | | | |||
| | | | | | | | | | | |
| | | | Series B Preferred Stock | | | Common Stock | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Total Shares Issued and Outstanding | | | Amount | | | Total Shares Issued and Outstanding | | | Amount | | | Treasury Stock | | | Additional Paid-in Capital | | | Due From Related Parties | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2011 (Predecessor) | | | | | — | | | | | $ | — | | | | | | 9,269,828 | | | | | $ | 929 | | | | | $ | (761,312 | ) | | | | | $ | 88,095,888 | | | | | $ | (369,128 | ) | | | | | $ | (146,698,297 | ) | | | | | $ | (59,731,920 | ) | | | |||||
| Increase in loans to related parties | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (130,053 | ) | | | | | | | | | | | | (130,053 | ) | | | |||||||
| Net income for the period | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,674,118 | | | | | | 1,674,1181 | | | |||||||||
| Fresh-start reporting adjustments: | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| Elimination of predecessor common stock, additional paid-in capital and accumulated deficit | | | | | — | | | | | | — | | | | | | (9,269,828 | ) | | | | | | (929 | ) | | | | | | 761,312 | | | | | | (88,095,888 | ) | | | | | | 499,181 | | | | | | 145,024,179 | | | | | | 58,187,855 | | | ||||||
| Balance at September 28, 2012 immediately prior to the Section 363 Sale | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | |||||||||
| Balance at September 29, 2012 (Successor) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| Issuance of common stock | | | | | — | | | | | $ | — | | | | | | 100,000,000 | | | | | $ | 100,000 | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 100,000 | | | |||||||||
| Fair value adjustment for Allied Preferred Stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,649,990 | | | | | | — | | | | | | — | | | | | | 1,649,990 | | | |||||||||
| Contributed capital from a majority shareholder | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,986,767 | | | | | | — | | | | | | — | | | | | | 5,986,767 | | | |||||||||
| Issuance of common stock for conversions of Brookville Special Purpose Fund debt at $1.20 per share | | | | | — | | | | | | — | | | | | | 3,894,524 | | | | | | 3,895 | | | | | | — | | | | | | 4,670,611 | | | | | | — | | | | | | — | | | | | | 4,674,506 | | | |||||||||
| Issuance of common stock for conversions of Veritas High Yield Fund debt at $1.20 per share | | | | | — | | | | | | — | | | | | | 2,261,689 | | | | | | 2,262 | | | | | | — | | | | | | 2,711,835 | | | | | | — | | | | | | — | | | | | | 2,714,097 | | | |||||||||
| Preferred stock dividends | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (150,000 | ) | | | | | | (150,000 | ) | | | |||||||
| Net loss for the period | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (29,142,682 | ) | | | | | | (29,142,682 | ) | | | |||||||
| Balance at December 31, 2012 (Successor) | | | | | — | | | | | | — | | | | | | 106,156,213 | | | | | | 106,157 | | | | | | — | | | | | | 15,019,203 | | | | | | — | | | | | | (29,292,682 | ) | | | | | | (14,167,322 | ) | | | |||||||
| Contributed capital from a majority shareholder | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,424,953 | | | | | | — | | | | | | — | | | | | | 6,424,953 | | | |||||||||
| Common stock issued in connection with the acquisition of SignalShare LLC | | | | | — | | | | | | — | | | | | | 3,000,000 | | | | | | 3,000 | | | | | | — | | | | | | 4,497,000 | | | | | | — | | | | | | �� | | | | | | 4,500,000 | | | |||||||||
| Issuance of Series B Preferred Stock to the majority shareholder | | | | | 10 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 760,000 | | | | | | — | | | | | | — | | | | | | 760,000 | | | |||||||||
| Preferred stock dividends | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (600,000 | ) | | | | | | (600,000 | ) | | | |||||||
| Net loss for the year | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,493,157 | ) | | | | | | (10,493,157 | ) | | | |||||||
| Balance at December 31, 2013 (Successor) | | | | | 10 | | | | | $ | — | | | | | | 109,156,213 | | | | | $ | 109,157 | | | | | $ | — | | | | | $ | 26,701,156 | | | | | $ | — | | | | | $ | (40,385,839 | ) | | | | | $ | (13,575,526 | ) | | | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated Statements of Cash Flows
| | | | Successor | | | Predecessor | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | December 31, 2013 | | | For the Period From September 29, 2012 Through December 31, 2012 | | | For the Period From January 1, 2012 Through September28, 2012 | | ||||||||||||
| Cash flow from operating activities | | | | | | | | | | | | | | | | | | | | |||
| Net (loss) income | | | | $ | (10,493,157 | ) | | | | | $ | (29,142,682 | ) | | | | | $ | 1,674,118 | | | |
| (Loss) income from discontinued operations | | | | | (3,122,701 | ) | | | | | | (2,476,932 | ) | | | | | | 207,274 | | | |
| (Loss) income from continuing operations | | | | | (7,370,456 | ) | | | | | | (26,665,750 | ) | | | | | | 1,466,844 | | | |
| Adjustments to reconcile loss (income) from continuing operations to net cash used in operating activities: | | | | | | | | | | | | | | | | | | | | |||
| Depreciation and amortization | | | | | 305,265 | | | | | | 67,863 | | | | | | 206,076 | | | |||
| Amortization of debt discount and deferred financing costs | | | | | 223,159 | | | | | | 922,877 | | | | | | 839,846 | | | |||
| Amortization of intangible asset | | | | | 95,833 | | | | | | — | | | | | | — | | | |||
| Bad debt expense | | | | | 555,096 | | | | | | 230,187 | | | | | | 506,740 | | | |||
| Loss on sale of assets | | | | | 31,173 | | | | | | — | | | | | | — | | | |||
| Impairment of goodwill | | | | | — | | | | | | 24,190,857 | | | | | | — | | | |||
| Stock based compensation | | | | | — | | | | | | — | | | | | | 1,508,054 | | | |||
| Write-off of capitalized software | | | | | — | | | | | | — | | | | | | 238,270 | | | |||
| Debt forgiveness: | | | | | | | | | | | | | | | | | | | | |||
| Related party interest | | | | | (370,045 | ) | | | | | | — | | | | | | — | | | ||
| Other, non-related party | | | | | (81,851 | ) | | | | | | — | | | | | | — | | | ||
| Reorganization items: | | | | | | | | | | | | | | | | | | | | |||
| Cancellation of accounts payable and accrued expenses | | | | | — | | | | | | — | | | | | | (28,474,182 | ) | | | ||
| Write-off of assets | | | | | — | | | | | | — | | | | | | (19,057,189 | ) | | | ||
| Cancellation of equity accounts | | | | | — | | | | | | — | | | | | | 57,688,694 | | | |||
| Change in current assets and liabilities: | | | | | | | | | | | | | | | | | | | | |||
| (Increase) decrease in accounts receivable | | | | | (83,317 | ) | | | | | | (262,956 | ) | | | | | | (311,751 | ) | | |
| (Increase) decrease in prepaid expenses and other current assets | | | | | (172,842 | ) | | | | | | 867 | | | | | | 178,778 | | | ||
| (Increase) decrease in other assets | | | | | (335,002 | ) | | | | | | (275,000 | ) | | | | | | (40,300 | ) | | |
| (Increase) decrease in assets held for sale | | | | | (2,988 | ) | | | | | | — | | | | | | — | | | ||
| Increase (decrease) in accounts payable and accrued expenses | | | | | 2,256,869 | | | | | | 566,685 | | | | | | — | | | |||
| Increase (decrease) in customer prepayments | | | | | 488,233 | | | | | | 2,420 | | | | | | 135,479 | | | |||
| Net cash (used in) provided by operating activities of continuing operations | | | | | (4,460,873 | ) | | | | | | (1,221,950 | ) | | | | | | 14,885,359 | | | |
| Cancellation of liabilities of discontinued operations in bankruptcy | | | | | — | | | | | | — | | | | | | (20,337,921 | ) | | | ||
| Other – net cash (used in) provided by discontinued operations | | | | | (1,510,939 | ) | | | | | | (547,524 | ) | | | | | | 2,406,907 | | | |
| Net cash used in operating activities | | | | | (5,971,812 | ) | | | | | | (1,769,474 | ) | | | | | | (3,045,655 | ) | | |
| Cash flows from investing activities | | | | | | | | | | | | | | | | | | | | |||
| Cash paid on acquisition of SignalShare LLC, net | | | | | (406,981 | ) | | | | | | — | | | | | | — | | | ||
| Cash acquired from SignalShare LLC upon acquisition | | | | | 31,289 | | | | | | — | | | | | | — | | | |||
| Proceeds from sale of property and equipment | | | | | 32,288 | | | | | | — | | | | | | — | | | |||
| Payment of software development costs | | | | | (67,071 | ) | | | | | | — | | | | | | — | | | ||
| Payment made in connection with the Section 363 Sale transaction | | | | | — | | | | | | (3,783,000 | ) | | | | | | — | | | ||
| Purchase of machinery and equipment | | | | | — | | | | | | — | | | | | | (8,200 | ) | | | ||
| Net cash used in investing activities of continuing operations | | | | | (410,475 | ) | | | | | | (3,783,000 | ) | | | | | | (8,200 | ) | | |
| | | | | | | | | | | |
Consolidated Statements of Cash Flows — (Continued)
| | | | Successor | | | Predecessor | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | December 31, 2013 | | | For the Period From September 29, 2012 Through December 31, 2012 | | | For the Period From January 1, 2012 Through September28, 2012 | | ||||||||||||
| Cash flows from financing activities | | | | | | | | | | | | | | | | | | | | |||
| Contributed capital from majority shareholder | | | | | 7,184,953 | | | | | | 5,986,766 | | | | | | — | | | |||
| Proceeds from issuance of common stock | | | | | — | | | | | | 100,000 | | | | | | — | | | |||
| Payment of related party loans | | | | | (168,358 | ) | | | | | | — | | | | | | (183,256 | ) | | | |
| Loans from related party | | | | | 35,351 | | | | | | — | | | | | | — | | | |||
| Payment on capital leases | | | | | (185,765 | ) | | | | | | (38,329 | ) | | | | | | (131,746 | ) | | |
| Payment of Series A Preferred Stock dividends | | | | | (550,000 | ) | | | | | | (150,000 | ) | | | | | | — | | | |
| Debtor-in-possession financing proceeds | | | | | — | | | | | | — | | | | | | 3,500,000 | | | |||
| Net cash provided by financing activities of continuing operations | | | | | 6,316,181 | | | | | | 5,898,437 | | | | | | 3,184,998 | | | |||
| Net cash used in financing activities of discontinued operations | | | | | (158,000 | ) | | | | | | (11,489 | ) | | | | | | (141,931 | ) | | |
| Net cash provided by financing activities of continuing operations | | | | | 6,158,181 | | | | | | 5,886,948 | | | | | | 3,043,067 | | | |||
| Net (decrease) increase in cash | | | | | (224,106 | ) | | | | | | 334,474 | | | | | | (10,788 | ) | | | |
| Cash, beginning of the period | | | | | 376,626 | | | | | | 42,152 | | | | | | 52,940 | | | |||
| Cash, end of the period | | | | $ | 152,520 | | | | | $ | 376,626 | | | | | $ | 42,152 | | | |||
| Supplementary disclosure of cash flow information – | | | | | | | | | | | | | | | | | | | | |||
| Cash paid during the year for | | | | | | | | | | | | | | | | | | | | |||
| Interest | | | | $ | 397,603 | | | | | $ | 2,173,142 | | | | | $ | — | | | |||
| Income taxes | | | | $ | — | | | | | $ | — | | | | | $ | — | | | |||
| Supplemental disclosure of non-cash investing and financing activities – | | | | | | | | | | | | | | | | | | | | |||
| Non-cash transactions | | | | | | | | | | | | | | | | | | | | |||
| Common stock issued in connection with the acquisition of SignalShare LLC | | | | $ | 4,500,000 | | | | | $ | — | | | | | | | | | | ||
| Assumption of net liabilities in Section 363 Sale | | | | $ | — | | | | | $ | 23,830,736 | | | | | $ | — | | | |||
| Fixed assets purchased under capital lease obligation | | | | $ | 418,046 | | | | | $ | — | | | | | $ | — | | | |||
| Proceeds from sale of assets offset against accounts payable | | | | $ | 145,156 | | | | | $ | — | | | | | $ | — | | | |||
| Equipment purchased for resale | | | | $ | 520,983 | | | | | $ | — | | | | | $ | — | | | |||
| Net present value of capital leases payable incurred on behalf of customers | | | | $ | 388,719 | | | | | $ | — | | | | | $ | — | | | |||
| Repayment of capital leases payable made by customers | | | | $ | 56,099 | | | | | $ | — | | | | | $ | — | | | |||
| Conversions of Brookville Special Purpose Fund debt to equity | | | | $ | — | | | | | $ | 4,674,506 | | | | | $ | — | | | |||
| Conversions of Veritas High Yield Fund debt to equity | | | | $ | — | | | | | $ | 2,714,097 | | | | | $ | — | | | |||
| Adjustment of the fair value of preferred stock assumed in the Section 363 Sale | | | | $ | — | | | | | $ | 1,649,999 | | | | | $ | — | | | |||
| | | | | | | | | | | |
| | | | Successor at September 29, 2012 | | ||||
---|---|---|---|---|---|---|---|---|---|
| Fresh-Start Accounting Reconciliation | | | | | | | | |
| Equity value | | | | $ | 5,432,999 | | | |
| Secured notes payable | | | | | 17,127,692 | | | |
| Enterprise value | | | | | 22,560,691 | | | |
| Operating liabilities | | | | | 5,510,444 | | | |
| Less, goodwill in the transaction | | | | | (24,859,316 | ) | | |
| Fair value of assets purchased | | | | $ | 3,211,819 | | | |
| | | | |
| | | | Balance Before Section 363 Sale | | | Reorganization Via Section 363 Sale Adjustments | | | Reorganization via Section 363 Sale Basis | | | Fresh-Start Reporting Adjustments | | | Successor Including Reorganization via Section 363 Sale and Fresh-Start Reporting Adjustments September 29, 2012 | | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| Current assets | | | | $ | 2,273,306 | | | | | $ | — | | | | | $ | 2,273,306 | | | | | $ | — | | | | | $ | 2,273,306 | | | |||||
| Net property, plant and equipment | | | | | 423,465 | | | | | | — | | | | | | 423,465 | | | | | | — | | | | | | 423,465 | | | |||||
| Other assets | | | | | 515,048 | | | | | | — | | | | | | 515,048 | | | | | | — | | | | | | 515,048 | | | |||||
| Goodwill | | | | | — | | | | | | 23,209,317 | (a) | | | | | | 23,209,317 | | | | | | 1,649,999 | (e) | | | | | | 24,859,316 | | | |||
| Total assets | | | | $ | 3,211,819 | | | | | $ | 23,209,317 | | | | | $ | 26,421,136 | | | | | $ | 1,649,999 | | | | | $ | 28,071,135 | | | |||||
| | | | | | | | | | | | | | | | |
| | | | Balance Before Section 363 Sale | | | Reorganization Via Section 363 Sale Adjustments | | | Reorganization via Section 363 Sale Basis | | | Fresh-Start Reporting Adjustments | | | Successor Including Reorganization via Section 363 Sale and Fresh-Start Reporting Adjustments September 29, 2012 | | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| Accounts payable assumed | | | | $ | 23,092,757 | | | | | $ | (18,911,538 | )(b) | | | | | $ | 4,181,219 | | | | | | | | | | | $ | 4,181,219 | | | ||||
| Other current liabilities | | | | | 1,276,667 | | | | | | — | | | | | | 1,276,667 | | | | | | | | | | | | 1,276,667 | | | |||||
| Total current liabilities | | | | | 24,369,424 | | | | | | (18,911,538 | ) | | | | | | 5,457,886 | | | | | | — | | | | | | 5,457,886 | | | ||||
| Other non-current liabilities | | | | | 52,557 | | | | | | — | | | | | | 52,557 | | | | | | | | | | | | 52,557 | | | |||||
| Long-term debt to Wilmington Trust | | | | | 19,850,000 | | | | | | (19,850,000 | )(c) | | | | | | — | | | | | | | | | | | | — | | | ||||
| Notes payable | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| Brookville Special Purpose Fund, net of debt discount | | | | | 9,771,439 | | | | | | — | | | | | | 9,771,439 | | | | | | | | | | | | 9,771,439 | | | |||||
| Veritas High Yield Fund, net of debt discount | | | | | 3,856,253 | | | | | | — | | | | | | 3,856,253 | | | | | | | | | | | | 3,856,253 | | | |||||
| Robert DePalo Special Opportunity Fund | | | | | 3,500,000 | | | | | | — | | | | | | 3,500,000 | | | | | | | | | | | | 3,500,000 | | | |||||
| Total long-term debt | | | | | 17,127,692 | | | | | | — | | | | | | 17,127,692 | | | | | | — | | | | | | 17,127,692 | | | |||||
| Nonconvertible Series A Preferred Stock | | | | | 1 | | | | | | — | | | | | | 1 | | | | | | 9 | (e) | | | | | | 10 | | | ||||
| Total liabilities | | | | | 61,399,674 | | | | | | (38,761,538 | ) | | | | | | 22,638,136 | | | | | | 9 | | | | | | 22,638,145 | | | ||||
| Stockholders’ Equity (Deficiency) | | | | | (58,187,855 | ) | | | | | | 61,970,855 | (d) | | | | | | 3,783,000 | | | | | | 1,649,990 | (e) | | | | | | 5,432,990 | | | ||
| Total Liabilities and Stockholders’ Equity | | | | $ | 3,211,819 | | | | | $ | 23,209,317 | | | | | $ | 26,421,136 | | | | | $ | 1,649,999 | | | | | $ | 28,071,135 | | | |||||
| | | | | | | | | | | | | | | | | |
| Telephone equipment | | | 5 – 9.5 years | |
| Machinery and equipment | | | 3 – 10 years | |
| Furniture and fixtures | | | 5 – 7 years | |
| Vehicles | | | 4 – 5 years | |
| Leasehold improvements | | | 3 years | |
| Computer software | | | 3 years | |
| | | |
| Payable Type | | | Wave2Wave | | | RNK | | | Total | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cure payments | | | | $ | 5,244,011 | | | | | $ | 690,783 | | | | | $ | 5,934,794 | | | |||
| Post-Petition | | | | | 969,582 | | | | | | 1,445,861 | | | | | | 2,415,443 | | | |||
| Total | | | | $ | 6,213,593 | | | | | $ | 2,136,644 | | | | | $ | 8,350,237 | | | |||
| | | | | | | | | | |
| Product | | | Recognition Policy | |
---|---|---|---|---|---|
| Event Services (Setting up a Wi-Fi network) Workshops and Workshop Certificates | | | Deferred and recognized upon the completion of the event | |
| Equipment sales | | | Recognized at the time delivered and installed at the customer location | |
| Equipment rental contract | | | Deferred and recognized as services are delivered, or on a straight-line basis over the initial term of the rental contract | |
| Consulting services (on Wi-Fi networks, installation, maintenance) | | | Recognized as services are delivered | |
| Support and Maintenance contract | | | Deferred and recognized on a straight-line basis over the term of the arrangement | |
| | | |
- There is persuasive evidence that an arrangement exists;
- Delivery has occurred or services have been rendered
- The fee is fixed and determinable; and
- Collectability is reasonably assured.
- Step 1. The carrying amount of the asset is compared with the undiscounted cash flows it is expected to generate. If the carrying amount is lower than the undiscounted cash flows, no impairment loss is recognized and Step 2 is not necessary. If the carrying amount is higher than the undiscounted cash flows, then Step 2 quantifies the impairment loss.
- Step 2. An impairment loss is measured as the difference between the carrying amount and fair value. Fair value is defined as the price that would be received to sell an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. All previously recorded goodwill related to its RNK subsidiary was written off at December 31, 2011. In addition, the Company determined that at December 31, 2012 the aggregate undiscounted future net cash flows of the Company’s various reporting unit were less than the net carrying value of the Company. Accordingly, the Company determined that the goodwill arising from its acquisition of the assets and assumption of the liabilities of the Predecessor Company was impaired and therefore an impairment charge of $24,859,316, of which $24,190,857 was expensed and included in the operating loss and the remaining amount of $668,459 was included in the (loss) income from Discontinued Operations as to completely write-off the goodwill arising from the transaction that formed the basis of the Section 363 Sale.
| Issuance of 3,000,000 shares of common stock to SignalShare LLC former Members | | | | $ | 4,500,000 | | | |
| Cash portion of acquisition price | | | | | 450,000 | | | |
| Total acquisition consideration | | | | $ | 4,950,000 | | | |
| | | | |
| Current Assets | | | | $ | 521,389 | | | |
| Fixed assets, net | | | | | 301,405 | | | |
| Other assets | | | | | 131,899 | ��� | | |
| Current liabilities | | | | | (362,524 | ) | | |
| Notes payable | | | | | (171,976 | ) | | |
| Capital leases | | | | | (91,477 | ) | | |
| Net assets acquired | | | | | 328,716 | | | |
| Identifiable intangible assets | | | | | 500,000 | | | |
| Goodwill | | | | | 4,121,284 | | | |
| Total consideration | | | | $ | 4,950,000 | | | |
| | | | |
| | | | Successor | | | Predecessor | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | For the Year Ended December 31, 2013 | | | For the Period From September 29, 2012 through December 31, 2012 | | | For the Period From January 1, 2012 through September 28, 2012 | | ||||||||||||
| (Loss) income from discontinued operations | | | | | | | | | | | | | | | | | | | | |||
| Revenues | | | | $ | 2,764,739 | | | | | $ | 1,901,352 | | | | | $ | 13,767,083 | | | |||
| Cost of sales | | | | | 3,455,165 | | | | | | 2,546,918 | | | | | | 15,902,471 | | | |||
| Gross margin | | | | | (690,426 | ) | | | | | | (645,566 | ) | | | | | | (2,135,388 | ) | | |
| Selling, general and administrative expenses | | | | | 2,413,464 | | | | | | 830,505 | | | | | | 10,309,431 | | | |||
| Other expense | | | | | 19,291 | | | | | | 1,000,861 | | | | | | 80,242 | | | |||
| Other income | | | | | (480 | ) | | | | | | — | | | | | | (12,732,335 | ) | | | |
| (Loss) income from discontinued operations before income taxes | | | | | (3,122,701 | ) | | | | | | (2,476,932 | ) | | | | | | 207,274 | | | |
| Income taxes | | | | | — | | | | | | | | | | | | — | | | |||
| (Loss) income from discontinued operations, net of tax | | | | $ | (3,122,701 | ) | | | | | $ | (2,476,932 | ) | | | | | $ | 207,274 | | | |
| | | | | | | | | | | |
| | | | December 31, 2013 | | | December 31, 2012 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | | | | | | | | | | | | | | ||
| Cash | | | | $ | 27,750 | | | | | $ | 95,997 | | | ||
| Accounts receivable | | | | | — | | | | | | 551,005 | | | ||
| Prepaids and other current assets | | | | | — | | | | | | 155,446 | | | ||
| Total current assets | | | | | 27,750 | | | | | | 802,448 | | | ||
| Other assets | | | | | 50,000 | | | | | | 649,634 | | | ||
| Total assets of discontinued operations | | | | $ | 77,750 | | | | | $ | 1,452,082 | | | ||
| Liabilities | | | | | | | | | | | | | | ||
| Accounts payable and accrued expenses | | | | $ | 3,296,410 | | | | | $ | 3,299,730 | | | ||
| Other liabilities | | | | | 199,278 | | | | | | 116,527 | | | ||
| Total liabilities of discontinued operations | | | | $ | 3,495,688 | | | | | $ | 3,416,257 | | | ||
| | | | | | | | |
| | | | Balance at December 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2013 | | | 2012 | | ||||||||
| Property, Plant and Equipment | | | | | | | | | | | | | | ||
| Machinery and equipment | | | | $ | 5,049,299 | | | | | $ | 4,535,055 | | | ||
| Equipment offsite | | | | | 121,808 | | | | | | 121,808 | | | ||
| Furniture, fixtures and equipment | | | | | 136,164 | | | | | | 232,230 | | | ||
| Software | | | | | 125,587 | | | | | | — | | | ||
| Trucks and autos | | | | | 36,040 | | | | | | 36,040 | | | ||
| Total property, plant and equipment | | | | | 5,468,898 | | | | | | 4,925,133 | | | ||
| Less: accumulated depreciation | | | | | (5,007,727 | ) | | | | | | (4,669,531 | ) | | |
| Property plant and equipment, net | | | | $ | 461,171 | | | | | $ | 255,602 | | | ||
| | | | | | | |
| | | | 2013 | | | 2012 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital Lease Property | | | | | | | | | | | | | | ||
| Machinery & equipment | | | | $ | 476,228 | | | | | $ | 311,712 | | | ||
| Software | | | | | 125,587 | | | | | | — | | | ||
| Less: Accumulated depreciation | | | | | (192,512 | ) | | | | | | (205,657 | ) | | |
| Net capital lease property | | | | $ | 409,303 | | | | | $ | 106,055 | | | ||
| | | | | | | |
| Year | | | Amount | | ||||
---|---|---|---|---|---|---|---|---|---|
| 2014 | | | | $ | 282,387 | | | |
| 2015 | | | | | 275,468 | | | |
| 2016 | | | | | 247,631 | | | |
| 2017 | | | | | 194,245 | | | |
| 2018 | | | | | 28,792 | | | |
| Total | | | | | 1,028,523 | | | |
| Less – amounts representing interest | | | | | (68,617 | ) | | |
| Present value of net minimum lease payments | | | | | 959,906 | | | |
| Less: Current portion | | | | | (249,265 | ) | | |
| Net long-term portion | | | | $ | 710,641 | | | |
| | | | |
| | | | December 31, 2013 | | ||||
---|---|---|---|---|---|---|---|---|---|
| Lease accounts receivable | | | | | | | | |
| Current (accounts receivable) | | | | $ | 133,892 | | | |
| Long-term (other assets) | | | | | 198,729 | | | |
| Total lease accounts receivable | | | | $ | 332,621 | | | |
| Lease obligations | | | | | | | | |
| Current (capital leases payable) | | | | $ | 133,892 | | | |
| Long-term (non-current lease obligations) | | | | | 198,729 | | | |
| Total lease obligations | | | | $ | 332,621 | | | |
| | | | |
| | | | Balance at | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | December 31, 2013 | | | December 31, 2012 | | ||||||||
| Brookville Special Purpose Fund, net of $0 and $93,843 unamortized debt discount at December 31, 2013 and 2012, respectively | | | | $ | 5,477,950 | | | | | $ | 5,373,767 | | | ||
| Veritas High Yield Fund, net of $160,966 and $245,615 unamortized debt discount at December 31, 2013 and 2012, respectively | | | | | 1,611,623 | | | | | | 1,564,523 | | | ||
| Robert DePalo Special Opportunities Fund | | | | | 3,053,121 | | | | | | 3,500,000 | | | ||
| Total notes payable – related parties | | | | | 10,142,694 | | | | | | 10,438,290 | | | ||
| Less: current portion of notes payable – related parties | | | | | (7,364,110 | ) | | | | | | (10,438,290 | ) | | |
| Long-term portion of notes payable – related parties | | | | $ | 2,778,584 | | | | | $ | — | | | ||
| | | | | | | | |
| Year | | | Amount | | ||||
---|---|---|---|---|---|---|---|---|---|
| 2014 | | | | $ | 7,353,136 | | | |
| 2015 | | | | | 808,802 | | | |
| 2016 | | | | | 2,141,722 | | | |
| Total | | | | | 10,303,660 | | | |
| Less: unamortized debt discount | | | | | (160,966 | ) | | |
| Total notes payable – related parties | | | | $ | 10,142,694 | | | |
| | | | |
| Description | | | 2013 | | | 2012 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan payable to majority shareholder | | | | $ | 35,351 | | | | | $ | — | | | ||
| Loan payable for SignalShare acquisition | | | | | 43,019 | | | | | | — | | | ||
| Note Payable to former SignalShare Members | | | | | 105,087 | | | | | | — | | | ||
| Loans payable – related parties | | | | $ | 183,457 | | | | | $ | — | | | ||
| | | | | | | |
| | | | December 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2013 | | | 2012 | | ||||||||
| Cost of service | | | | $ | 272,171 | | | | | $ | 118,492 | | | ||
| Selling, general and administrative expense | | | | | 208,294 | | | | | | 71,769 | | | ||
| Compensation | | | | | 43,671 | | | | | | 186,108 | | | ||
| Total | | | | $ | 524,136 | | | | | $ | 376,369 | | | ||
| | | | | | | |
| Year Ending December 31, | | | Amount | | ||||
---|---|---|---|---|---|---|---|---|---|
| 2014 | | | | $ | 225,041 | | | |
| 2015 | | | | | 272,579 | | | |
| 2016 | | | | | 278,021 | | | |
| 2017 | | | | | 283,464 | | | |
| 2018 | | | | | 288,906 | | | |
| Thereafter | | | | | 97,965 | | | |
| Total | | | | $ | 1,445,976 | | | |
| | | | |
- Interpret the provisions of the 2013 Plan and all stock rights and to make all rules and determinations, which it deems necessary or advisable for the administration of the 2013 Plan;
- The determination of which employees, directors and consultants will be granted options and other awards;
- The determination of the number of shares for which a stock right or stock rights shall be granted, provided, however, that in no event shall stock rights with respect to more than 300,000 shares be granted to any participant in any fiscal year; and
- Exercise such other duties as necessary to successfully administer the 2013 Plan.
- 1,000,000 or the equivalent of such number of shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction;
- 3% of the number of outstanding shares of common stock on such date; and
- An amount determined by the board of directors.
| | | | December 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2013 | | | 2012 | | ||||||||
| Statutory federal income tax rate | | | | | 35.0 | % | | | | | | 35.0 | % | | |
| Combined average statutory state and local income tax rate (7.4%) net of federal benefits | | | | | 4.8 | % | | | | | | 4.8 | % | | |
| Net operating losses and other tax benefits for which no current benefit is being realized | | | | | (39.8 | )% | | | | | | (39.8 | )% | | |
| Effective tax rate | | | | | 0.0 | % | | | | | | 0.0 | % | | |
| | | | | | | | |
| | | | December 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2013 | | | 2012 | | ||||||||
| Deferred tax asset: | | | | | | | | | | | | | | ||
| Net operating loss carry forwards | | | | $ | 13,873,000 | | | | | $ | 10,200,000 | | | ||
| State and local net operating loss carryforwards | | | | | 1,902,000 | | | | | | 1,399,000 | | | ||
| Less: valuation allowance | | | | | (15,775,000 | ) | | | | | | (11,599,000 | ) | | |
| Net deferred tax asset | | | | $ | — | | | | | $ | — | | | ||
| | | | | | | | |
- all shares of Holdings common stock issued and outstanding immediately prior to the Effective Time will be exchanged for an aggregate of 120,000,000 restricted shares of common stock of RoomLinx, and the holders of Holdings common stock immediately prior to the Effective Time will, when taken together with shares of RoomLinx common stock (i) issuable at the Effective Time to The Robert DePalo Special Opportunity Fund, LLC upon conversion of approximately $3,200,000 of indebtedness at $1.20 per share in Signal Point (or approximately 2,666,667 shares) which conversion took place on March 14, 2014 into Holdings common stock and (ii) issuable pursuant to any equity offering consummated by any party to the Merger Agreement prior to the Effective Time, hold shares of the new merged company common stock representing in the aggregate eighty-six percent (86%) of the outstanding shares of the new merged company’s common stock immediately following the Effective Time;
- the shares of Holdings’ Series A Preferred Stock and Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be exchanged for shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, of RoomLinX, having substantially identical terms to Holdings’ Series A Preferred Stock and Series B Preferred Stock;
- each share of the RoomLinx’s common stock issued and outstanding immediately prior to the Effective Time, but after giving effect to the Reverse Stock Split, will remain outstanding. Also, the holders of RoomLinx’s common stock immediately prior to the Effective Time and Cenfin, LLC, a secured lender of RoomLinx (in exchange for its agreement at the closing of the Merger to restructure indebtedness owed to it by RoomLinx), will receive additional (but restricted) shares of the new merged company’s common stock at the Effective Time. Accordingly, the holders of RoomLinx’s common stock will hold shares of RoomLinx common stock which, when taken together with shares of RoomLinX common stock (i) issuable upon the exercise of RoomLinX warrants outstanding immediately prior to the Effective Time (not including out-of-the-money warrants) and (ii) to be issued to Cenfin, LLC in exchange for its agreement to restructure indebtedness owed to it by RoomLinX, will represent in the aggregate fourteen percent (14%) of the outstanding shares of the RoomLinX’s common stock immediately following the Effective Time;
- the existing preferred stock of RoomLinX will be cancelled and there will be no existing shares of RoomLinX preferred stock outstanding following the Merger, except as described above; and
- all outstanding options to purchase RoomLinX capital stock issued under RoomLinX’s Stock Option Plan will terminate in accordance with the terms thereof. Also, at the closing of the Merger, Holdings will make a cash contribution to the new merged company in an amount equal to One Million Dollars ($1,000,000) (subject to certain limitations regarding the use thereof).
| Quarterly Financial Information | | | | | | | | |
| Financial Statements (Unaudited) | | | | | | | | |
| Condensed Consolidated Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013 | | | | | F-41 | | | |
| Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013 (Unaudited) | | | | | F-42 | | | |
| Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three Months Ended March 31, 2014 (Unaudited) | | | | | F-43 | | | |
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 (Unaudited) | | | | | F-44 | | | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | | | | | F-45 | | | |
| | | | | |
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | | | | | | | | | | | | | | ||
| Current assets | | | | | | | | | | | | | | ||
| Cash | | | | $ | 3,064,430 | | | | | $ | 152,520 | | | ||
| Accounts receivable | | | | | 716,626 | | | | | | 594,873 | | | ||
| Prepaid expenses | | | | | 599,588 | | | | | | 480,764 | | | ||
| Equipment purchased for resale | | | | | 616,543 | | | | | | 520,983 | | | ||
| Other current assets | | | | | 10 | | | | | | 15,740 | | | ||
| Current assets of discontinued operations | | | | | 1,358 | | | | | | 27,750 | | | ||
| Total current assets | | | | | 4,998,555 | | | | | | 1,792,630 | | | ||
| Property, plant and equipment, net | | | | | 516,285 | | | | | | 461,171 | | | ||
| Intangible assets | | | | | 379,167 | | | | | | 404,167 | | | ||
| Goodwill | | | | | 4,121,284 | | | | | | 4,121,284 | | | ||
| Security Deposits | | | | | 809,887 | | | | | | 777,230 | | | ||
| Other assets | | | | | 417,111 | | | | | | 474,601 | | | ||
| Assets held for sale | | | | | 102,988 | | | | | | 102,988 | | | ||
| Assets of discontinued operations | | | | | 50,000 | | | | | | 50,000 | | | ||
| Total Assets | | | | $ | 11,395,277 | | | | | $ | 8,184,071 | | | ||
| Liabilities and Stockholders’ Deficit | | | | | | | | | | | | | | ||
| Current liabilities | | | | | | | | | | | | | | ||
| Accounts payable | | | | $ | 3,996,036 | | | | | $ | 5,002,973 | | | ||
| Current maturities of notes payable, related parties | | | | | 754,777 | | | | | | 7,364,110 | | | ||
| Accrued expenses | | | | | 675,574 | | | | | | 524,136 | | | ||
| Leases payable | | | | | 485,852 | | | | | | 383,157 | | | ||
| Loans payable, related parties | | | | | 121,327 | | | | | | 183,457 | | | ||
| Deferred revenue and customer prepayments | | | | | 1,431,349 | | | | | | 1,013,035 | | | ||
| Other current liabilities | | | | | 157,663 | | | | | | 105,077 | | | ||
| Current liabilities of discontinued operations | | | | | 3,388,743 | | | | | | 3,495,688 | | | ||
| Total current liabilities | | | | | 11,011,321 | | | | | | 18,071,633 | | | ||
| Long-term portion of notes payable, related parties | | | | | 2,608,503 | | | | | | 2,778,584 | | | ||
| Non-current lease obligations | | | | | 1,216,859 | | | | | | 909,370 | | | ||
| Nonconvertible Series A preferred stock, related party | | | | | 10 | | | | | | 10 | | | ||
| Total liabilities | | | | | 14,836,693 | | | | | | 21,759,597 | | | ||
| Commitments and contingencies | | | | | — | | | | | | — | | | ||
| Stockholders’ Deficit | | | | | | | | | | | | | | ||
| Preferred stock, par value $0.01 per share, 10,000,000 shares authorized and 1,010 shares and 1,000 shares designated at March 31, 2014 and December 31, 2013, respectively | | | | | — | | | | | | — | | | ||
| Series A preferred stock, par value $0.01 per share; 1,000 shares designated, 1,000 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | | | | | — | | | | | | — | | | ||
| Series B preferred stock, par value $0.01 per share; 10 shares designated, 10 shares and no shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | | | | | — | | | | | | — | | | ||
| Common stock, par value $0.001 per share; 150,000,000 shares authorized, 114,282,138 and 109,156,213 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | | | | | 114,283 | | | | | | 109,157 | | | ||
| Additional paid-in capital | | | | | 39,205,140 | | | | | | 26,701,156 | | | ||
| Accumulated deficit | | | | | (42,760,839 | ) | | | | | | (40,385,839 | ) | | |
| Total stockholders’ deficit | | | | | (3,441,416 | ) | | | | | | (13,575,526 | ) | | |
| Total Liabilities and Stockholders’ Deficit | | | | $ | 11,395,277 | | | | | $ | 8,184,071 | | | ||
| | | | | | | | |
| | | | Three Months Ended March 31, 2014 | | | Three Months Ended March 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | | | | $ | 3,125,314 | | | | | $ | 3,414,209 | | | ||
| Cost of sales, excluding depreciation and amortization which is included in selling, general and administrative expense below | | | | | 2,291,982 | | | | | | 2,356,136 | | | ||
| Net margin | | | | | 833,332 | | | | | | 1,058,073 | | | ||
| Selling, general and administrative expense | | | | | 2,485,604 | | | | | | 2,574,066 | | | ||
| Operating loss | | | | | (1,652,272 | ) | | | | | | (1,515,993 | ) | | |
| Other (expense) income: | | | | | | | | | | | | | | ||
| Interest expense, net | | | | | (531,064 | ) | | | | | | (400,453 | ) | | |
| Other (expense) income, net | | | | | 36,246 | | | | | | (42,757 | ) | | | |
| Loss from continuing operations before income taxes | | | | | (2,147,090 | ) | | | | | | (1,959,203 | ) | | |
| Income tax expense (benefit) | | | | | — | | | | | | — | | | ||
| Loss from continuing operations | | | | | (2,147,090 | ) | | | | | | (1,959,203 | ) | | |
| Loss from discontinued operations, net of tax | | | | | (77,910 | ) | | | | | | (2,007,490 | ) | | |
| Net loss | | | | | (2,225,000 | ) | | | | | | (3,966,693 | ) | | |
| Less: Dividends on preferred stock | | | | | 150,000 | | | | | | 150,000 | | | ||
| Net loss attributable to common shareholders | | | | $ | (2,375,000 | ) | | | | | $ | (4,116,693 | ) | | |
| Loss per share: | | | | | | | | | | | | | | ||
| Basic and diluted loss per common share from | | | | | | | | | | | | | | ||
| Continuing operations, attributable to common shareholders | | | | $ | (0.02 | ) | | | | | $ | (0.02 | ) | | |
| Discontinued operations, attributable to common shareholders | | | | | (0.00 | ) | | | | | | (0.02 | ) | | |
| Net loss attributable to common shareholders | | | | $ | (0.02 | ) | | | | | $ | (0.04 | ) | | |
| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | ||
| Basic and diluted | | | | | 109,665,482 | | | | | | 108,689,546 | | | ||
| | | | | | | | |
| | | | Series B Preferred Stock | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Total Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Total Shares Issued and Outstanding | | | Amount | | | Total Shares Issued and Outstanding | | | Amount | | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2013 | | | | | 10 | | | | | $ | — | | | | | | 109,156,213 | | | | | $ | 109,157 | | | | | $ | 26,701,156 | | | | | $ | (40,385,839 | ) | | | | | $ | (13,575,526 | ) | | | |||||
| Contributed capital from a majority shareholder | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,583,500 | | | | | | — | | | | | | 5,583,500 | | | |||||||
| Issuance of common stock for conversion of the Robert DePalo Special Opportunity Fund debt at $1.50 per share | | | | | | | | | | | | | | | | | 2,544,268 | | | | | | 2,544 | | | | | | 3,050,577 | | | | | | | | | | | | 3,053,121 | | | |||||||
| Issuance of common stock for conversion of Brookville Special Purpose Fund debt at $1.50 per share | | | | | | | | | | | | | | | | | 2,065,607 | | | | | | 2,066 | | | | | | 3,096,350 | | | | | | | | | | | | 3,098,416 | | | |||||||
| Issuance of common stock for conversion of Veritas High Yield Fund debt at $1.50 per share | | | | | | | | | | | | | | | | | 516,050 | | | | | | 516 | | | | | | 773,557 | | | | | | | | | | | | 774,073 | | | |||||||
| Preferred stock dividends | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (150,000 | ) | | | | | | (150,000 | ) | | | |||||
| Net loss for the period | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,225,000 | ) | | | | | | (2,225,000 | ) | | | |||||
| Balance at March 31, 2014 (Unaudited) | | | | | 10 | | | | | $ | — | | | | | | 114,282,138 | | | | | $ | 114,283 | | | | | $ | 39,205,140 | | | | | $ | (42,760,839 | ) | | | | | $ | (3,441,416 | ) | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | |
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2014 and 2013
(Unaudited)
| | | | March 31, 2014 | | | March 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash flow from operating activities | | | | | | | | | | | | | | ||
| Net loss | | | | $ | (2,225,000 | ) | | | | | $ | (3,966,693 | ) | | |
| Loss from discontinued operations | | | | | (77,910 | ) | | | | | | (2,007,490 | ) | | |
| Loss from continuing operations | | | | | (2,147,090 | ) | | | | | | (1,959,203 | ) | | |
| Adjustments to reconcile loss from continuing operations to net cash used in operating activities — | | | | | | | | | | | | | | ||
| Depreciation and amortization | | | | | 44,942 | | | | | | 76,316 | | | ||
| Amortization of debt discount and deferred financing costs | | | | | 122,694 | | | | | | 128,901 | | | ||
| Amortization of intangible asset | | | | | 25,000 | | | | | | 20,833 | | | ||
| Bad debt expense (recovery) | | | | | (28,877 | ) | | | | | | 69,862 | | | |
| Change in operating assets and liabilities — | | | | | | | | | | | | | | ||
| (Increase) decrease in accounts receivable | | | | | (83,425 | ) | | | | | | 272,443 | | | |
| (Increase) decrease in prepaid expenses and other current assets | | | | | (103,094 | ) | | | | | | 25,720 | | | |
| (Increase) decrease in other assets | | | | | (72,547 | ) | | | | | | (187,103 | ) | | |
| Increase (decrease) in accounts payable and accrued expenses | | | | | (525,923 | ) | | | | | | 39,430 | | | |
| Increase (decrease) in customer prepayments | | | | | 418,314 | | | | | | (59,140 | ) | | | |
| Net cash used in operating activities of continuing operations | | | | | (2,350,006 | ) | | | | | | (1,571,941 | ) | | |
| Other — net cash used in discontinued operations | | | | | (158,463 | ) | | | | | | (2,296,174 | ) | | |
| Net cash used in operating activities | | | | | (2,508,469 | ) | | | | | | (3,868,115 | ) | | |
| Cash flows from investing activities | | | | | | | | | | | | | | ||
| Cash acquired from SignalShare LLC upon acquisition | | | | | — | | | | | | 31,289 | | | ||
| Payment of software development costs | | | | | (4,267 | ) | | | | | | (58,825 | ) | | |
| Purchase of machinery and equipment | | | | | (12,055 | ) | | | | | | (4,912 | ) | | |
| Net cash used in investing activities of continuing operations | | | | | (16,322 | ) | | | | | | (32,448 | ) | | |
| Cash flows from financing activities — | | | | | | | | | | | | | | ||
| Contributed capital from majority shareholder | | | | | 5,583,500 | | | | | | 4,267,454 | | | ||
| Payment of related party loans | | | | | (62,130 | ) | | | | | | (14,949 | ) | | |
| Repayment of notes payable, related parties | | | | | (130,794 | ) | | | | | | — | | | |
| Capital lease transactions, net | | | | | 196,125 | | | | | | (31,676 | ) | | | |
| Payment of Series A Preferred Stock dividends | | | | | (150,000 | ) | | | | | | (150,000 | ) | | |
| Net cash provided by financing activities of continuing operations | | | | | 5,436,701 | | | | | | 4,070,829 | | | ||
| Net increase in cash | | | | | 2,911,910 | | | | | | 170,266 | | | ||
| Cash, beginning of the period | | | | | 152,520 | | | | | | 376,626 | | | ||
| Cash, end of the period | | | | $ | 3,064,430 | | | | | $ | 546,892 | | | ||
| Supplementary disclosure of cash flow information: | | | | | | | | | | | | | | ||
| Cash paid during the period for — | | | | | | | | | | | | | | ||
| Interest | | | | $ | 343,021 | | | | | $ | 282,224 | | | ||
| Income taxes | | | | $ | — | | | | | $ | — | | | ||
| Supplemental disclosure of non-cash investing and financing activities: | | | | | | | | | | | | | | ||
| Non-cash transactions — | | | | | | | | | | | | | | ||
| Common stock issued in connection with the acquisition of SignalShare LLC | | | | $ | — | | | | | $ | 4,500,000 | | | ||
| Fixed assets purchased under capital lease obligation | | | | $ | 88,000 | | | | | $ | 377,878 | | | ||
| Equipment purchased under financed lease payable for resale | | | | $ | 95,560 | | | | | $ | 208,617 | | | ||
| Repayment of capital leases payable made by customers | | | | $ | 30,499 | | | | | $ | — | | | ||
| Conversion of The Robert DePalo Special Opportunity Fund debt into equity | | | | $ | 3,053,121 | | | | | $ | — | | | ||
| Conversion of the Brookville Special Purpose Fund debt into equity | | | | $ | 3,098,416 | | | | | $ | — | | | ||
| Conversion of the Veritas High Yield Fund debt into equity | | | | $ | 774,073 | | | | | $ | — | | | ||
| | | | | | | | |
| Telephone equipment | | | 5 – 9.5 years | |
| Machinery and equipment | | | 3 – 10 years | |
| Furniture and fixtures | | | 5 – 7 years | |
| Vehicles | | | 4 – 5 years | |
| Leasehold improvements | | | 3 years | |
| Computer software | | | 3 years | |
| | | |
| Product | | | Recognition Policy | |
---|---|---|---|---|---|
| Event Services (Setting up a Wi-Fi network) Workshops and Workshop Certificates | | | Deferred and recognized upon the completion of the event | |
| Equipment sales | | | Recognized at the time delivered and installed at the customer location | |
| Equipment rental contract | | | Deferred and recognized as services are delivered, or on a straight-line basis over the initial term of the rental contract | |
| Consulting services (on Wi-Fi networks, installation, maintenance) | | | Recognized as services are delivered | |
| Support and Maintenance contract | | | Deferred and recognized on a straight-line basis over the term of the arrangement | |
| | | |
- There is persuasive evidence that an arrangement exists;
- Delivery has occurred or services have been rendered;
- The fee is fixed and determinable; and
- Collectability is reasonably assured.
| Issuance of 3,000,000 shares of common stock to SignalShare LLC former Members | | | | $ | 4,500,000 | | | |
| Cash portion of acquisition price | | | | | 450,000 | | | |
| Total acquisition consideration | | | | $ | 4,950,000 | | | |
| | | | |
| Current Assets | | | | $ | 521,389 | | | |
| Fixed assets, net | | | | | 301,405 | | | |
| Other assets | | | | | 131,899 | | | |
| Current liabilities | | | | | (362,524 | ) | | |
| Notes payable | | | | | (171,976 | ) | | |
| Capital leases | | | | | (91,477 | ) | | |
| Net assets acquired | | | | | 328,716 | | | |
| Identifiable intangible assets | | | | | 500,000 | | | |
| Goodwill | | | | | 4,121,284 | | | |
| Total consideration | | | | $ | 4,950,000 | | | |
| | | | |
for the Periods Ended March 31,
(Unaudited)
| | | | 2014 | | | 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Loss) income from discontinued operations | | | | | | | | | | | | | | ||
| Revenues | | | | $ | — | | | | | $ | 1,604,100 | | | ||
| Cost of sales | | | | | — | | | | | | 1,840,810 | | | ||
| Gross margin | | | | | — | | | | | | (236,710 | ) | | | |
| Selling, general and administrative expenses | | | | | — | | | | | | 1,151,806 | | | ||
| Other expense | | | | | 77,910 | | | | | | 618,974 | | | ||
| Loss from discontinued operations before income taxes | | | | | (77,910 | ) | | | | | | (2,007,490 | ) | | |
| Income taxes | | | | | — | | | | | | | | | ||
| Loss from discontinued operations, net of tax | | | | $ | (77,910 | ) | | | | | $ | (2,007,490 | ) | | |
| | | | | | | |
At March 31, 2014 and December 31, 2013
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | | | | | | | | | | | | | | ||
| Cash | | | | $ | 1,358 | | | | | $ | 27,750 | | | ||
| Accounts receivable | | | | | — | | | | | | — | | | ||
| Prepaids and other current assets | | | | | — | | | | | | — | | | ||
| Total current assets | | | | | 1,358 | | | | | | 27,750 | | | ||
| Other assets | | | | | 50,000 | | | | | | 50,000 | | | ||
| Total assets of discontinued operations | | | | $ | 51,358 | | | | | $ | 77,750 | | | ||
| Liabilities | | | | | | | | | | | | | | ||
| Accounts payable and accrued expenses | | | | $ | 3,388,743 | | | | | $ | 3,296,410 | | | ||
| Other liabilities | | | | | — | | | | | | 199,278 | | | ||
| Total liabilities of discontinued operations | | | | $ | 3,388,743 | | | | | $ | 3,495,688 | | | ||
| | | | | | | |
| | | | Balance at | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
| Property, Plant and Equipment | | | | | | | | | | | | | | ||
| Machinery and equipment | | | | $ | 5,138,892 | | | | | $ | 5,049,299 | | | ||
| Equipment offsite | | | | | 121,808 | | | | | | 121,808 | | | ||
| Furniture, fixtures and equipment | | | | | 145,154 | | | | | | 136,164 | | | ||
| Software | | | | | 127,060 | | | | | | 125,587 | | | ||
| Trucks and autos | | | | | 36,040 | | | | | | 36,040 | | | ||
| Total property, plant and equipment | | | | | 5,568,954 | | | | | | 5,468,898 | | | ||
| Less: accumulated depreciation | | | | | (5,052,669 | ) | | | | | | (5,007,727 | ) | | |
| Property plant and equipment, net | | | | $ | 516,285 | | | | | $ | 461,171 | | | ||
| | | | | | | |
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital Lease Property | | | | | | | | | | | | | | ||
| Machinery and equipment | | | | $ | 490,353 | | | | | $ | 476,228 | | | ||
| Software | | | | | 125,587 | | | | | | 125,587 | | | ||
| Less: Accumulated depreciation | | | | | (146,247 | ) | | | | | | (192,512 | ) | | |
| Net capital lease property | | | | $ | 469,693 | | | | | $ | 409,303 | | | ||
| | | | | | | |
| | | | March 31, 2014 (Unaudited) | | ||||
---|---|---|---|---|---|---|---|---|---|
| Lease accounts receivable | | | | | | | | |
| Current (accounts receivable) | | | | $ | 124,440 | | | |
| Long-term (other assets) | | | | | 177,681 | | | |
| Total lease accounts receivable | | | | $ | 302,121 | | | |
| Lease obligations | | | | | | | | |
| Current (capital leases payable) | | | | $ | 124,440 | | | |
| Long-term (non-current lease obligations) | | | | | 177,681 | | | |
| Total lease obligations | | | | $ | 302,121 | | | |
| | | | |
| | | | Balance at | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
| Brookville Special Purpose Fund | | | | $ | 2,474,497 | | | | | $ | 5,477,950 | | | ||
| Veritas High Yield Fund, net of $78,982 and $160,966 of unamortized debt discount at March 31, 2014 and December 31, 2013, respectively | | | | | 888,783 | | | | | | 1,611,623 | | | ||
| Robert DePalo Special Opportunity Fund | | | | | — | | | | | | 3,053,121 | | | ||
| Total notes payable – related parties | | | | | 3,363,280 | | | | | | 10,142,694 | | | ||
| Less: current portion of notes payable – related parties | | | | | (754,777 | ) | | | | | | (7,364,110 | ) | | |
| Long-term portion of notes payable – related parties | | | | $ | 2,608,503 | | | | | $ | 2,778,584 | | | ||
| | | | | | | |
| Year ended March 31, | | | Amount | | ||||
---|---|---|---|---|---|---|---|---|---|
| 2015 | | | | $ | 754,777 | | | |
| 2016 | | | | | 2,687,485 | | | |
| Total | | | | | 3,442,262 | | | |
| Less: unamortized debt discount | | | | | (78,982 | ) | | |
| Total notes payable – related parties | | | | $ | 3,363,280 | | | |
| | | | |
| Description | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan payable to majority shareholder | | | | $ | 35,351 | | | | | $ | 35,351 | | | ||
| Loan payable for SignalShare acquisition | | | | | — | | | | | | 43,019 | | | ||
| Note Payable to former SignalShare Members | | | | | 85,976 | | | | | | 105,087 | | | ||
| Loans payable – related parties | | | | $ | 121,327 | | | | | $ | 183,457 | | | ||
| | | | | | | |
| | | | March 31, 2014 (Unaudited) | | | December 31, 2013 | | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of service | | | | $ | 322,818 | | | | | $ | 272,171 | | | ||
| Selling, general and administrative expense | | | | | 218,291 | | | | | | 208,294 | | | ||
| Compensation | | | | | 73,864 | | | | | | 43,671 | | | ||
| Interest | | | | | 60,601 | | | | | | — | | | ||
| Total | | | | $ | 675,574 | | | | | $ | 524,136 | | | ||
| | | | | | | |
- Interpret the provisions of the 2013 Plan and all stock rights and to make all rules and determinations that it deems necessary or advisable for the administration of the 2013 Plan;
- The determination of which employees, directors and consultants will be granted options and other awards;
- The determination of the number of shares for which a stock right or stock rights shall be granted, provided, however, that in no event shall stock rights with respect to more than 300,000 shares be granted to any participant in any fiscal year; and
- Exercise such other duties as necessary to successfully administer the 2013 Plan.
- 1,000,000 or the equivalent of such number of shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction;
- 3% of the number of outstanding shares of common stock on such date; and
- An amount determined by the board of directors.
| | | | March 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2014 (Unaudited) | | | 2013 (Unaudited) | | ||||||||
| Statutory federal income tax rate | | | | | 35.0 | % | | | | | | 35.0 | % | | |
| Combined average statutory state and local income tax rate (7.4%) net of federal benefits | | | | | 4.8 | % | | | | | | 4.8 | % | | |
| Net operating losses and other tax benefits for which no current benefit is being realized | | | | | (39.8 | )% | | | | | | (39.8 | )% | | |
| Effective tax rate | | | | | 0.0 | % | | | | | | 0.0 | % | | |
| | | | | | | | |
| | | | March 31, | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | 2014 (Unaudited) | | | 2013 (Unaudited) | | ||||||||
| Deferred tax asset: | | | | | | | | | | | | | | ||
| Net operating loss carry forwards | | | | $ | 14,651,000 | | | | | $ | 11,588,000 | | | ||
| State and local net operating loss carryforwards | | | | | 2,009,000 | | | | | | 1,589,000 | | | ||
| Less: valuation allowance | | | | | (16,660,000 | ) | | | | | | (13,177,000 | ) | | |
| Net deferred tax asset | | | | $ | — | | | | | $ | — | | | ||
| | | | | | | | |
Unaudited Pro Forma Condensed Consolidated Financial Information
| Pro Forma Financial Information | | | | | | | | |
| | | | | | | |||
| | | | | | | |||
| | | | | | | |||
| | | | | | | |||
| | | | | |
| | | | Roomlinx | | | Holdings | | | Combined | | | Pro Forma Adjustments | | | | | Pro Forma Combined | | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash | | | | $ | 2,077,468 | | | | | $ | 3,064,430 | | | | | $ | 5,141,898 | | | | | $ | (144,000 | ) | | | | | | a | | | | | $ | 4,997,898 | | | |||||
| Other current assets | | | | | 3,244,835 | | | | | | 1,932,767 | | | | | | 5,177,602 | | | | | | | | | | | | | | | | | | 5,177,602 | | | ||||||
| Current assets of discontinued operations | | | | | — | | | | | | 1,358 | | | | | | 1,358 | | | | | | | | | | | | | | | | | | 1,358 | | | ||||||
| Total current assets | | | | | 5,322,303 | | | | | | 4,998,555 | | | | | | 10,320,858 | | | | | | (144,000 | ) | | | | | | | | | | | | 10,176,858 | | | |||||
| Net property and equipment | | | | | 262,131 | | | | | | 516,285 | | | | | | 778,416 | | | | | | | | | | | | | | | | | | 778,416 | | | ||||||
| Other assets | | | | | 658,577 | | | | | | 5,830,437 | | | | | | 6,489,014 | | | | | | | | | | | | | | | | | | 6,489,014 | | | ||||||
| Assets of discontinued operations | | | | | — | | | | | | 50,000 | | | | | | 50,000 | | | | | | | | | | | | | | | | | | 50,000 | | | ||||||
| Total assets | | | | $ | 6,243,011 | | | | | $ | 11,395,277 | | | | | $ | 17,638,288 | | | | | $ | (144,000 | ) | | | | | | | | | | | $ | 17,494,288 | | | |||||
| Liabilities and Stockholders’ Deficit | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Line of credit, current portion | | | | $ | 464,000 | | | | | $ | — | | | | | $ | 464,000 | | | | | | | | | | | | | | | | | $ | 464,000 | | | ||||||
| Accounts payable | | | | | 3,991,582 | | | | | | 3,996,036 | | | | | | 7,987,618 | | | | | | | | | | | | | | | | | | 7,987,618 | | | ||||||
| Notes payable | | | | | — | | | | | | 754,777 | | | | | | 754,777 | | | | | | | | | | | | | | | | | | 754,777 | | | ||||||
| Other current liabilities | | | | | 2,016,541 | | | | | | 2,871,765 | | | | | | 4,888,306 | | | | | | | | | | | | | | | | | | 4,888,306 | | | ||||||
| Currnt liabilities of discontinued operations | | | | | — | | | | | | 3,388,743 | | | | | | 3,388,743 | | | | | | | | | | | | | | | | | | 3,388,743 | | | ||||||
| Total current liabilities | | | | | 6,472,123 | | | | | | 11,011,321 | | | | | | 17,483,444 | | | | | | — | | | | | | | | | | | | 17,483,444 | | | ||||||
| Line of credit, less current portion | | | | | 3,970,709 | | | | | | — | | | | | | 3,970,709 | | | | | | | | | | | | | | | | | | 3,970,709 | | | ||||||
| Notes payable – long-term | | | | | — | | | | | | 2,608,503 | | | | | | 2,608,503 | | | | | | | | | | | | | | | | | | 2,608,503 | | | ||||||
| Other non-current liabilities | | | | | 304,015 | | | | | | 1,216,859 | | | | | | 1,520,874 | | | | | | | | | | | | | | | | | | 1,520,874 | | | ||||||
| Series A preferred stock – Holdings | | | | | — | | | | | | 10 | | | | | | 10 | | | | | | | | | | | | | | | | | | 10 | | | ||||||
| Total liabilities | | | | | 10,746,847 | | | | | | 14,836,693 | | | | | | 25,583,540 | | | | | | — | | | | | | | | | | | | 25,583,540 | | | ||||||
| Stockholders’ deficit | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A – Roomlinx | | | | | 144,000 | | | | | | — | | | | | | 144,000 | | | | | | (144,000 | ) | | | | | | a | | | | | | — | | | |||||
| Series A – Holdings (see liabilities section above) | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | — | | | ||||||
| Series B – Holdings | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | — | | | ||||||
| Common stock: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Roomlinx’s Common stock – $0.001 par value, 200,000,000 shares authorized; 641,141 shares issued and outstanding in historical column; and 132,051,754 shares issued and outstanding in pro forma column | | | | | 6,411 | | | | | | — | | | | | | 6,411 | | | | | | (5,770 | ) | | | | | | b | | | | | | 132,052 | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | 131,411 | | | | | | f | | | | | | | | | | |||||
| Holdings’ Common stock, par value $0.001 per share; 150,000,000 shares authorized, 114,282,138 shares issued and outstanding in historical column; and nil share issued and outstanding in pro forma column | | | | | — | | | | | | 114,283 | | | | | | 114,283 | | | | | | (114,283 | ) | | | | | | c | | | | | | — | | | |||||
| Additional paid-in capital | | | | | 37,570,567 | | | | | | 39,205,140 | | | | | | 76,775,707 | | | | | | 5,770 | | | | | | b | | | | | | 34,513,507 | | | ||||||
| | | | | | | | | | | | | | | | | | | | | | | | 114,283 | | | | | | c | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | (37,576,978 | ) | | | | | | d | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | (4,673,864 | ) | | | | | | e | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | (131,411 | ) | | | | | | f | | | | | | | | | | ||||
| Accumulated deficit | | | | | (42,250,842 | ) | | | | | | (42,760,839 | ) | | | | | | (85,011,681 | ) | | | | | | 37,576,978 | | | | | | d | | | | | | (42,760,839 | ) | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | 4,673,864 | | | | | | e | | | | | | | | | | |||||
| Other comprehensive income | | | | | (17,768 | ) | | | | | | — | | | | | | (17,768 | ) | | | | | | — | | | | | | | | | | | | (17,768 | ) | | | |||
| Total combined stockholders deficit | | | | | (4,547,632 | ) | | | | | | (3,441,416 | ) | | | | | | (7,989,048 | ) | | | | | | (144,000 | ) | | | | | | | | | | | | (8,133,048 | ) | | | |
| Non-controlling interest | | | | | 43,796 | | | | | | — | | | | | | 43,796 | | | | | | — | | | | | | | | | | | | 43,796 | | | ||||||
| Total stockholders’ deficit | | | | | (4,503,836 | ) | | | | | | (3,441,416 | ) | | | | | | (7,945,252 | ) | | | | | | (144,000 | ) | | | | | | | | | | | | (8,089,252 | ) | | | |
| Total liabilities and stockholders’ deficit | | | | $ | 6,243,011 | | | | | $ | 11,395,277 | | | | | $ | 17,638,288 | | | | | $ | (144,000 | ) | | | | | | | | | | | $ | 17,494,288 | | | |||||
| | | | | | | | | | | | | | | | | | | | |
- To payoff RoomLinx preferred stock in accordance with the plan of merger
- To adjust RoomLinx par value of common stock for 1 for 10 reverse merger
- To eliminate Holdings existing common stock
- To eliminate RoomLinx additional paid in capital against its accumulated deficit
- To eliminate the remaining RoomLinx deficit against Holdings accumulated paid-in capital
- To issue common shares in the merged company to Holdings and RoomLinx former shareholders
- The portion of the 17,128,475 shares to be issued to RoomLink’s non-insider sharehoders will be issued to an escrow agent who will hold those shares for nine (9) months, the shares will be registered with the SEC for the non-insider shareholders at which point in time they will be freely tradable shares in the market.
Unaudited Condensed Combined Pro Forma Consolidated Statement of Opertations
For the Three Months Ended March 31, 2014
| | | | Roomlinx | | | Holdings | | | Combined | | | Pro Forma Adjustments | | | | | Pro Forma Combined | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | | | | $ | 1,630,157 | | | | | $ | 3,125,314 | | | | | $ | 4,755,471 | | | | | $ | — | | | | | | | | | | | $ | 4,755,471 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Cost of goods sold | | | | | 1,051,817 | | | | | | 2,291,982 | | | | | | 3,343,799 | | | | | | — | | | | | | | | | | | | 3,343,799 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
| Operating expenses | | | | | 1,006,989 | | | | | | 2,485,604 | | | | | | 3,492,593 | | | | | | — | | | | | | | | | | | | 3,492,593 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Operating loss | | | | | (428,649 | ) | | | | | | (1,652,272 | ) | | | | | | (2,080,921 | ) | | | | | | — | | | | | | | | | | | | (2,080,921 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Non-operating income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| Interest expense | | | | | (152,432 | ) | | | | | | (531,064 | ) | | | | | | (683,496 | ) | | | | | | 316,737 | | | | | | a | | | | | | (366,759 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Interest income | | | | | 32,435 | | | | | | 36,246 | | | | | | 68,681 | | | | | | — | | | | | | | | | | | | 68,681 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Gain on settlement of laibilities | | | | | 9,268 | | | | | | — | | | | | | 9,268 | | | | | | — | | | | | | | | | | | | 9,268 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Total non-operating income (expense) | | | | | (110,729 | ) | | | | | | (494,818 | ) | | | | | | (605,547 | ) | | | | | | 316,737 | | | | | | | | | | | | (288,810 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net loss from continuing operations before income taxes | | | | | (539,378 | ) | | | | | | (2,147,090 | ) | | | | | | (2,686,468 | ) | | | | | | 316,737 | | | | | | | | | | | | (2,369,731 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Income tax expense (benefit) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Net loss from continuing operations | | | | | (539,378 | ) | | | | | | (2,147,090 | ) | | | | | | (2,686,468 | ) | | | | | | 316,737 | | | | | | | | | | | | (2,369,731 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Net loss from discontinued operations | | | | | — | | | | | | (77,910 | ) | | | | | | (77,910 | ) | | | | | | — | | | | | | | | | | | | (77,910 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
| Net loss | | | | | (539,378 | ) | | | | | | (2,225,000 | ) | | | | | | (2,764,378 | ) | | | | | | 316,737 | | | | | | | | | | | | (2,447,641 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Less: Dividends on preferred stock | | | | | — | | | | | | 150,000 | | | | | | 150,000 | | | | | | — | | | | | | | | | | | | 150,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Less: Net loss attributable to non-controlling interest | | | | | 2,174 | | | | | | — | | | | | | 2,174 | | | | | | — | | | | | | | | | | | | 2,174 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Net loss attributale to common shareholders | | | | $ | (537,204 | ) | | | | | $ | (2,375,000 | ) | | | | | $ | (2,762,204 | ) | | | | | $ | 316,737 | | | | | | | | | | | $ | (2,445,467 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Loss per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Basic and diluted loss per share from Continuing operations, attributable to common shareholders | | | | $ | (0.84 | ) | | | | | $ | (0.02 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.02 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
| Discontinued operations, attributable to common shareholders | | | | $ | — | | | | | $ | (0.00 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.00 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| Net loss attributable to common sharesholders – Basic and Diluted | | | | $ | (0.84 | ) | | | | | $ | (0.02 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.02 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Basic and diluted | | | | | 641,141 | | | | | | 109,665,482 | | | | | | | | | | | | 131,410,613 | | | | | | | | | | | | 132,051,754 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- To adjust interest expense and amortization of debt discount and deferred financing costs to account for the conversions of the Brookville Special Purpose Fund, the Veritas High Yield Fund and the Robert DePalo Special Opportunity Fund notes payable to common equity, including the acceleration of the related debt discount and deferred financing costs
Unaudited Condensed Combined Pro Forma Statement of Operations
For the Year Ended December 31, 2013
| | | | Roomlinx | | | Holdings | | | Combined | | | Pro Forma Adjustments | | | | | Pro Forma Combined | | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | | | | $ | 9,448,543 | | | | | $ | 14,666,968 | | | | | $ | 24,115,511 | | | | | $ | — | | | | | | | | | | | $ | 24,115,511 | | | ||||||
| Cost of goods sold | | | | | 6,880,599 | | | | | | 9,968,364 | | | | | | 16,848,963 | | | | | | — | | | | | | | | | | | $ | 16,848,963 | | | ||||||
| Operating expenses | | | | | 5,836,664 | | | | | | 10,587,155 | | | | | | 16,423,819 | | | | | | — | | | | | | | | | | | $ | 16,423,819 | | | ||||||
| Operating loss | | | | | (3,268,720 | ) | | | | | | (5,888,551 | ) | | | | | | (9,157,271 | ) | | | | | | — | | | | | | | | | | | | (9,157,271 | ) | | | ||
| Non-operating income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Interest expense | | | | | (642,813 | ) | | | | | | (1,689,344 | ) | | | | | | (2,332,157 | ) | | | | | | 930,351 | | | | | | a | | | | | | (1,401,806 | ) | | | ||
| Interest income | | | | | 180,220 | | | | | | 207,439 | | | | | | 387,659 | | | | | | — | | | | | | | | | | | | 387,659 | | | ||||||
| Total non-operating income (expense) | | | | | (462,593 | ) | | | | | | (1,481,905 | ) | | | | | | (1,944,498 | ) | | | | | | 930,351 | | | | | | | | | | | | (1,014,147 | ) | | | ||
| Net loss from continuing operations before income taxes | | | | | (3,731,313 | ) | | | | | | (7,370,456 | ) | | | | | | (11,101,769 | ) | | | | | | 930,351 | | | | | | | | | | | | (10,171,418 | ) | | | ||
| Income tax expense (benefit) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | ||||||
| Loss from continuing operations | | | | | (3,731,313 | ) | | | | | | (7,370,456 | ) | | | | | | (11,101,769 | ) | | | | | | 930,351 | | | | | | | | | | | | (10,171,418 | ) | | | ||
| Net loss from discontinued operations | | | | | (422,503 | ) | | | | | | (3,122,701 | ) | | | | | | (3,545,204 | ) | | | | | | — | | | | | | | | | | | | (3,545,204 | ) | | | ||
| Net loss | | | | | (4,153,816 | ) | | | | | | (10,493,157 | ) | | | | | | (14,646,973 | ) | | | | | | 930,351 | | | | | | | | | | | | (13,716,622 | ) | | | ||
| Less: Dividends on preferred stock | | | | | — | | | | | | (600,000 | ) | | | | | | (600,000 | ) | | | | | | | | | | | | | | | | | | (600,000 | ) | | | |||
| Less; net loss attributable to non-controlling interest | | | | | 12,074 | | | | | | — | | | | | | 12,074 | | | | | | — | | | | | | | | | | | | 12,074 | | | ||||||
| Net loss attributable to common shareholders | | | | $ | (4,141,742 | ) | | | | | $ | (11,093,157 | ) | | | | | $ | (15,234,899 | ) | | | | | $ | 930,351 | | | | | | | | | | | $ | (14,304,548 | ) | | | ||
| Loss per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Basic and diluted loss per share from Continuing operations, attributable to common shareholders | | | | $ | (5.82 | ) | | | | | $ | (0.07 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.08 | ) | | | |||
| Discontinued operations, attributable to common shareholders | | | | $ | (0.66 | ) | | | | | $ | (0.03 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.03 | ) | | | |||
| Net loss attributable to common sharesholders – Basic and Diluted | | | | $ | (6.48 | ) | | | | | $ | (0.10 | ) | | | | | | | | | | | | | | | | | | | | | | | $ | (0.11 | ) | | | |||
| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Basic and diluted | | | | | 640,748 | | | | | | 109,008,268 | | | | | | | | | | | | 131,411,006 | | | | | | | | | | | | 132,051,754 | | | ||||||
| | | | | | | | | | | | | | | | | | | | |
- To adjust interest expense and amortization of debt discount and deferred financing costs to account for the conversions of the Brookville Special Purpose Fund, the Veritas High Yield Fund and the Robert DePalo Special Opportunity Fund notes payable to common equity, including the acceleration of the related debt discount and deferred financing costs
- The Registrant had 641,141 shares of issued and outstanding common stock with the effect of 1 for 10 reverse stock split as of March 31, 2014. At the Effective Time, pursuant to the Merger Agreement, the existing shareholders of the Registrant will represent in the aggregate of approximately 14% of the Registrant’s then issued and outstanding common stock.
- All shares of Holdings’ issue and outstanding common stock immediately prior to the Effective Time will be exchanged for on a one for one ratio of the Registrant’s common stock. There were 114.3 million shares of Holdings’ issued and outstanding common stock at March 31, 2014. Accordingly, the shareholders of Holdings would receive 114.3 million shares of the Registrant’s common stock on a proforma basis as if the Merger consummated on March 31, 2014, which will represent approximately 86.54% of the proforma basis of total issued and outstanding shares of the Registrantwhich while RoomLinx’s existing shareholders will own approximately 17.8 million shares or 13.46% of the total proforma basis of approximately 132.1 million shares of the then issued and outstanding common stock.
- Shares expected to be issued to current non-insider shareholders of RoomLinx will be held by a trustee for nine-months and, at the end of that holding period, will be distributed to those non-insider shareholders and will be freely tradable at that time.
- All shares of Holdings’ Series A Preferred Stock and Series B Preferred Stock issued and outstanding immediately prior to the Effective Time will be exchanged for shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, of the Company, having substantially identical terms of Holdings’ Series A Preferred Stock and Series B Preferred Stock pursuant to the Merger Agreement.
- Holders of the existing preferred stock of the Company will receive payments with respect to such shares, the Company’s preferred stock will be cancelled and there will be no existing shares of the Company’s preferred stock outstanding following the Merger.
- All options to purchase Holdings’ common stock and restricted stock awards issued and outstanding immediately prior to the Effective Time under the current Holdings’ Employee Incentive Plan will be exchanged for options and awards to purchase an identical number of shares of Company common stock on the same terms and conditions.
- All then outstanding options to purchase Company capital stock issued under the Company’s Stock Option Plan will terminate in accordance with the terms thereof.
570 Lexington Avenue, 22nd Floor
New York, NY 10022
Tel: (212) 755-0289
Facsimile: (212) 253-4570
F-72 |
APPENDIX D
FINANCIAL STATEMENTS OF ROOMLINX, INC.
GHP Horwath, P.C. Member Crowe Horwath International
1670 Broadway, Suite 3000 Denver, CO 80202 +1.303.831.5000 Tel +1.303.831.5032 Fax |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Roomlinx, Inc.
We have audited the accompanying consolidated balance sheets of Roomlinx, Inc. and its subsidiaries (“the Company”) as of December 31, 2013 and 2012, and the related statements of comprehensive loss, changes in deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 17 to the consolidated financial statements, in March 2014, the Company entered into a merger agreement with a company in a related industry. Our opinion is not modified with respect to this matter.
/s/ GHP Horwath, P.C.
Denver, Colorado
March 31, 2014
D-1 |
2013 | 2012 | |||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 2,125,655 | $ | 3,211,182 | ||||||||
Accounts receivable, net | 1,241,459 | 1,761,503 | ||||||||||
Leases receivable, current portion | 764,879 | 995,220 | ||||||||||
Prepaid and other current assets | 87,303 | 115,902 | ||||||||||
Inventory, net | 1,434,337 | 3,308,792 | ||||||||||
Total current assets | 5,653,633 | 9,392,599 | ||||||||||
Property and equipment, net | 317,486 | 790,873 | ||||||||||
Leases receivable, non-current | 816,487 | 1,672,245 | ||||||||||
Total assets | $ | 6,787,606 | $ | 11,855,717 | ||||||||
LIABILITIES AND DEFICIT | ||||||||||||
Current liabilities: | ||||||||||||
Line of credit, current portion | $ | 464,000 | $ | - | ||||||||
Accounts payable | 3,970,034 | 5,079,204 | ||||||||||
Accrued expenses and other current liabilities | 512,683 | 668,012 | ||||||||||
Customer deposits | 1,295,450 | 1,125,248 | ||||||||||
Notes payable and other obligations, current portion | 23,374 | 21,884 | ||||||||||
Unearned income, current portion | 59,344 | 187,540 | ||||||||||
Deferred revenue, current portion | 274,862 | 609,988 | ||||||||||
Total current liabilities | 6,599,747 | 7,691,876 | ||||||||||
Deferred revenue, less current portion | 251,595 | 294,963 | ||||||||||
Notes payable and other obligations, less current portion | 23,449 | 47,691 | ||||||||||
Unearned income, less current portion | 103,268 | 198,404 | ||||||||||
Line of credit, net of discount, less current portion | 3,885,203 | 4,007,177 | ||||||||||
Total liabilities | 10,863,262 | 12,240,111 | ||||||||||
Deficit: | ||||||||||||
Preferred stock - $0.20 par value, 5,000,000 shares authorized: | ||||||||||||
Class A - 720,000 shares authorized, issued and outstanding (liquidationpreference of $144,000 at December 31, 2013 and 2012) | 144,000 | 144,000 | ||||||||||
Common stock - $0.001 par value, 200,000,000 shares authorized: 6,411,413and 6,405,413 shares issued and outstanding at December 31, 2013 and2012, respectively | 6,411 | 6,405 | ||||||||||
Additional paid-in capital | 37,460,577 | 36,971,369 | ||||||||||
Accumulated deficit | (41,713,638 | ) | (37,571,896 | ) | ||||||||
Accumulated other comprehensive income | (18,976 | ) | 7,684 | |||||||||
Total Roomlinx, Inc. shareholders’ deficit | (4,121,626 | ) | (442,438 | ) | ||||||||
Non-controlling interest | 45,970 | 58,044 | ||||||||||
Total deficit | (4,075,656 | ) | (384,394 | ) | ||||||||
Total liabilities and deficit | $ | 6,787,606 | $ | 11,855,717 |
D-2 |
2013 | 2012 | |||||||
Revenues: | ||||||||
Hospitality: | ||||||||
Product and installation | $ | 3,556,389 | $ | 9,034,223 | ||||
Services | 5,030,160 | 3,054,638 | ||||||
Residential: | ||||||||
Services | 861,994 | 915,054 | ||||||
Total | 9,448,543 | 13,003,915 | ||||||
Direct costs and operating expenses: | ||||||||
Direct costs (exclusive of operating expenses and depreciation shown seperately below): | ||||||||
Hospitality | 6,259,578 | 11,231,195 | ||||||
Residential | 621,021 | 644,655 | ||||||
Operating expenses: | ||||||||
Operations | 1,278,320 | 2,128,652 | ||||||
Product development | 805,885 | 1,280,743 | ||||||
Selling, general and administrative | 2,672,324 | 3,047,946 | ||||||
Depreciation | 247,706 | 498,168 | ||||||
Loss on asset impairment | 832,429 | - | ||||||
12,717,263 | 18,831,359 | |||||||
Operating loss | (3,268,720 | ) | (5,827,444 | ) | ||||
Non-operating income (expense): | ||||||||
Interest expense | (642,813 | ) | (601,725 | ) | ||||
Interest income | 180,220 | 287,759 | ||||||
(462,593 | ) | (313,966 | ) | |||||
Net loss from continuing operations | (3,731,313 | ) | (6,141,410 | ) | ||||
Discontinued operations: | ||||||||
Loss from discontinued operations | (422,503 | ) | (1,250,324 | ) | ||||
Net loss | (4,153,816 | ) | (7,391,734 | ) | ||||
Less: net loss attributable to the non-controlling interest | 12,074 | 5,763 | ||||||
Net loss attributable to the Company | (4,141,742 | ) | (7,385,971 | ) | ||||
Other comprehensive (loss) income: | ||||||||
Currency translation (loss) income | (26,660 | ) | 16,486 | |||||
Comprehensive loss | (4,168,402 | ) | (7,369,485 | ) | ||||
Comprehensive loss attributable to the non-controlling interest | - | - | ||||||
Comprehensive loss attributable to the Company | $ | (4,168,402 | ) | $ | (7,369,485 | ) | ||
Net loss per common share: | ||||||||
Basic and diluted | $ | (0.65 | ) | $ | (1.27 | ) | ||
Loss attributable to continuing operations per common share | ||||||||
Basic and diluted | $ | (0.58 | ) | $ | (1.06 | ) | ||
Loss attributable to discontined operations per common share | ||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.22 | ) | ||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 6,407,484 | 5,809,406 |
D-3 |
Roomlinx, Inc. | |||
CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT | |||
for the yearss ended December 31, 2013 and 2012 | |||
(unaudited) |
Roomlinx, Inc. Shareholders | ||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||
Preferred Stock A | Common Stock | Additional | Other | Total | ||||||||||||||||||||||||||||||||
Number of | Par Value | Number of | Par Value | Paid - in | Comprehensive | Accumulated | Non-Contolling | Stockholders’ | ||||||||||||||||||||||||||||
Shares | $0.20 | Shares | $0.001 | Capital | Income (Loss) | (Deficit) | Interest | (Deficit) Equity | ||||||||||||||||||||||||||||
Balances, January 1, 2012 | 720,000 | $ | 144,000 | 5,118,877 | $ | 5,119 | $ | 33,102,512 | $ | (8,802 | ) | $ | (30,185,925 | ) | $ | 63,807 | $ | 3,120,711 | ||||||||||||||||||
Warrants issued in conjuction with draw on line of credit | 350,167 | 350,167 | ||||||||||||||||||||||||||||||||||
Shares issued at $2.50 per share, net of costs | 1,280,000 | 1,280 | 2,992,031 | 2,993,311 | ||||||||||||||||||||||||||||||||
Cashless option exercises | 6,536 | 6 | (6 | ) | - | |||||||||||||||||||||||||||||||
Stock based compensation | 526,665 | 526,665 | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net loss | (7,385,971 | ) | (5,763 | ) | (7,391,734 | ) | ||||||||||||||||||||||||||||||
Translation loss | 16,486 | 16,486 | ||||||||||||||||||||||||||||||||||
Balances, December 31, 2012 | 720,000 | $ | 144,000 | 6,405,413 | $ | 6,405 | $ | 36,971,369 | $ | 7,684 | $ | (37,571,896 | ) | $ | 58,044 | $ | (384,394 | ) | ||||||||||||||||||
Restricted shares of common stock vested | 6,000 | 6 | 11,994 | 12,000 | ||||||||||||||||||||||||||||||||
Stock based compensation | 477,214 | 477,214 | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net loss | (4,141,742 | ) | (12,074 | ) | (4,153,816 | ) | ||||||||||||||||||||||||||||||
Translation loss | (26,660 | ) | (26,660 | ) | ||||||||||||||||||||||||||||||||
Balances, December 31, 2013 | 720,000 | $ | 144,000 | 6,411,413 | $ | 6,411 | $ | 37,460,577 | $ | (18,976 | ) | $ | (41,713,638 | ) | $ | 45,970 | $ | (4,075,656 | ) |
D-4 |
Roomlinx, Inc. CONSOLIDATED CASH FLOW STATEMENTS | |
for the years ended December 31, 2013 and 2012 (unaudited) |
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,153,816 | ) | $ | (7,391,734 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 247,706 | 498,168 | ||||||
Amortization of debt discount | 342,026 | 332,121 | ||||||
Stock-based compensation | 477,214 | 526,665 | ||||||
Compensation cost related to restricted stock issuances | 16,077 | - | ||||||
Settlement of royalty payable | - | (179,834 | ) | |||||
Provision for uncollectable accounts and leases receivable | (48,000 | ) | 352,157 | |||||
Reserve for inventory obsolescence | - | 30,000 | ||||||
Asset impairment | 832,429 | - | ||||||
Loss on discontinued operations | 422,503 | 1,250,324 | ||||||
Change in operating assets and liabilities: | - | |||||||
Accounts receivable | 590,016 | (1,075,299 | ) | |||||
Prepaid and other current assets | 28,599 | 76,319 | ||||||
Inventory | 995,345 | (2,240,883 | ) | |||||
Accounts payable and other liabilities | (1,264,499 | ) | 4,832,326 | |||||
Customer deposits | 166,125 | 1,125,248 | ||||||
Unearned income | (223,332 | ) | (222,495 | ) | ||||
Deferred revenue | (378,494 | ) | 293,379 | |||||
Total adjustments | 2,203,715 | 5,598,196 | ||||||
Net cash used in operating activities: | (1,950,101 | ) | (1,793,538 | ) | ||||
Cash flows from investing activities: | ||||||||
Lease financing provided to customers | - | (142,879 | ) | |||||
Payments received on leases receivable | 923,861 | 972,627 | ||||||
Purchase of property and equipment | (16,540 | ) | (201,480 | ) | ||||
Net cash provided by investing activities: | 907,321 | 628,268 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from sale of common stock, net | - | 2,993,311 | ||||||
Proceeds from the line of credit | - | 1,000,000 | ||||||
Proceeds from notes payable | - | 45,000 | ||||||
Payments on capital lease | (11,499 | ) | (13,280 | ) | ||||
Payments on notes payable | (11,253 | ) | (61,526 | ) | ||||
Net cash (used in) provided by financing activities | (22,752 | ) | 3,963,505 | |||||
Effects of foreign currency translation | (19,995 | ) | 51,719 | |||||
Net (decrease) increase in cash and equivalents | (1,085,527 | ) | 2,849,954 | |||||
Cash and equivalents at beginning of period | 3,211,182 | 361,228 | ||||||
Cash and equivalents at end of period | $ | 2,125,655 | $ | 3,211,182 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 285,454 | $ | 264,900 | ||||
Non-cash investing and financing activities: | ||||||||
Restricted stock vested | $ | 12,000 | $ | - | ||||
Assets acquired under capital lease | $ | - | $ | 34,617 | ||||
Warants isssed in connection with line of credit | $ | - | $ | 350,167 |
D-5 |
D-6 |
D-7 |
D-8 |
D-9 |
D-10 |
Years Ended December 31, | Minimum Receipts | |||
2014 | $ | 764,878 | ||
2015 | 546,973 | |||
2016 | 250,464 | |||
2017 | 19,051 | |||
$ | 1,581,366 |
2013 | 2012 | |||||||
Raw materials | $ | 1,399,444 | $ | 2,546,441 | ||||
Work in process | 154,893 | 882,351 | ||||||
1,554,337 | 3,428,792 | |||||||
Reserve for obsolescence | (120,000 | ) | (120,000 | ) | ||||
Inventory, net | $ | 1,434,337 | $ | 3,308,792 |
D-11 |
2013 | 2012 | |||||||
Leasehold improvements | $ | 17,195 | $ | 17,195 | ||||
Hospitality property equipment | 479,387 | 745,117 | ||||||
Residential property equipment | 351,727 | 351,727 | ||||||
Computers and office equipment | 601,171 | 590,566 | ||||||
Software | 141,807 | 141,807 | ||||||
1,591,287 | 1,846,412 | |||||||
Accumulated depreciation | (1,273,801 | ) | (1,055,539 | ) | ||||
$ | 317,486 | $ | 790,873 |
2013 | 2012 | |||||||
Note payable to the FCC; monthly principal and interest payment of $1,188; interest at 11% per annum; and matures in August 2016. | $ | 31,261 | $ | 41,178 | ||||
Note payable, assumed as part of the acquisition of Canadian Communications on October 1, 2010, monthly principal and interest payment of $537; interest at 11% per annum; and matured in March 2013. | - | 1,583 | ||||||
31,261 | 42,761 | |||||||
Less: current portion | (11,065 | ) | (10,631 | ) | ||||
$ | 20,196 | $ | 32,130 |
D-12 |
Years ended December 31, | Minimum Payments | |||
2014 | $ | 11,065 | ||
2015 | 12,345 | |||
2016 | 7,851 | |||
$ | 31,261 |
D-13 |
Years ended December 31, | Minimum Receipts | |||
2014 | $ | 464,000 | ||
2015 | 1,232,000 | |||
2016 | 2,480,000 | |||
2017 | 1,000,000 | |||
$ | 5,176,000 |
D-14 |
2013 | 2012 | |||||||
Hospitality services revenue | $ | 356,097 | $ | 611,950 | ||||
Direct costs (exclusive of operating expenses and depreciation shown separately below): | 355,019 | 761,391 | ||||||
Selling, general and administrative | 27,108 | 15,800 | ||||||
Depreciation | 110,688 | 152,447 | ||||||
Loss on asset impairment | - | 1,112,470 | ||||||
492,815 | 2,042,108 | |||||||
Operating loss | (136,718 | ) | (1,430,158 | ) | ||||
Non-operating (expense) income forgiveness of debt | - | 179,834 | ||||||
Loss from operations | (136,718 | ) | (1,250,324 | ) | ||||
Loss on disposal of operations | (285,785 | ) | - | |||||
Net loss on discontinued operations | $ | (422,503 | ) | $ | (1,250,324 | ) |
D-15 |
At December 31, 2013, the Company has tax loss carryforwards approximating $14,000,000 that expire at various dates through 2031 (IRC Section 382 may impose limitations in available NOL carryforwards related to certain transactions which are deemed to be ownership changes, including proposed 2014 transaction described in note 17). The principal difference between the net loss for book purposes and the net loss for income tax purposes relates to expenses that are not deductible for tax purposes, including reorganization costs, impairment of goodwill, stock issued for services and amortization of debt discount.
2013 | 2012 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carry forward - federal | $ | 4,852,000 | $ | 4,147,000 | ||||
Net operating loss carry forward - state | 431,000 | 369,000 | ||||||
Stock-based compensation | 458,000 | 387,000 | ||||||
Property and equipment | 374,000 | 479,000 | ||||||
Allowance for doubtful accounts | 71,000 | 135,000 | ||||||
Other | 93,000 | 93,000 | ||||||
6,279,000 | 5,610,000 | |||||||
Valuation allowance | (6,279,000 | ) | (5,610,000 | ) | ||||
$ | - | $ | - |
2013 | 2012 | |||||||
Federal income tax at statutory rate of 34% | $ | (1,412,000 | ) | $ | (2,514,000 | ) | ||
State tax net of federal tax effect | (125,000 | ) | (222,000 | ) | ||||
Effect of permanent differences | 359,000 | 224,000 | ||||||
Asset impairment | 308,000 | - | ||||||
Other net | 201,000 | (23,000 | ) | |||||
Valuation allowance | 669,000 | 2,535,000 | ||||||
$ | - | $ | - |
D-16 |
D-17 |
2012 | ||||
Term | 3 years | |||
Expected volatility | 136% - 148 | % | ||
Risk free interest rate | 0.35% - 0.57 | % | ||
Dividend yield | 0 | % |
Warrants | Shares Underlying Warrants | Weighted Average Exercise Price | Weighted Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2013 | 1,542,800 | $ | 2.84 | |||||||||||||
Granted and Issued | - | - | ||||||||||||||
Expired/Cancelled | - | - | ||||||||||||||
Outstanding and exercisable at December 31, 2013 | 1,542,800 | $ | 2.84 | 1.01 | $ | - |
D-18 |
2013 | 2012 | |||||||
Expected term | 7 years | 7 years | ||||||
Expected volatility | 213 | % | 214% - 225 | % | ||||
Risk free interest rate | 1.28 | % | 1.11% - 1.69 | % | ||||
Dividend yield | 0 | % | 0 | % |
Number of Shares | Weighted Average Exercise Price | Remaining Contractual Life (in years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at January 1, 2013 | 1,086,074 | $ | 2.74 | |||||||||||||
Granted | 30,000 | 0.60 | ||||||||||||||
Forfeited | (235,821 | ) | 2.17 | |||||||||||||
Outstanding at December 31, 2013 | 880,253 | $ | 1.60 | 1.49 | $ | - | ||||||||||
Exercisable at December 31, 2013 | 495,209 | $ | 1.55 | 1.47 | $ | - |
Non-vested Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at January 1, 2013 | 763,363 | $ | 2.16 | $ | 1.95 | |||||||
Granted | 30,000 | 0.60 | 0.52 | |||||||||
Vested | (219,502 | ) | 1.48 | 1.41 | ||||||||
Forfeited | (188,817 | ) | 2.08 | 2.26 | ||||||||
Non-vested at December 31, 2013 | 385,044 | $ | 1.34 | $ | 1.31 |
D-19 |
Hospitality | Residential | Corporate | Totals | |||||||||||||
Year ended December 31, 2013 | ||||||||||||||||
Revenue | $ | 8,586,549 | $ | 861,994 | $ | - | $ | 9,448,543 | ||||||||
Operating loss | (986,959 | ) | (292,108 | ) | (1,989,653 | ) | (3,268,720 | ) | ||||||||
Depreciation expense | (106,844 | ) | (59,012 | ) | (81,850 | ) | (247,706 | ) | ||||||||
Stock based compensation | - | - | (477,214 | ) | (477,214 | ) | ||||||||||
Loss on asset impairment | (832,429 | ) | - | - | (832,429 | ) | ||||||||||
Loss on discontinued operations | (422,503 | ) | - | - | (422,503 | ) | ||||||||||
Acquisition of property and equipment | - | - | 16,540 | 16,540 | ||||||||||||
Net loss | $ | (1,247,632 | ) | $ | (291,108 | ) | $ | (2,615,076 | ) | $ | (4,153,816 | ) | ||||
Year ended December 31, 2012 | ||||||||||||||||
Revenue | $ | 12,088,861 | $ | 915,054 | $ | - | $ | 13,003,915 | ||||||||
Operating loss | (3,944,407 | ) | (207,473 | ) | (1,675,564 | ) | (5,827,444 | ) | ||||||||
Depreciation expense | (357,306 | ) | (59,012 | ) | (81,850 | ) | (498,168 | ) | ||||||||
Stock based compensation | (184,581 | ) | (568 | ) | (341,516 | ) | (526,665 | ) | ||||||||
Loss on asset impairment | - | - | - | - | ||||||||||||
Loss on discontinued operations | (1,250,324 | ) | - | - | (1,250,324 | ) | ||||||||||
Acquisition of property and equipment | - | - | 201,480 | 201,480 | ||||||||||||
Net loss | $ | (5,174,151 | ) | $ | (207,473 | ) | $ | (2,010,110 | ) | $ | (7,391,734 | ) | ||||
As of December 31, 2013 | ||||||||||||||||
Total assets | $ | 6,382,239 | $ | 223,586 | $ | 181,781 | $ | 6,787,606 | ||||||||
As of December 31, 2012 | ||||||||||||||||
Total assets | $ | 11,363,514 | $ | 286,891 | $ | 205,312 | $ | 11,855,717 |
United States | Canada | Other Foreign | Totals | |||||||||||||
Year ended December 31, 2013 | ||||||||||||||||
Hospitality: | ||||||||||||||||
Product and installation | $ | 3,137,766 | $ | 281,528 | $ | 137,095 | $ | 3,556,389 | ||||||||
Services | 4,912,804 | 79,449 | 37,907 | 5,030,160 | ||||||||||||
Residential: | ||||||||||||||||
Services | 861,994 | - | - | 861,994 | ||||||||||||
Totals | $ | 8,912,564 | $ | 360,977 | $ | 175,002 | $ | 9,448,543 | ||||||||
Year ended December 31, 2012 | ||||||||||||||||
Hospitality: | ||||||||||||||||
Product and installation | $ | 9,034,223 | $ | - | $ | - | $ | 9,034,223 | ||||||||
Services | 2,888,518 | 41,873 | 124,247 | 3,054,638 | ||||||||||||
Residential: | ||||||||||||||||
Services | 915,054 | - | - | 915,054 | ||||||||||||
Totals | $ | 12,837,795 | $ | 41,873 | $ | 124,247 | $ | 13,003,915 | ||||||||
As of December 31, 2013 | ||||||||||||||||
Total assets | $ | 6,669,827 | $ | - | $ | 117,779 | $ | 6,787,606 | ||||||||
As of December 31, 2012 | ||||||||||||||||
Total assets | $ | 11,222,082 | $ | 527,920 | $ | 105,715 | $ | 11,855,717 |
D-20 |
2012 | 2012 | |||||||
Revenue | $ | 76,690 | $ | 92,374 | ||||
Direct Costs | (65,690 | ) | (66,378 | ) | ||||
Operating expense | (35,147 | ) | (37,523 | ) | ||||
Net loss | $ | (24,147 | ) | $ | (11,527 | ) |
D-21 |
D-22 |
On March 14, 2014, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Signal Point Holdings Corp. (“Signal Point”) and Roomlinx Merger Corp., a wholly-owned subsidiary of the Company (“Merger Subsidiary”). Upon the terms and subject to the conditions set forth in the Merger Agreement, the Merger Subsidiary will be merged with and into Signal Point, a provider of domestic and international telecommunications services, with Signal Point continuing as the surviving entity in the merger. Simultaneous with the effective time of the merger, the Company will affect a reverse split of its common stock utilizing a ratio resulting in the Company having 600,000 shares of common stock issued and outstanding following the reverse stock split.
The effect of the merger will result in the owners of Signal Point holding 86% of the Company’s common stock at the date of the transaction and the holders of the Company’s stock immediately prior to the transaction owning 14%. Cenfin, LLC, a secured lender of the Company, will receive a currently undetermined number of shares to be included in the 14% ownership. The preferred shareholders will receive payments with respect to their shares (currently undetermined) and upon execution of the merger, there will be no shares of the Company’s preferred stock outstanding. In addition, upon merger, all outstanding options immediately prior to the transaction will be terminated.
All conditions included in the Merger Agreement must be completed (some of which require approval of the Company’s shareholders) in order for the merger to be executed. Upon completing all conditions, the Company will receive a cash contribution from Signal Point of $1,000,000 (subject to certain use limitations) at the closing of the merger. Upon execution, the Company will have certain obligations including an accelerated debt payment of $750,000 (see Note 7), payments to preferred stock holders, and bonus payments of approximately $500,000 to certain officers of the Company in accordance with employment agreements which will only be incurred and become due upon completion of the merger.
D-23 |
D-24 |
D-25 |
37 |
38 |
2012 | 2011 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,211,182 | $ | 361,228 | ||||
Accounts receivable, net | 1,761,503 | 889,657 | ||||||
Leases receivable, current portion | 995,220 | 994,728 | ||||||
Prepaid and other current assets | 115,902 | 192,221 | ||||||
Inventory, net | 3,308,792 | 1,244,072 | ||||||
Total current assets | 9,392,599 | 3,681,906 | ||||||
Property and equipment, net | 790,873 | 2,145,831 | ||||||
Leases receivable, non-current | 1,672,245 | 2,697,696 | ||||||
Total assets | $ | 11,855,717 | $ | 8,525,433 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,079,204 | $ | 632,428 | ||||
Accrued expenses and other current liabilities | 668,012 | 462,296 | ||||||
Customer deposits | 1,125,248 | - | ||||||
Notes payable and other obligations, current portion | 21,884 | 63,182 | ||||||
Unearned income, current portion | 187,540 | 245,058 | ||||||
Deferred revenue, current portion | 609,988 | 611,572 | ||||||
Total current liabilities | 7,691,876 | 2,014,536 | ||||||
Deferred revenue, less current portion | 294,963 | - | ||||||
Notes payable and other obligations, less current portion | 47,691 | 1,582 | ||||||
Unearned income, less current portion | 198,404 | 363,381 | ||||||
Line of credit, net of discount | 4,007,177 | 3,025,223 | ||||||
Total liabilities | 12,240,111 | 5,404,722 | ||||||
Equity: | ||||||||
Preferred stock - $0.20 par value, 5,000,000 shares authorized: | ||||||||
Class A - 720,000 shares authorized, issued and outstanding (liquidation preference of $144,000 at December 31, 2012 and 2011) | 144,000 | 144,000 | ||||||
Common stock - $0.001 par value, 200,000,000 shares authorized: 6,405,413 and 5,118,877 shares issued and outstanding at December 31, 2012 and 2011, respectively | 6,405 | 5,119 | ||||||
Additional paid-in capital | 36,971,369 | 33,102,512 | ||||||
Accumulated deficit | (37,571,896 | ) | (30,185,925 | ) | ||||
Accumulated other comprehensive income | 7,684 | (8,802 | ) | |||||
Total Roomlinx, Inc. shareholders’ (deficit) equity | (442,438 | ) | 3,056,904 | |||||
Non-controlling interest | 58,044 | 63,807 | ||||||
Total (deficit) equity | (384,394 | ) | 3,120,711 | |||||
Total liabilities and equity | $ | 11,855,717 | $ | 8,525,433 |
39 |
2012 | 2011 | |||||||
Revenues: | ||||||||
Hospitality | $ | 12,700,811 | $ | 5,281,608 | ||||
Residential | 915,054 | 942,317 | ||||||
Total | 13,615,865 | 6,223,925 | ||||||
Direct costs and operating expenses: | ||||||||
Direct costs (exclusive of operating expenses and depreciation shown seperately below): | ||||||||
Hospitality | 11,992,587 | 4,119,520 | ||||||
Residential | 644,655 | 637,552 | ||||||
Operating expenses: | ||||||||
Operations | 2,128,651 | 925,293 | ||||||
Product development | 1,280,743 | 725,993 | ||||||
Selling, general and administrative | 3,064,200 | 1,833,038 | ||||||
Depreciation | 650,615 | 695,817 | ||||||
Loss on asset impairment | 1,112,470 | - | ||||||
20,873,921 | 8,937,213 | |||||||
Operating loss | (7,258,056 | ) | (2,713,288 | ) | ||||
Non-operating income (expense): | ||||||||
Interest expense | (601,725 | ) | (340,072 | ) | ||||
Interest income | 288,213 | 254,155 | ||||||
Other income | 179,834 | 144,810 | ||||||
(133,678 | ) | 58,893 | ||||||
Net loss | (7,391,734 | ) | (2,654,395 | ) | ||||
Less: net loss attributable to the non-controlling interest | 5,763 | 2,206 | ||||||
Net loss attributable to the Company | (7,385,971 | ) | (2,652,189 | ) | ||||
Other comprehensive income (loss): | ||||||||
Currency translation gain (loss) | 16,486 | (2,017 | ) | |||||
Comprehensive loss | (7,369,485 | ) | (2,654,206 | ) | ||||
Comprehensive loss attributable to the non-controlling interest | - | - | ||||||
Comprehensive loss attributable to the Company | $ | (7,369,485 | ) | $ | (2,654,206 | ) | ||
Net loss per common share: | ||||||||
Basic and diluted | $ | (1.27 | ) | $ | (0.52 | ) | ||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 5,809,406 | 5,072,157 |
40 |
2012 | 2011 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (7,391,734 | ) | $ | (2,654,395 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 650,615 | 695,817 | ||||||
Amortization of debt discount | 332,121 | 175,345 | ||||||
Stock-based compensation | 526,665 | 479,234 | ||||||
Gain on settlement of royalty payable | (179,834 | ) | - | |||||
Gain on forgiveness of debt | - | (144,810 | ) | |||||
Provision for uncollectable accounts and leases receivable | 291,946 | 43,813 | ||||||
Loss on cancellation of contracts | 60,211 | - | ||||||
Reserve for inventory obsolescence | 30,000 | 90,000 | ||||||
Asset impairment | 1,112,470 | - | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (1,075,299 | ) | (80,470 | ) | ||||
Prepaid and other current assets | 76,319 | (56,799 | ) | |||||
Inventory | (2,240,883 | ) | (441,571 | ) | ||||
Accounts payable and other liabilities | 4,832,326 | 273,199 | ||||||
Customer deposits | 1,125,248 | - | ||||||
Unearned income | (222,495 | ) | 172,658 | |||||
Deferred revenue | 293,379 | 475,042 | ||||||
Total adjustments | 5,612,789 | 1,681,458 | ||||||
Net cash used in operating activities: | (1,778,945 | ) | (972,937 | ) | ||||
Cash flows from investing activities: | ||||||||
Lease financing provided to customers | (142,879 | ) | (2,046,356 | ) | ||||
Payments received on leases receivable | 972,627 | 722,982 | ||||||
Purchase of property and equipment | (201,480 | ) | (174,677 | ) | ||||
Net cash provided by (used in) investing activities: | 628,268 | (1,498,051 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from sale of common stock, net | 2,993,311 | 125,000 | ||||||
Proceeds from the line of credit | 1,000,000 | 2,480,000 | ||||||
Proceeds from notes payable | 45,000 | - | ||||||
Payments on capital lease | (13,280 | ) | (10,361 | ) | ||||
Payments on notes payable | (61,526 | ) | (66,582 | ) | ||||
Net cash provided by financing activities | 3,963,505 | 2,528,057 | ||||||
Effects of foreign currency translation | 37,126 | (10,209 | ) | |||||
Net increase in cash and equivalents | 2,849,954 | 46,860 | ||||||
Cash and equivalents at beginning of period | 361,228 | 314,368 | ||||||
Cash and equivalents at end of period | $ | 3,211,182 | $ | 361,228 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 264,900 | $ | 152,237 | ||||
Non-cash investing and financing activities: | ||||||||
Assets acquired under capital lease | $ | 34,617 | $ | - | ||||
Warrants issued in connection with line of credit | $ | 350,167 | $ | 826,060 |
41 |
Roomlinx, Inc. Shareholders | ||||||||||||||||||||||||||||||||||||
Preferred Stock A | Common Stock | Additional | Accumulated Other | Total | ||||||||||||||||||||||||||||||||
Number of Shares | Par Value $0.20 | Number of Shares | Par Value $0.001 | Paid - in Capital | Comprehensive Income | Accumulated (Deficit) | Non-Contolling Interest | Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||
Balances, January 1, 2011 | 720,000 | $ | 144,000 | 4,958,913 | $ | 4,959 | $ | 31,672,378 | $ | - | $ | (27,533,736 | ) | $ | 66,013 | $ | 4,353,614 | |||||||||||||||||||
Warrants issued in conjuction with draw on line of credit | 826,060 | 826,060 | ||||||||||||||||||||||||||||||||||
Exercise of warrants at $2.00 per share | 62,500 | 63 | 124,937 | 125,000 | ||||||||||||||||||||||||||||||||
Shares issued at $2.00 per share | 30,000 | 30 | 59,970 | 60,000 | ||||||||||||||||||||||||||||||||
Shares issued at $1.80 per share | 62,010 | 62 | 111,552 | 111,614 | ||||||||||||||||||||||||||||||||
Shares issued at $2.75 per share | 5,454 | 5 | 14,995 | 15,000 | ||||||||||||||||||||||||||||||||
Stock based compensation | 292,620 | 292,620 | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net loss | (2,652,189 | ) | (2,206 | ) | (2,654,395 | ) | ||||||||||||||||||||||||||||||
Translation gain (loss) | (8,802 | ) | (8,802 | ) | ||||||||||||||||||||||||||||||||
Balances, December 31, 2011 | 720,000 | 144,000 | 5,118,877 | 5,119 | 33,102,512 | (8,802 | ) | (30,185,925 | ) | 63,807 | 3,120,711 | |||||||||||||||||||||||||
Warrants issued in conjuction with draw on line of credit | 350,167 | 350,167 | ||||||||||||||||||||||||||||||||||
Shares issued at $2.50 per share, net of costs | 1,280,000 | 1,280 | 2,992,031 | 2,993,311 | ||||||||||||||||||||||||||||||||
Cashless option exercises | 6,536 | 6 | (6 | ) | - | |||||||||||||||||||||||||||||||
Stock based compensation | 526,665 | 526,665 | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||
Net loss | (7,385,971 | ) | (5,763 | ) | (7,391,734 | ) | ||||||||||||||||||||||||||||||
Translation gain (loss) | 16,486 | 16,486 | ||||||||||||||||||||||||||||||||||
Balances, December 31, 2012 | 720,000 | $ | 144,000 | 6,405,413 | $ | 6,405 | $ | 36,971,369 | $ | 7,684 | $ | (37,571,896 | ) | $ | 58,044 | $ | (384,394 | ) |
42 |
43 |
44 |
45 |
46 |
47 |
Year Ended December 31, | Minimum Receipts | |||
2013 | $ | 995,220 | ||
2014 | 854,402 | |||
2015 | 628,122 | |||
2016 | 305,671 | |||
2017 | 19,050 | |||
$ | 2,802,465 |
2012 | 2011 | |||||||
Raw materials | $ | 2,546,441 | $ | 671,991 | ||||
Work in process | 882,351 | 662,081 | ||||||
3,428,792 | 1,334,072 | |||||||
Reserve for obsolescence | (120,000 | ) | (90,000 | ) | ||||
Inventory, net | $ | 3,308,792 | $ | 1,244,072 |
2012 | 2011 | |||||||
Leasehold improvements | $ | 17,195 | $ | 14,738 | ||||
Hospitality property equipment | 745,117 | 3,011,871 | ||||||
Residential property equipment | 351,727 | 351,727 | ||||||
Computers and office equipment | 590,566 | 469,607 | ||||||
Software | 141,807 | 61,969 | ||||||
1,846,412 | 3,909,912 | |||||||
Accumulated depreciation | (1,055,539 | ) | (1,764,081 | ) | ||||
$ | 790,873 | $ | 2,145,831 |
48 |
2012 | 2011 | |||||||
Note payable, assumed as part of the acquisition of Canadian Communications on October 1, 2010, monthly principal and interest payment of $537; interest at 11% per annum; and matured in March 2013. | $ | 1,583 | $ | 7,495 | ||||
Note payable to the FCC; monthly principal and interest payment of $1,188; interest at 11% per annum; and matures in August 2016. | 41,178 | - | ||||||
Note payable, assumed as part of the acquisition of Canadian Communications on October 1, 2010, monthly principal and interest payment of $4,996; interest at 12% per annum; and matured in November 2012. | - | 51,790 | ||||||
42,761 | 59,285 | |||||||
Less: current portion | (10,631 | ) | (57,703 | ) | ||||
$ | 32,130 | $ | 1,582 |
49 |
Years Ended | Minimum | |||
December 31, | Payments | |||
2013 | $ | 10,631 | ||
2014 | 10,964 | |||
2015 | 12,233 | |||
2016 | 8,933 | |||
$ | 42,761 |
50 |
Years Ended December 31, | Minimum Payments | |||
2013 | $ | - | ||
2014 | 464,000 | |||
2015 | 1,232,000 | |||
2016 | 2,480,000 | |||
2017 | 1,000,000 | |||
$ | 5,176,000 |
2012 | 2011 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforward - federal | $ | 4,147,000 | $ | 2,597,000 | ||||
Net operating loss carryforward - state | 369,000 | 232,000 | ||||||
Stock-based compensation | 387,000 | 89,000 | ||||||
Property and equipment | 479,000 | 97,000 | ||||||
Allowance for doubtful accounts | 135,000 | - | ||||||
Other | 93,000 | 60,000 | ||||||
5,610,000 | 3,075,000 | |||||||
Valuation allowance | (5,610,000 | ) | (3,075,000 | ) | ||||
$ | - | $ | - |
51 |
2012 | 2011 | |||||||
Federal income tax at statutory rate of 34% | $ | (2,514,000 | ) | $ | (592,000 | ) | ||
State tax net of federal tax effect | (222,000 | ) | - | |||||
Effect of permanent differences | 224,000 | (61,500 | ) | |||||
Stock-based compensation | - | 222,500 | ||||||
Other net | (23,000 | ) | 25,000 | |||||
Valuation allowance | 2,535,000 | 406,000 | ||||||
$ | - | $ | - |
52 |
2012 | 2011 | |||||||
Term | 3 years | 3 years | ||||||
Expected volatility | 136% - 148 | % | 122% - 125 | % | ||||
Risk free interest rate | 0.35% - 0.57 | % | 0.33% - 1.18 | % | ||||
Dividend yield | 0 | % | 0 | % |
Warrants | Shares Underlying Warrants | Weighted Average Exercise Price | Weighted Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2012 | 726,550 | $ | 2.21 | |||||||||||||
Granted and Issued | 890,000 | 3.26 | ||||||||||||||
Expired/Cancelled | (73,750 | ) | 3.15 | |||||||||||||
Outstanding and exercisable at December 31, 2012 | 1,542,800 | $ | 2.84 | 1.97 | $ | 41,300 |
53 |
2012 | 2011 | |||||||
Expected term | 7 years | 7 years | ||||||
Expected volatility | 214% - 225 | % | 132 | % | ||||
Risk free interest rate | 1.11% - 1.69 | % | 1.14% - 2.48 | % | ||||
Dividend yield | 0 | % | 0 | % |
Options | Number of Shares | Weighted Average Exercise Price | Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2012 | 404,194 | $ | 2.78 | |||||||||||||
Granted | 921,817 | 2.16 | ||||||||||||||
Exercised | (14,000 | ) | 1.33 | |||||||||||||
Forfeited | (225,937 | ) | 3.64 | |||||||||||||
Outstanding at December 31, 2012 | 1,086,074 | $ | 3.12 | 5.77 | $ | 26,850 | ||||||||||
Exercisable at December 31, 2012 | 322,711 | $ | 2.74 | 3.60 | $ | 26,850 |
54 |
Non-vested Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at January 1, 2012 | 63,296 | $ | 3.68 | $ | 2.98 | |||||||
Granted | 921,817 | 2.16 | 2.28 | |||||||||
Vested | (13,730 | ) | 3.58 | 2.22 | ||||||||
Forfeited | (208,020 | ) | 3.76 | 2.94 | ||||||||
Non-vested at December 31, 2012 | 763,363 | $ | 2.16 | $ | 1.95 |
55 |
Hospitality | Residential | Corporate | Totals | |||||||||||||
Year ended December 31, 2012 | ||||||||||||||||
Revenue | $ | 12,700,811 | $ | 915,054 | $ | - | $ | 13,615,865 | ||||||||
Operating loss | (5,375,019 | ) | (207,473 | ) | (1,675,564 | ) | (7,258,056 | ) | ||||||||
Depreciation expense | (509,753 | ) | (59,012 | ) | (81,850 | ) | (650,615 | ) | ||||||||
Stock based compensation | (184,581 | ) | (568 | ) | (341,516 | ) | (526,665 | ) | ||||||||
Loss on asset impairment | (1,112,470 | ) | - | - | (1,112,470 | ) | ||||||||||
Gain on settlement of royalty payable | 179,834 | - | - | 179,834 | ||||||||||||
Acquisition of property and equipment | - | - | 201,480 | 201,480 | ||||||||||||
Net loss | $ | (5,174,151 | ) | $ | (207,473 | ) | $ | (2,010,110 | ) | $ | (7,391,734 | ) | ||||
Year ended December 31, 2011 | ||||||||||||||||
Revenue | $ | 5,281,608 | $ | 942,317 | $ | - | $ | 6,223,925 | ||||||||
Operating loss | (1,729,305 | ) | (26,614 | ) | (957,369 | ) | (2,713,288 | ) | ||||||||
Depreciation expense | (597,873 | ) | (53,844 | ) | (44,100 | ) | (695,817 | ) | ||||||||
Stock based compensation | (208,349 | ) | - | (270,885 | ) | (479,234 | ) | |||||||||
Gain on forgiveness of debt | 144,810 | - | - | 144,810 | ||||||||||||
Acquisition of property and equipment | 120,867 | 52,293 | 1,517 | 174,677 | ||||||||||||
Net loss | $ | (1,511,574 | ) | $ | (26,614 | ) | $ | (1,116,207 | ) | $ | (2,654,395 | ) | ||||
As of December 31, 2012 | ||||||||||||||||
Total assets | $ | 11,363,514 | $ | 286,891 | $ | 205,312 | $ | 11,855,717 | ||||||||
As of December 31, 2011 | ||||||||||||||||
Total assets | $ | 8,065,489 | $ | 281,356 | $ | 178,588 | $ | 8,525,433 |
United States | Canada | Other Foreign | Totals | |||||||||||||
Year ended December 31, 2012 | ||||||||||||||||
Hospitality Revenue | $ | 11,928,694 | $ | 629,143 | $ | 142,974 | $ | 12,700,811 | ||||||||
Residential Revenue | 915,054 | - | - | 915,054 | ||||||||||||
Totals | $ | 12,843,748 | $ | 629,143 | $ | 142,974 | $ | 13,615,865 | ||||||||
Year ended December 31, 2011 | ||||||||||||||||
Hospitality Revenue | $ | 3,909,726 | $ | 1,170,319 | $ | 201,563 | $ | 5,281,608 | ||||||||
Residential Revenue | 942,317 | - | - | 942,317 | ||||||||||||
Totals | $ | 4,852,043 | $ | 1,170,319 | $ | 201,563 | $ | 6,223,925 | ||||||||
As of December 31, 2012 | ||||||||||||||||
Total assets | $ | 11,222,082 | $ | 527,920 | $ | 105,715 | $ | 11,855,717 | ||||||||
As of December 31, 2011 | ||||||||||||||||
Total assets | $ | 6,421,065 | $ | 681,082 | $ | 1,423,286 | $ | 8,525,433 |
56 |
2012 | 2011 | |||||||
Revenue | $ | 92,374 | $ | 111,146 | ||||
Direct Costs | (66,378 | ) | (79,459 | ) | ||||
Operating expense | (37,523 | ) | (36,109 | ) | ||||
Non-operating income | (11,527 | ) | (4,422 | ) | ||||
Non-operating income | 10 | |||||||
Net loss | $ | (11,527 | ) | $ | (4,412 | ) |
57 |
58 |
END
Roomlinx, Inc. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,863,005 | $ | 2,125,655 | ||||
Accounts receivable, net | 877,388 | 1,241,459 | ||||||
Leases receivable, current portion | 650,601 | 764,879 | ||||||
Prepaid and other current assets | 150,637 | 87,303 | ||||||
Inventory, net | 1,474,649 | 1,434,337 | ||||||
Total current assets | 5,016,280 | 5,653,633 | ||||||
Property and equipment, net | 210,942 | 317,486 | ||||||
Leases receivable, non-current | 500,696 | 816,487 | ||||||
Total assets | $ | 5,727,918 | $ | 6,787,606 | ||||
LIABILITIES AND DEFICIT | ||||||||
Current liabilities: | ||||||||
Line of credit, current portion | $ | 124,000 | $ | 464,000 | ||||
Accounts payable | 3,876,701 | 3,970,034 | ||||||
Accrued expenses and other current liabilities | 459,236 | 512,683 | ||||||
Customer deposits | 1,261,874 | 1,295,450 | ||||||
Notes payable and other obligations, current portion | 22,255 | 23,374 | ||||||
Unearned income, current portion | 73,178 | 59,344 | ||||||
Deferred revenue, current portion | 310,131 | 274,862 | ||||||
Total current liabilities | 6,127,375 | 6,599,747 | ||||||
Deferred revenue, less current portion | 206,308 | 251,595 | ||||||
Notes payable and other obligations, less current portion | 13,047 | 23,449 | ||||||
Unearned income, less current portion | 29,577 | 103,268 | ||||||
Line of credit, net of discount, less current portion | 4,056,216 | 3,885,203 | ||||||
Total liabilities | 10,432,523 | 10,863,262 | ||||||
Deficit: | ||||||||
Preferred stock - $0.20 par value, 5,000,000 shares authorized: | ||||||||
Class A - 720,000 shares authorized, issued and outstanding (liquidationpreference of $144,000 at June 30, 2014 and December 31, 2013) | 144,000 | 144,000 | ||||||
Common stock - $0.001 par value, 200,000,000 shares authorized: 6,411,413shares issued and outstanding at June 30, 2014 and December 31, 2013 | 6,411 | 6,411 | ||||||
Additional paid-in capital | 37,681,771 | 37,460,577 | ||||||
Accumulated deficit | (42,554,302 | ) | (41,713,638 | ) | ||||
Accumulated other comprehensive loss | (23,403 | ) | (18,976 | ) | ||||
Total Roomlinx, Inc. shareholders’ deficit | (4,745,523 | ) | (4,121,626 | ) | ||||
Non-controlling interest | 40,918 | 45,970 | ||||||
Total deficit | (4,704,605 | ) | (4,075,656 | ) | ||||
Total liabilities and deficit | $ | 5,727,918 | $ | 6,787,606 |
D-48 |
Roomlinx, Inc. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||||||
for the three and six months ended June 30, 2014 and 2013 | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Hospitality: | ||||||||||||||||
Product and installation | $ | 396,187 | $ | 932,265 | $ | 517,418 | $ | 1,474,822 | ||||||||
Services | 1,314,181 | 1,193,706 | 2,634,833 | 2,445,996 | ||||||||||||
Residential: | ||||||||||||||||
Services | 186,044 | 217,839 | 374,318 | 435,317 | ||||||||||||
Total | 1,896,412 | 2,343,810 | 3,526,569 | 4,356,135 | ||||||||||||
Direct costs and operating expenses: | ||||||||||||||||
Direct costs (exclusive of operating expenses and depreciation shown seperately below): | ||||||||||||||||
Hospitality | 1,041,864 | 1,557,883 | 1,945,026 | 3,021,655 | ||||||||||||
Residential | 141,292 | 164,792 | 289,947 | 334,280 | ||||||||||||
Operating expenses: | ||||||||||||||||
Operations | 250,729 | 271,665 | 502,942 | 796,230 | ||||||||||||
Product development | 135,295 | 195,257 | 279,687 | 473,549 | ||||||||||||
Selling, general and administrative | 485,219 | 674,293 | 1,030,248 | 1,414,734 | ||||||||||||
Depreciation | 51,189 | 64,436 | 116,544 | 128,853 | ||||||||||||
2,105,588 | 2,928,326 | 4,164,394 | 6,169,301 | |||||||||||||
Operating loss | (209,176 | ) | (584,516 | ) | (637,825 | ) | (1,813,166 | ) | ||||||||
Non-operating income (expense): | ||||||||||||||||
Interest expense | (146,326 | ) | (144,064 | ) | (298,758 | ) | (297,757 | ) | ||||||||
Interest income | 28,112 | 48,234 | 60,547 | 100,960 | ||||||||||||
Gain on settlement of liabilities | 67,709 | - | 76,977 | - | ||||||||||||
(50,505 | ) | (95,830 | ) | (161,234 | ) | (196,797 | ) | |||||||||
Net loss from continuing operations | (259,681 | ) | (680,346 | ) | (799,059 | ) | (2,009,963 | ) | ||||||||
Discontinued operations: | ||||||||||||||||
Loss from discontinued operations | (46,657 | ) | (38,744 | ) | (46,657 | ) | (107,686 | ) | ||||||||
Net loss | (306,338 | ) | (719,090 | ) | (845,716 | ) | (2,117,649 | ) | ||||||||
Less: net loss attributable to the non-controlling interest | 2,878 | 2,016 | 5,052 | 5,435 | ||||||||||||
Net loss attributable to the Company | (303,460 | ) | (717,074 | ) | (840,664 | ) | (2,112,214 | ) | ||||||||
Other comprehensive (loss) income: | ||||||||||||||||
Currency translation (loss) gain | (5,635 | ) | 20,747 | (4,427 | ) | 12,750 | ||||||||||
Comprehensive loss | (309,095 | ) | (696,327 | ) | (845,091 | ) | (2,099,464 | ) | ||||||||
Comprehensive loss attributable to the non-controlling interest | - | - | - | - | ||||||||||||
Comprehensive loss attributable to the Company | $ | (309,095 | ) | $ | (696,327 | ) | $ | (845,091 | ) | $ | (2,099,464 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic and diluted | $ | (0.05 | ) | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.33 | ) | ||||
Loss attributable to continuing operations per common share | ||||||||||||||||
Basic and diluted | $ | (0.04 | ) | $ | (0.11 | ) | $ | (0.12 | ) | $ | (0.31 | ) | ||||
Loss attributable to discontinued operations per common share | ||||||||||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 6,411,413 | 6,405,413 | 6,411,413 | 6,405,413 |
D-49 |
Roomlinx, Inc. | ||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN DEFICIT | ||||||||||||||||||||||||||||||||||||
for the six months ended June 30, 2014 | ||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||
Roomlinx, Inc. Shareholders | ||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||
Preferred Stock A | Common Stock | Additional | Other | Total | ||||||||||||||||||||||||||||||||
Number of | Par Value | Number of | Par Value | Paid - in | Comprehensive | Accumulated | Non-Contolling | Stockholders’ | ||||||||||||||||||||||||||||
Shares | $ | 0.20 | Shares | $ | 0.001 | Capital | Income (Loss) | (Deficit) | Interest | (Deficit) Equity | ||||||||||||||||||||||||||
Balances, January 1, 2014 | 720,000 | $ | 144,000 | 6,411,413 | $ | 6,411 | $ | 37,460,577 | $ | (18,976 | ) | $ | (41,713,638 | ) | $ | 45,970 | $ | (4,075,656 | ) | |||||||||||||||||
Stock based compensation | 221,194 | 221,194 | ||||||||||||||||||||||||||||||||||
Comprehensive income loss: | ||||||||||||||||||||||||||||||||||||
Net loss | (840,664 | ) | (5,052 | ) | (845,716 | ) | ||||||||||||||||||||||||||||||
Translation loss | (4,427 | ) | (4,427 | ) | ||||||||||||||||||||||||||||||||
Balances, June 30, 2014 | 720,000 | $ | 144,000 | 6,411,413 | $ | 6,411 | $ | 37,681,771 | $ | (23,403 | ) | $ | (42,554,302 | ) | $ | 40,918 | $ | (4,704,605 | ) |
D-50 |
Roomlinx, Inc. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
for the six months ended June 30, 2014 and 2013 | ||||||||
(unaudited) | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (845,716 | ) | $ | (2,117,649 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 116,544 | 128,853 | ||||||
Amortization of debt discount | 171,013 | 171,013 | ||||||
Stock-based compensation | 221,194 | 237,029 | ||||||
Compensation cost related to restricted stock issuances | 5,918 | 12,000 | ||||||
Provision for uncollectable accounts and leases receivable | 31,649 | 102,254 | ||||||
Loss on discontinued operations | 46,657 | 107,686 | ||||||
Gain on settlement of liabilities | 76,977 | - | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | 332,422 | 74,184 | ||||||
Prepaid and other current assets | (63,334 | ) | (13,837 | ) | ||||
Inventory | (40,312 | ) | (150,752 | ) | ||||
Accounts payable and other liabilities | (276,332 | ) | (1,113,652 | ) | ||||
Customer deposits | (33,576 | ) | (1,800 | ) | ||||
Unearned income | (59,857 | ) | (132,086 | ) | ||||
Deferred revenue | (10,018 | ) | 801,908 | |||||
Total adjustments | 518,945 | 222,800 | ||||||
Net cash used in operating activities: | (326,771 | ) | (1,894,849 | ) | ||||
Cash flows from investing activities: | ||||||||
Payments received on leases receivable | 430,069 | 469,822 | ||||||
Purchase of property and equipment | (10,000 | ) | (16,540 | ) | ||||
Net cash provided by investing activities: | 420,069 | 453,282 | ||||||
Cash flows from financing activities: | ||||||||
Payments on line of credit | (340,000 | ) | - | |||||
Payments on capital lease | (4,994 | ) | (5,500 | ) | ||||
Payments on notes payable | (6,527 | ) | (7,235 | ) | ||||
Net cash used in financing activities | (351,521 | ) | (12,735 | ) | ||||
Effects of foreign currency translation | (4,427 | ) | 12,750 | |||||
Net decrease in cash and equivalents | (262,650 | ) | (1,441,552 | ) | ||||
Cash and equivalents at beginning of period | 2,125,655 | �� | 3,211,182 | |||||
Cash and equivalents at end of period | $ | 1,863,005 | $ | 1,769,630 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 129,053 | $ | 66,445 |
D-51 |
D-52 |
D-53 |
D-54 |
D-55 |
Twelve Months ended June 30, | Minimum Receipts | |||
2015 | $ | 650,601 | ||
2016 | 369,199 | |||
2017 | 126,707 | |||
2018 | 4,790 | |||
$ | 1,151,297 |
2014 | 2013 | |||||||
Raw materials | $ | 1,378,060 | $ | 1,399,444 | ||||
Work in process | 216,589 | 154,893 | ||||||
1,594,649 | 1,554,337 | |||||||
Reserve for obsolescence | (120,000 | ) | (120,000 | ) | ||||
Inventory, net | $ | 1,474,649 | $ | 1,434,337 |
D-56 |
Twelve Months ended June 30, | Minimum Payments | |||
2015 | $ | 124,000 | ||
2016 | 1,942,000 | |||
2017 | 2,770,000 | |||
$ | 4,836,000 |
D-57 |
Three months ended June 30, 2014 | Three months ended June 30, 2013 | |||||||
Hospitality services revenue | $ | - | $ | 101,992 | ||||
Direct costs (exclusive of operating expenses and depreciation shown separately below: | - | 92,630 | ||||||
Selling, general and administrative | 46,657 | 20,435 | ||||||
Depreciation | - | 27,671 | ||||||
46,657 | 140,736 | |||||||
Net loss on discontinued operations | $ | (46,657 | ) | $ | (38,744 | ) |
Six months ended June 30, 2014 | Six months ended June 30, 2013 | |||||||
Hospitality services revenue | $ | - | $ | 214,731 | ||||
Direct costs (exclusive of operating expenses and depreciation shown separately below: | - | 239,341 | ||||||
Selling, general and administrative | 46,657 | 27,733 | ||||||
Depreciation | - | 55,343 | ||||||
46,657 | 322,417 | |||||||
Net loss on discontinued operations | $ | (46,657 | ) | $ | (107,686 | ) |
D-58 |
Warrants | Shares Underlying Warrants | Weighted Average Exercise Price | Weighted Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Outstanding at January 1, 2014 | 1,542,800 | $ | 2.84 | |||||||||||||
Granted and Issued | - | - | ||||||||||||||
Expired/Cancelled | (177,500 | ) | 2.00 | |||||||||||||
Outstanding and exercisable at June 30, 2014 | 1,365,300 | $ | 2.94 | 0.61 | $ | - |
D-59 |
2013 | ||||
Expected term | 7 years | |||
Expected volatility | 213 | % | ||
Risk free interest rate | 1.28 | % | ||
Dividend yield | 0 | % |
Number of Shares | Weighted Average Exercise Price | Remaining Contractual Life (in years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at January 1, 2014 | 880,253 | $ | 1.60 | |||||||||||||
Granted | - | - | ||||||||||||||
Forfeited | - | - | ||||||||||||||
Outstanding at June 30, 2014 | 880,253 | $ | 1.60 | 0.64 | $ | - | ||||||||||
Exercisable at June 30, 2014 | 613,062 | $ | 1.75 | 0.43 | $ | - |
D-60 |
Non-vested Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at January 1, 2014 | 385,044 | $ | 1.34 | $ | 1.31 | |||||||
Vested | (117,853 | ) | 1.84 | 1.73 | ||||||||
Non-vested at June 30, 2014 | 267,191 | $ | 1.17 | $ | 1.05 |
Hospitality | Residential | Corporate | Totals | |||||||||||||
Three months ended June 30, 2014 | ||||||||||||||||
Revenue | $ | 1,710,368 | $ | 186,044 | $ | - | $ | 1,896,412 | ||||||||
Operating loss | $ | 43,962 | $ | (84,171 | ) | $ | (168,967 | ) | $ | (209,176 | ) | |||||
Net loss from continuing operations | $ | 78,964 | $ | (84,171 | ) | $ | (254,474 | ) | $ | (259,681 | ) | |||||
Loss from discontinued operations | $ | (46,657 | ) | $ | - | $ | - | $ | (46,657 | ) | ||||||
Net loss | $ | 32,307 | $ | (84,171 | ) | $ | (254,474 | ) | $ | (306,338 | ) | |||||
Three months ended June 30, 2013 | ||||||||||||||||
Revenue | $ | 2,125,971 | $ | 217,839 | $ | - | $ | 2,343,810 | ||||||||
Operating loss | $ | (330,470 | ) | $ | 17,391 | $ | (271,437 | ) | $ | (584,516 | ) | |||||
Net loss from continuing operations | $ | (426,300 | ) | $ | 17,391 | $ | (271,437 | ) | $ | (680,346 | ) | |||||
Loss from discontinued operations | $ | (38,744 | ) | $ | - | $ | - | $ | (38,744 | ) | ||||||
Net loss | $ | (465,044 | ) | $ | 17,391 | $ | (271,437 | ) | $ | (719,090 | ) | |||||
Six months ended June 30, 2014 | ||||||||||||||||
Revenue | $ | 3,152,251 | $ | 374,318 | $ | - | $ | 3,526,569 | ||||||||
Operating loss | $ | (37,726 | ) | $ | (191,463 | ) | $ | (408,636 | ) | $ | (637,825 | ) | ||||
Net loss from continuing operations | $ | (27,858 | ) | $ | (191,463 | ) | $ | (579,738 | ) | $ | (799,059 | ) | ||||
Loss from discontinued operations | $ | (46,657 | ) | $ | - | $ | - | $ | (46,657 | ) | ||||||
Net loss | $ | (74,515 | ) | $ | (191,463 | ) | $ | (579,738 | ) | $ | (845,716 | ) | ||||
Six months ended June 30, 2013 | ||||||||||||||||
Revenue | $ | 3,920,818 | $ | 435,317 | $ | - | $ | 4,356,135 | ||||||||
Operating loss | $ | (1,081,974 | ) | $ | (83,052 | ) | $ | (648,140 | ) | $ | (1,813,166 | ) | ||||
Net loss from continuing operations | $ | (1,278,771 | ) | $ | (83,052 | ) | $ | (648,140 | ) | $ | (2,009,963 | ) | ||||
Loss from discontinued operations | $ | (107,686 | ) | $ | - | $ | - | $ | (107,686 | ) | ||||||
Net loss | $ | (1,386,457 | ) | $ | (83,052 | ) | $ | (648,140 | ) | $ | (2,117,649 | ) | ||||
As of June 30, 2014 | ||||||||||||||||
Total assets | $ | 5,469,553 | $ | 160,644 | $ | 97,721 | $ | 5,727,918 |
D-61 |
United States | Foreign | Totals | ||||||||||
Three months ended June 30, 2014 | ||||||||||||
Hospitality: | ||||||||||||
Product and installation | $ | 396,187 | $ | - | $ | 396,187 | ||||||
Services | $ | 1,301,483 | $ | 12,698 | $ | 1,314,181 | ||||||
Residential: | ||||||||||||
Services | $ | 186,044 | - | $ | 186,044 | |||||||
Totals | $ | 1,883,714 | $ | 12,698 | $ | 1,896,412 | ||||||
Three months ended June 30, 2013 | ||||||||||||
Hospitality: | ||||||||||||
Product and installation | $ | 795,170 | $ | 137,095 | $ | 932,265 | ||||||
Services | $ | 1,165,889 | $ | 27,817 | $ | 1,193,706 | ||||||
Residential: | ||||||||||||
Services | $ | 217,839 | - | $ | 217,839 | |||||||
Totals | $ | 2,178,898 | $ | 164,912 | $ | 2,343,810 | ||||||
Six months ended June 30, 2014 | ||||||||||||
Hospitality: | ||||||||||||
Product and installation | $ | 517,418 | $ | - | $ | 517,418 | ||||||
Services | $ | 2,608,383 | $ | 26,450 | $ | 2,634,833 | ||||||
Residential: | ||||||||||||
Services | $ | 374,318 | - | $ | 374,318 | |||||||
Totals | $ | 3,500,119 | $ | 26,450 | $ | 3,526,569 | ||||||
Six months ended June 30, 2013 | ||||||||||||
Hospitality: | ||||||||||||
Product and installation | $ | 1,337,728 | $ | 137,095 | $ | 1,474,822 | ||||||
Services | $ | 2,374,989 | $ | 71,006 | $ | 2,445,996 | ||||||
Residential: | ||||||||||||
Services | $ | 435,317 | - | $ | 435,317 | |||||||
Totals | $ | 4,148,034 | $ | 208,101 | $ | 4,356,135 | ||||||
As of June 30, 2014 | ||||||||||||
Total assets | $ | 5,717,689 | $ | 10,229 | $ | 5,727,918 |
D-62 |
D-63 |