================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to _______________.
Commission File Number 333-45678
SEQUIAM CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0875030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 SUNPORT LANE, ORLANDO, FLORIDA 32809
(Address, including zip code, of principal executive offices)
407-541-0773
(Registrant's telephone number, including area code)
(Former name, former address)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for the such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
The number of shares of the Registrant's Common Stock outstanding as of April
23, 2003 was 36,267,747.
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
================================================================================
FORM 10-QSB
INDEX
Page
PART I: FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . 3
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 4
Sequiam Corporation and Subsidiaries . . . . . . . . . . . . . . . . 4
Condensed Consolidated Balance Sheets. . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Operations. . . . . . . . . . . 5
Condensed Consolidated Statements of Stockholders' Deficit . . . . . 6
Condensed Consolidated Statements of Cash Flows. . . . . . . . . . . 7
Condensed Consolidated Statements of Cash Flows. . . . . . . . . . . 8
Notes to Condensed Consolidated Financial Statements . . . . . . . . 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . 16
ITEM 3. CONTROLS AND PROCEDURES. . . . . . . . . . . . . . . . . . . 19
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) . . . . . . . . . . . . 22
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2
PART I: FINANCIAL INFORMATION
------------------------------
This Quarterly Report on Form 10-QSB includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended. These include, among
others, the statements about our plans and strategies. When used in this
document and the documents incorporated herein by reference, the words
"believes," "expects," "anticipates," "intends," "plans," "estimates," or
similar expressions are intended to identify, in certain circumstances,
forward-looking statements. Forward-looking statements are not guarantees of
future performance and are subject to certain risks, uncertainties, and other
factors, some of which are beyond our control, are difficult to predict and
could cause actual results to differ materially from those expressed in
forward-looking statements. Although it is not possible to itemize all of the
factors and specific events that could affect the outlook of a technology
company like ours operating in a competitive environment, factors that could
significantly impact expected results include: the acceptance of our technology;
the effect of national and local economic conditions; our outstanding
indebtedness; the loss of key employees; competition from technologies developed
by other companies; the ability to attract and retain employees; delays in
completing the development of our new products caused by a lack of capital or
external causes beyond our reasonable control; and the ability to identify and
consummate relationships with strategic partners. Although we believe that our
plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we cannot assure that such plans,
intentions or expectations will be achieved. Actual results may differ
materially from the forward-looking statements made in this Quarterly Report on
Form 10-QSB. We do not intend to update any forward-looking statements, and we
hereby disclaim any obligation to update such forward-looking statements.
3
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
SEQUIAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2003
(Unaudited) December 31, 2002
---------------- -------------------
ASSETS
Current assets:
Cash $ - $ 85,922
Accounts receivable, net 32,068 41,141
Prepaid expenses 110,000 -
Equipment held for sale 40,706 177,080
---------------- -------------------
Total current assets 182,774 304,143
---------------- -------------------
Property and equipment, net 1,307,461 1,375,398
Software development costs, net 136,145 131,939
Acquired software 273,600 288,000
Deposits and other assets 7,800 7,800
---------------- -------------------
Total assets $ 1,907,780 $ 2,107,280
================ ===================
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Bank overdraft $ 22,770 $ -
Amount due for acquisition 92,866 288,457
Accounts payable 541,129 646,331
Accrued expenses 118,447 64,783
Loan from shareholders 795,450 795,450
Accrued shareholder salaries 944,792 854,792
---------------- -------------------
Total current liabilities 2,515,454 2,649,813
---------------- -------------------
Long-term debt 824,447 680,540
---------------- -------------------
Total liabilities 3,339,901 3,330,353
---------------- -------------------
Shareholders' deficit:
Common shares 36,267 35,463
Additional Paid-in capital 1,595,875 935,677
Accumulated deficit (3,064,263) (2,194,213)
---------------- -------------------
Total shareholders' deficit (1,432,121) (1,223,073)
---------------- -------------------
Total liabilities and shareholders' deficit $ 1,907,780 $ 2,107,280
================ ===================
<FN>
See accompanying notes to condensed consolidated financial statements.
4
SEQUIAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
Net sales $ 123,194 $ -
Costs and expenses:
Software and web development costs 141,863 -
Selling, general and administrative 631,685 80,926
Depreciation and amortization 82,840 4,851
------------ ------------
856,388 85,777
------------ ------------
Loss from operations (733,194) (85,777)
Loss on impairment of equipment held for sale (75,000) -
Loss on sale of equipment (43,870) -
Interest expense (17,986) (837)
------------ ------------
Net loss $ (870,050) $ (86,614)
============ ============
Net loss per common share: Basic and diluted $ (0.02) $ (0.00)
============ ============
Weighted average common shares outstanding: Basic and diluted 35,640,120 20,000,000
============ ============
<FN>
See accompanying notes to condensed consolidated financial statements.
5
SEQUIAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Three months Ended March 31, 2003
(Unaudited)
Common Shares
-------------------- Additional
Shares Par Paid-in Accumulated
Outstanding Value Capital Deficit Total
--------------------------------------------------------------
Balance at December 31, 2002 35,462,609 $35,463 $ 935,677 $ (2,194,213) $(1,223,073)
Sale of common shares 276,667 276 189,726 190,002
Beneficial conversion feature on convertible
debenture 150,000 150,000
Common shares issued for services 210,000 210 170,790 171,000
Common shares issued for acquisition of WMW Communications 318,471 318 149,682 150,000
Net Loss (870,050) (870,050)
--------------------------------------------------------------
Balance at December 31, 2002 36,267,747 $36,267 $ 1,595,875 $ (3,064,263) $(1,432,121)
==============================================================
<FN>
See accompanying notes to condensed consolidated financial statements.
6
SEQUIAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months Ended
March 31,
2003 2002
----------- -----------
Cash flows from operating activities:
Net loss $ (870,050) $ (86,614)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 82,840 4,851
Accretion of debt discount 6,250 -
Increase in accrued expenses in exchange for services 90,000 -
Issuance of common stock in exchange for services 171,000 -
Increase in note payable for deferred rent 141,943 -
Loss on sale of equipment 43,871 -
Loss on impairment of equipment held for sale 75,000 -
Decrease in accounts receivable 9,074 2,000
Increase in prepaid expenses and other assets (110,000) -
Increase in bank overdraft 22,770 -
Decrease in accounts payable (105,202) -
Increase in accrued shareholders salaries 90,000 69,000
Decrease in other accrued expenses (36,336) -
----------- -----------
Net cash used for operating activities (388,840) $ (10,763)
----------- -----------
Cash flows from investing activities:
Proceeds from sales of equipment 17,000 -
Cash paid for WMW Communications (45,591) -
Software development costs capitalized (4,206) (4,097)
----------- -----------
Net cash used for investing activities (32,797) (4,097)
----------- -----------
Cash flows from financing activities:
Proceeds from Debenture 150,000 -
Sale of common stock 190,002 -
Repayment of note payable (4,287) (2,205)
Proceeds from loan from related party - 17,065
----------- -----------
Net cash provided by financing activities 335,715 14,860
----------- -----------
Net change in cash (85,922) -
Cash, beginning of period 85,922 -
----------- -----------
Cash, end of period $ - $ -
=========== ===========
<FN>
See accompanying notes to condensed consolidated financial statements.
7
SEQUIAM CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Non-cash activities:
- -------------------
Common Stock issued for acquisition of WMW Communications $150,000 -
Beneficial conversion feature on convertible debenture $150,000 -
<FN>
See accompanying notes to condensed consolidated financial statements.
8
SEQUIAM CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Description of Business
Sequiam Corporation ("Sequiam" or the "Company") through its wholly owned
subsidiaries, Sequiam Software, Inc. and Sequiam Communications, Inc., develops,
markets, and supports a portfolio of Internet and print enterprise-wide software
products that enable users to acquire, manage, personalize, and present
information. In addition, the Company provides application service provider
("ASP") hosting of Internet-enabled solutions, Internet service provider ("ISP")
including Internet access and hosting, consulting, application integration, and
custom web development and software development services. ASP and ISP hosting is
performed using the Company's software and facilities to provide processing,
print, mail, archival, and Internet delivery of documents for customers who
outsource this activity. On May 9, 2003, the Company acquired substantially all
of the assets of Smart Biometrics, Inc. (see Note 9).
Effective April 1, 2002, Sequiam Corporation (f/k/a Wedge Net Experts, Inc.),
through its wholly owned subsidiary, Sequiam Acquisitions, Inc., merged with
Sequiam, Inc. and Sequiam Acquisitions, Inc. survived the merger. Sequiam
Acquisitions, Inc. changed its name to Sequiam Software, Inc. on May 1, 2002.
Pursuant to the merger agreement, Sequiam Corporation issued 20,000,000 shares
of common stock in exchange for all of the outstanding shares of common stock of
the Company, consisting of 20,000,000 shares. Additionally, pursuant to the
merger agreement, 500,000 shares of Sequiam Corporation's common stock were
returned to treasury and cancelled. As a result, the former shareholders of the
Company obtained 82.53% of the voting rights of Sequiam Corporation. The
transaction was accounted for as a recapitalization of Sequiam Corporation and
the results of operations and cash flows presented herein prior to the merger
are those of Sequiam, Inc. Sequiam, Inc. was incorporated in Delaware on January
23, 2001 (date of inception) to research, develop, produce and market a document
management software product.
Since inception, the Company's primary activities have consisted of research and
development, and software development activities. Accordingly, the Company had
not generated any significant revenues. During 2002, the Company acquired the
Brekel Group, Inc. and WMW Communications, Inc. doing business as Access
Orlando, and began offering web development, Internet and web hosting and custom
software development, while continuing its software development activities.
During the three months ended March 31, 2003, the Company paid $45,591 in cash
and $150,000 in common shares related to the acquisition of Access Orlando and
the remaining amount due for this acquisition was $92,866 as of March 31,2003.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
-----------------------
The Company, under the rules and regulations of the Securities and Exchange
Commission, has prepared the unaudited condensed consolidated financial
9
statements. The accompanying condensed consolidated financial statements
contain all normal recurring adjustments, which are, in the opinion of
management, necessary for the fair presentation of such financial
statements. Certain information and disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted under such rules and
regulations although the Company believes that the disclosures are adequate
to make the information presented not misleading. The year-end balance
sheet data was derived from the audited financial statements, but does not
include all disclosures required by accounting principles generally
accepted in the United States of America. These unaudited condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes for Sequiam Corporation included in Form
10-KSB filed for the year ended December 31, 2002. Interim results of
operations for the periods presented may not necessarily be indicative of
the results to be expected for the full year.
Net Loss per Common Share
-------------------------
Basic and diluted net loss per share is computed by dividing the net loss
by the weighted average number of shares of common stock outstanding during
the period. Common stock warrants are included in the calculation of
diluted earnings per common share using the treasury stock method, when the
result is dilutive. Common shares underlying the convertible debenture are
included in the calculation of diluted earnings per common share using the
if-converted method when the result is dilutive. Potential common shares
underlying outstanding warrants were 2,400,000 as of March 31, 2003.
Potential common shares underlying the convertible debenture are contingent
upon certain factors as described in Note 7.
Principles of Consolidation
-----------------------------
The consolidated financial statements include the accounts of Sequiam
Corporation and its subsidiaries Sequiam Software, Inc. and Sequiam
Communications, Inc (the "Company"). All intercompany transactions and
accounts have been eliminated.
Note 3 - Going Concern and Managements' Plan
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. Sequiam
has accumulated significant operating losses, a working capital deficit and
produced minimal revenues since inception. During the first quarter of 2003
and April 2003, the Company obtained financing from La Jolla Cove Investors,
Inc. (the "Investor") as well as additional financing from the sale of its
common stock and a loan agreement (see Notes 7,8 and 9). In addition, the
Company has begun to generate revenues on a consistent basis.
With the proceeds expected to be received from the Investor, the Company will
fund continuing product development and the marketing of the products developed
by the Company. The company will also actively seek new acquisitions of proven
products and technologies. Management plans to continue to seek additional
10
financing in the form of a private placement of common and preferred stock, debt
or some combination thereof to supplement its financing arrangement with the
Investor.
With the proceeds from the financings described above along with the expected
increase in revenues from the sale of the Company's existing products and
services, the Company believes there will be sufficient working capital during
the next 12 months to support operations during that period. The Company's
ability to continue as a going concern remains dependent upon its ability to
meet the requirements of its financing agreement with the Investor and execute
its business plan.
Note 4 - Commitments and Contingencies
On October 1, 2002, the Companies Chief Executive Officer and Chief Financial
Officer entered into amended and restated employment agreements with Sequiam
Corporations and its Subsidiaries. The amended agreements replace separate
agreements with Sequiam, Inc. and Brekel Group, Inc. The agreements have an
initial term of two years with automatic one-year renewals. The agreements
provide for compensation in the form of minimum annual salary of $185,000 and
$175,000 respectively, and allow for bonuses in cash, stock or stock options and
participation in Company benefit plans. Full time employment is a requirement
of the contract. In the event that a change in control of the Company occurs
without the prior approval of the then existing Board of Directors, then these
contracts will be deemed terminated and compensation of $5 million is payable at
termination and $1 million annually for five years subsequent to termination
will be due and payable to each employee.
Included in accounts payable and accrued expenses at March 31, 2003 are
un-reimbursed business expenses of $21,054 and $8,185 owed to Nicholas
VandenBrekel and Mark Mroczkowski, respectively.
The Company is involved in various claims and legal actions incidental to the
normal conduct of its business. On or about October 3, 2002, General Electric
Capital Corporation ("GE") filed a lawsuit against Brekel Group, Inc.
("Brekel"), in the Circuit Court of the 9th Judicial Circuit in and for Orange
County, located in Orlando, Florida. GE claims that Brekel owes a deficiency
balance in the amount of $93,833 for three digital copiers rented under a lease
agreement. Brekel has returned possession of the copiers to GE, but Brekel
disputes the claim for damages. The court has entered no decisions to date.
The Company does not believe that the ultimate resolution of these actions will
have a material adverse effect on the Company based upon the value of the
equipment returned to GE.
Brekel entered into a note payable with Xerox Corporation in November 2000 to
finance equipment. Brekel also entered into a Document Services Agreement
("Agreement") with Xerox Corporation on November 1, 1999 commencing April 1,
2000. During the 63-month term of the Agreement ending June 30, 2005, Xerox
agreed to provide equipment and services in accordance with specified
performance standards. Those standards include, among other things, a
performance satisfaction guaranty by Xerox. Under the terms of that guaranty,
Brekel may terminate the agreement without incurring any early termination
charges. Brekel did in March 2001 give proper notice of such termination. On
11
September 3, 2002 Xerox did, contrary to the contract, assert its claim for
early termination charges and for monthly minimum service charges on billings
made after the termination date. The Company disputes these claims and believes
them to be without merit.
A competing web-development company has posted an alternative web site for the
World Olympian Association ("WOA"), claiming such right was granted to it by the
WOA. We are seeking to resolve this conflict with the WOA without resort to
litigation. This dispute will not affect our publication of the print magazine
"World Olympian," but it has the potential to result in the loss of revenue from
the WOA web site. We do not believe the loss of such revenue will have a
material, adverse effect on our overall business.
Note 5 - Income taxes
The Company records income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes." The Company has incurred net operating losses since
inception resulting in a deferred tax asset, for which a valuation allowance was
provided since it is more likely than not that the deferred tax asset will not
be realized.
Note 6 - Long-lived Assets Held for Disposal
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an investment may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair value
less costs to sell.
In connection with the acquisition of Brekel in July 2002, the Company
reclassified production equipment acquired from Brekel that is no longer being
used for operations to equipment held for disposal. During the three months
ended March 31, 2003, the Company recorded an impairment loss of $75,000 to
reduce the equipment to fair market value. The Company believes that $40,706 as
of March 31, 2003 is a reasonable estimate of the current fair market value for
the remaining equipment to be disposed. The Company expects to sell this
remaining equipment by June 30, 2003.
Note 7 - Convertible Debenture
Sequiam entered into a Securities Purchase Agreement with La Jolla Cove
Investors, Inc. (the "Investor"), dated March 5, 2003, pursuant to which it
delivered to Investor an 8% Convertible Debenture in the amount of $300,000,
convertible into our common stock, and a Warrant to Purchase Common Stock. Upon
closing on March 7, 2003, Sequiam received $150,000 less attorneys fees of
$2,500, of the total $300,000 principal amount of the 8% Convertible Debenture.
12
When the Securities and Exchange Commission declares this registration statement
filed on April 25, 2003 effective, the Company will receive the balance of
$150,000.
On April 16, 2003, the terms of the debenture and warrant agreement were
amended, as set forth in a letter agreement with the Investor. Under the terms
of the amended debenture, provided the "Market Rate" (as defined and determined
in accordance with the debenture) is greater than $0.625, the number of common
shares into which the debenture may be converted is equal to the dollar amount
of the debenture being converted multiplied by eleven, minus the product of the
"Conversion Price" multiplied by six and two-thirds times the dollar amount of
the debenture being converted, and the entire foregoing result shall be divided
by the Conversion Price. The "Conversion Price" is defined as the lesser of
$1.50 per share or 80% of "Market Value" (as defined and determined in
accordance with the debenture)(the "Discount Multiplier"), but if the Market
Rate is equal to or below $0.625 on the day La Jolla Cove Investors, Inc. elects
to convert a portion of the 8% Convertible Debenture, then the Company will have
the right to prepay that portion of the Debenture in which La Jolla Cove
Investors had elected to convert, at a rate of 150% of such amount, provided La
Jolla Cove Investors, Inc. may, in lieu of accepting such prepayment, elect to
withdraw its notice of conversion. If the Market Rate is less than $0.625 and
the Company does not prepay the debenture, then the debenture may only be
converted into the number of shares equal to the dollar amount of the debenture
being converted divided by the Conversion Price. The Investor may convert a
maximum of 10% of the principal into our common stock during any month.
Under the terms of the amended warrant, the Investor received a warrant to
purchase 2,000,000 shares of our common stock, at an exercise price of $1.50 per
share. The warrant will expire in March 2006. As of the date of filing this
report, the Investor had not exercised any portion of the warrant or converted
any portion of the debenture, and no shares of common stock have been issued
relative to these agreements.
Sequiam is obligated to register the sale of the underlying common stock to be
issued upon conversion of the debenture and the exercise of the warrant. Upon
the effective date of the registration statement, we will receive the balance of
the principal amount of the debenture. Beginning the first full month following
the effectiveness of such registration statement, we have the right to cause the
Investor to convert at least 5% of the debenture each month and provided that
the market price of the Company's common shares is above $0.625, to exercise a
portion of the warrant equal to the product of the dollar amount of the
debenture being converted multiplied by ten, divided by 1.5 (which will result
in the exercise of at least 5% of the related warrant, per month). In the
event the Investor breaches the provision to convert at least 5% of the original
principal amount of the debenture and exercise the related warrant, the Investor
shall not be entitled to collect interest on the debenture for that month. At
the time the debenture has been fully converted and the warrant has been fully
exercised, the Company will issue additional warrants to the Investor in an
amount equal to 6,600,000 minus the number of shares issued to the Investor
pursuant to the conversion of the debenture and exercise of the warrants. The
additional warrants will have an exercise price of $1.50 per share and will
expire three years from the date of issuance.
13
The 8% Convertible Debenture contains a beneficial conversion feature since the
calculated conversion amount is lower than the Company's stock price at the date
of the agreement. In accordance with EITF 00-27, since the fair value of the
beneficial conversion feature exceeded the amount of the proceeds received from
the debenture, the Company recorded the beneficial conversion feature as a debt
discount of $150,000, which is equal to the proceeds received. The debt discount
is being amortized over the life of the debenture of 24 months. As of March 31,
2003, the balance of the debenture, net of the unamortized debt discount of
$143,750 was $6,250 and is included in long-term debt.
The number of shares to be issued to the selling security holder upon conversion
of the 8% Convertible Debenture depends upon the trading price of our common
stock, but cannot, exceed 4,600,000 shares of common stock. Upon conversion of
all of the 8% Convertible Debenture and exercise of all of the related Warrant
to Purchase Common Stock, we will have issued a maximum of 6,600,000 shares of
common stock to the selling security holder. If the selling security holder
receives less than 6,600,000 shares of common stock after conversion of the
entire amount of the 8% Convertible Debenture and exercise of the entire amount
of the Warrant to Purchase Common Stock, then we have agreed, pursuant to the
letter agreement dated April 16, 2003, to issue to the selling security holder
the difference between 6,600,000 shares and the number of shares received upon
conversion of the debenture and exercise of the warrant, at a purchase price of
$1.50 per share (regardless of market rate). This right will expire three years
after the conversion of the 8% Convertible Debenture. In some circumstances, we
may repay some or all the 8% Convertible Debenture, in which event less than
6,600,000 shares will be issued to the selling security holder.
Beginning thirty (30) days after this registration statement is declared
effective by the Securities and Exchange Commission, the selling security holder
has agreed to convert at least 5% but no more than 10% of the 8% Convertible
Debenture and exercise at least 5% but no more than 10% of the related Warrant
to Purchase Common Stock, per month. However, the selling stockholder has
contractually agreed to restrict its ability to convert or exercise its
warrants and receive shares of our common stock such that the number of shares
of common stock held by it and its affiliates after such conversion or
exercise does not exceed 4.99% of the then issued and outstanding shares of
common stock.
Sequiam has agreed not to pay any accrued salaries or shareholder loans that are
presently outstanding until after the 8% Convertible Debenture is paid in full
or converted, except to the extent that any such accrued salaries or shareholder
loans are used to perform obligations under a Put and Call Agreement between
Nick VandenBrekel, Mark Mroczkowski and the Investor, or unless the Company can
pay the accrued salaries out of the proceeds of any additional financing we
might obtain.
Note 8 - Capital Stock
During the three months ended March 31, 2003, the Company issued 210,000 common
shares for business advisory services and technology transfer services valued at
$171,000 based on the Company's quoted market price on the date of the related
14
agreements. In addition, the Company agreed to issue 90,000 shares for investor
and public relations services valued at $90,000 which was included in accrued
expenses. The 90,000 shares were issued in April 2003.
On January 2, 2003, Sequiam Corporation sold an aggregate of 10,000 shares of
its common stock to two accredited investors at a price of $1.00 per share for
proceeds of $10,000.
On February 6, 2003, Sequiam Corporation sold an aggregate of 266,667 shares of
its common stock to one accredited investor at a price of $0.75 per share for
proceeds of $200,002, less a commission of $20,000 for net proceeds of $180,002.
Sequiam Corporation also granted warrants to this accredited investor to
purchase 400,000 shares of its common stock at $1.50 exercisable through
February 6, 2007.
Note 9 - Subsequent Events
On April 22, 2003 Sequiam Corporation sold an aggregate of 200,000 shares of its
common stock to one accredited investor at a price of $0.50 per share for
proceeds of $100,000 less a commission of $10,000 for net proceeds of $90,000.
Sequiam Corporation also granted warrants to this accredited investor to
purchase 500,000 shares of its common stock at $1.00 per share, exercisable
through April 22, 2007. In connection with such sales, Sequiam Corporation
relied on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. This investor represented in writing that the shares
were being acquired for investment and, in addition, the certificates
representing the shares bear a restrictive securities legend.
On May 9, 2003, Sequiam Biometrics, Inc., a wholly owned subsidiary of Sequiam
Corporation formed on April 21, 2003, acquired substantially all of the assets
of Smart Biometrics, Inc. of Sanford, Florida. In consideration for the assets,
Sequiam Corporation issued a total of 1,500,000 shares of its common stock to
Smart Biometrics, Inc. Smart Biometrics, Inc. is engaged in the development of
biometric technologies. The assets acquired by Sequiam Biometrics, Inc. include
the BioVault(TM), which is a secure safe that utilizes patent pending technology
and protocols to recognize a person's fingerprint to unlock.
On May 13, 2003, Sequiam Corporation entered into a loan agreement ("Note") with
Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John
Svenningsen, for a principal loan amount of $400,000 under a promissory note
bearing interest at five percent (5%) interest. On April 22, 2003, Sequiam
Corporation received $75,000, and on May 13, 2003, Sequiam Corporation received
another $75,000 as advances under the Note. The remaining loan proceeds will be
disbursed $100,000 on June 12, 2003 and $50,000 on July 12, 2003. In connection
with this note, Sequiam Corporation issued two warrants to the holder to
purchase 625,000 shares of its common stock at an exercise price of $0.01 per
share and 350,000 shares of its common stock at $1.00 per share. These warrants
expire in May 2008.
The outstanding principal balance, together with any and all accrued unpaid
interest and any other amounts due and owing under this Note, shall be due and
payable on the date that is the earlier of (a) the date that the exercise price
is paid to Sequiam Corporation for any portion of the warrants by La Jolla Cove
Investors, Inc. (see Note 7), or (b) the date the La Jolla Warrant
15
expires in March 2006. The principal payments to the holder will be made in a
percentage of the obligation that is equal to the percentage of the total
warrants exercised by La Jolla, such that the Note is fully repaid as the
Warrants are exercised by La Jolla. Unless otherwise specifically provided for
in the Note, all Note payments shall be applied first to interest and then to
principal.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- --------------
Recent Developments
- --------------------
On May 12, 2003, Sequiam Biometrics, Inc., a wholly owned subsidiary of Sequiam
Corporation formed on April 21, 2003, acquired substantially all of the assets
of Smart Biometrics, Inc. of Sanford, Florida. In consideration for the assets,
Sequiam Corporation issued a total of 1,500,000 shares of its common stock to
Smart Biometrics, Inc.
Smart Biometrics, Inc. is engaged in the development of biometric technologies.
The assets acquired by Sequiam Biometrics, Inc. include the BioVault(TM), which
is a secure safe that utilizes patent pending technology and protocols to
recognize a person's fingerprint to unlock.
In addition, we closed several private equity transactions that are more fully
described below in Part II, Item 2.
Quarter Ended March 31, 2003 compared to Quarter Ended March 31, 2002.
- --------------------------------------------------------------------------------
REVENUES
We derived our revenues from four sources: (i) the sale and licensing of our
software products; (ii) consulting, custom software services and web development
services; (iii) maintenance agreements in connection with the sale and licensing
of software products; and (iv) Internet access and web hosting services. During
2003, we intend to also derive revenue from our print publication. Software
license revenue will be recognized when all of the following criteria have been
met: (a) there is an executed license agreement, and software has been delivered
to the customer, (b) the license fee is fixed and payable within twelve months,
(c) collection is deemed probable, and (d) product returns are deemed reasonably
estimable. Revenues related to multiple element arrangements will be allocated
to each element of the arrangement based on the fair values of elements such as
license fees, maintenance and professional services. Fair value will be
determined based on vendor specific objective evidence. Maintenance revenues are
recognized ratably over the term of the maintenance contract, typically 12 to 36
months. Consulting, custom software and web development and other service
revenues are recognized when services are performed. Internet access and
web-hosting services are recognized over the period the services are provided,
typically month-to-month. Total revenue increased to $123,194 for the quarter
ended March 31, 2003 from $-0- for the quarter ended March 31, 2001.
Software and license fee revenues were unchanged at $-0- for both 2002 and 2003.
During first quarter 2002 and 2003, Sequiam Document Management System was still
16
under development, and we did not acquire Access Orlando and its IRP and
IRPlicator software products until November 2002. We expect to begin generating
revenues from the sale of our DMS and IRP software products in the second
quarter of 2003.
Other sales for 2003 included consulting, custom software services and web
development services totaling $71,158; and Internet access and web-hosting
services totaling $52,036. All of the foregoing were 100% increases over 2002
first quarter revenues of $-0-.
OPERATING EXPENSES
Operating expenses increased by $770,611, from $85,777 for the quarter ended
March 31, 2002 to $856,388 for the quarter ended March 31, 2003. This increase
is explained below.
Selling, general and administrative expenses increased $550,759 (681%) from
$80,926 in first quarter 2002 to $631,685 in first quarter 2003. We increased
our selling and overhead expenditures such as salaries, wages and benefits for
administrative and marketing personnel, office rent, computer maintenance and
supplies, professional services such as investor relations, legal and accounting
fees, and corporate travel expenses as a result of expanding our operations, our
merger with Sequiam Corporation and our acquisitions of Brekel Group and Access
Orlando. We also increased expenditures for marketing including advertising,
production of marketing materials, and participation in trade show activities as
we completed the development of our software products and introduced web
development, web hosting and Internet access services.
Software and web development costs increased from $-0- in first quarter 2002 to
$141,863 in first quarter 2003, due to the establishment and expansion of the
development staff beginning in the second quarter 2002. This expansion of staff
was needed to expand our products and services and to keep pace with new
industry developments and the continued need to improve features and
functionality of the Sequiam software products.
Depreciation expense increased by $77,989, from $4,851 in first quarter 2002 to
$82,840 in first quarter 2003, as a result of depreciation on assets acquired
from Brekel in July 2002.
LOSS ON IMPAIRMENT OF EQUIPMENT HELD FOR SALE AND SALES OF EQUIPMENT
A loss on impairment of equipment held for sale of $75,000 was recognized in the
first quarter of 2003 based upon the estimated net realizable value of the
equipment acquired from Brekel. A loss of $43,870 was recognized in the first
quarter of 2003 on the actual sale of certain equipment acquired from Brekel.
INTEREST EXPENSE
Interest expense increased by $17,148, from $837 in first quarter 2002 to
$17,986 in first quarter 2003, as a result of an increase in loans from
shareholders and a note payable related to leasehold improvements acquired from
Brekel Group in July 2002 and accretion of the discount on the convertible
debenture of $6,250.
17
NET LOSSES
Sequiam Corporation incurred net losses of $870,050 and $86,614 for the quarters
ended March 31, 2003 and 2002, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased to $-0- as of March 31, 2003 from $85,922 as
of March 31, 2002. Net cash used in operating activities was $388,840 for the
quarter ended March 31, 2003, as a result of the net loss during the period of
$870,050 and decreases in accounts payable and accrued expenses totaling
$141,538, which was partially offset by increases in accrued shareholder
salaries of $90,000 and non-cash expenses and losses totaling $610,904.
Net cash used for investing activities was $32,797 for the quarter ended March
31, 2003, primarily due to proceeds from the sale of equipment of $17,000 offset
by cash paid for the acquisition of Access Orlando of $45,591 and software
development costs of $4,206 for the Sequiam DMS product.
Net cash provided by financing activities was $335,715 for the quarter ended
March 31, 2003. Proceeds from the La Jolla Cove Debenture accounted for $150,000
and sales of common stock accounted for $210,002 and was offset by commissions
of $20,000. During the quarter ended March 31, 2003, we repaid $4,287 of an
existing note payable for tenant improvements described below.
On July 1, 2001, the Brekel Group, Inc., prior to its acquisition by Sequiam,
entered into a lease agreement to rent approximately 60,000 square feet of
combined office and manufacturing space through June 30, 2011. Effective July
1, 2002, Sequiam entered into a lease forbearance agreement for 10,000 square
feet of the same space for the remaining term of the lease. Pursuant to the
lease agreement, we make monthly base rent payments including common area
maintenance charges of $9,633, with annual increases of approximately 3% per
year beginning in July 2004. As part of the lease forbearance agreement, we
executed a note payable to the landlord to reimburse them for lost rents on the
50,000 square feet relinquished to them through June 30, 2004; less rents and
principal payments received from us; less 75% of any rents received from
replacement tenants; plus any leasing commissions or tenant build out costs
required for replacement tenants. The note also includes amounts previously
owed by Brekel to the landlord for tenant improvements. The outstanding balance
on the note of $818,197 as of March 31, 2003 represents $424,504 of deferred
rent and $393,693 of tenant improvements. Payments on the note commence July 1,
2004 through June 1, 2010 with interest at 6%.
Rental expense for the quarter ended March 31, 2003 was $172,577(of which
$141,943 was deferred rent) and $11,927 for the three months ended March 31,
2002. The minimum future rentals required under the lease and the maturities of
the long-term note payable are as follows:
18
Debt
Year Rentals Maturities
- ---------- -------- -----------
2003 $ 86,700 $ 0
2004 117,334 61,313
2005 120,854 119,754
2006 124,480 127,140
2007 128,214 134,982
Thereafter 339,169 375,008
-------- -----------
$916,751 $ 818,197
======== ===========
Since the end of our last fiscal year ending December 31, 2002, we sold
securities in four separate private placements, as more fully described in Part
II, Item 2, below. As a result, we have received to date total net proceeds of
$600,002. We received $190,002 (approximately one-third) of these proceeds
during the quarter ending March 31, 2003, and most of this amount is reflected
as additional paid-in capital in our financial statements for the period ending
March 31, 2003.
We will need additional capital to continue operations during the next twelve
months. Our management is undertaking several initiatives to address our
liquidity, including the following: (1) continued efforts to increase our
revenues from software licenses and other revenue sources; (2) proceeds expected
to be received from the convertible debentures and exercise of warrants as
described above; (3) proceeds expected to be received from the promissory note
and exercise of warrants as described above; (4) continued efforts to obtain
additional debt and/or equity financing. Our management believes that these
activities will generate sufficient cash flows to sustain our operations during
the next twelve months.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
We utilize certain accounting policies and procedures to manage changes that
occur in our business environment that may affect accounting estimates made in
preparation of our financial statements. These estimates relate primarily to
our allowance for doubtful accounts receivable. Our strategy for managing
doubtful accounts includes stringent, centralized credit policies and collection
procedures for all customer accounts. We utilize a credit risk rating system in
order to measure the quality of individual credit transactions. We strive to
identify potential problem receivables early, take appropriate collection
actions, and maintain adequate reserve levels. Management has determined that
the allowance for doubtful accounts is adequate at March 31, 2003.
ITEM 3. CONTROLS AND PROCEDURES
- -----------------------------------
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the periodic reports filed
by the Company with the Securities and Exchange Commission (the "SEC") is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC and that such information is accumulated and
communicated to the Company's management. Based on their most recent evaluation,
which was completed within 90 days of the filing of this Quarterly Report on
Form 10-QSB, the Company's Chief Executive Officer and Chief Financial Officer
19
believe that the Company's disclosure controls and procedures (as defined in
Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended) are
effective. There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these internal controls
subsequent to the date of the most recent evaluation.
PART II. OTHER INFORMATION
- -----------------------------
ITEM 2. CHANGES IN SECURITIES
(c) Recent Sales of Unregistered Securities
Common Stock. On January 2, 2003, we sold an aggregate of 10,000 shares of our
- -------------
common stock to two accredited investors at a price of $1.00 per share for
proceeds of $10,000. In connection with such sales, we relied upon an exemption
from registration provided by Section 4(2) of the Securities Act of 1933 and
Rule 504.
On February 6, 2003, we sold an aggregate of 266,667 shares of our common stock
to one accredited investor at a price of $0.75 per share for proceeds of
$200,002. We also granted warrants to this accredited investor to acquire
400,000 shares of our common stock at $1.50 per share, exercisable through
February 6, 2007. In connection with such sales, we relied on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933 and Rule
506. This accredited investor represented in writing that the shares were being
acquired for investment and, in addition, the certificates representing the
shares bear a restrictive securities legend.
Common Stock and Warrants. On April 22, 2003, we sold an aggregate of 200,000
- ---------------------------
shares of our common stock to one accredited investor at a price of $0.50 per
share for proceeds of $100,000, less a commission of $10,000, for net proceeds
of $90,000. We also granted warrants to this accredited investor to purchase
500,000 shares of our common stock at $1.00 per share, exercisable through April
22, 2007. In connection with such sales, we relied on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933 and Rule
506. This investor represented in writing that the shares were being acquired
for investment and, in addition, the certificates representing the shares bear a
restrictive securities legend.
Convertible Debenture and Warrants. We entered into a Securities Purchase
- -------------------------------------
Agreement with La Jolla Cove Investors, Inc. (the "Investor"), dated March 5,
2003, pursuant to which we delivered to the Investor an 8% Convertible Debenture
in the amount of $300,000, convertible into our common stock, and a Warrant to
Purchase Common Stock that permits the Investor to purchase up to 2,000,000
shares of common stock at a purchase price of $1.50 per share. In connection
with such sales, we relied upon an exemption from registration provided by
Section 4(2) of the Securities Act of 1933 and Rule 506.
20
We are obligated to register the Investor's sale of the underlying common stock
to be issued upon conversion of the 8% Convertible Debenture and the exercise of
the Warrant to Purchase Common Stock. Upon closing on March 5, 2003, we
received $150,000 of the total $300,000 principal amount of the 8% Convertible
Debenture. When the Securities and Exchange Commission declares our amended
registration statement filed on May 7, 2003 effective, we will receive the
balance of $150,000.
The number of shares to be issued to the selling Investor upon conversion of the
8% Convertible Debenture depends upon the trading price of our common stock, but
cannot exceed 4,600,000 shares of our common stock. Upon conversion of all of
the 8% Convertible Debenture and exercise of all of the related Warrant to
Purchase Common Stock, we will have issued a maximum of 6,600,000 shares of our
common stock to the Investor. If the Investor receives less than 6,600,000
shares of our common stock after conversion of the entire amount of the 8%
Convertible Debenture and exercise of the entire amount of the Warrant to
Purchase Common Stock, then we have agreed, pursuant to the letter agreement
dated April 16, 2003, to issue to the Investor the difference between 6,600,000
shares and the number of shares received upon conversion of the debenture and
exercise of the warrant, at a purchase price of $1.50 per share (regardless of
market rate). This right will expire three years after the conversion of the 8%
Convertible Debenture. In some circumstances, we may repay some or all the 8%
Convertible Debenture, in which event less than 6,600,000 shares will be issued
to the Investor.
Beginning thirty (30) days after our amended registration statement filed on May
7, 2003 is declared effective by the Securities and Exchange Commission, the
Investor has agreed to convert at least 5% but no more than 10% of the 8%
Convertible Debenture and exercise at least 5% but no more than 10% of the
related Warrant to Purchase Common Stock, per month. However, the Investor has
contractually agreed to restrict its ability to convert or exercise its warrants
and receive shares of our common stock such that the number of shares of common
stock held by it and its affiliates after such conversion or exercise does not
exceed 4.99% of the then issued and outstanding shares of common stock.
The conversion price of the 8% Convertible Debenture and the exercise price of
the Warrant to Purchase Common Stock may be adjusted in certain circumstances,
such as if we pay a stock dividend, subdivide or combine outstanding shares of
common stock into a greater or lesser number of shares, or take such other
actions as would otherwise result in dilution of the selling security holder's
position prior to conversion.
As of the date of filing this report, the Investor had not converted any portion
of the 8% Convertible Debenture or exercised any portion of the Warrant to
Purchase Common Stock, and no shares of our common stock have been issued to the
Investor.
We have agreed not to pay any accrued salaries or shareholder loans that are
presently outstanding until after the 8% Convertible Debenture is paid in full
or converted, except to the extent that any such accrued salaries or shareholder
loans are used to perform obligations under a Put and Call Agreement between
Nick VandenBrekel, Mark Mroczkowski and the Investor, or unless we can pay the
accrued salaries out of the proceeds of any additional financing we might
obtain.
21
Debenture and Warrants. On May 13, 2003, we entered into a loan agreement with
- -----------------------
Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John
Svenningsen for $400,000, pursuant to the terms of a certain Promissory Note
bearing interest at five percent (5%) interest. On April 22, 2003 we received
$75,000 and on May 13, 2003 we received another $75,000 as advances under the
Note. The remaining loan proceeds will be disbursed $100,000 on June 12, 2003
and $50,000 on July 12, 2003. In connection with this note, we issued two
warrants to the holder to purchase 625,000 shares of our common stock at an
exercise price of $0.01 per share and 350,000 shares of our common stock at
$1.00 per share. These warrants expire in May 2008. In connection with such
sales, we relied upon an exemption from registration provided by Section 4(2) of
the Securities Act of 1933 and Rule 506.
The outstanding principal balance, together with any and all accrued unpaid
interest and any other amounts due and owing under this loan agreement, shall be
due and payable on the date that is the earlier of (a) the date that the
exercise price is paid to us for any portion of the warrants issued to La Jolla
Cove Investors, Inc. (see "Convertible Debenture and Warrants" above), or (b)
the date such warrant expires in March 2006. The principal payments to the
holder will be made in a percentage of the obligation that is equal to the
percentage of the total warrants exercised by La Jolla, such that the loan
agreement is fully repaid as such warrants are exercised by La Jolla. Unless
otherwise specifically provided for in the loan agreement, all payments shall be
applied first to interest and then to principal.
We may at any time prepay principal and interest to the holder without penalty.
We may not use the loan proceeds to pay accrued officers' salaries or
shareholder loans.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective as of January 8, 2003, our stockholders approved an amendment to our
Articles of Incorporation to increase the authorized number of common shares
from 50 million to 100 million and the authorized number of preferred shares
from 10 million to 50 million. Action was taken by written consent of the
stockholders without a meeting in accordance with our Bylaws. Stockholders
holding collectively 23,282,000 shares of common stock took such action by
written consent without a meeting, which represented more than 50% of the total
number of possible votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)
- ---------------------------------------------
(a) Exhibits:
4.1 Securities Purchase Agreement dated March 5, 2003, between Sequiam
Corporation and La Jolla Cove Investors, Inc. is hereby incorporated
by this reference to Exhibit 4.1 to our Form 8-K filed with the
Securities and Exchange Commission on March 13, 2003.
4.2 8% Convertible Debenture, dated March 5, 2003, issued to La Jolla Cove
Investors, Inc. is hereby incorporated by this reference to Exhibit
4.2 to our Form 8-K filed with the Securities and Exchange Commission
on March 13, 2003.
22
4.3 Warrant to Purchase Common Stock, dated March 5, 2003, issued to La
Jolla Cove is hereby incorporated by this reference to Exhibit 4.3 to
our Form 8-K filed with the Securities and Exchange Commission on
March 13, 2003.Investors, Inc.
4.4 Side Letter Agreement, dated March 5, 2003, between Sequiam
Corporation and La Jolla Cove Investors, Inc. is hereby incorporated
by this reference to Exhibit 4.4 to our Form 8-K filed with the
Securities and Exchange Commission on March 13, 2003.
4.5 Registration Rights Agreement dated March 5, 2003, between Sequiam
Corporation and La Jolla Cove Investors, Inc. is hereby incorporated
by this reference to Exhibit 4.5 to our Form 8-K filed with the
Securities and Exchange Commission on March 13, 2003.
4.6 Letter Agreement, dated April 16, 2003, by and between La Jolla
Cove Investors, Inc. and Sequiam Corporation is hereby incorporated by
this reference to Exhibit 4.1 to our Form 8-K filed with the
Securities and Exchange Commission on April 17, 2003.
21.1 Subsidiaries
99.1 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350.
99.2 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 15d-14.
(b) Reports on Form 8-K: The following reports on Form 8-K were filed during
the quarter ending March 31,2003:
Form 8-K filed on January 8, 2003, regarding increase in authorized
common and preferred shares.
Form 8-K/A filed on February 20, 2003, regarding amended financial
statements for the acquisition of the Brekel Group, Inc.
Form 8-K/A filed on February 20, 2003, regarding amended financial
statements for the acquisition of the Brekel Group, Inc.
Form 8-K filed on March 13, 2003, regarding a private equity financing
with La Jolla Cove Investors, Inc.
10.1 Put and Call Agreement by and between La Jolla Cove Investors, Inc.,
Nicholas VandenBrekel and Mark Mroczkowski, dated April 16, 2003, is
hereby incorporated by reference to Exhibit 10.1 our Form 10-KSB/A,
Amendment No. 1, filed with the Securities and Exchange Commission on
April 21, 2003.
(b) Reports on Form 8-K
23
- Form 8-K filed with the Securities and Exchange Commission on February
10, 2003, to report an increase in the number of authorized shares of
common and preferred stock.
- Form 8-K/A, Amendment No. 2, filed with the Securities and Exchange
Commission on February 20, 2003, including amended Financial
Statements of Sequiam Software, Inc.
- Form 8-K filed with the Securities and Exchange Commission on March
13, 2003, to report under Item 5 the equity transaction with La Jolla
Cove Investors, Inc.
- Form 8-K filed with the Securities and Exchange Commission on April
17, 2003, to report under Item 5 an amendment to the equity
transaction with La Jolla Cove Investors, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
SEQUIAM CORPORATION
Date: May 15, 2003
By: /s/ Nicholas H. VandenBrekel
- --------------------------------------------------
Nicholas H. VandenBrekel, Chief Executive Officer
By: /s/ Mark Mroczkowski
- --------------------------------------------
Mark L. Mroczkowski, Chief Financial Officer
24