UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2004
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number 000-33391
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SYSTEMS EVOLUTION INC.
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(Exact name of Small Business Issuer as specified in its charter)
IDAHO 82-0291029
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10707 CORPORATE DRIVE, SUITE 156
STAFFORD, TEXAS 77477
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(Address of principal executive offices)
281-265-7075
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Issuer's telephone number
NONE
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all documents and reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months or for 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.
(1) [X] Yes [ ] No
(2) [X] Yes [ ] No
The number of shares of issuer's Common Stock outstanding as of August 31, 2004:
54,988,699 SHARES
SYSTEMS EVOLUTION INC.
INDEX
QUARTERLY REPORT ON FORM 10-QSB
FOR QUARTERLY PERIOD ENDED August 31, 2004
PART I. FINANCIAL INFORMATION
ITEM 1 - Unaudited Consolidated Financial Statements
a. Consolidated Balance Sheets as of August 31,
2004 (Unaudited) and May 31, 2004 3
b. Consolidated Statements of Operations
for the Three Months Ended August 31,
2004 and 2003 (Unaudited) 4
C. Consolidated Statements of Cash Flows
for the Three Months Ended August 31,
2004 and 2003 (Unaudited) 5
D. Notes to Consolidated Financial Statements 6
ITEM 2 - Management's Discussion and Analysis
ITEM 3 - Controls and Procedures
PART II. OTHER INFORMATION
ITEM 1 - Legal proceedings
ITEM 2 - Changes in Securities and Use of Proceeds
ITEM 6 - Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT 10.7 - Definitive Acquisition Agreement of CMS Technology
Services, L.P.
EXHIBIT 31 - Certification pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
EXHIBIT 32 - Certification pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
PART I. FINANCIAL INFORMATION
ITEM 1 - Unaudited Consolidated Financial Statements
SYSTEMS EVOLUTION INC.
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 2004 (UNAUDITED) AND MAY 31, 2004
AUGUST 31, May 31,
2004 2004
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ASSETS (Unaudited)
CURRENT ASSETS:
Cash $- $19,522
Accounts receivable - trade,
net of allowance of $28,617 & $15,000 149,292 107,369
Other current assets 36,562 -
------------ ------------
Total current assets 185,854 126,891
INTANGIBLES 343,154 143,150
FURNITURE AND EQUIPMENT, NET 112,757 55,883
OTHER 1,642 -
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Total assets $643,407 $325,924
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $295,573 $48,515
Accrued expenses 248,310 192,369
Current portion, long-term debt 44,204 5,000
Notes payable 224,167 150,973
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Total current liabilities 812,254 396,857
Long-term debt, net of current portion 39,387 11,137
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Total liabilities 851,641 407,994
Commitments
STOCKHOLDERS'(DEFICIT)
Common stock 4,183,565 2,679,765
Accumulated deficit (4,391,799) (2,761,835)
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Total stockholders' deficit (208,234) (82,070)
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Total liabilities and stockholders' deficit 643,407 325,924
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SYSTEMS EVOLUTION INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED AUGUST 31,
2004 2003
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REVENUES $ 232,629 $ 186,143
OPERATING EXPENSES:
Payroll and related costs 303,865 259,952
General, administrative and selling 1,695,728 87,390
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Loss from Operations 1,999,593 347,342
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Interest Expense 11,947 --
Net Loss (1,766,964) (161,199)
============ ============
Basic and Diluted Loss Per Share: ($0.03) $ 0.00
============ ============
Basic and Diluted Weighted Average Shares 54,637,571 37,500,000
Outstanding ============ ============
SYSTEMS EVOLUTION INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 2004 AND 2003
(UNAUDITED)
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,766,964) $ (161,199)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 28,150 7,000
Bad debt expense 13,627 -
Stock issued for services 137,000 -
Stock option and warrant expense 1,387,550 -
Changes in assets and liabilities:
Accounts receivable - trade (20,210) 46,176
Prepaid expenses and other assets (22,684) -
Accounts payable 240,311 34,741
Accrued expenses (26,136) 6,198
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Net cash used in operating activities (29,356) (67,084)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of CMS (10,000) -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and long-term debt (14,943) (10,408)
Proceeds from stockholder receivable - 9,036
Proceeds from notes payable and long-term debt 22,527 19,969
Sale of common Stock 12,250 9,300
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Net provided by financing activities 19,834 38,305
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Net Change in cash (19,522) (28,779)
CASH, beginning of year 19,522 29,670
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CASH, end of year $ - $ 891
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 11,947 $ -
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Taxes paid $ - $ -
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NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for Acquisition of CMS $ 104,000 $ -
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Common stock issued for computer equipment $ 52,070 $ -
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SYSTEMS EVOLUTION INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 2004
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Systems
Evolution Inc. ("SEVI") have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report filed with the SEC on Form 10-KSB. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for 2004 as reported in the 10-KSB have been omitted.
STOCK OPTIONS
SEVI accounts for its stock-based compensation plans under Accounting
Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
Employees. Statement of Financial Accounting Standard ("FAS") No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure, issued in
December 2002 requires pro forma net loss and pro forma net loss per share to be
disclosed in interim financial statements.
During fiscal 2004, the Company created the 2003 Directors, Officers,
and Consultants Stock Option, Stock Warrant and Stock Award Plan ("2003 Plan").
Under the 2003 Plan, the total number of shares of common stock that may be
granted is 20,000,000. As of August 31, 2004, the Company has granted a total of
13,573,333 options with exercise prices of $.05 to $.36 per share which vest
over 48 months. The maximum term of the options is ten years. During the quarter
ended August 31, 2004, the Company recorded compensation expense totaling
$277,550 based on the intrinsic value of the options vested during the quarter.
The following table illustrates the effect on net income and earnings
per share if SEVI had applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation:
Three Months Ended
August 31,
------------------------------
2004 2003
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Net loss, as reported (1,766,964) (135,341)
Add: Expense recorded 277,550
Deduct: Total stock-based employee compensation
expense determined under the fair value based
method for all awards (3,748,941) -
Pro forma net loss (5,238,355) 181,762
Loss per share:
Basic and diluted - as reported (.03) .00
Basic and diluted - pro forma (.10) .00
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions: dividend yield 0.0%, expected volatility of 191%, risk-free
interest rate of 1.5%, and expected life of six months to two years.
NOTE 2 - ACQUISITION
Effective July 27, 2004, the Company completed the acquisition of all the
issued and outstanding shares of Southwest CMS Technology Services, LP and its
general partner CMS Associates, LLC ("CMS"), a San Antonio based network
integration firm. Pursuant to the transaction, the Company paid $10,000 cash,
issued a note payable totaling $40,000 and issued an aggregate of 200,000 shares
of the Company's common stock to the owners of CMS. As of the effective date,
CMS became a wholly-owned subsidiary of the Company. The acquisition was
accounted for using the purchase method of accounting.
The following are pro forma condensed statements of income for the three
month period ended August 31, 2004 and 2003, as though the acquisition had
occurred on June 1, 2003. Other historical financial statements will be included
in the Company's report on Form 8-K/A when filed.
Three Months Ended
August 31,
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2004 2003
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Revenues 286,468 471,461
Net Income/(Loss) (1,767,800) 4,233
Loss per share - basic and diluted (.03) .00
NOTE 3 - COMMON STOCK
On June 21, 2004, the Company re-issued a lost certificate to Mr.
Patrick L. Anderson, one of the Company's directors. Mr. Anderson provided the
Company with: a request for a replacement certificate; a statement that the
certificate was not endorsed; affirmation that the security had not been
hypothecated, transferred, pledged or otherwise disposed; and an agreement that
the original certificate be immediately surrendered if found. The lost
certificate, #1000 for 8,563,094 shares, was re-issued as a certificate for
6,463,094 shares to Mr. Anderson. 2,000,000 shares of Mr. Anderson's were
returned to the Company in a transaction previously disclosed in the Company's
10-KSB for the period ending May 31, 2004. The lost certificate is not
considered issued or outstanding in the accompanying financials, but, has not
been cancelled by the transfer agent.
During the three months ending August 31, 2004, the Company sold
112,580 shares of common stock for proceeds totaling $34,900. The Company has
only issued 32,258 of the shares and has recorded a liability totaling $24,900
related to the unissued shares as of August 31, 2004. The liability is included
in accrued expenses at August 31, 2004.
During the three months ending August 31, 2004, the Company issued
2,250,000 shares of common stock to H.C. Wainwright and 1st SB related to the
exercise of warrants (see Note 5). The warrants were issued and exercised during
the quarter at a exercise price of $.001 per share resulting in $1,110,000 of
compensation expense being recorded based on the fair value of the warrants.
During the three months ending August 31, 2004, the Company issued 200,000
shares of common stock to 8 consultants and $20,000 shares to an employee. The
company recorded consulting expense totaling $137,000 based on the fair market
value on the date issued (earned). Fair market value was determined by using the
stock price on the date issued.
During the three months ended August 31, 2004, the Company issued 200,000
shares of common stock as consideration for the acquisition of CMS (See note 2).
During the three months ended August 31, 2004, the Company acquired
equipment in exchange for the 100,000 shares of the Company's common stock
valued at $52,070 using the stock price on the date acquired.
NOTE 4 - WARRANTS
During the three months ended August 31, 2004, warrants were issued to
H.C. Wainwright and 1st SB for consulting services. These warrants were
exercised fully during the three month period ending August 31, 2004 (NOTE 4).
Subsequent to the three month period ending August 31, 2004 and in conjunction
with the Purchase Agreement (See Note 6), the Notes were issued together with
warrants, denominated Series A, B, C and D warrants (each, a "Warrant"), to
purchase in the aggregate 36,500,000 shares of our Common Stock. Each investor
received Warrants to purchase shares of Common Stock equal to the number of
shares of Common Stock that are issuable upon full conversion of that investor's
Note, each investor receiving an equal number of each of the four series of
Warrants. The Series A Warrants are exercisable at $.06 per share commencing on
the Closing Date and expire 90 days after the registration statement that we are
required to file under the registration rights agreement referred to below has
been declared effective by the Securities and Exchange Commission (the
"Commission"). The Series B Warrants are exercisable at $.07 per share
commencing on the Closing Date and expire 180 days after such registration
statement is declared effective. The Series C Warrants are exercisable at $.08
per share commencing on the Closing Date and expire 270 days after such
registration statement is declared effective. The Series D Warrants are
exercisable at $.15 per share commencing on the Closing Date and expire five
years from the Closing Date.
In conjunction with the Purchase Agreement (see Note 6), 14,400,000
warrants were issued to H.C. Wainwright to purchase shares of the Company's
common stock with an exercise price of $0.05, providing for a cashless exercise,
and expiration of August 31, 2009. Also in conjunction with the Purchase
Agreement (See note 6), 7,200,000 warrants were issued to 1st SB to purchase
shares of the Company's common stock with an exercise price of $0.05, providing
for a cashless exercise, and expiration of August 31, 2009.
As of August 31, 2004, the Company has no outstanding warrants to acquire _____
shares of common stock at exercise prices ranging from $____ to $___. The
warrants expire in ____
NOTE 5 - SUBSEQUENT EVENTS
On August 31, 2004, the Company executed a Purchase Agreement with certain
institutional and accredited investors under which the Company agreed to sell
and the purchasers agreed to purchase convertible promissory notes due August
31, 2007 (the "Notes") in the aggregate principal amount of up to $2,500,000
bearing interest at the rate of 8% per annum and convertible into shares of our
Common Stock at a conversion price of $0.05 per share. On September 9, 2004, the
Company completed the sale of an aggregate of $1,825,000 in Notes and
accompanying Warrants under the Purchase Agreement which resulted in net
proceeds to the Company of $1,542,417. The Notes are initially convertible into
36,500,000 shares of Common Stock, and an additional 36,500,000 shares of Common
Stock are reserved for issuance upon exercise of the Warrants issued to the note
holders. The Company is required to file a registration statement registering
the shares related to the convertible debentures and underlying warrants on or
prior to October 31, 2004. The company is required to have the registration
statement declared effective prior to February 7, 2004 and filed by October 31,
2004 or the Company will be in default.
The Company acquired Duration Software, Inc. ("Duration"), an Austin
based business and technology consulting firm, on September 24, 2004. Duration's
primary focus is on custom applications and integration solutions for
government, healthcare, and business. Its core service offerings include:
Application Design and Development; Application Integration; Database Design,
Development and Integration; and Project Management. In connection with the
acquisition of Duration from its five stockholders, the Company paid the selling
stockholders $450,000 in cash, and issued them $300,000 aggregate principal
amount of our non-interest bearing notes due February 1, 2007, and 15,000,000
shares of our common stock.
The Company entered into a definitive agreement to acquire Next Hire
("Next Hire") Consultants Inc., a Houston based staffing and permanent placement
firm, on July 12, 2004, and closed the acquisition on September 23, 2004. In
connection with the acquisition of Next Hire from its stockholder, the Company
issued 400,000 shares of our common stock.
On September 22, 2004, the Company increased its authorized number of shares of
common stock to 750,000,000.
ITEM 2 - Management's Discussion and Analysis
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve
risks and uncertainties. We use words such as anticipate, believe, plan, expect,
future, intend and similar expressions to identify such forward-looking
statements. You should not place too much reliance on these forward-looking
statements. Our actual results are likely to differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us described in this section.
The Company, previously known as Wallace Resources Inc., was organized
in the State of Idaho on August 26, 1968. Systems Evolution Inc., our Texas
operating company was acquired by the Company on September 9, 2003, and after
the acquisition, the Company's current directors and management took control of
the Company. We generate revenue from professional services performed for our
end-user customers and the end-user customers of our software partners.
Revenue is derived primarily from professional services provided on a
time and materials basis, with the remaining revenue provided from fixed fee
engagements. For time and material contracts, revenue is recognized and billed
by multiplying the number of hours expended by our professionals in the
performance of the contract by the established billing rates. For fixed fee
projects, revenue is generally recognized using the proportionate performance
method. Provisions for estimated losses on uncompleted contracts are made on a
contract-by-contract basis and are recognized in the period in which such losses
are determined. Billings in excess of costs plus earnings are classified as
deferred revenues. On many projects we are also reimbursed for out-of-pocket
expenses such as airfare, lodging and meals. These reimbursements are included
as a component of revenue.
Our revenue and operating results are subject to substantial variations
based on our customers' expenditures and the frequency with which we are chosen
to perform services for our customers. Revenue from any given customer will vary
from period to period.
Our gross margins are affected by trends in the utilization rate of our
professionals (defined as the percentage of our professionals' time billed to
customers, divided by the total available hours in the respective period), the
salaries we pay our consulting professionals, and the average rate we receive
from our customers. If a project ends earlier than scheduled or we retain
professionals in advance of receiving project assignments, our utilization rate
will decline and adversely affect our gross margins.
RECENT DEVELOPMENTS
The Company entered into a definitive agreement to acquire Southwest
CMS Technology Services LP and its general partner CMS Associates, LLC ("CMS"),
a San Antonio based network integration firm, on June 10, 2004, and closed the
acquisition on July 27, 2004. CMS's primary focus is Microsoft and Novell
network integration. In connection with the acquisition of CMS from its two
stockholders, the Company paid the selling stockholders $10,000 in cash, and
issued them $40,000 aggregate principal amount of our non-interest bearing notes
dependent upon the note holders being retained by the Company, and 200,000
shares of our common stock.
The Company entered into a definitive agreement to acquire Duration
Software, Inc. ("Duration"), an Austin based business and technology consulting
firm, on August 30, 2004, and closed the acquisition on September 24, 2004.
Duration's primary focus is on custom applications and integration solutions for
government, healthcare, and business. Its core service offerings include:
Application Design and Development; Application Integration; Database Design,
Development and Integration; and Project Management. In connection with the
acquisition of Duration from its five stockholders, the Company paid the selling
stockholders $450,000 in cash, and issued them $300,000 aggregate principal
amount of our non-interest bearing notes due February 1, 2007, and 15,000,000
shares of our common stock.
The Company entered into a definitive agreement to acquire Next Hire
("Next Hire") Consultants Inc., a Houston based staffing and permanent placement
firm, on July 12, 2004, and closed the acquisition on September 23, 2004. In
connection with the acquisition of Next Hire from its stockholder, the Company
issued 400,000 shares of our common stock.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDING AUGUST 31, 2004
Total gross revenue increased from $186,143 for the three month period
ended August 31, 2003 to $232,629 for the three month period ended August 31,
2004, an increase of 25%. The increase in revenue resulted in part from addition
of AXP Technologies Inc. and CMS.
Net loss from operations increased from $161,199 for the three month
period ended August 31, 2003 to $1,766,964 for the three month period ended
August 31, 2004.
OPERATING EXPENSES
Payroll and related costs make up the majority of our cost of revenue.
Total payroll and related costs increased from $259,952 for the three month
period ended August 31, 2003 to $303,865 for the three month period ended August
31, 2004, an increase of 17%. This increase is attributed to an increase in
staff.
General and administrative expenses consist of salaries and benefits
for sales, executive and administrative employees, training, marketing
activities, investor relations, recruiting, non-reimbursable travel costs and
expenses and miscellaneous expenses. General and administrative expenses
increased from $87,390 for three month period ended August 31, 2003 to
$1,695,728 for the three month period ended August 31, 2004. This increase is
related to hiring a professional management team, including Richard N. Hartmann
and Willie A. Jackson, Jr.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $29,356 for the three month
period ended August 31, 2004 compared to $67,084 used by operating activities
for the three month period ended August 31, 2003.
Net cash provided by financing activities was $19,834 for the three
month period ended August 31, 2004 compared to $38,305 for three month period
ended August 31, 2003. This increase was attributed to the acquisition of CMS.
On August 31, 2004, the Company executed a Purchase Agreement with
certain institutional and accredited investors under which the Company agreed to
sell and the purchasers agreed to purchase convertible promissory notes due
August 31, 2007 (the "Notes") in the aggregate principal amount of up to
$2,500,000 bearing interest at the rate of 8% per annum and convertible into
shares of our Common Stock at a conversion price of $0.05 per share. On
September 9, 2004, the Company completed the sale of an aggregate of $1,825,000
in Notes and accompanying Warrants under the Purchase Agreement which resulted
in net proceeds to the Corporation of $1,542,417. The Notes are initially
convertible into 36,500,000 shares of Common Stock, and an additional 36,500,000
shares of Common Stock are reserved for issuance upon exercise of the Warrants
issued to the note holders.
The Company estimates that our requirements for additional capital over
the next 15 months will be in the range of $675,000 to $1,800,000. There can be
no assurance we will be able to raise this additional required capital on
satisfactory terms, or at all. In the event we are unable to obtain such
additional capital or to obtain it on acceptable terms or in sufficient amounts,
the impact thereof would have a material adverse effect on our business,
operating results, financial condition and may affect our ability to carry on as
a Company.
CRITICAL ACCOUNTING POLICIES
Consulting revenues are comprised of revenue from professional services
fees recognized primarily on a time and materials basis as performed. For fixed
fee engagements, revenue is recognized using the proportionate performance
method (based on the ratio of hours expended to total estimated hours).
Provisions for estimated losses on uncompleted contracts are made on a
contract-by-contract basis and are recognized in the period in which such losses
are determined. Billings in excess of costs plus earnings are classified as
deferred revenues. Our normal payment terms are net 30 days. We record an
expense for the expected losses on uncollectible accounts receivable each period
based on known facts and circumstances for the respective period.
ITEM 3 - Controls and Procedures.
DISCLOSURE CONTROLS AND PROCEDURES. The Company's management, with
the participation of the Company's Chief Executive Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as of the end of the period covered by
this report. Based on such evaluation, the Company's Chief Executive Officer has
concluded that, as of the end of such period, the Company's disclosure controls
and procedures are effective in recording, processing, summarizing and
reporting, on a timely basis, information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act.
INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any
changes in the Company's internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over
financial reporting
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None.
ITEM 2 - Changes in Securities and Use of Proceeds
In June 2004, the Company issued 20,000 shares of restricted shares to
an employee as a signing bonus.
In June 2004, the Company sold 112,580 shares of stock to two private
investors at $0.31 per share. The transactions are viewed as exempt from
registration under the Securities Act of 1933, as amended, under section 4(2)
thereof, as transactions not involving any public offering.
On July 27, 2004, The Company issued 200,000 shares of stock to acquire
Southwest CMS Technology Services LP and its general partner CMS Associates,
LLC.
On July 28 and August 25 respectively, H.C. Wainwright and 1st SB
exercised warrants to purchase 1,500,000 and 750,000 shares of stock under their
respective consulting agreements with the Company.
ITEM 6 - Exhibits and Report on Form 8-K
(a) Exhibits.
Ex 10.7 Definitive Acquisition Agreement of CMS Technology Services, L.P.
Ex 31 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Ex 32 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed herewith.
(b) Reports on Form 8-K
During the three month period ended August 31, 2004, the Company
filed the following reports on Form 8-K:
On August 30, 2004, the Company filed a report on Form 8-K
concerning the change in Company's certifying accountants.
On August 30, 2004, the Company filed an amendment to its Form 8-K
filed March 26, 2004, relating to the acquisition of AXP Technologies, Inc.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Company caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Systems Evolution Inc.
Dated: October 20, 2004
/s/ Robert C. Rhodes
-------------------------
Robert C. Rhodes
Chief Executive Officer
And
Chief Financial Officer