UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 10, 2005
ROOMLINX, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 000-26213 83-0401552
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
401 Hackensack Avenue, 3rd Floor, Hackensack, New Jersey 07601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 525-1777
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On August 10, 2005, the Registrant entered into an Agreement and Plan of
Merger (the "Merger Agreement") by and among the Registrant, a wholly-owned
subsidiary of the Registrant ("Subcorp") and SuiteSpeed, Inc. ("SuiteSpeed")
pursuant to which, concurrent with the execution of the Merger Agreement (a)
Subcorp merged with and into SuiteSpeed, (b) SuiteSpeed became a wholly-owned
subsidiary of the Registrant, (c) the Registrant became obligated to issue a
total of 21,450,000 shares of its Common Stock to the former stockholders of
SuiteSpeed and (d) the Registrant became obligated to issue a total of 6,183,870
additional shares of its Common Stock to cancel certain indebtedness of
SuiteSpeed to its principal stockholder, Michael Wasik.
Pursuant to the Merger Agreement, Michael Wasik assumed the title of
Executive Vice President of the Wireless LAN Division of the Registrant. At the
closing, he entered into an employment agreement with a two year term providing
for base salary of $150,000 and stock options covering 1,000,000 shares of the
registrant's common stock. Subsequently, Mr. Wasik assumed the title of Chief
Executive Officer of the Registrant and as of October 15, 2005 reduced his
salary from $150,000 per year to $75,000 per year. Concurrently, Aaron Dobrinsky
reduced his salary from $200,000 per year to $75,000 per year.
SuiteSpeed is a provider of high-speed wireless Internet access solutions
to hotels. Prior to the negotiation of this transaction, there was no material
relationship between SuiteSpeed and the Registrant.
Item 2.01 Completion of Acquisition or Disposition of Assets
Reference is made to Item 1.01. On August 10, 2005, the Registrant
consummated the transactions contemplated by the Merger Agreement, pursuant to
which (a) Subcorp merged with and into SuiteSpeed, (b) SuiteSpeed became a
wholly-owned subsidiary of the Registrant, (c) the Registrant became obligated
to issue a total of 21,450,000 shares of its Common Stock to the former
stockholders of SuiteSpeed and (d) the Registrant became obligated to issue a
total of 6,183,870 additional shares of its Common Stock to cancel certain
indebtedness of SuiteSpeed to its principal stockholder.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to Item 1.01 with respect to the issuance by the
Registrant of 21,450,000 shares of the Registrant's common stock to the former
stockholders of SuiteSpeed and the issuance by the Registrant of 6,183,870
shares to Suitespeed's principal stockholder in cancellation of indebtedness
owed by SuiteSpeed. These shares were issued in a private placement of
securities exempt from registration under the Securities Act of 1933, as amended
(the "Act"), pursuant to Section 4(2) of the Act. There are a total of five
persons who will receive shares of the Registrant's common stock pursuant to the
Merger Agreement. Holders owning more than 98% of the outstanding SuiteSpeed
shares have provided the Registrant with investment representations and the
remaining holders will be required to provide such representations when
exchanging their SuiteSpeed shares for shares of the Registrant's common stock
The Registrant will arrange for the certificates representing the
securities issued pursuant to the Merger Agreement to be legended and subject to
stop transfer restrictions. The Registrant did not engage in any form of general
solicitation or general advertising in connection with these issuances.
-2-
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of businesses acquired.
Audited Financial Statements of SuiteSpeed, Inc. as of and for the Year
Ended December 31, 2004:
Independent Auditors' Report
Balance Sheet as of December 31, 2004
Statement of Operations for the years ended December 31, 2004 and 2003
Statements of Shareholders' (Deficit) for the years ended December 31,
2004 and 2003
Statement of Cash Flows for the years ended December 31, 2004 and 2003
Notes to Financial Statements
Unaudited Financial Statements of SuiteSpeed, Inc. as of and for the Six
Months Ended June 30, 2005:
Balance Sheet
Statement of Operations
Statement of Cash Flows
Notes to Financial Statements
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Combined Financial Statements as of and for
the Year Ended December 31, 2004:
Unaudited Pro Forma Condensed Combined Balance Sheet
Unaudited Pro Forma Condensed Combined Statement of Operations
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
Unauditied Pro Forma Condensed Combined Financial Statements as of and for
the Six Months Ended June 30, 2005.
Unaudited Pro Forma Condensed Combined Balance Sheet
Unaudited Pro Forma Condensed Combined Statement of Operations
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
(c) Exhibits.
The following exhibits have been filed with this Current Report on Form
8-K (as filed on August 16, 2005):
Exhibit 10.1 Agreement and Plan of Merger, dated as of August 10,
2005, by and among RoomLinX, Inc., SS-R Acquisition
Corp. and SuiteSpeed, Inc.
Exhibit 10.2 Employment Agreement, dated as of August 10, 2005,
between the Registrant and Michael Wasik.
Exhibit 99.1 Press release dated August 10, 2005.
-3-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROOMLINX, INC.
By: /s/ Michael Wasik
------------------------------------
Name: Michael Wasik
Title: Chief Executive Officer
Dated: December 2, 2005
-4-
EXHIBIT INDEX (PREVIOUSLY FILED)
Exhibit 10.1 Agreement and Plan of Merger, dated as of August 10,
2005, by and among RoomLinX, Inc., SS-R Acqusition Corp.
and SuiteSpeed, Inc.
Exhibit 10.2 Employment Agreement, dated as of August 10, 2005,
between the Registrant and Michael Wasik.
Exhibit 99.1 Press release dated August 10, 2005.
-5-
[LOGO]
SWS
STARK o WINTER o SCHENKEIN
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
SuiteSpeed, Inc.
Broomfield, Colorado
We have audited the accompanying balance sheet of SuiteSpeed Inc. as of December
31, 2004 and the related statements of operations, changes in shareholders'
deficit and cash flows for the years ended December 31, 2004 and 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based upon
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
and has working capital and stockholders' deficits. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SuiteSpeed, Inc. as of December
31, 2004, and the results of its operations and its cash flows for the years
ended December 31, 2004 and 2003, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Stark Winter Schenkein & Co., LLP
September 22, 2005 Denver,
Colorado
STARK o WINTER o SCHENKEIN &Co., LLP o Certified Public Accountants
o Financial Consultants
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7535 EAST HAMPDEN AVENUE o SUITE 109 o DENVER, COLORADO 80231
PHONE: 303.694.6700 o FAX: 303.694.6761 o TOLL FREE: 888.766.3985
o WWW.SWSCPAS.COM
SUITESPEED. INC.
Balance Sheet
December 31, 2004
ASSETS
Current assets:
Cash $ 31,381
Accounts receivable 78,297
Inventory 5,033
Prepaid and other current assets 5,901
-----------
Total current assets 310,612
-----------
Property and equipment, net 298,014
-----------
$ 608,626
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 154,804
Related party accrued expenses 14,063
Deferred revenue 568,221
Note payable 300,000
Related party notes payable 170,000
Other current liabilities 24,915
-----------
Total current liabilities 1,232,003
-----------
Commitments and contingencies
Stockholders' (Deficit)
Preferred stock, stated value $0.0001,
5,000,000 shares authorized;
none issued and outstanding
Common stock, $0.0001 par value,
5,000,000 shares authorized;
2,002,086 shares issued and outstanding 200
Additional paid in capital 1,043
Accumulated (deficit) (624,620)
-----------
(623,377)
-----------
$ 608,626
===========
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
Statements of Operations
For the Years Ended December 31, 2004 and 2003
2004 2003
----------- -----------
Revenue
System sales and installation $ 1,005,384 $ 52,818
Service, maintenance and usage 487,463 185,845
----------- -----------
1,492,847 238,663
----------- -----------
Costs and expenses
Stock compensation 1,043 --
System sales and installation 660,609 146,023
Service, maintenance and usage 280,676 79,586
Sales and marketing 100,222 33,595
General and administrative 439,348 258,573
Depreciation 115,429 31,095
----------- -----------
1,597,327 548,872
----------- -----------
(Loss) before other costs and expenses (104,480) (310,209)
Other costs and expenses
Interest expense 20,149 213
----------- -----------
Net (loss) $ (124,629) $ (310,422)
=========== ===========
Per Share Information - Basic and Diluted
Net (loss) per share $ (0.06) $ (0.16)
=========== ===========
Weighted-average number of common shares outstanding 2,000,429 2,000,000
=========== ===========
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
Statement of Stockholders' (Deficit)
For the Years Ended December 31, 2004 and 2003
Additional
Common Stock Paid in Accumulated
Shares Amount Capital (Deficit) Total
------------ ------------ ------------ ------------ ------------
Balance as of December 31, 2002 2,000,000 $ 200 $ -- $ (189,569) $ (189,369)
Net (loss) (310,422) (310,422)
------------ ------------ ------------ ------------ ------------
Balance as of December 31, 2003 2,000,000 200 -- (499,991) (499,791)
Issue shares of common stock for payment
of services 2,086 -- 1,043 -- 1,043
Net (loss) (124,629) (124,629)
------------ ------------ ------------ ------------ ------------
Balance as of December 31, 2004 2,002,086 $ 200 $ 1,043 $ (624,620) $ (623,377)
============ ============ ============ ============ ============
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
Statements of Cash Flows
For the Years Ended December 31, 2004 and 2003
2004 2003
--------- ---------
Operating activities
Net (loss) $(124,629) $(310,422)
Adjustments to reconcile net (loss)
to cash provided by (used in)
operating activities
Depreciation 115,429 31,095
(Increase) in accounts receivable (5,721) (172,385)
(Increase) in inventory (54,410) (32,785)
(Increase) decrease in prepaid assets (5,901) 3,406
Increase in deferred revenue 145,691 385,340
Increase in accounts payable and accrued expenses 64,398 4,893
Increase in related party accrued expenses 14,063 --
Increase in other liabilities 8,615 13,300
--------- ---------
Cash provided by (used in) operating activities 157,535 (77,558)
--------- ---------
Investing activities
Purchase of property and equipment (220,175) (203,014)
--------- ---------
Cash (used in) investing activities (220,175) (203,014)
--------- ---------
Financing activities
(Repayment) proceeds from related parties, net (212,727) 82,250
Proceeds from Bank loan 300,000 --
--------- ---------
Cash provided by financing activities 87,273 82,250
--------- ---------
Net increase (decrease) in cash 24,633 (198,322)
Cash, beginning of year 6,748 205,070
--------- ---------
Cash, end of year $ 31,381 $ 6,748
========= =========
Cash interest paid $ 10,301 $ 213
========= =========
Cash paid for income taxes $ -- $ --
========= =========
Non-cash investing and financing activities
Issuance of common stock for settlement of accounts payable $ 1,043 $ --
========= =========
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The Company sells, installs and services hardware and software for wired
networking solutions and Wireless Fidelity networking solutions, also known as
Wi-Fi, for high speed internet access to hotels, convention centers, and
apartments. The Company installs and provides services that address the
productivity and communications needs of hotel guests, convention center
exhibitors, and apartment residents. The Company specializes in providing
advanced Wi-Fi wireless services such as the wireless standards known as
802.11a/b/g. The Company has utilized employees and third party contractors to
install such hardware and software.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern.
The Company has experienced losses from operations as a result of its investment
necessary to achieve its operating plan, which is long-range in nature. For the
year ended December 31, 2004, the Company incurred a net (loss) of $124,629. At
December 31, 2004, the Company had a working capital (deficit) of $(921,391) and
stockholders' (deficit) of $(623,377).
The Company's ability to continue as a going concern is contingent upon its
ability to obtain capital, incur debt or be party to an acquisition agreement.
The Company is reliant on advances from affiliates to maintain operations and is
currently seeking acquisition candidates and capital.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
Cash equivalents consist of highly liquid investments with an original maturity
of three months or less when purchased.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities and
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates. Significant estimates that
affect the financial statements include, but are not limited to: collectibility
of accounts receivable, amortization periods and recoverability of long-lived
assets.
Receivables and Credit Policies
The carrying amount of accounts receivable is reduced by a valuation allowance
that reflects the Company's best estimate of the amounts that may not be
collected. This estimate is based on reviews of all balances in excess of 90
days from the invoice date and, based on an assessment of current
creditworthiness, estimates the portion, if any, of the balance that will not be
collected. The Company reviews its valuation allowance on a quarterly basis. At
December 31, 2004, the Company determined that there was no need for a valuation
allowance.
Inventories
Inventory, principally wireless devices related to Wi-Fi installations, is
stated at the lower of cost (first-in, first-out) basis or market. Inventories
are recorded net of any reserve for excess and obsolescence.
Work in Progress
Work in progress represents the cost of wireless equipment and third party
installation related to installations which were not completed prior to year
end. No profits have been recognized with respect to work in progress. As of
December 31, 2004 there was no work in progress.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the related assets,
including assets held under capital leases, ranging from two to seven years.
Expenditures for maintenance and repairs are charged to expense as incurred.
Revenue and Deferred Revenue
Over the course of its development, the Company has derived revenue from the
following sources:
(i) Revenue from the sale and installation of Wi-Fi wireless networking
solutions is recognized under contracted arrangements upon delivery and
installation at customer sites where the fee is fixed or determinable and
collection is probable. Where the contracted arrangement provides for customer
acceptance or there is uncertainty about customer acceptance, revenue is
deferred until the Company has evidence of customer acceptance. Customers
generally do not have the right to return.
(ii) Revenue from the lease of Wi-Fi wireless networking solutions
installed by the Company under contracted arrangements are accounted for as
either an operating lease or a "Sales Type Financing" capital lease in the event
title to the equipment transfers to the customer. Under the terms of the
installation contract, 50% of the cost of installation is invoiced and due at
the time of contract execution and the remaining 50% is invoiced and due upon
acceptance of the installation of the equipment, resulting in the total cost of
installation being invoiced in advance of the lease term. These invoices are
reclassified to Deferred Revenue, which is amortized on a straight line basis
over the life of the contract term.
(iii) Service maintenance and monitoring revenue ("Recurring Revenue") are
recognized under contracted arrangements with customers when the fee is fixed or
determinable and collection is probable. Service and maintenance contract
revenue is recognized ratably over the contractual period. Usage fees are
recognized under specific customer contracts as services are rendered where the
fee is fixed or determinable and collection is probable.
Deferred revenue consists of payments received in advance of revenue being
earned under installation and service contracts described above. Specific to
installations, contracted arrangements in which title to the installed equipment
either remains with the Company or transfers to the customer at the end of the
term via a bargain purchase option is recorded to deferred revenue and is
amortized to installation revenue on a straight line basis over the life of the
service contract. Additionally, service maintenance and monitoring fees are
invoiced in advance of the quarter such service is provided. This deferred
revenue is amortized to recurring revenue monthly as earned.
Income Taxes
Deferred income taxes are determined using the asset and liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. A valuation allowance is recorded
when the expected recognition of a deferred tax asset is considered to be
unlikely.
Stock-Based Employee Compensation
The Company accounts for employee stock-based compensation in accordance with
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees", using an intrinsic value approach to measure compensation
expense, if any. Under this method, compensation expense is recorded on the date
of the grant only if the current market price of the underlying stock exceeds
the exercise price. Options issued to non-employees are accounted for in
accordance with SFAS 123, "Accounting for Stock-Based Compensation", and SFAS
No. 148, "Accounting for Stock-Based Compensation Transition and Disclosure,
using a fair value approach. SFAS No. 123 established accounting and disclosure
requirements using a fair value-basis method of accounting for stock-based
employee compensation plans. As allowed by SFAS No. 123, the Company has elected
to continue to apply the intrinsic value-based method of accounting described
above, and has adopted the disclosure requirements of SFAS No. 123. Had the
Company elected to recognize compensation cost based on the fair value of the
stock options at the date of grant under SFAS 123, such costs would have been
recognized ratably over the vesting period of the underlying instruments.
Had the Company elected to recognize compensation cost based on the fair value
of the stock options at the date of grant under SFAS 123, such costs would have
been recognized ratably over the vesting period of the underlying instruments
and the Company's net loss and net loss per common share would have increased to
the pro forma amounts indicated in the table below.
Year ended
December 31, 2004
------------------
Net (loss) $ (124,629)
Add: Total stock-based employee compensation expense determined under fair value
based method for all awards $ (14,272)
------------------
Pro forma net (loss) $ (138,901)
==================
Net (loss) per share, as reported $ (0.06)
==================
Pro forma net (loss) per share $ (0.07)
==================
The pro forma results above are not intended to be indicative of or a projection
of future results.
Earnings (Loss) Per share
The Company computes net loss per share under the provisions of SFAS No. 128,
"Earnings per Share" (SFAS 128), and SEC Staff Accounting Bulletin No. 98 (SAB
98). Under the provisions of SFAS 128 and SAB 98, basic loss per share is
computed by dividing the Company's net loss attributable to common stockholders
for the year by the weighted-average number of shares of common stock
outstanding during the period. Diluted net loss per share excludes potential
common shares if the effect is antidilutive. Diluted loss per share is
determined in the same manner as basic loss per share except that the number of
shares is increased assuming exercise of dilutive stock options using the
treasury stock method.
At December 31, 2004, stock options outstanding for 78,000 shares have been
excluded since they are antidilutive.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments, which include cash
and cash equivalents, accounts receivable, accounts payable, accrued expenses
and notes payable approximate their fair values due to the short maturity of
these items.
Recent Accounting Pronouncements
In November 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
151, "Inventory Costs - An Amendment of ARB No. 43, Chapter 4" ("SFAS 151").
SFAS 151 amends the guidance in ARB No. 43, Chapter 4 to clarify the accounting
for abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). The provisions of SFAS 151 are effective for
inventory costs incurred during fiscal years beginnng after June 15, 2005. The
adoption of SFAS 151 is not expected to have a material effect on the Company's
financial condition or results of operations.
In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary Assets -
an amendment of APB Opinion No. 29" ("SFAS 153"). SFAS 153 amends APB Opinion 29
to eliminate the similar productive asset exception and establishes that
exchanges of productive assets should be accounted for at fair value, rather
than at carryover basis unless (1) neither the asset received nor the asset
surrendered has a fair value that is determinable within reasonable limits, (2)
the transaction is an exchange transaction to facilitate sales to customers, or
(3) the transaction lacks commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of SFAS 153 are
effective for nonmonetary exchanges occurring in fiscal periods beginning after
June 15, 2005. The adoption of SFAS 153 is not expected to have a material
effect on the Company's financial condition or results of operations.
In December 2004, the FASB issued SFAS 123R, "Share-Based Payment". SFAS 123R
establishes that employee services received in exchange for share-based payments
result in a cost that should be recognized in the income statement as an expense
when the services are consumed by the enterprise. It further establishes that
those expenses be measured at fair value determined as of the grant date. For
the Company, the provisions of SFAS 123R become effective as of the beginning of
the first annual reporting period that begins after December 15, 2005. The
Company is currently evaluating the effect that the adoption of SFAS 123R will
have on the Company's financial condition and results of operations.
NOTE 3 - PROPERTY AND EQUIPMENT
The components of property and equipment as of December 31, 2004, are as
follows:
Accumulated
Cost Depreciation Book Value
------------ ------------ ------------
Furnishings $ 8,403 $ 1,333 $ 7,070
Assets held for Lease 441,134 150,190 290,944
------------ ------------ ------------
$ 449,537 $ 151,523 $ 298,014
============ ============ ============
Depreciation expense for the years ended December 31, 2004 and 2003, totaled
$115,429 and $31,095, respectively.
NOTE 4 - NOTES PAYABLE
At December 31, 2004, the Company had a bank note of $300,000 and related party
notes payable of $170,000.
The bank note is a $300,000 carve out of a $500,000 Line of Credit to a related
party. Under the terms of the note, accounts receivable and inventory
collateralize the outstanding balance. In addition, the majority shareholder of
the Company has personally guaranteed the loan balance. As of December 31, 2004,
the interest rate was 6.0%. The Line of Credit matured on March 31, 2005. This
date was initially extended to June 30, 2005 at the request of the Company.
Thereafter, the parties executed a new credit facility with a maturity date of
September 1, 2006, for the line of credit. Concomitant with the extension of the
line of credit, the Company's $300,000 carve out was termed with a maturity date
of September 1, 2006. Under the term note, the Company agreed to make monthly
principal payments of $10,000 plus interest until September 1, 2006, at which
time a balloon payment for the remaining principal balance of $180,000 is due.
Each of the Company related party notes payable are unsecured, bear interest at
5.5% and are payable on demand with a maturity date of December 31, 2005. During
the year ended December 31, 2004, the Company did not make any loan interest
payments on the $170,000 of related party notes. Accordingly at December 31,
2004, the Company had accrued interest payable of $9,848. On August 10, 2005, as
described in Note 8, the Company executed a merger with RoomlinX, Inc. at which
time the related party interest payable had accumulated to $15,491. The related
party distributed the face amount of the notes payable plus accrued interest
totaling $185,491 to its majority shareholder, who is also the majority
shareholder of the Company. Immediately thereafter, RoomlinX issued 6,183,870
shares of common stock in exchange for and full payment of the total amount owed
to such shareholder.
NOTE 5 - RELATED PARTY TRANSACTIONS
A substantial portion of the Company's working capital and personnel were funded
by the related party through 2003, either as a loan or as a payable. In
addition, the Company leases office space from this related party. Additional
shared services include employee benefits including the employee health plan and
the 401k Plan.
During the year ended December 31, 2004, the Company made rent payments of
$30,000 directly to the lessee and $3,179 in employee benefits to the related
party. At December 31, 2004, the total amount due to the related party was
$14,063, consisting of $9,848 of accrued interest and $4,215 of accrued employee
benefits.
NOTE 6 - STOCKHOLDERS' DEFICIT
Common Stock
As of December 31, 2004, 2,002,086 shares of Common Stock were issued and
outstanding of which 2,086 shares were issued pursuant to a partial payment
totaling $1,043 for services provided by a consultant.
Stock Options
The Company adopted a long term incentive stock option plan (the "Stock Option
Plan") effective January 1, 2004. The Stock Option Plan provides for the
issuance of 1,000,000 shares of common stock upon exercise of options which may
be granted pursuant to the Stock Option Plan. As of December 31, 2004, options
granted to purchase 78,000 shares were outstanding and 922,000 shares are
available for future grants of options. The options vest over a four year period
from the date of issue and are exercisable for a period of no more than 10 years
with the exception that all outstanding options become immediately exercisable
concomitant with a liquidating event. On August 8, 2005 (See Note 8) such an
event occurred with the sale of 100% of the outstanding shares of common stock
to RoomlinX.
A summary of stock option activity for 2004 is as follows:
2004
---------------------------------
Weighted Average
Shares Exercise Price
-------------- --------------
Outstanding, beginning of year -- $ --
Granted 128,000 $ 0.46
Exercised -- --
Forfeited (50,000) --
--------------
Outstanding on December 31, 78,000 $ 0.43
==============
Exercisable on December 31, 34,666 $ 0.50
==============
Shares available for grant on December 31, 922,000
==============
The following table summarizes information about the Company's stock options, at
December 31, 2004:
Outstanding Stock Options Exercisable Stock
-------------------------------------------------------- --------------------------------------
Remaining
Contractual Weighted Average Weighted Average
Exercise Prices Shares Life Exercise Price Shares Exercise Price
- ---------------------- ------------- -------------- -------------------- ------------ --------------------
$0.01 10,500 7-10 $ 0.01 10,500 $ 0.01
$0.50 67,500 7-10 $ 0.50 24,166 $ 0.50
------------ -------------------- ------------ --------------------
78,000 $ 0.43 34,666 $ 0.19
============ ==================== ============ ====================
NOTE 7 - INCOME TAXES
Prior to 2004, the Company filed its corporate tax returns as an S Corporation,
a pass through entity for income tax reporting purposes; as such, the Company's
taxable losses passed through to its shareholders on a pro rata basis consistent
with their ownership interests. Accordingly, there was no Federal Net Operating
Loss ("NOL") carryforward at December 31, 2003.
Effective January 1, 2004 the Company converted from an S Corporation to a C
Corporation for income tax reporting purposes. For the taxable year ended
December 31, 2004, the Company generated a taxable net operating loss of
approximately $238,000. Utilization of this NOL carryforward to offset future
taxable earnings may be carried forward for a period of 20 years; accordingly,
this NOL expires through 2024. The Tax Reform Act of 1986 enacted a complex set
of rules limiting the potential utilization of net operating loss and tax credit
carryforwards in periods following a corporate "ownership change." The Company
has not performed a detailed analysis to determine the amount of the potential
limitations.
The Company's statutory tax rate is reduced to zero due to the impact of
unbenefited tax loss carryforwards.
Deferred income taxes result principally from temporary differences in the
recognition of certain revenue and expense items for financial and income tax
reporting purposes. Deferred tax assets and liabilities of the Company as of
December 31, 2004, are as follows:
Deferred income tax assets:
Net operating (loss) carryforwards $ 237,650
Valuation allowance for deferred income tax assets (237,650)
---------
Net deferred income tax assets $ --
=========
Due to the uncertainty surrounding the realization of deferred income tax assets
in future income tax returns, the Company has recorded a 100% valuation
allowance against its deferred income tax asset.
A reconciliation between the Company's effective tax rate and the Federal and
State statutory rates as of December 31, 2004, is as follows:
Statutory federal and state income tax (benefit) at 39% $(92,700)
Non-deductible expenses 6,000
Temporary Differences
Direct Financing Capital Leases 19,500
Valuation Allowance 67,200
--------
Total $ --
========
NOTE 8 - SUBSEQUENT EVENTS
Merger with RoomlinX, Inc.
On April 1, 2005, the Company entered into a non-binding letter of intent to
sell all of its outstanding stock in exchange for 21,450,000 shares of common
stock of RoomlinX, Inc. Subsequently on August 10, 2005, this acquisition was
executed. Immediately prior to the execution of this transaction, the
individuals with stock options terminated their rights to exercise their
SuiteSpeed options, which had an option price of $0.50 per share in exchange for
a corresponding number of options in RoomlinX with an option price of $0.03 per
share.
Stock Issued in lieu of Payment
The Company had engaged an investment banker while exploring several
opportunities regarding the sale of its stock. In exchange for that service, on
January 1, 2005 the Company issued 233,406 shares of common stock to SilverLeaf
Consulting LLC in lieu of a $10,000 payment.
SUITESPEED. INC.
Balance Sheet
June 30, 2005
(Unaudited)
ASSETS
Current assets:
Cash $ 10,581
Accounts receivable 163,508
Inventory 64,014
Prepaid and other current assets 9,418
---------
Total current assets 247,521
---------
Property and equipment, net 282,684
---------
$ 530,205
=========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 126,203
Related party accrued expenses 15,491
Deferred revenue 485,265
Note payable, current portion 80,000
Related party notes payable 170,000
Other current liabilities 26,615
---------
Total current liabilities 903,574
---------
Notes payable, non-current 220,000
---------
Commitments and contingencies
Stockholders' (Deficit)
Preferred stock, stated value $0.0001,
5,000,000 shares authorized;
none issued and outstanding --
Common stock, $0.0001 par value,
5,000,000 shares authorized;
2,240,492 shares issued and outstanding 224
Additional paid in capital 13,519
Accumulated (deficit) (607,112)
---------
(593,369)
---------
$ 530,205
=========
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------- -------------- -------------- --------------
Revenue
System sales and installation $ 118,200 $ 427,126 $ 199,231 $ 593,855
Service, maintenance and usage 134,735 117,899 283,581 220,424
-------------- -------------- -------------- --------------
252,935 545,025 482,812 814,279
-------------- -------------- -------------- --------------
Costs and expenses
Stock compensation -- -- 12,500 --
System sales and installation 20,357 351,285 21,762 500,266
Service, maintenance and usage 75,007 46,611 133,097 85,762
Sales and marketing 18,012 28,870 37,036 69,912
General and administrative 90,548 91,360 175,172 207,938
Depreciation 40,068 22,090 79,846 41,001
-------------- -------------- -------------- --------------
243,992 540,216 459,413 904,878
-------------- -------------- -------------- --------------
Income (loss) before other costs and expenses 8,943 4,809 23,399 (90,599)
Other costs and expenses
Interest expense 7,580 6,680 14,293 8,144
-------------- -------------- -------------- --------------
Net income (loss) $ 1,363 $ (1,871) $ 9,106 $ (98,742)
============== ============== ============== ==============
Per Share Information - Basic and Diluted
Net income (loss) per share $ 0.00 $ (0.05) $ 0.00 $ (0.05)
============== ============== ============== ==============
Weighted-average number of common shares
outstanding 2,235,659 2,000,000 2,240,492 2,000,000
============== ============== ============== ==============
The accompanying footnotes are an integral part of these financial statements.
SUITESPEED, INC.
Statements of Cash Flows
(Unaudited)
Six Months Ended
----------------------------------
June 30, 2005 June 30, 2004
-------------- --------------
Operating activities
Cash provided by (used in) operating activities $ 35,115 $ (46,182)
-------------- --------------
Investing activities
Purchase of property and equipment (55,915) (151,547)
-------------- --------------
Cash (used in) investing activities (55,915) (151,547)
-------------- --------------
Financing activities
Proceeds from Bank loan -- 300,000
-------------- --------------
Cash provided by financing activities -- 300,000
-------------- --------------
Net increase (decrease) in cash (20,800) 102,271
Cash, beginning of period 31,381 6,748
-------------- --------------
Cash, end of period $ 10,581 $ 109,019
============== ==============
Cash paid for interest $ 8,650 $ 8,144
============== ==============
Cash paid for income taxes $ -- $ --
============== ==============
The accompanying footnotes are an integral part of these financial statements.
Suitespeed, Inc.
Notes to Financial Statements
June 30, 2005
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-B and include the results of Suitespeed, Inc. (the "Company").
Accordingly, certain information and footnote disclosures required in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted. In the opinion of the
Company's management, the accompanying unaudited condensed financial statements
contain all adjustments (consisting only of normal recurring adjustments except
as otherwise disclosed herein) that the Company considers necessary for the fair
presentation of its financial position as of June 30, 2005, the results of its
operations for the three and six month periods ended June 30, 2005 and 2004, and
its cash flows for the six month periods ended June 30, 2005 and 2004.
The Company sells, installs and services hardware for wired networking solutions
and Wireless Fidelity networking solutions, also known as Wi-Fi, for high speed
internet access to hotels, convention centers, corporate apartments and
apartments. The Company installs and provides services that address the
productivity and communications needs of hotel guests, convention center
exhibitors, corporate apartment customers and individual consumers. The Company
specializes in providing advanced Wi-Fi wireless services such as the wireless
standards known as 802.11a/b/g. The Company utilizes third party contractors to
install such hardware and software.
The accompanying unaudited financial statements have been prepared assuming that
the Company will continue as a going concern. However, the Company has incurred
significant operating losses since its inception and, as of June 30, 2005, had a
working capital (deficit) and stockholders' (deficit) of $(656,053) and
$(593,369), respectively. Accordingly, this raises substantial doubt about the
Company's ability to continue as a going concern. As of June 30 2005, the
Company had $10,581 in cash. Management has evaluated the Company's alternatives
to enable it to pay its liabilities as they become due and payable in the
current year, reduce operating losses and obtain additional or new financing in
order to advance its business plan. Additional alternatives being considered by
management include obtaining financing from new lenders and the issuance of
additional equity or debt. Additionally, the Company has implemented cost
reduction measures in the areas of general and administrative and sales
expenses, which includes reduction in staff.
Results for the interim period are not necessarily indicative of results that
may be expected for the entire year.
Note 2 - Earnings Per Share
The Company computes net loss per share under the provisions of SFAS No. 128,
"Earnings per Share" (SFAS 128), and SEC Staff Accounting Bulletin No. 98 (SAB
98).
Under the provisions of SFAS 128 and SAB 98, basic net loss per share is
computed by dividing the Company's net loss for the period by the
weighted-average number of shares of common stock outstanding during the period.
Diluted net loss per share excludes potential common shares if the effect is
anti-dilutive. Diluted net loss per share is determined in the same manner as
basic net loss per share except that the number of shares is increased assuming
exercise of dilutive stock options and warrants using the treasury stock method
and shares issuable upon conversion of convertible debt and adding back to net
loss the related interest expense. As the Company had a net loss, the impact of
the assumed exercise of stock options is anti-dilutive and as such, these
amounts have been excluded from the calculation of diluted loss per share.
Note 3 - Notes Payable
At June 30, 2005 the Company has a bank note with an outstanding balance of
$300,000 carved out of a $500,000 Line of Credit to a related party. Under the
terms of the note, accounts receivable and inventory collateralize the
outstanding balance. In addition, the majority shareholder of the Company has
personally guaranteed the loan balance. As of June 30, 2004, the interest rate
was 7.25%. The Line of Credit matured on March 31, 2005. This date was initially
extended to June 30, 2005, at the request of the Company. Thereafter, the
parties executed a new credit facility with a maturity date of September 1,
2006, for the line of credit. Concomitant with the extension of the line of
credit, the Company's $300,000 carve out was termed with a maturity date of
September 1, 2006. Under the term note, the Company agreed to make monthly
principal payments of $10,000 plus interest until September 1, 2006, at which
time a balloon payment for the remaining principal balance of $180,000 is due.
At June 30, 2005, the Company had related party notes payable totaling $170,000
that are unsecured, bear interest at 5.5% and are payable on demand with a
maturity date of December 31, 2005. During the six months ended June 30, 2005,
the Company did not make any loan interest payments on these notes; at June 30,
2005, accrued interest payable to the related party was $14,471.
Note 4 - Stockholders' (Deficit)
Common Stock
As of June 30, 2005, 2,240,492 shares of Common Stock were issued and
outstanding.
The following common stock transactions were executed during the six months
ended June 30th, 2005: (i) on January 1, 2005, the Company issued 233,406 shares
of Common Stock to an investment banker for services to be incurred associated
with the Company's merger with RoomlinX, Inc. and (ii) the Company issued 5,000
of exerciseable stock options to a former employee.
Stock Options
The Company adopted a long term incentive stock option plan (the "Stock Option
Plan") effective January 1, 2004. The Stock Option Plan provides for the
issuance of 1,000,000 shares of common stock upon exercise of options which may
be granted pursuant to the Stock Option Plan. As of June 30, 2005, options
granted to purchase 17,500 shares were outstanding and 982,500 shares are
available for future grants of options. The options vest over a four year period
from the date of issue and are exercisable for a period of no more than 10 years
with the exception that all outstanding options become immediately exercisable
concomitant with a liquidating event. On August 8, 2005, such an event occurred
with the sale of 100% of the outstanding shares of common stock to RoomlinX.
A summary of stock option activity for the six months ended June 30, 2005, is as
follows:
June 30, 2005
--------------------------------------
Weighted Average
Shares Exercise Price
---------------- ----------------
Outstanding on January 1, 78,000 $ 0.43
Granted 7,500 0.50
Exercised (5,000) 0.50
Forfeited (63,000) --
----------------
Outstanding on June 30, 17,500 0.43
================
Exercisable on June 30, 3,750 $ 0.04
================
Shares available for grant on June 30, 982,500
================
The following table summarizes information about the Company's stock options at
June 30, 2005.
Outstanding Stock Options Exercisable Stock
------------------------------------------------------------ ---------------------------------
Remaining Weighted Weighted
Contractual Average Average
Exercise Prices Shares Life Exercise Price Shares Exercise Price
- --------------------- ------------------ -------------- -------------------- ------------- ---------------
$0.01 2,500 7-10 $ 0.01 2,500 $ 0.01
$0.50 15,000 7-10 0.50 1,250 0.50
------------------ -------------------- ------------- --------------
17,500 $ 0.30 3,750 $ 0.04
================== ==================== ============= ===============
Note 5 - Subsequent Events
On August 10, 2005, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with RoomlinX, Inc, and it's wholly-owned subsidiary
(hereinafter referred to as "Subcorp") pursuant to which, concurrent with the
execution of the Merger Agreement (a) Subcorp merged with and into the Company,
(b) the Company became a wholly-owned subsidiary of RoomlinX, (c) the
stockholders of the Company exchanged their 2,238,835 outstanding shares of
common stock for 21,450,000 shares of RoomlinX Common Stock and (d) RoomlinX
issued 6,183,870 shares of Common Stock to Michael Wasik, the Company's
principal stockholder in exchange for and full payment of Related Party Notes
Payable and accrued interest totaling $185,491.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF ROOMLINX, INC.
The following unaudited pro forma condensed combined financial statements give
effect to the acquisition of SuiteSpeed, Inc. by way of the merger of a
subsidiary of RoomLinX with SuiteSpeed. This transaction is accounted for
utilizing the purchase method of accounting. The pro forma condensed combined
balance sheet combines the December 31, 2004 and June 30, 2005 balance sheets of
RoomLinX and SuiteSpeed. The pro forma condensed combined statement of
operations for the year ended December 31, 2004 and six months ended June 30,
2005 reflects the historical results of RoomLinX and SuiteSpeed for the year
ended December 31, 2004 and six months ended June 30, 2005.
The pro forma adjustments are based on currently available information and upon
estimates and assumptions that we believe are reasonable under the
circumstances. You should read the accompanying unaudited pro forma condensed
combined financial data and related notes in conjunction with the unaudited
financial statements and notes thereto included in RoomLinX's Form 10-QSB for
the quarter and six months ended June 30, 2005 and the audited financial
statements and notes thereto included in RoomLinX's Form 10-KSB for the year
ended December 31, 2004.
The pro forma condensed consolidated financial statements included in this
filing have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles in the United States of America have been
condensed or omitted pursuant to such rules and regulations. However, we believe
that the disclosures are adequate to make the information not misleading.
RoomLinX, Inc.
Pro Forma Condensed Combined Balance Sheet
December 31, 2004
(Unaudited)
Historical Historical Pro Forma Pro Forma
RoomLinX SuiteSpeed Adjustments Combined
------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash $ 10,141 $ 31,381 $ $ 41,522
Accounts receivable and other 178,059 178,297 356,356
Inventory 27,707 95,033 122,740
Work in progress 54,738 54,738
Due from sale of continuing professional segment 75,000 75,000
Prepaid and other current assets 26,218 5,901 32,119
------------ ------------ ------------ ------------
Total Current Assets 371,862 310,612 -- 682,474
Property and equipment, net 188,724 298,014 486,738
Goodwill 625,522 (4) 625,522
Other assets 15,489 15,489
------------ ------------ ------------ ------------
Total assets $ 576,075 $ 608,626 $ 625,522 $ 1,810,223
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts Payable and Accrued Expenses $ 953,155 154,804 1,107,959
Deferred revenue 46,032 568,221 614,253
Current portions of obligations under capital lease 243,383 243,383
Loans Payable 206,220 206,220
Other current liabilities 29,101 24,915 54,016
Convertible debenture 10,000 10,000
Related party accrued expenses 14,063 14,063
Notes payable 300,000 300,000
Related party notes payable 170,000 (170,000) (3) --
------------ ------------ ------------ ------------
Total Current Liabilities 1,487,891 1,232,003 (170,000) 2,549,894
Commitments and contingencies
Stockholders' (Deficit)
Preferred Stock, Stated Value $.20; 5,000,000 Shares Authorized;
Issued and Outstanding 720,000 Shares
144,000 144,000
Common Stock, $.001 Par Value, Authorized 250,000,000 shares
103,991,779 shares; 131,625,649, pro forma shares outstanding) 103,992 200 1,945 (1) 106,755
618 (3)
Additional Paid in Capital 16,617,261 1,043 (1,043) (1) 16,786,643
169,382 (3)
Accumulated Deficit (17,777,070) (624,620) 624,620 (2) (17,777,070)
------------ ------------ ------------ ------------
Total stockholders' deficit (911,817) (623,377) 795,522 (739,672)
------------ ------------ ------------ ------------
Total liabilities and stockholders' deficit $ 576,074 $ 608,626 $ 625,522 $ 1,810,222
============ ============ ============ ============
See notes to the unaudited pro forma condensed combined financial statements.
Pro Forma Condensed Combined Statements of Operations
For the Year Ended December 31, 2004
(Unaudited)
Historical Historical Pro Forma Pro Forma
RoomLinX SuiteSpeed Adjustments Combined
------------- ------------- ------------- -------------
Revenues
System sales and installation $ 1,252,953 $ 1,005,384 $ -- $ 2,258,337
Service, maintenance and usage 755,968 487,463 1,243,431
------------- ------------- ------------- -------------
2,008,921 1,492,847 -- 3,501,768
Cost of revenue
System sales and installation 1,069,156 660,609 1,729,765
Service, maintenance and usage 415,811 280,676 696,487
------------- ------------- ------------- -------------
1,484,967 941,285 -- 2,426,252
------------- ------------- ------------- -------------
Gross profit 523,954 551,562 -- 1,075,516
Operating expenses
Sales and marketing 1,015,638 100,222 1,115,860
General and administrative 1,492,933 439,348 1,932,281
Stock compensation 1,043 1,043
Depreciation 88,338 115,429 203,767
------------- ------------- ------------- -------------
2,596,909 656,042 -- 3,252,951
------------- ------------- ------------- -------------
Loss before other costs and expenses (2,072,955) (104,480) -- (2,177,435)
------------- ------------- ------------- -------------
Other costs and expenses
Interest expense (54,071) (20,149) -74,220
Reorganization costs (10,026,707) -- -10,026,707
Loss on foreign exchange (21,867) -21,867
------------- ------------- ------------- -------------
Total other costs and expenses (10,102,646) (20,149) -- (10,122,795)
------------- ------------- ------------- -------------
Net loss $ (12,175,601) $ (124,629) $ -- $ (12,300,230)
============= ============= ============= =============
Basic and diluted net loss per share $ (0.15) $ (0.06) $ $ (0.11)
============= ============= ============= =============
Basic and diluted weighted-average number of common
shares used to calculate net loss per share 81,771,287 2,000,429 27,633,870 (5) 109,405,157
============= ============= ============= =============
See notes to unaudited pro forma condensed combined financial statements.
RoomLinX, Inc.
Pro Forma Condensed Combined Balance Sheet
June 30, 2005
(Unaudited)
Historical Historical Pro Forma Pro Forma
RoomLinX SuiteSpeed Adjustments Combined
------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash $ 36,913 $ 10,581 $ $ 47,494
Accounts receivable and other 147,937 163,508 311,445
Inventory 87,254 64,014 151,268
Work in progress 12,154 12,154
Due from sale of continuing professional segment 75,000 75,000
Deferred finance costs 73,826 73,826
Prepaid and other current assets 18,762 9,418 28,180
------------ ------------ ------------ ------------
Total Current Assets 451,846 247,521 -- 699,366
Property and equipment, net 117,574 282,684 400,258
Goodwill 595,514 (4) 595,514
Other assets 15,489 15,489
------------ ------------ ------------ ------------
Total assets $ 584,909 $ 530,205 $ 595,514 $ 1,710,628
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 948,339 $ 126,203 $ $ 1,074,542
Deferred revenue 167,168 485,265 652,433
Current portion of obligations under capital lease 245,316 245,316
Notes payable, current portion 279,550 80,000 359,550
Convertible debentures 727,222 727,222
Related party accrued expenses 15,491 15,491
Related party notes payable 170,000 (170,000)(3) --
Other current liabilities 25,668 26,615 52,283
------------ ------------ ------------ ------------
Total current liabilities 2,393,263 903,574 (170,000) 3,126,837
------------ ------------ ------------ ------------
Notes payable 220,000 220,000
Commitments and contingencies
Stockholders' deficit
Preferred Stock, Stated Value $.20; 5,000,000 Shares Authorized;
Issued and Outstanding 720,000 Shares 144,000 144,000
Common Stock, $.001 Par Value, Authorized 45,000,000 shares
(250,000,000 pro forma, issued and outstanding
104,441,799 shares; pro forma 132,075,669 shares) 104,442 224 1,921 (1) 107,205
618 (3)
Additional Paid in Capital 17,935,311 13,519 (13,519)(1) 18,104,693
169,382 (3)
Accumulated Deficit (19,992,107) (607,112) 607,112 (2) (19,992,107)
------------ ------------ ------------ ------------
Total stockholders' deficit (1,808,353) (593,369) 765,514 (1,636,208)
------------ ------------ ------------ ------------
Total liabilities and stockholders' deficit $ 584,909 $ 530,205 $ 595,514 $ 1,710,628
============ ============ ============ ============
See notes to the unaudited pro forma condensed combined financial statements.
RoomLinX, Inc.
Pro Forma Condensed Combined Statements of Operations
For the Six Months Ended June 30, 2005
(Unaudited)
Historical Historical Pro Forma Pro Forma
RoomLinX SuiteSpeed Adjustments Combined
------------- ------------- ------------- -------------
Revenues
System sales and installation $ 618,535 $ 199,231 $ $ 817,766
Service, maintenance and usage 428,903 283,581 712,484
------------- ------------- ------------- -------------
1,047,439 482,812 -- 1,530,251
Cost of revenue
System sales and installation 515,843 21,762 537,605
Service, maintenance and usage 333,957 133,097 467,054
------------- ------------- ------------- -------------
849,800 154,859 -- 1,004,659
------------- ------------- ------------- -------------
Gross profit 197,639 327,953 -- 525,592
Operating expenses
Sales and marketing 342,324 37,036 379,360
General and administrative 1,030,227 175,172 1,205,399
Stock compensation 12,500 12,500
Depreciation 62,849 79,846 142,695
------------- ------------- ------------- -------------
1,435,400 304,554 -- 1,739,954
------------- ------------- ------------- -------------
Loss before other costs and expenses (1,237,762) 23,399 -- (1,214,363)
------------- ------------- ------------- -------------
Other costs and expenses
Interest expense (845,093) (14,293) (859,386)
Income on foreign exchange 14,544 14,544
Finance costs (146,676) (146,676)
------------- ------------- ------------- -------------
Total other costs and expenses (977,225) (14,293) -- (844,842)
------------- ------------- ------------- -------------
Net loss $ (2,214,986) $ 9,106 $ -- $ (2,059,204)
============= ============= ============= =============
Basic and diluted net loss per share $ (0.02) $ 0.00 $ $ (0.02)
============= ============= ============= =============
Basic and diluted weighted-average number of common
shares used to calculate net loss per share 104,291,799 2,240,492 27,633,870 (5) 131,925,669
============= ============= ============= =============
See notes to unaudited pro forma condensed combined financial statements.
ROOMLINX, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(Unaudited)
PRO FORMA ADJUSTMENTS
1. All outstanding shares of SuiteSpeed common stock were converted into
21,450,000 shares of RoomLinX's common stock.
2. SuiteSpeed's accumulated deficit has been eliminated since the transaction
has been accounted for as a purchase.
3. Upon completion of the merger and pursuant to the merger agreement, RoomLinX
issued 6,183,870 shares of common stock in exchange for debt to certain
shareholders of SuiteSpeed in the amount of $170,000.
4. The acquisition has been accounted for by the purchase method of accounting
and, accordingly, the purchase price has been allocated, on a preliminary basis,
to the assets acquired and liabilities assumed based on estimates of fair market
values at the date of acquisition. The cost of the acquisition exceeded the fair
value of the acquired net assets by approximately $625,000 which has been
recorded as goodwill.
5. Loss Per Share
Basic and diluted net loss per share are calculated by dividing pro forma net
loss by the pro forma outstanding common shares.
The weighted average shares outstanding have been adjusted to reflect the shares
to be issued as a result of the merger transaction.