U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange
Act of 1934 For the quarterly period ended MARCH 31, 2004
|_| Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______ TO _______
Commission File No. 814-00631
CELERITY SYSTEMS, INC.
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(Exact name of registrant as specified in Its charter)
DELAWARE 52-2050585
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
122 PERIMETER PARK DRIVE, KNOXVILLE, TENNESSEE 37922
- ---------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(865) 539-5300
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: NONE
----
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR VALUE $0.001 PER SHARE
----------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months, and (2) has been subject to such filing requirements for the past 90
days.
Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated filed
(as defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
There were 4,806,051,556 shares of common Stock outstanding as of April
23, 2004.
1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(unaudited)
March 31, 2004 December 31,2003
-------------- ----------------
Assets
Cash $ 42,891 $ 56,156
Other current assets 5,244 6,764
------------ ------------
Total current assets 48,135 62,920
------------ ------------
Fixed assets, net 39,418 38,317
Investment in Yorkville Advisors Management, LLC, at cost which
approximates fair value 5,240,000 5,240,000
Investment in and advances to Celerity Systems-NV, at fair value -- --
Debt offering costs, net 128,779 165,903
------------ ------------
Total assets $ 5,456,332 $ 5,507,140
============ ============
Liabilities and Stockholders' Equity
Accounts payable $ 492,374 $ 463,552
Judgments and defaults payable (including $213,400 to a related party) 538,372 570,781
Accrued interest (including $133,516 and $126,416 to a related party) 273,000 270,746
Notes payable - related party 10,000 115,000
Other current liabilities 19,631 16,867
------------ ------------
Total current liabilities 1,333,377 1,436,946
Convertible debentures - related party, net 574,724 570,727
Convertible debentures, net 1,419,087 1,518,758
------------ ------------
1,993,811 2,089,485
------------ ------------
Total liabilities 3,327,188 3,526,431
------------ ------------
Commitments and contingencies -- --
Stockholders' Equity
Common stock, $.001 par value, 5,000,000,000 shares authorized,
4,806,051,556 issued and outstanding at March 31, 2004 and
4,553,473,409 issued and outstanding at December 31, 2003 4,806,051 4,553,473
Additional paid-in capital 40,655,261 40,544,690
Net unrealized depreciation on investments (945,504) (842,121)
Accumulated deficit (42,386,664) (42,275,333)
------------ ------------
Total stockholders' equity 2,129,144 1,980,709
------------ ------------
Total liabilities and stockholders' equity $ 5,456,332 $ 5,507,140
============ ============
The accompanying notes are an integral part of these
condensed consolidated financial statements
2
CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations (unaudited)
Prior to
becoming a
As a Business Business
Development Development
Company Company
--------------- ---------------
Three Months Three Months
Ended March Ended March
31, 2004 31, 2003
--------------- ---------------
Unrealized loss on investments $ (103,383) $ --
Dividend income 345,000 --
--------------- ---------------
241,617 --
General and administrative expenses 196,788 159,791
--------------- ---------------
Operating income (loss) 44,829 (159,791)
Other income (expense)
Amortization of debt offering costs (37,124) (41,618)
Beneficial conversion feature - convertible debentures (175,326) (69,078)
Interest expense (48,207) (100,818)
Settlement of debt -- 162,816
Other income 1,114 --
--------------- ---------------
Total other income (expense) (259,543) (48,698)
--------------- ---------------
Net loss attributable to common stockholders $ (214,714) $ (208,489)
=============== ===============
Loss per common share, basic and diluted
Net loss per common share attributable to common stockholders $ -- $ --
=============== ===============
Weighted average shares outstanding - basic and diluted 4,768,446,271 248,552,839
=============== ===============
The accompanying notes are an integral part of these
condensed consolidated financial statements
3
CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows (unaudited)
Prior to
becoming a
As a Business Business
Development Development
Company Company
------------- ------------
Three Months Three Months
Ended March Ended March
31, 2004 31, 2003
------------- ------------
Cash flows from operating activities:
Net loss $(214,714) $(208,489)
Adjustments to reconcile net loss to net
cash used in operating activities:
Settlement of debt -- (162,816)
Unrealized loss on investments 103,383 --
Depreciation and amortization 2,075 11,851
Beneficial conversion - convertible notes 175,326 69,078
Amortization of debt offering costs 37,124 41,618
Changes in operating assets and liabilities:
Other assets 1,520 --
Accounts payable 28,822 10,646
Judgments and defaults payable (32,409) --
Accrued interest 9,403 100,818
Other current liabilities 2,764 (15,869)
--------- ---------
Net cash provided by (used in) operating activitities 113,294 (153,163)
Cash flows from investing activities:
Purchase of fixed assets (3,176) --
Advances to Celerity Systems-NV (103,383) --
--------- ---------
Net cash used in investing activitities (106,559) --
Cash flows from financing activities:
Proceeds from notes payable - related party 30,000
Payments on notes payable - related party (105,000) --
Proceeds from convertible debentures 139,000
Principal payments on debt (125,000) --
Proceeds from issuance of common stock 210,000 --
--------- ---------
Net cash (used in) provided by financing activitities (20,000) 169,000
Net increase (decrease) in cash (13,265) 15,837
Cash, beginning of period 56,156 5,012
--------- ---------
Cash, end of period $ 42,891 $ 20,849
========= =========
Cash paid for:
Interest $ 38,806 $ --
========= =========
Taxes $ 1,450 $ --
========= =========
The accompanying notes are an integral part of these
condensed consolidated financial statements
4
CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Changes in Stockholders' Equity (unaudited)
Common Stock Additional Net Unrealized
-------------------------------- Paid-In Depreciation Accumulated
Shares Amount Capital on Investments Deficit
-------------- -------------- -------------- -------------- --------------
Balance, December 31, 2003 4,553,473,409 $ 4,553,473 $ 40,544,690 $ (842,121) $ (42,275,333)
Issuance of common stock 150,000,000 150,000 60,000
Conversion of convertible debentures to
shares of common stock 102,578,147 102,578 50,571
Net loss (103,383) (111,331)
-------------- -------------- -------------- -------------- --------------
Balance, March 31, 2004 4,806,051,556 $ 4,806,051 $ 40,655,261 $ (945,504) $ (42,386,664)
============== ============== ============== ============== ==============
Total
Stockholders'
Equity
--------------
Balance, December 31, 2003 $ 1,980,709
Issuance of common stock 210,000
Conversion of convertible debentures to
shares of common stock 153,149
Net loss (214,714)
--------------
Balance, March 31, 2004 $ 2,129,144
==============
The accompanying notes are an integral part of these condensed consolidated
financial statements
5
CELERITY SYSTEMS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OVERVIEW
The Company is a business development company that has elected to be
regulated pursuant to Section 54 of the Investment Company Act of 1940. We
intend to focus our investments in developing companies, but do not intend to
limit our focus on investment in any particular industry. We intend to seek
investments in companies that offer attractive investment opportunities.
1. PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying interim condensed consolidated financial statements
and notes to the financial statements for the interim periods as of March 31,
2004 and for the three months ended March 31, 2004 and 2003, are unaudited. The
accompanying interim unaudited financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States for interim financial statements and pursuant to the requirements
for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2004, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2004. The condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the Form
10-K of the Company as of and for the year ended December 31, 2003. Certain
March 31, 2003 balances have been reclassified to conform with the March 31,
2004 financial statement presentation.
On May 20, 2003, the Company formed a subsidiary, Celerity Systems,
Inc. (a Nevada corporation), ("Celerity NV"). The assets and liabilities related
to the existing interactive video business were transferred to Celerity NV for
100% of the common stock. As this subsidiary is not an investment company, after
June 2, 2003 it is not consolidated with the parent company. The Company's
investment in Celerity NV is recorded at fair value, represented as cost, plus
or minus unrealized appreciation or depreciation, respectively.
In accordance with Article 6 of Regulation S-X under the Securities Act
of 1933 and Securities Exchange Act of 1934, the Company does not consolidate
portfolio company investments in which the Company has a controlling interest.
The Company's financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The Company has
had recurring losses and continues to suffer cash flow and working capital
shortages. Since inception in January, 1993 through March 31, 2004 the losses
total approximately $43,332,000. As of March 31, 2004, the Company had a
negative net working capital of approximately $1,285,000. These factors taken
together with the lack of sales and the absence of significant financial
commitments raise substantial doubt about the Company's ability to continue as a
going concern.
On June 3, 2003, the Company elected to become a Business Development
Company which is regulated under Section 54 of the Investment Company Act of
1940. On June 4, 2003 the Company filed an Offering Circular Under Regulation E
to sell up to $4,500,000 of its common stock at a minimum price of $0.001 to a
maximum price of $0.02. Between June 30, 2003 and March 31, 2004 the Company
sold 1,299,833,333 shares resulting in net proceeds of $1,376,500.
There can be no assurances that the Company will be successful in its
attempts to raise sufficient capital essential to its survival. To the extent
that the Company is unable to raise the necessary operating capital it will
become necessary to further curtail operations. Additionally, even if the
Company does raise operating capital, there can be no assurances that the net
proceeds will be sufficient enough to enable it to develop its business to a
level where it will generate profits and positive cash flows. The financial
statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.
6
CONVERSION TO BUSINESS DEVELOPMENT COMPANY
The operating results for the three months ended March 31, 2004 reflect
the Company's results as a business development company under the Investment
Company Act of 1940, as amended, whereas the operating results for the three
months ended March 31, 2003 reflect the Company's results prior to operating as
a business development company. Accounting principles used in the preparation of
the consolidated financial statements for these two periods are different and,
therefore, the results of operations are not directly comparable. The primary
differences in accounting principles relate to the carrying value of
investments.
CONSOLIDATION POLICY
The condensed consolidated financial statements include the accounts of
Celerity Systems, Inc. (a Delaware corporation) and its wholly-owned subsidiary
Celerity Systems, Inc. (a Nevada corporation) collectively referred to as the
"Company". All significant inter-company transactions and balances have been
eliminated in consolidation.
STOCK-BASED COMPENSATION
The Company had no stock options granted in 2004 and 2003. There was no
stock-based compensation determined under the fair value method during the three
months ended March 31, 2004 and 2003 and there is no difference between net loss
as reported and proforma net loss.
In January 2003, the Financing Accounting Standards Board ("FASB")
issued Interpretation Number 46, "Consolidation of Variable Interest Entities"
("FIN No. 46"). This interpretation of Accounting Research Bulletin ("ARB") No.
51, "Consolidated Financial Statements," provides guidance for identifying a
controlling interest in a variable interest entity ("VIE") established by means
other than voting interests. FIN No. 46 also requires consolidation of a VIE by
an enterprise that holds such a controlling interest. In December 2003, the FASB
completed its deliberations regarding the proposed modification to FIN No. 46
and issued Interpretation Number 46(R), "Consolidation of Variable Interest
Entities - an Interpretation of ARB No. 51" ("FIN No. 46(R)"). The decisions
reached included a deferral of the effective date and provisions for additional
scope exceptions for certain types of variable interests. Application of FIN No.
46(R) is required in financial statements of public entities that have interests
in VIEs or potential VIEs commonly referred to as special-purpose entities for
periods ending after December 15, 2003. Application by public entities (other
than small business issuers) for all other types of entities is required in
financial statements for periods ending after March 15, 2004. The adoption of
FIN No. 46(R) did not impact on the Company's consolidated financial position,
results of operations or cash flows.
2. INVESTMENT IN CELERITY SYSTEMS, INC. (A NEVADA CORPORATION)
The following table represents Celerity NV's statement of operations
for the three months ended March 31, 2004.
Sales $ --
Cost of Sales --
Gross loss --
General and administrative expenses 81,368
-------
Net loss (81,368)
=======
7
The following table represents Celerity NV's balance sheet as of March
31, 2004.
Accounts receivable, net $ 24,319
Inventories, net 299,200
------------
Total current assets 323,519
Fixed assets, net 60,433
Other 1,600
------------
Total assets $ 385,552
============
Accounts payable $ 883,084
Other current liabilities 23,601
------------
Total liabilities 906,685
Stockholder Deficit
Common stock 250
Additional paid-in capital 499,750
Accumulated deficit (1,021,133)
------------
Total stockholder deficit (521,133)
------------
Total liabilities and deficit $ 385,552
============
Celerity NV develops and manufacturers, at third party plants, digital
set top boxes and digital video servers for the interactive television and high
speed Internet markets. Celerity NV can also provide a comprehensive content
package for education users with over 1,300 titles available. Due to a lack of
funding Celerity NV has been targeting the education market, to the exclusion of
other markets available to us.
The education market, particularly the public schools segment, is a
growing area. Celerity NV believes that its products and services are more
effective than tradition VCR or analog media storage systems, and at a better
cost.
During the fourth quarter of 2003 an informal arrangement concerning a
pending sale was terminated and the Company determined that a significant
portion of the inventory was not salable. As a result during the fourth quarter
of 2003 Celerity NV recorded a reserve adjustment of $1,068,870. The write down
results from a lower of cost of market valuation on certain parts and finished
goods. Without additional sales, there is a substantial risk that Celerity NV
will not be able to continue operations.
The Company charges Celerity NV for salaries and benefits and a portion
of costs as a facility charge. During the first three months of 2004, the
Company advanced $103,383 to Celerity NV to fund operations. This amount
resulted in an unrealized depreciation on the investment in Celerity NV of
$103,383 as reflected in the statement of operations of the Company as a BDC.
3. LOSS PER SHARE
Basic and diluted loss per share were computed by dividing net loss
attributable to common stock by the weighted average number of common shares
outstanding during each period. Potential common equivalent shares are not
included in the computation of per share amounts in the periods because the
Company reported a net loss and their effect would be anti-dilutive.
4. ISSUANCE OF CONVERTIBLE DEBENTURES
The long-term debt of the Company includes the following items:
March 31, December 31,
2004 2004
------------ ------------
4% convertible debentures $ 12,500 $ 67,500
5% convertible debentures 1,374,000 1,475,000
10% secured convertible debenture 1,055,000 1,170,000
------------ ------------
2,441,500 2,712,500
Less: Unamortized debt discount (447,689) (623,015)
------------ ------------
Long-term debt less current maturities $ 1,993,811 $ 2,089,485
============ ============
8
During the three months ended March 31, 2004 the Company issued
52,186,027 shares of its common stock upon the conversion of $91,000 of 5%
convertible debentures and 50,392,120 shares of its common stock upon the
conversion of $55,000 of 4% convertible debentures.
5. JUDGMENTS AND DEFAULTS PAYABLE
In January 2002, the Company terminated the Equity Line of Credit
entered into on September 14, 2001 due to delays in getting related shares
registered and in order to pursue other types of financing arrangements. As a
result, the Company does not have an effective registration statement including
common shares to be issued in connection with certain debentures issued in 2001
and the first quarter of 2002 under the 1999 Line of Credit Agreement. The
Company is required to pay liquidated damages in the form of increased interest
on the convertible debentures as a result of not filing an effective
registration statement for these debentures at a rate of 2% of the principle
plus interest per month. The liability for liquidated damages will continue to
accrue until the earlier of one year from the issuance date of the convertible
debentures or the date a new registration statement becomes effective. The
Company has accrued $342,400 for liquidated damages at March 31, 2004.
In December, 2001, Veja Electronics, Inc. d/b/a Stack Electronics sued
the Company for breach of contract and is seeking damages in excess of $106,000.
This action relates to amounts alleged to be owed from the cancellation of a
purchase order. During 2003 a judgment was rendered against the Company in the
amount of $71,000, which has been accrued at March 31, 2004.
On October 27, 2001, we defaulted on payment due of $100,000, plus
accrued interest, on a certain unsecured note. We are seeking to make an
arrangements with this note holder.
In March, 2003, R. R. Donnelly & Sons sued the Company for non-payment
of expenses related to printing services. During 2003 a judgment was rendered
against the Company in the amount of $16,972, which has been accrued at March
31, 2004.
In 2003, Del Rio Enterprises sued the Company for non-payment of
services rendered. During 2003 a judgment was rendered against the Company in
the amount of $8,000. This amount has been accrued at March 31, 2004.
In addition, certain creditors have threatened litigation if not paid.
The Company is seeking to make arrangements with these creditors. There can be
no assurance that any claims, if made, will not have an adverse effect on the
Company. These amounts are included in the Company's accounts payable and are
accruing applicable late fees and interest.
6. COMMON STOCK
During the three months ended March 31, 2004 the Company issued
150,000,000 shares of its common stock for cash proceeds in the amount of
$210,000 to third party investors.
9
ITEM 2. MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS
INTRODUCTORY STATEMENTS
Forward-Looking Statements and Associated Risks. This filing contains
forward-looking statements, including statements regarding, among other things,
(a) our Company's projected sales and profitability, (b) our company's growth
strategies, (c) anticipated trends in our company's industry, (d) our company's
future financing plans and (e) our company's anticipated needs for working
capital. In addition, when used in this filing, the words "believes,"
"anticipates," "intends," "in anticipation of," "expects," and similar words are
intended to identify forward-looking statements. These forward-looking
statements are based largely on our company's expectations and are subject to a
number of risks and uncertainties, including those described in "Business Risk
Factors" of our Form 10-K for the year ended December 31, 2003. Actual results
could differ materially from these forward-looking statements as a result of
changes in trends in the economy and our company's industry, demand for our
company's products, competition, reductions in the availability of financing and
availability of raw materials, and other factors. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this filing will in fact occur.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED
MARCH 31, 2003
UNREALIZED LOSS ON INVESTMENTS
Since the election to operate as a BDC the Company has recorded an
unrealized loss on its investment in Celerity Systems-NV. This loss is comprised
of two elements:
Effect of recording advances at fair value $ 445,504
Effect of recording equity investments at fair value 500,000
----------
$ 945,504
==========
During the three month period ended March 31, 2004, the Company had an
unrealized loss on investments of $103,383. Celerity NV recorded no sales or
gross profit, but incurred general and administrative expenses that resulted in
a net loss of $81,368 for the same period. During this period, Celerity NV
received parent company advances of $103,383 to fund its working capital
requirements. Management recorded a write-down of the Company's advances since
without additional sales, there is a substantial risk that NV will not be able
to continue operation.
DIVIDEND INCOME
During the three month period ended March 31, 2004 the Company received
$345,000 in proceeds from its investment in Yorkville Advisors Management, LLC
("Yorkville") which has been recorded as dividend income in the statement of
operations. Since its investment in Yorkville on December 1, 2003, the Company
has received a total of $410,000 in proceeds. Yorkville has no set dividend
policy. Dividends are declared based on the discretion of the management of
Yorkville.
GENERAL AND ADMINISTRATIVE EXPENSES
Operating expenses for the first three months of 2004 were $196,788
compared to the first three months of 2003 of $159,791. Increased operating
expenses in 2004 can be attributed to higher payroll expenses (approximately
$35,000) and increased expenses for legal, accounting and other professional
services (approximately $16,000). Expenses were reduced by lower depreciation
and office costs (approximately $14,000).
AMORTIZATION OF DEBT OFFERING COSTS
Amortization of debt offering costs for the first three months of 2003
was $37,124 compared to $41,618 in same period of 2003.
10
BENEFICIAL CONVERSION FEATURE - CONVERTIBLE DEBENTURES
Non-cash interest expense relating to amortization of a beneficial
conversion feature for the various convertible debentures issues amounted to
$175,326 and $69,078 for the three months ended March 31, 2004 and 2003,
respectively. This increase results primarily from the conversion in 2004 of
certain debt to equity securities which caused full recognition of the related
beneficial conversion feature in this period compared to the longer amortization
period for debt not converted.
INTEREST EXPENSE
Interest expense for the three months ended March 31, 2004 was $48,207
compared to $100,818 for the same period in 2003. Part of this reduction is from
liquidated damages incurred due to the late filing of certain registration
statements resulting in a charge of $-0- in the first quarter of 2004 compared
to a charge of $28,520 in for the same period in 2003. Interest expense on
borrowings decreased from $72,298 in the first three months of 2003 to $48,207
in for the first three months of 2004. This results from the lower level of debt
outstanding during the three months ended March 31, 2004 as compared to the same
period in 2003.
SETTLEMENT OF DEBT
For the three months ended March 31, 2003, the Company settled certain
trade payables wherein the total amount due was reduced by $162,816. For the
three months ended March 31, 2004 there were no additional settlements of debt.
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
As a result of the foregoing, Celerity had a net loss of $214,714, or
$0.00 per share, for the three months ended March 31, 2004 compared to a net
loss of $208,489, or $0.00 per share, for the three months ended March 31, 2003.
LIQUIDITY AND CAPITAL RESOURCES
The primary source of financing for us since our inception has been
through the issuance of common and preferred stock and debt. We had cash
balances on hand of $42,891 as of March 31, 2004 and $56,156 as of December 31,
2003. Our cash position continues to be uncertain. Our primary need for cash is
to fund our ongoing operations until such time that income from our investments
generate enough proceeds to fund operations. In addition, our need for cash
includes satisfying current liabilities of $1,333,377, consisting primarily of
accounts payable of $492,374, accrued interest of $273,000 and judgments and
defaults payable of $538,372, including a judgment of $16,972 obtained by R.R.
Donnelley Corporation for non-payment of printing fees, a judgment of $71,000
obtained by Veja Electronics, Inc. for breach of contract, and a judgment of
$8,000 obtained by Del Rio Enterprises for non-payment of services. Additionally
this also includes notes payable in default of $100,000 and liquidated damages
resulting from the lack of filing a registration statement relating to certain
convertible debentures of $342,400. We do not currently have sufficient funds to
pay these obligations. We will need significant new funding from the sale of
securities or from proceeds from our investments to fund our ongoing operations
and to satisfy the above obligations. We anticipate the dividend income from our
investment in Yorkville Advisors Management will be sufficient to operate the
Company. We currently do not have any commitments for funding.
As discussed in the overview section, on June 3, 2003 the Company
elected to become a BDC which is regulated under Section 54 of the Investment
Company Act of 1940. As a BDC the Company may sell shares of its common stock up
to $5,000,000 in a twelve month period. Shares sold are exempt from registration
under Regulation E of the Securities Act of 1933. To that end, at our Annual
Meeting of Shareholders held on January 14, 2003, the shareholders approved an
increase in our authorized capital stock to 5 billion shares of common stock. On
June 4, 2003 the Company filed an Offering Circular Under Regulation E to sell
up to $4,500,000 of its common stock at a minimum price of $0.001 to a maximum
price of $0.02. Between June 4, 2003 and March 31, 2004 the Company has sold
1,299,833,333 shares resulting in net proceeds of $1,376,500.
We are also looking at several other options in terms of improving our
cash shortage. We are continuing to seek to arrange financing, including
possible strategic investment opportunities or opportunities to sell some or all
of our assets and business, while continuing to pursue sales opportunities. We
have granted a security interest in our personal property to the investors in
the 10% convertible debentures issued in 2002. Such security interests may
hinder our efforts to obtain financing. The lack of sales or a significant
financial commitment raises substantial doubt about our ability to continue as a
going concern or to resume a full-scale level of operations.
During the three months ended March 31, 2004, we had a net decrease in
cash of $13,265. Our sources and uses of funds were as follows:
11
CASH PROVIDED BY OPERATING ACTIVITIES. We generated net cash of
$113,294 from our operating activities in the three months ended March 31, 2004.
Our net cash provided from operating activities resulted primarily from non-cash
expenses of $317,908 related to the amortization of beneficial conversion
feature of debt, amortization of debt offering costs and the unrealized loss on
an investment. These non-cash items were directly offset due to the Company's
net loss of $214,714.
CASH USED IN INVESTING ACTIVITIES. We used net cash of $106,559 in
investing activities in the three months ended March 31, 2004 of which $103,383
was used to fund the operating activities of Celerity NV.
CASH PROVIDED BY FINANCING ACTIVITIES. We used $20,000 in net cash for
financing activities, consisting primarily of principal payments on long-term
debt of $125,000 and notes payable - related party of $105,000. This was
partially offset by proceeds from issuance of common stock of $210,000.
As of March 31, 2004 we had a negative net working capital of
approximately $1,285,000. Celerity NV has ceased purchasing any material amount
of inventory until inventory levels can be reduced and has reduced overhead
expenses, which will have a favorable impact on cash required to fund the
business. We had no significant capital spending or purchase commitments at
March 31, 2004 other than a certain lease of corporate office space.
We have no existing bank lines of credit.
There can be no assurances that we will be successful in our attempts
to raise sufficient capital essential to our survival. To the extent that we are
unable to raise the necessary operating capital it will become necessary to
further curtail operations. Additionally, even if we raise operating capital,
there can be no assurances that the net proceeds will be sufficient enough to
enable us to develop our business to a level where we will generate profits and
positive cash flows. These matters raise substantial doubt about our ability to
continue as a going concern.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
The Company does not have any exposure to market risk as it relates to
changes in interest rates as all of the borrowings of the Company are at a fixed
rate of interest.
The Company has no cash equivalents or short-term investment which are
subject to market risk.
FOREIGN CURRENCY RISK
The Company does not do any business that has any risk of foreign
exchange rate fluctuations.
EQUITY SECURITY PRICE RISK
We do not have any investment in marketable equity securities;
therefore, we do not have any direct equity price risk.
COMMODITY PRICE RISK
We no not do any business involving commodities; therefore, we do not
have any commodity price risk.
ITEM 4. CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's Principal Executive Officer/Acting Principal Financial Officer (one
person), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. The Company's disclosure controls and
procedures are designed to provide a reasonable level of assurance of achieving
the Company's disclosure control objectives. The Company's Principal Executive
Officer/Acting Principal Accounting Officer has concluded that the Company's
disclosure controls and procedures are, in fact, effective at this reasonable
assurance level. In addition, we reviewed our internal controls, and there have
been no significant changes in our internal controls or in other factors that
12
could significantly affect those controls subsequent to the date of their last
valuation or from the end of the reporting period to the date of this Form 10-Q.
(B) CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls during the
quarter covered by this report or from the end of the reporting period to the
date of this Form 10-Q.
13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There is no pending litigation against us, other than those claims
described below:
o In December 2001, Veja Electronics, Inc. d/b/a Stack Electronics sued
us for breach of contract and is seeking damages in excess of
$106,000. This action relates to amounts alleged to be owed from the
order of products not received by us. We intend to defend this action.
o On October 27, 2001, we defaulted on payments due of $150,000, plus
accrued interest, on certain unsecured notes. Written demand has been
received from one of the two note holders. We are seeking to make
arrangements with these note holders. In addition, certain creditors
have threatened litigation if not paid. We are seeking to make
arrangements with these creditors. There can be no assurance that any
claims, if made, will not have an adverse effect on us.
o On March 25, 2003, R R Donnelly & Sons sued the Company for a
delinquent account. The action was brought in the Chancery Court for
Knox County, Tennessee. In this action the plaintiff, R R Donnelly &
Sons, has sued the Company for non-payment of invoices for printing
services and is seeking $16,972. In September, 2003, a default
judgment was entered against the Company.
o In 2003, Del Rio Enterprises sued the Company for non-payment of
services rendered. During 2003 a judgment was rendered against the
Company in the amount of $8,000. This amount has been accrued at March
31, 2004.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
On October 27, 2001, we defaulted on payments due of $150,000, of which
$100,000 is remaining unpaid, plus accrued interest, on certain unsecured notes.
We are seeking to make arrangements with this note holder.
In January 2002, the Company terminated the Equity Line of Credit
entered into on September 14, 2001 due to delays in getting related shares
registered and in order to pursue other types of financing arrangements. As a
result, the Company does not have an effective registration statement including
common shares to be issued in connection with certain debentures issued in 2001
and the first quarter of 2002 under the 1999 Line of Credit Agreement. The
Company is required to pay liquidated damages in the form of increased interest
on the convertible debentures as a result of not filing an effective
registration statement for these debentures at a rate of 2% of the principle
plus interest per month. The liability for liquidated damages will continue to
accrue until the earlier of one year from the issuance date of the convertible
debentures or the date a new registration statement becomes effective. The
Company has accrued $342,400 for liquidated damages at March 31, 2004.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not applicable.
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ------------------------------------------------- -------------------------------------------------
3.1 Certificate of Incorporation of Celerity Systems, Incorporated by reference to Exhibit 3.1 to the
Inc. Registration Statement on SB-2 filed with the
SEC on August 13, 1997
3.2 By laws of Celerity Systems, Inc. Incorporated by reference to Exhibit 3.2 to the
Registration Statement on SB-2 filed with the
SEC on August 13, 1997
3.3 Certificate of Designation of Series C Preferred Incorporated by reference to the Registration
Stock Statement on Form SB-2 filed with the SEC on
October 18, 2001
3.4 Certificate of Designation of Series D Preferred Incorporated by reference to Exhibit 3.4 to the
Stock Form 10-KSB for the year ended December 31, 2001
filed with the SEC on March 27, 2002
3.5 Certificate of Designation of Series E Preferred Incorporated by reference to Exhibit 3.5 to the
Stock Form 10-KSB for the year ended December 31, 2001
filed with the SEC on March 27, 2002
4.1 Form of Underwriter's Warrant Incorporated by reference to Exhibit 4.1 to
Amendment No. 1 to Registration Statement on
SB-2 filed with the SEC on October 8, 1997
4.2 1995 Stock Option Plan Incorporated by reference to Exhibit 4.2 to the
Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.3 1997 Stock Option Plan Incorporated by reference to Exhibit 4.3 to the
Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.4 Form of Stock Certificate Incorporated by reference to Exhibit 4.4 to
Amendment No. 2 to Registration Statement on
SB-2 filed with the SEC on October 28, 1997
4.5 Form of Bridge Warrant Incorporated by reference to Exhibit 4.5 to the
Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.6 Form of 1996 Warrant Incorporated by reference to Exhibit 4.6 to
Amendment No. 2 to Registration Statement on
SB-2 filed with the SEC on October 28, 1997
4.7 Form of Hampshire Warrant Incorporated by reference to Exhibit 4.7 to
Amendment No. 1 to Registration Statement on
SB-2 filed with the SEC on October 8, 1997
4.8 Form of 1995 Warrant Incorporated by reference to Exhibit 4.8 to the
Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.9 Letter Agreement dated July 15, 1997, between Incorporated by reference to Exhibit 4.9 to the
Celerity and Mahmoud Youssefi, including exhibits Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.10 Letter Agreement, dated July 11, 1997, between Incorporated by reference to Exhibit 4.10 to the
Celerity and Dr. Fenton Scruggs Registration Statement on SB-2 filed with the
SEC on August 13, 1997
4.11 Form of 9% Convertible Debenture Incorporated by reference to Exhibit 4.11 to
Amendment No. 1 to Form 10-KSB for the year
ended December 31, 1998 filed with the SEC on
April 30, 1999
4.12 Form of 7% Promissory Note Incorporated by reference to Exhibit 4.12 to
Amendment No. 1 to Form 10-KSB for the year
ended December 31, 1998 filed with the SEC on
April 30, 1999
4.13 Form of Registration Rights Agreement, between Incorporated by reference to Exhibit 4.13 to
Celerity and each of RNI Limited Partnership, Amendment No. 1 to Form 10-KSB for the year
First Empire Corporation, Greg A. Tucker and ended December 31, 1998 as filed with the SEC on
Michael Kesselbrenner April 30, 1999
4.14 Form of Warrant issued April 27, 1999 Incorporated by reference to Exhibit 4.2 to the
Registration Statement on S-3 filed with the SEC
on September 18, 1999
4.15 Shareholders Agreement, dated August 10, 1999, Incorporated by reference to Exhibit 99.2 to the
between Celerity Systems, Inc., FutureTrak Merger Form 8-K filed with the SEC on September 14, 1999
Corp. and certain parties listed therein
15
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ------------------------------------------------- -------------------------------------------------
4.16 Registration Rights Agreement, dated September Incorporated by reference to Exhibit 99.2 to the
30, 1999, between Celerity and GMF Holdings Form 8-K filed with the SEC on October 8, 1999
4.17 Form of Debenture in connection with Line of Incorporated by reference to Exhibit 99.4 to the
Credit Agreement, dated September 30, 1999 Form 8-K filed with the SEC on October 8, 1999
4.18 Form of Warrant issued September 30, 1999 Incorporated by reference to Exhibit 4.10 to the
Registration Statement on S-3 filed with the SEC
on February 15, 2000
4.19 Form of 4% Convertible Debenture due 2002 between Incorporated by reference to Exhibit 4.2 to the
Celerity and each of John Bridges, John Faure, Registration Statement on S-3 filed with the SEC
Loni Spurkeland, Robert Dettle, Michael Genta, on February 15, 2000
Lennart Dallgren
4.20 Form of 8% Convertible Debenture due 2002 between Incorporated by reference to Exhibit 4.3 to the
Celerity and each of Richard T. Garrett, W. David Registration Statement on S-3 filed with the SEC
McCoy, Dominick Chirarisi, Gilda R. Chirarisi, on February 15, 2000
Joseph C. Cardella, Carl Hoehner
4.21 Form of 8% Convertible Debenture due 2003 between Incorporated by reference to Exhibit 4.4 to the
Celerity and John Bolliger Registration Statement on S-3 filed with the SEC
on February 15, 2000
4.22 Form of Registration Rights Agreement, between Incorporated by reference to Exhibit 4.6 to the
Celerity and each of John Bridges, John Faure, Registration Statement on S-3 filed with the SEC
Loni Spurkeland, Robert Dettle, Michael Genta, on February 15, 2000
Lennart Dallgren
4.23 Form of Registration Rights Agreement, between Incorporated by reference to Exhibit 4.7 to the
Celerity and each of Richard T. Garrett, W. David Registration Statement on S-3 filed with the SEC
McCoy, Dominick Chirarisi, Gilda R. Chirarisi, on February 15, 2000
Joseph C. Cardella, Carl Hoehner
4.24 Form of Registration Rights Agreement, between Incorporated by reference to Exhibit 4.8 to the
Celerity and John Bolliger Registration Statement on S-3 filed with the SEC
on February 15, 2000
4.25 Form of 8% Convertible Debenture due 2003 between Incorporated by reference to Exhibit 99.7 to the
Celerity and each of Sui Wa Chau, Qinu Guan, Form 8-K filed with the SEC on March 23, 2000
Peter Chenan Chen, K&M Industry, Inc., Michael
Dahlquist, Denise and Vernon Koto and Rance Merkel
4.26 Form of Registration Rights Agreement, between Incorporated by reference to Exhibit 99.8 to the
Celerity and each of Sui Wa Chau, Qinu Guan, Form 8-K filed with the SEC on March 23, 2000
Peter Chenan Chen, K&M Industry, Inc., Michael
Dahlquist, Denise and Vernon Koto and Rance Merkel
4.27 Securities Purchase Agreement, dated August 31, Incorporated by reference to Exhibit 99.1 to the
2000, between Celerity and the Investors Form 8-K filed with the SEC on September 5, 2000
specified therein
4.28 Registration Rights Agreement, dated August 31, Incorporated by reference to Exhibit 99.2 to the
2000, between Celerity and the Investors Form 8-K filed with the SEC on September 5, 2000
specified therein
4.29 Form of Warrant issued September 30, 2000 Incorporated by reference to Exhibit 99.3 to the
Form 8-K filed with the SEC on April 5, 2000
10.1 Employment Agreement, dated January 7, 1997, as Incorporated by reference to Exhibit 10.1 to
amended, between Celerity and Kenneth D. Van Meter Amendment No. 1 to Registration Statement on
SB-2 filed with the SEC on October 8, 1997
10.2 Employment, Non-Solicitation, Confidentiality and Incorporated by reference to Exhibit 10.2 to the
Non-Competition Agreement, dated as of May 1, Registration Statement on SB-2 filed with the
1996, between Celerity and Glenn West SEC on August 13, 1997
10.3 Termination Agreement, dated as of April 5, 1997, Incorporated by reference to Exhibit 10.3 to the
between Celerity and Mahmoud Youssefi Registration Statement on SB-2 filed with the
SEC on August 13, 1997
10.4 [Reserved]
10.5 Letter Agreement, dated March 13, 1997, between Incorporated by reference to Exhibit 10.5 to
Celerity and William Chambers Amendment No. 1 to Registration Statement on
SB-2 filed with the SEC on October 8, 1997
10.6 Letter Agreement, dated July 24, 1997, between Incorporated by reference to Exhibit 10.6 to
Celerity and Mark. C. Cromwell Amendment No. 1 to Registration Statement on
SB-2 filed with the SEC on October 8, 1997
10.7 Exclusive OEM/Distribution Agreement, dated Incorporated by reference to Exhibit 10.7 to the
March 10, 1995, between Celerity and InterSystem Registration Statement on SB-2 filed with the
Multimedia, Inc. SEC on August 13, 1997
10.8 Purchase Order Agreement, dated September 26, Incorporated by reference to Exhibit 10.8 to the
1995, between Tadiran Telecommunications Ltd. and Registration Statement on SB-2 filed with the
Celerity SEC on August 13, 1997
16
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ------------------------------------------------- -------------------------------------------------
10.9 License Agreement, dated as of September 26, Incorporated by reference to Exhibit 10.9 to the
1996, between Celerity and En Kay Telecom Co., Registration Statement on SB-2 filed with the
Ltd. SEC on August 13, 1997
10.10 License Agreement, dated as of February 21, 1997, Incorporated by reference to Exhibit 10.10 to
between Celerity and En Kay Telecom Co., Ltd. the Registration Statement on SB-2 filed with
the SEC on August 13, 1997
10.11 Remarketer Agreement, dated as of September 15, Incorporated by reference to Exhibit 10.11 to
1997, between Celerity and Minerva Systems, Inc. the Registration Statement on SB-2 filed with
the SEC on August 13, 1997
10.12 Memorandum of Understanding, dated April 25, Incorporated by reference to Exhibit 10.12 to
1996, between Integrated Network Corporation and the Registration Statement on SB-2 filed with
Celerity the SEC on August 13, 1997
10.13 Letter of Agreement, dated September 30, 1993, Incorporated by reference to Exhibit 10.13 to
between Celerity and Herzog, Heine & Geduld, Inc. the Registration Statement on SB-2 filed with
and Development Agreement attached thereto the SEC on August 13, 1997
10.14 Subcontract Agreement, dated September 26, 1997, Incorporated by reference to Exhibit 10.14 to
between Unisys Corporation and Celerity the Registration Statement on SB-2 filed with
the SEC on August 13, 1997
10.15 Lease Agreement for Crossroad Commons, dated Incorporated by reference to Exhibit 10.15 to
November 25, 1996, as amended, between Lincoln Amendment No. 1 to Registration Statement on
Investment Management, Inc., as attorney in fact SB-2 filed with the SEC on October 8, 1997
for the Lincoln National Life Insurance Company,
and Celerity
10.16 Lease Agreement, dated November 25, 1997, between Incorporated by reference to Exhibit 10.16 to
Centerpoint Plaza, L.P. and Celerity the Form 10-KSB for the year ended December 31,
1997 filed with the SEC on September 30, 1998
10.17 Letter Agreement, dated October 3, 1997, between Incorporated by reference to Exhibit 10.17 to
Dennis Smith and Celerity the Form 10-KSB for the year ended December 31,
1997 filed with the SEC on September 30, 1998
10.18 Letter Agreement, dated January 8, 1998, between Incorporated by reference to Exhibit 10.18 to
James Fultz and Celerity the Form 10-KSB for the year ended December 31,
1997 filed with the SEC on September 30, 1999
10.19 Amendment to Employment, Non-Solicitation, Incorporated by reference to Exhibit 10.19 to
Confidentiality and Non-Competition Agreement, the Form 10-KSB for the year ended December 31,
dated January 1, 1999, between Celerity and Glenn 1997 filed with the SEC on April 30, 1998
West
10.20 Form of Subscription Agreement, between Celerity Incorporated by reference to Exhibit 10.20 to
and each of RNI Limited Partnership, First Empire Amendment No. 1 to Form 10-KSB for the year
Corporation, Greg A. Tucker and Michael ended December 31, 1998 filed with the SEC on
Kesselbrenner April 30, 1999
10.21 Form of Subscription Agreement, between Celerity Incorporated by reference to Exhibit 10.21 to
and each of Donald Alexander, Leo Abbe, Amendment No. 1 to Form 10-KSB for the year
Centerpoint Plaza, L.P., William Chambers, Fenton ended December 31, 1998 filed with the SEC on
Scruggs, Dennis Smith, Kenneth Van Meter, George April 30, 1999
Semb and Rodney Conard
10.22 Form of Royalty Agreement, between Celerity and Incorporated by reference to Exhibit 10.22 to
each of Donald Alexander, Leo Abbe, Centerpoint Amendment No. 1 to Form 10-KSB for the year
Plaza, LP, William Chambers, Fenton Scruggs, ended December 31, 1998 filed with the SEC on
Dennis Smith, Kenneth Van Meter, George Semb and April 30, 1999
Rodney Conard
10.23 Agreement and Plan of Merger, dated August 10, Incorporated by reference to Exhibit 99.1 to the
1999, between Celerity Systems, Inc., FutureTrak Form 8-K filed with the SEC on September 14, 1999
Merger Corp. and FutureTrak International, Inc.
10.24 Line of Credit Agreement, dated September 30, Incorporated by reference to Exhibit 99.1 to the
1999, between GMF Holdings, May Davis Group and Form 8-K filed with the SEC on October 8, 1999
Celerity
10.25 Termination Agreement, dated December 7, 1999, Incorporated by reference to Exhibit 99.1 to the
between Celerity, FutureTrak Merger Corp. and Form 8-K filed with the SEC on December 8, 1999
FutureTrak International, Inc.
10.26 Manufacturing Agreement, dated November 30, 1999, Incorporated by reference to Exhibit 99.2 to the
between Celerity, Primax Electronics, Ltd and Form 8-K filed with the SEC on January 5, 2000
Global Business Group, Ltd.
10.27 Lease, dated December 17, 1999, between Andy Incorporated by reference to Exhibit 99.1 to the
Charles Johnson, Raymond Perry Johnson, Tommy F. Form 8-K filed with the SEC on January 5, 2000
Griffin and Celerity
10.28 Amendment to the Line of Credit Agreement between Incorporated by reference to Exhibit 10.28 to
Celerity and GMF Holdings, Inc. dated October 16, the Registration Statement on SB-2 filed with
2000 the SEC on October 27, 2000
10.29 Purchase Agreement, dated September 22, 2000, Incorporated by reference to Exhibit 99.2 to the
between Celerity and WIT Technologies Inc. Form 8-K filed with the SEC on July 11, 2000
17
EXHIBIT NO. DESCRIPTION LOCATION
- ----------- ------------------------------------------------- -------------------------------------------------
10.30 Manufacturing Service Agreement, dated January 4, Incorporated by reference to Exhibit 99.1 to the
2001, between Celerity and Nextek, Inc. Registration Statement on SB-2 filed with the
SEC on December 27, 2000
10.31 Broadband Services Agreement, dated January 4, Incorporated by reference to Exhibit 99.2 to the
2001, between Celerity and DeserScape L.P. Form 8-K filed with the SEC on January 10, 2001
10.32 Cooperative Marketing Agreement, dated January 4, Incorporated by reference to Exhibit 99.3 to the 2001,
between Celerity and In4Structures LLC Form 8-K filed with the SEC on January 10, 2001
10.33 Equity Line of Credit Agreement dated as of Incorporated by reference to the Registration
September 14, 2001 between Celerity Systems, Inc. Statement on Form SB-2 filed with the SEC on
and Cornell Capital Partners, L.P. October 18, 2001
10.34 Registration Rights Agreement dated as of Incorporated by reference to the Registration
September 14, 2001 between Celerity Systems, Inc. Statement on Form SB-2 filed with the SEC on
and Cornell Capital Partners, L.P. October 18, 2001
10.35 Consulting Services Agreement dated as of Incorporated by reference to the Registration
September 14, 2001 between Celerity Systems, Inc. Statement on Form SB-2 filed with the SEC on
and Cornell Capital Partners, L.P. October 18, 2001
10.36 Escrow Agreement dated as of September 14, 2001 Incorporated by reference to the Registration
among Celerity Systems, Inc. Meir Levin and Statement on Form SB-2 filed with the SEC on
Cornell Capital Partners, L.P. October 18, 2001
10.37 Warrant to purchase 2,500,000 shares of common Incorporated by reference to the Registration
stock dated as of September 14, 2001 given by Statement on Form SB-2 filed with the SEC on
Celerity Systems to Cornell Capital Partners, L.P. October 18, 2001
10.38 Warrant to purchase 3,500,000 shares of common Incorporated by reference to the Registration
stock dated as of August, 2001 given by Celerity Statement on Form SB-2 filed with the SEC on
Systems to Cornell Capital Partners, L.P. October 18, 2001
10.39 Letter Agreement dated August, 2001 between Incorporated by reference to the Registration
Celerity Systems and Yorkville Advisors Statement on Form SB-2 filed with the SEC on
Management, LLC October 18, 2001
10.40 Consulting Services Agreement dated as of August, Incorporated by reference to the Registration
2001 between Celerity Systems, Inc. and Yorkville Statement on Form SB-2 filed with the SEC on
Advisors, LLC October 18, 2001
10.41 Consulting Services Agreement dated as of Incorporated by reference to the Registration
September, 2001 between Celerity Systems, Inc. Statement on Form SB-2 filed with the SEC on
and Yorkville Advisors, LLC October 18, 2001
10.42 Advisory Agreement dated September 6, 2001 Incorporated by reference to the Registration
between Celerity Systems, Inc. and Internet Statement on Form SB-2 filed with the SEC on
Finance International Corporation October 18, 2001
10.43 Financing Agreement dated as of August, 2001 Incorporated by reference to the Registration
between Celerity Systems, Inc. and Artesian Statement on Form SB-2 filed with the SEC on
Direct Holdings Corporation October 18, 2001
10.44 Partial Guaranty Agreement dated August, 2001 Incorporated by reference to the Registration
given by Ed Kidston to Celerity Systems, Inc. Statement on Form SB-2 filed with the SEC on
October 18, 2001
10.45 Termination Agreement Incorporated by reference to Exhibit 10.45 to
the Form 10-KSB for the year ended December 31,
2001 filed with the SEC on March 27, 2002
10.46 Letter Agreement dated as of April 26, 2002 Incorporated by reference to Exhibit 10.46 to
regarding the Purchase Order Financing form SB-2 filed with the SEC on September 28,
2002
10.47 Letter Agreement dated September 12, 2002 between Incorporated by reference to Exhibit 10.47 to
Cornell Capital Partners and Celerity Systems, form SB-2 filed with the SEC on September 28,
Inc. 2002
31.1 Certification re: Section 302 Provided herewith
32.1 Certification re: Section 906 Provided herewith
(b) REPORTS ON FORM 8-K.
None.
18
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.
Date: May 13, 2004 CELERITY SYSTEMS, INC.
By: /s/ Robert Legnosky
--------------------------------
Robert Legnosky, President and
Interim Chief Financial Officer
19