UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
Commission File No. 0-50038
ARADYME CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
33-0619254
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(IRS Employer Identification No.)
677 East 700 South, Suite 201
American Fork, Utah 84003
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(Address of principal executive offices)
(801) 756-9585
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(Issuer's telephone number)
n/a
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(Former name, former address and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. The number of shares of
$0.001 par value common stock outstanding as of August 19, 2003, was
14,927,118.
Transitional Small Business Disclosure Format (Check one):
Yes [X] No [ ]
PART I--OTHER INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, September 30,
2003 2002
------------------ -----------------
(Unaudited)
CURRENT ASSETS
Cash $ - $ 47,032
Accounts receivable 12,792 6,324
Employee advances 54 100
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Total Current Assets 12,846 53,456
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PROPERTY AND EQUIPMENT, NET 146,062 164,654
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OTHER ASSETS
Investment in available-for-sale securities, net 16,200 40,000
Deposits and prepaid expenses 13,958 3,958
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Total Other Assets 30,158 43,958
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TOTAL ASSETS $ 189,066 $ 262,068
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' DEFICIT
June 30, September 30,
2003 2002
------------------ -----------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 139,489 $ 50,729
Bank overdraft 5,372 -
Related party payables 383,840 283,856
Accrued expenses 67,072 28,409
Deferred revenue - 5,400
Equipment leases payable - 1,227
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Total Current Liabilities 595,773 369,621
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock: 1,000,000 shares authorized of $0.001
par value, 12,000 and 12,000 shares issued and
outstanding, respectively 12 12
Common stock: 50,000,000 shares authorized of $0.001
par value, 14,927,118 and 12,605,678 shares issued and
outstanding 14,927 12,605
Additional paid-in capital 1,622,515 989,810
Accumulated other comprehensive loss (40,800) (17,000)
Deficit accumulated during the development stage (2,003,361) (1,092,980)
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Total Stockholders' Deficit (406,707) (107,553)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 189,066 $ 262,068
================== =================
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations and Other Comprehensive Loss
(Unaudited)
From
Inception
February 13,
For the Three Months Ended For the Nine Months Ended 2001 Through
June 30, June 30, June 30,
2003 2002 2003 2002 2003
---------- ---------- ---------- ---------- ------------
REVENUES $ 5,000 $ 2,196 $ 46,250 $ 20,946 $ 78,398
---------- ---------- ---------- ---------- ------------
OPERATING EXPENSES
Depreciation and
amortization 8,504 7,671 24,849 23,695 60,637
Rent 12,270 14,245 40,124 34,880 98,392
Contract services 314,324 196,183 768,419 520,447 1,405,608
General and administrative 32,703 15,785 106,359 52,587 474,487
---------- ---------- ---------- ---------- ------------
Total Operating Expenses 367,801 233,884 939,751 631,609 2,039,124
---------- ---------- ---------- ---------- ------------
LOSS FROM OPERATIONS (362,801) (231,688) (893,501) (610,663) (1,960,726)
---------- ---------- ---------- ---------- ------------
OTHER INCOME (EXPENSE)
Gain on disposal of assets 12,335 - 12,335 - 12,335
Interest income 51 - 51 - 51
Other loss - - (1,993) - (1,993)
Interest expense (9,993) (1,191) (27,273) (2,142) (58,028)
---------- ---------- ---------- ---------- ------------
Total Other Income
(Expense) 2,393 (1,191) (16,880) (2,142) (47,635)
---------- ---------- ---------- ---------- ------------
NET LOSS (360,408) (232,879) (910,381) (612,805) (2,008,361)
---------- ---------- ---------- ---------- ------------
OTHER COMPREHENSIVE LOSS
Unrealized loss on
available-for-sale securities (1,500) (21,000) (23,800) (21,000) (40,800)
---------- ---------- ---------- ---------- ------------
TOTAL COMPREHENSIVE
LOSS $ (361,908) $ (253,879) $ (934,181) $ (633,805) $ (2,049,161)
========== ========== ========== ========== ============
BASIC AND DILUTED LOSS
PER SHARE $ (0.02) $ (0.02) $ (0.06) $ (0.05)
========== ========== ========== ==========
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 14,810,239 11,905,076 14,585,715 11,412,254
========== ========== ========== ==========
The accompanying notes are an integral part of these unaudited consolidated financial statements
4
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception on
February 13,
For the Nine Months Ended 2001 Through
June 30, June 30,
2003 2002 2003
---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (910,381) $ (612,805) $ (2,003,361)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 24,849 23,695 60,637
Bad debt - - 7,676
Other loss 1,993 - 1,993
Gain on disposal of assets (12,335) - (12,335)
Warrants and options issued below market value 211,012 - 211,012
Common stock issued for services 32,001 - 38,226
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (6,468) 1,350 (20,468)
(Increase) decrease in employee advances 46 (100) (54)
(Increase) in deposits and prepaids (10,000) (3,958) (13,958)
Increase in accounts payable 88,760 12,682 139,489
Increase (decrease) in accrued expenses 37,436 (462) 65,845
Increase (decrease) in deferred revenue (5,400) 10,800 -
---------------- ---------------- ----------------
Net Cash Used by Operating Activities (548,487) (568,798) (1,525,298)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (8,250) (4,823) (23,034)
---------------- ---------------- ----------------
Net Cash Used by Investing Activities (8,250) (4,823) (23,034)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in bank overdraft 5,372 - 5,372
Proceeds from related party payable 120,060 78,024 333,798
Payments on related party payable (20,076) (14,650) (107,973)
Preferred stock issued for cash - 50,000 60,000
Common stock issued for cash 404,349 476,000 1,293,899
Payments on leases payable - (20,647) (26,416)
Stock offering costs - (3,183) (10,348)
---------------- ---------------- ----------------
Net Cash Provided by Financing Activities 509,705 565,544 1,548,332
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN CASH (47,032) (8,077) -
CASH AT BEGINNING OF PERIOD 47,032 70,327 -
---------------- ---------------- ----------------
CASH AT END OF PERIOD $ - $ 62,250 $ -
---------------- ---------------- ----------------
The accompanying notes are an integral part of these unaudited consolidated financial statements
5
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
February 13,
For the Nine Months Ended 2001 Through
June 30, June 30,
2003 2002 2003
---------------- ---------------- ----------------
CASH PAID FOR:
Interest $ 124 $ - $ 30,879
Income taxes $ - $ - $ -
NON-CASH TRANSACTIONS:
Common stock issued for investment $ - $ 57,000 $ 57,000
Common stock issued for services $ 32,001 $ - $ 38,226
Warrants and options granted below market value $ 211,012 $ - $ 211,012
The accompanying notes are an integral part of these unaudited consolidated financial statements
6
ARADYME CORPORATION AND SUBSIDIARIES
(Formerly Albion Aviation, Inc.)
(A Development Stage Company)
Consolidated Notes to the Financial Statements
June 30, 2003 and September 30, 2002
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Aradyme Corporation and Subsidiaries (the "Company") have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted in accordance with such rules and regulations. The
information furnished in the interim condensed consolidated financial statements
include normal recurring adjustments and reflects all adjustments that, in the
opinion of management, are necessary for a fair presentation of such
consolidated financial statements. Although management believes the disclosures
and information presented are adequate to make the information not misleading,
it is suggested that these interim condensed consolidated financial statements
be read in conjunction with the Company's most recent audited consolidated
financial statements and notes included in its Form 8-K/A filed May 30, 2003.
Operating results for the three and nine months ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2003.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern that contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable.
In order to continue as a going concern, develop a reliable source of revenues,
and achieve a profitable level of operations, the Company will need, among other
things, additional capital resources. Management is in the process of
negotiating additional contracts to increase revenues and plans to raise
approximately $5,000,000 through private placement of its preferred and/or
common stock to sustain operations until revenues are sufficient to cover costs.
However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying consolidated financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
7
NOTE 3 - MATERIAL EVENTS
During April 2003, the Company changed its fiscal year to September 30.
During April 2003, the Company authorized its directors and officers to execute
and deliver all documents related to the discontinuing of the operations of its
wholly-owned subsidiary, Svetlana Aviation, and complete the sale of Svetlana
Aviation to a former stockholder.
During the period ended June 30, 2003, the Company sold 286,500 shares of its
restricted common stock for cash of $171,900, or $0.60 per share.
NOTE 4 - DISCONTINUED OPERATIONS
During March 2003, the Company discontinued the operations of its wholly-owned
subsidiary, Svetlana Aviation, and subsequently authorized the sale of the line
of business on April 22, 2003, to a former stockholder. Assets and liabilities
applicable to the discontinued operations at March 31, 2003, were $54,535 and
$66,870, respectively. No operations are classified as discontinued as the
deficit of Albion Aviation, Inc. was eliminated at March 31, 2003, as part of
the reverse acquisition. During the third quarter ended June 30, 2003, the
Company completed the sale of the line of business. Accordingly, a gain on sale
of assets of $12,335 was recognized.
NOTE 5 - SUBSEQUENT EVENTS
Subsequent to June 30, 2003, the Company executed two letters of intent to form
strategic partnerships with two outside companies. No formal agreements for
services to be performed have been executed.
Subsequent to June 30, 2003, the Company sold 50,000 shares of its investment in
available-for-sale securities for $21,728.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
General
The Company develops, manufactures, markets and distributes computer
database management software based on proprietary technology that is being
acquired. Because of the relatively short period, results for any given interim
period may not be indicative of comparative results for longer periods or for
the year as a whole.
Reverse Merger Method of Accounting
On March 31, 2003, the Company completed the acquisition of Aradyme
Development Corporation, a Nevada corporation, which had 1,527,000 shares of
common stock issued and outstanding, by issuing an aggregate of 13,155,574
shares of common stock and 12,000 shares of preferred stock (convertible into
120,000 shares of common stock) to the Nevada corporation stockholders. Options
to purchase approximately 1.3 million shares of the Nevada corporation common
stock at $0.50 per share are being converted into options to purchase the same
number of shares of the Company's common stock on the same terms. This
transaction was accounted for as a reverse acquisition. The Company changed its
name to Aradyme Corporation in conjunction with the reverse acquisition. The
Company is the surviving entity for legal purposes and the Nevada corporation is
the surviving entity for accounting purposes.
Accordingly, the financial statements include the following:
o The balance sheets consist of the net assets of the Nevada
corporation at historical cost and the net assets of the
Company at historical cost as of March 31, 2003 and 2002.
o The statements of operations include the operations of the
Nevada corporation for the periods presented.
Pursuant to the merger, all capital stock shares and amounts and per share data
were retroactively restated.
Discontinued Activities
During March 2003, as a result of the reorganization discussed above,
the Company discontinued the operations of its wholly-owned subsidiary, Svetlana
Aviation, Inc., whose plan of operation was to operate an air charter service,
and subsequently authorized the sale of the line of business on April 22, 2003,
to a former stockholder. Assets and liabilities applicable to the discontinued
operations at March 31, 2003, were $54,535 and $66,870, respectively. No
operations are classified as discontinued as the deficit of Svetlana Aviation,
Inc. was eliminated at March 31, 2003, as part of the reverse acquisition.
Subsequent to June 30, 2003, the Company conveyed all of its interest
in Svetlana Aviation, Inc. to Jehu Hand, a principal stockholder and former
officer and director of the Company, in consideration of Mr. Hand's assumption
of all of the liabilities of Svetlana Aviation, Inc. The effective date of the
transfer for accounting purposes was April 1, 2003.
Liquidity and Capital Resources
As of June 30, 2003, the Company had negative working capital of
$582,927, as compared to negative working capital of $316,165 as of September
30, 2002. As of June 30, 2003, the Company had a deficit accumulated during the
9
development stage of $2,003,361 and total stockholders' deficit of $406,707, as
compared to a stockholders' deficit of $107,553 as of September 30, 2002. The
auditors' report for the year ended September 30, 2002, contained an explanatory
paragraph regarding the ability of the Company to continue as a going concern.
Since inception, the Company has relied principally on proceeds from
the sale of securities and advances from related parties to fund its activities.
During the nine months ended June 30, 2003, the Company used $548,487 in cash
for operating activities and $8,250 for investing activities, which were
provided by net cash of $509,705 received from financing activities and a
$47,032 reduction in cash during the period. Financing activities provided net
cash of $404,349 from the sale of common stock and $99,984 from net increases in
a related party payable. From inception through June 30, 2003, the Company
required an aggregate of $1,525,298 in cash to fund its operating activities and
$23,034 to fund its investing activities, all of which was provided by the
$1,548,332 received from financing activities, including $1,353,899 in net
proceeds from the sale of common and preferred stock and $225,825 in net
advances from a related party.
The Company estimates that it will require approximately $400,000 in
cash to fund its activities through September 30, 2003, which it will seek to
obtain principally through the sale of securities. The Company has no commitment
from any person to acquire all or any of such securities or to provide funding
through any other mechanism. The Company expects that additional capital will be
required in 2004 if it is unable to generate sufficient revenues from
commercialization of its database management systems.
Results of Operations
The Company's revenues from the commercialization of its database
management system were relatively minor during both the three and nine months
ended June 30, 2003. The Company had revenues of $5,000 in the quarter ended
June 30, 2003, as compared to revenues of $2,196 for the quarter ended June 30,
2002. Revenues of $46,250 for the nine months ended June 30, 2003, more than
doubled the revenues for the same period a year earlier, but still were
immaterial in amount compared to our ongoing substantial operating expenses.
The Company's principal operating expense is for employee and
consultant contract services with those providing principal technical and other
services. The Company obtains required technical and other services under
independent contractor relationships accounted for as consulting services, but
intends to convert some of these independent contractors to employees, which
could increase the Company's costs for payroll burdens and employee benefits.
Contract services increased 60.2% for the three months ended June 30, 2003, as
compared to the same quarter a year earlier, as the Company increased its
efforts to bring its initial products to market, as well as costs associated
with its corporate acquisition completed March 31, 2003. In addition, the
Company implemented cost-cutting measures by closing the St. George office and
terminating the services of one-third of the Company personnel and consultants
in the face of extreme shortages of capital and continuing delays in generating
revenue. Contract services increased 47.6% during the nine months ended June 30,
2003, as compared to the same period in the preceding fiscal year, reflecting
the increased level of development activity for the Company's initial products
and accounting and legal services of $72,589 for the nine months ended June 30,
2003, as compared to $9,118 over the same period in the preceding fiscal year,
reflecting costs associated with the corporate acquisition completed March 31,
2003. General and administrative costs increased 107.2% and 102.3% during the
three and nine months ended June 30, 2003, respectively, as compared to the
previous fiscal year, reflecting increased products development activity as well
as costs associated with our corporate acquisition completed March 31, 2003.
10
As noted above, the Company obtains most of its technical services
under independent contractor agreements with consultants and records the related
costs as contract services separate from general and administrative expenses. If
contract services and general and administrative services were reported
together, the combined amount of $347,027 for the quarter ended June 30, 2003,
would be an increase of $135,059, or 63.7%, over the $211,968 for the same
quarter in the preceding fiscal year, and the combined amount of $874,778 for
the nine months ended June 30, 2003, would be an increase of $301,744, or 52.7%,
over the same period in the preceding fiscal year.
During the quarter ended March 31, 2003, the Company received $129,100
for 215,167 shares of common stock that were issued in the quarter ended June
30, 2003. As a result, general and administrative expenses for the six months
ended March 31, 2003, are understated by $129,100 and for the three months ended
June 30, 2003, are overstated by $129,100. General and administrative expenses
for the nine months ended June 30, 2003, are accurately stated. The Company
intends to file an amendment to the quarterly report on Form 10-QSB for the
quarter ended March 31, 2003, to reflect the foregoing.
Other operating expenses did not vary materially in the three- and
nine-month interim periods in the current fiscal year as compared to a year
earlier.
Because of this early stage of the Company's business development,
revenue and operating expense comparisons between various interim periods may
not be indicative of expected future results of operations. Generally, the
Company expects that operating expenses will continue to grow during the ongoing
initial marketing efforts as anticipated increased sales will require additional
expenditures for sales and marketing and implementation services. It may be some
time before the Company's sales and marketing and implementation resources are
capable of supporting substantially expanded sales without corresponding
increases in operating expenses. The Company also expects that its general and
administrative costs will increase as a result of new legal, accounting and
other costs associated with meeting its new regulatory and investor relations
obligations as a result of the reorganization as discussed above.
Other income and expenses during both the three- and nine-month interim
periods ended June 30, 2003, consist principally of interest accrued on
borrowings from a related party, partially offset by $12,335 in gain on the
disposition of assets in the quarter ended June 30, 2003.
Other Items
The Company has reviewed all other recently issued, but not yet
adopted, accounting standards in order to determine their effects, if any, on
the results of operations or financial position of the Company. Based on that
review, the Company believes that none of these pronouncements will have a
significant effect on current or future financial position or results of
operations.
Critical Accounting Policies
Software Development Costs
Development costs related to software products are expensed as incurred
until technological feasibility of the product has been established. Based on
the Company's product development process, technological feasibility is
established upon completion of a working model. Costs incurred by the Company
between completion of the working model and the point at which the product is
ready for general release have not been significant. Accordingly, no costs have
been capitalized to date.
Revenue Recognition
The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2, "Software Revenue Recognition," as amended by SOP 98-9, and
generally recognizes revenue when all of the following criteria are met as set
11
forth in paragraph 8 of SOP 97-2: (i) persuasive evidence of an arrangement
exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable and
(iv) collectibility is probable. The Company defines each of these four criteria
as follows:
Persuasive evidence of an arrangement exists. It is the Company's
customary practice to have a written contract, which is signed by both the
customer and the Company, or a purchase order from those customers who have
previously negotiated a standard license arrangement with the Company.
Delivery has occurred. The Company's software is physically delivered
to the customer. If an arrangement includes undelivered products or services
that are essential to the functionality of the delivered product, delivery is
not considered to have occurred until these products or services are delivered.
The fee is fixed or determinable. The Company's policy is not to
provide customers the right to a refund of any portion of their license fees
paid. Generally, 100% of the invoiced fees are due within 30 days. Payment terms
extending beyond these customary payment terms are considered not to be fixed or
determinable, and revenues from such arrangements are recognized as payments
become due and payable.
Collectibility is probable. Collectibility is assessed on a
customer-by-customer basis. If it is determined from the outset of an
arrangement that collectibility is not probable, revenues would be recognized as
cash is collected.
For contracts with multiple elements (e.g., license and maintenance),
revenue is allocated to each component of the contract based on vendor specific
objective evidence ("VSOE") of its fair value, which is the price charged when
the elements are sold separately. Since VSOE has not been established for
license transactions, the residual method is used to allocate revenue to the
license portion of multiple-element transactions. Therefore, the Company
recognizes the difference between the total arrangement fee and the amount
deferred for the undelivered items as revenue.
The Company sells its products to end users under license agreements.
The fee associated with such agreements is allocated between software license
revenue and maintenance revenue based on the residual method. Software license
revenue from these agreements is recognized upon receipt and acceptance of a
signed contract and delivery of the software, provided the related fee is fixed
and determinable, collectibility of the revenue is probable and the arrangement
does not involve significant customization of the software. If an acceptance
period is required, revenue is recognized upon the earlier of customer
acceptance or the expiration of the acceptance period, as defined in the
applicable software license agreement.
The Company recognizes maintenance revenue ratably over the life of the
related maintenance contract. Maintenance contracts on perpetual licenses
generally renew annually. The Company typically invoices and collects
maintenance fees on an annual basis at the anniversary date of the license.
Deferred revenue represents amounts received by the Company in advance of
performance of the maintenance obligation. Professional services revenue
includes fees derived from the delivery of training, installation, and
consulting services. Revenue from training, installation, and consulting
services is recognized on a time and materials basis as the related services are
performed.
12
Forward-Looking Statements
This report contains statements about the future, sometimes referred to
as "forward-looking" statements. Forward-looking statements are typically
identified by the use of the words "believe," "may," "should," "expect,"
"anticipate," "estimate," "project," "propose," "plan," "intend" and similar
words and expressions. We intend that the forward-looking statements will be
covered by the safe harbor provisions for forward-looking statements contained
in Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Statements that describe our future strategic plans, goals
or objectives are also forward-looking statements.
Although we have attempted to identify important factors that could
cause actual results to differ materially, there may be other factors that cause
the forward-looking statements not to come true as described in this information
statement/memorandum. These forward-looking statements are only predictions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially.
While we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.
The forward-looking information is based on present circumstances and
on our predictions respecting events that have not occurred, that may not occur
or that may occur with different consequences from those now assumed or
anticipated.
ITEM 3. CONTROLS AND PROCEDURES
Within 90 days prior to the filing date of this report, the Company's
principal executive officer ("CEO") and principal financial officer ("CFO")
carried out an evaluation of the effectiveness of the Company's disclosure
controls and procedures. Based on those evaluations, the Company's CEO and CFO
believe:
(i) that the Company's disclosure controls and procedures are designed
to ensure that information required to be disclosed by the Company in
the reports it files under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms and that such information is
accumulated and communicated to the Company's management, including the
CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure; and
(ii) that the Company's disclosure controls and procedures are
effective.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the Company's
internal controls subsequent to the evaluation referred to above, nor have there
been any corrective actions with regard to significant deficiencies or material
weaknesses.
13
PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On April 29, 2003, we issued 215,167 shares of our restricted common
stock that had been subscribed to and paid for during February and March 2003
for cash of $129,100, or $0.60 per share, to six existing stockholders or their
affiliates, three of whom were accredited investors. During February and March
2003, the market price for our common stock ranged from approximately $1.35 to
$1.70 per share. On April 29, 2003, the market price for our common stock was
approximately $1.50 per share.
Between April 4 and May 23, 2003, we sold 71,333 shares of our
restricted common stock for cash of $42,800, or $0.60 per share, to four
existing stockholders or their affiliates, two of whom were accredited
investors. Between April 4 and May 23 2003, the market price for our common
stock ranged from approximately $1.05 to $1.50 per share.
All of the foregoing transactions were the result of arm's-length
negotiations. Each investor was provided with our business and financial
information, including copies of our periodic reports as filed with the
Securities and Exchange Commission, and the opportunity to ask questions
directly of our executive officers. Each purchaser acknowledged in writing that
the securities purchased were restricted securities taken for investment and
that the certificates representing the shares would bear a restrictive legend.
The certificates for the shares issued in the transactions bear a restrictive
legend conspicuously on their face, and stop-transfer instructions are noted
respecting the certificates on our stock transfer records. No underwriter
participated in the foregoing placement of securities. The foregoing
transactions were effected in reliance on the exemption from registration
provided in Section 4(2) of the Securities Act of 1933 as transactions not
involving any public offering and Rule 506 of Regulation D thereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as a part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
--------- --------- ------------------------------------------ -----------
Item 31 Rule 13a-14(a)/15d14(a) Certifications
--------- --------- ------------------------------------------ -----------
31.01 31 Certification of Chief Executive Officer Attached
Pursuant to Rule 13a-14
31.02 31 Certification of Chief Financial Officer Attached
Pursuant to Rule 13a-14
Item 32 Section 1350 Certifications
--------- --------- ------------------------------------------ -----------
32.01 32 Certification Pursuant to 18 U.S.C. Attached
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002 (Chief Executive Officer)
32.02 32 Certification Pursuant to 18 U.S.C. Attached
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002 (Chief Financial Officer)
(b) Reports on form 8-K
During the quarter ended June 30, 2003, the Company filed the following
reports on Form 8-K:
Date of Event Reported Item(s) Reported
---------------------- -------------------------------------------
May 16, 2003 Item 4. Changes in Registrant's Certifying
Accountant
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ARADYME CORPORATION
(Registrant)
Date: August 19, 2003 By /s/ James R. Spencer
---------------------------------
James R. Spencer, Chairman
(Chief Executive Officer)
Date: August 19, 2003 By /s/ Merwin D. Rasmussen
---------------------------------
Merwin D. Rasmussen, Secretary
(Chief Financial Officer)
15