UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 2003.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required) for the transition period from ____________________ to
_____________________.
Commission file number: 0-49763
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CIROND CORPORATION
-------------------
(Name of Small Business Issuer in Its Charter)
Nevada 88-0469593
-------- -----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1999 Bascom Avenue, Suite 700, Campbell, California 95008
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(604) 688-4060
---------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of Registrant's common stock, par value $0.001
("Common Stock") as of November 11, 2003 was 64,000,000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
TABLE OF CONTENTS
PART I-FINANCIAL INFORMATION...................................................3
ITEM 1. Financial Statements..........................................3
ITEM 2. Management's Plan of Operation................................4
ITEM 3. Controls and Procedures.......................................5
PART II-OTHER INFORMATION......................................................6
ITEM 2. Changes in Securities.........................................6
ITEM 4. Submission of Matters to a Vote of Security Holders...........6
ITEM 6. Exhibits and Reports on Form 8-K............................. 6
SIGNATURES.....................................................................7
INDEX TO EXHIBITS............................................................. 8
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
3
eXmailit.com
A DEVELOPMENT STAGE COMPANY
I N T E R I M F I N A N C I A L S T A T E M E N T S
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report
- --------------------------------------------------------------------------------
F-1
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
I N T E R I M F I N A N C I A L S T A T E M E N T S
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report
- --------------------------------------------------------------------------------
C O N T E N T S
Page
----
INDEPENDENT REVIEW ENGAGEMENT REPORT 1
INTERIM STATEMENT OF FINANCIAL POSITION 2
INTERIM STATEMENT OF RESULTS OF OPERATIONS 3
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY 4
INTERIM STATEMENT OF CASH FLOW 5
NOTES TO THE INTERIM FINANCIAL STATEMENTS 6 - 8
F-2
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Parker & Co., Chartered Accountants
P A R K E R & C O.
CHARTERED ACCOUNTANTS Page 1 of 8
200 - 2560 Simpson Road, Richmond BC V6X 2P9
Tel: (604) 276-9920 Fax: (604) 276-2415
================================================================================
INDEPENDENT REVIEW ENGAGEMENT REPORT
To the Board of Directors
eXmailit.com
We have reviewed the interim statement of financial position of eXmailit.com, a
development stage company, as at 30 September 2003 and as at 31 December 2002
and the interim statements of results of operations and cash flow for the three
months and nine months ended 30 September 2003 and 2002 and the interim
statement of changes in stockholders' equity from inception, 6 April 2000, to 30
September 2003, in accordance with the standards established by the American
Institute of Certified Public Accountants. These interim financial statements
are the responsibility of the company's management.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. A review
is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statement taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the interim financial statements referred to above for them to be in
conformity with generally accepted accounting principles in the United States of
America.
We have previously audited, in accordance with generally accepted auditing
standards in the United States, the statements of financial position as at 31
December 2002, and the statements of results of operation and cash flow for the
year then ended and the statement of changes in shareholders' equity from
inception, 6 April 2000, to 31 December 2002; and in our report dated 21 March
2003, we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying interim statement of
financial position as of 30 September 2003, is fairly stated in all material
respects in relation to the statement of financial position from which it has
been derived.
These interim financial statements have been prepared assuming the company will
continue as a going concern. As stated in Note 2 to the interim financial
statements, the company will require an infusion of capital to sustain itself.
This requirement for additional capital raises substantial doubt about the
company's ability to continue as a going concern. The interim financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Richmond, British Columbia, Canada
10 November 2003
F-3
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
I N T E R I M S T A T E M E N T O F F I N A N C I A L P O S I T I O N
Unaudited - see the Review Engagement Report Page 2 of 8
- --------------------------------------------------------------------------------
AS AT AS AT
30 SEPTEMBER 31 DECEMBER
2003 2002
----------- ---------
CURRENT ASSETS
Cash $6,705 $19,295
----------- ---------
Total current assets 6,705 19,295
----------- ---------
EQUIPMENT AND SOFTWARE, NOTE 3
Office and computer equipment and software, at cost 14,560 14,560
Accumulated amortization 7,635 6,557
----------- ---------
Unamortized cost 6,925 8,003
----------- ---------
----------- ---------
TOTAL ASSETS $13,630 $27,298
=========== =========
CURRENT LIABILITIES
Accounts payable $1,194 $2,250
Loans payable, Note 4 75,000 75,000
----------- ---------
Total current liabilities 76,194 77,250
----------- ---------
STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Share capital, Note 5 4,000 4,000
Additional paid in capital 49,000 49,000
Currency translation adjustment 3,426 1,691
Deficit accumulated during the development stage (118,990) (104,643)
----------- ---------
Total stockholders' equity (deficiency in assets) (62,564) (49,952)
----------- ---------
----------- ---------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $13,630 $27,298
=========== =========
DIRECTOR'S APPROVAL:
F-4
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
INTERIM STATEMENT OF RESULTS OF OPERATIONS
Unaudited - see the Review Engagement Report Page 3 of 8
================================================================================
FROM
INCEPTION,
6 APRIL
FOR THE THREE FOR THE NINE 2000
MONTHS ENDED MONTHS ENDED TO
------------------------- ------------------------
30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER
2003 2002 2003 2002 2003
--------- --------- --------- --------- ----------
EXPENSES
Accounting, legal and professional fees $3,273 $7,509 $10,765 $14,705 $69,781
Transfer agents fees 406 91 406 91 406
Advertising 0 0 0 0 647
Bank charges and interest 70 41 222 128 1,026
Dues and subscriptions 0 0 0 75 1,816
Telephone 90 359 291 1,080 4,701
Utilities 0 0 0 0 153
Rent 0 0 0 0 7,445
Postage and courier 106 (5) 293 48 751
Office supplies 0 248 0 413 3,397
Travel and entertainment 0 0 0 0 7,621
Registration fees 969 (23) 1,302 3,730 5,128
Amortization 397 (2) 1,078 2,785 12,427
Exchange losses 0 (666) 0 475 4,335
--------- --------- --------- --------- ----------
Total expenses 5,311 7,552 14,357 23,530 119,634
--------- --------- --------- --------- ----------
OTHER INCOME
Interest earned 0 0 0 0 554
Exchnage gain 0 0 10 0 10
--------- --------- --------- --------- ---------
Total other income 0 0 10 0 564
--------- --------- --------- --------- ----------
LOSS BEFORE INCOME TAXES (5,311) (7,552) (14,347) (23,530) (119,070)
INCOME TAXES, NOTE 7 0 0 0 0 0
--------- --------- --------- --------- ----------
LOSS $(5,311) $(7,552) $(14,347) $(23,530) $(119,070)
========= ========= ========= ========= ==========
LOSS PER SHARE, NOTE 8 $0.00 $0.00 $0.00 ($0.01) ($0.03)
========= ========= ========= ========= ==========
WEIGHTED AVERAGE NUMBER OF SHARES 4,000,000 4,000,000 4,000,000 4,000,000 3,580,000
========= ========= ========= ========= ==========
F-5
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
INTERIM STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report Page 4 of 8
- --------------------------------------------------------------------------------
COMMON COMMON ADDITIONAL CURRENCY
STOCK STOCK PAID IN TRANSLATION
CONSIDERATION ISSUED AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
- ---------------------------------------------------------------------------------------------------
Private placement for cash on
10 April 2000 3,000,000 $3,000 $0 $0 $3,000
Net loss from inception, 6 April
2000 to 31 December 2000 $(28,224) (28,224)
------------------------------------------------------------------
Balance as at 31 December 2000 3,000,000 3,000 0 (28,224) 0 (25,224)
Private placement for cash on
20 September 2001 1,000,000 1,000 49,000 50,000
Net loss for the year ended
31 December 2001 (46,241) (46,241)
------------------------------------------------------------------
Balance as at 31 December 2001 4,000,000 4,000 49,000 (74,465) 0 (21,465)
Net loss for the year ended
31 December 2002 (30,178) (30,178)
Currency translation adjustment change
For the year ended 31 December 2002 1,691 1,691
-------------------------------------------------------------------
Balance as at 31 December 2002 4,000,000 4,000 49,000 (104,643) 1,691 (49,952)
--------- ---------
Net loss for the three months ended
31 March 2003 (3,949) (3,949)
30 June 2003 (5,087) (5,087)
30 September 2003 (5,311) (5,311)
Net loss for the nine months --------- ---------
ended 30 September 2003 (14,347) (14,347)
--------- ---------
Currency translation adjustment
for the nine month ended 30 ---------
September 2003 1,735 1,735
---------
------------------------------------------------------------------
Balance as at 30 September 2003 4,000,000 4,000 49,000 $(118,990) $3,426 $(62,564)
==================================================================
F-6
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
I N T E R I M S T A T E M E N T O F C A S H F L O W
Unaudited - see the Review Engagement Report
Page 5 of 8
- --------------------------------------------------------------------------------
FROM
INCEPTION,
6 APRIL
FOR THE THREE FOR THE NINE 2000
MONTHS ENDED MONTHS ENDED TO
30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER
2003 2002 2003 2002 2003
-----------------------------------------------------------------
CASH PROVIDED (USED) FROM OPERATIONS
Net loss $(5,311) $(7,552) $(14,347) $(23,530) $(119,070)
Items not involving cash
Amortization of equipment and software cost 397 (2) 1,078 2,785 12,427
Office equipment exchanged for consulting services 0 0 0 0 15,354
-----------------------------------------------------------------
Total cash used for the loss (4,914) (7,554) (13,269) (20,745) (91,289)
-----------------------------------------------------------------
Changes in working capital other than cash
Accounts payable (707) 610 (1,056) 62 1,194
Loan payable 0 0 0 0 75,000
-----------------------------------------------------------------
Total changes in working capital (707) 610 (1,056) 62 76,194
-----------------------------------------------------------------
-----------------------------------------------------------------
Total cash provided (used) in opeerations (5,621) (6,944) (14,325) (20,683) (15,095)
-----------------------------------------------------------------
CASH (USED) BY INVESTMENT ACTIVITY
Acquisition of equipment and software 0 2 0 (2,828) (34,626)
-----------------------------------------------------------------
Total cash provided (used) by investment activity 0 2 0 (2,828) (34,626)
-----------------------------------------------------------------
CASH PROVIDED (USED) BY FINANCING ACTIVITY
Issue of common stock 0 0 0 0 53,000
Unrealized gain on the translation of foreign currency (213) (2,053) 1,735 395 3,426
-----------------------------------------------------------------
Total cash provided by financing (213) (2,053) 1,735 395 56,426
-----------------------------------------------------------------
CASH CHANGE (5,834) (8,995) (12,590) (23,116) 6,705
CASH BEGINNING 12,539 32,492 19,295 46,613 0
------------------------------------------------------------------
CASH ENDING $6,705 $23,497 $6,705 $23,497 $6,705
==================================================================
COMPRISED OF:
Cash $6,705 $23,497 $6,705 $23,497 $6,705
==================================================================
F-7
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
N O T E S T O T H E I N T E R I M F I N A N C I A L S T A T E M E N T S
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report Page 6 of 8
- --------------------------------------------------------------------------------
Note 1 THE CORPORATION AND ITS BUSINESS
eXmailit.com was incorporated in the State of Nevada, United States on 6 April
2000. The company has a total of 100,000,000 authorized shares with a par value
of $0.001 per share with 4,000,000 shares issued and outstanding as at 30
September 2003.
The company has offices in Vancouver, British Columbia, Canada. The company has
been organized to operate an online email to mail service network on the
internet. The company is a development stage company which has not derived any
revenue from its operations. The fiscal year end of the company is 31 December.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
These financial statements have been prepared using United States Generally
Accepted Accounting Principles as established by the American Institute of
Certified Public Accountants and have been stated in United States dollars
rounded to the nearest whole dollar except for the loss per share which has been
rounded to the nearest cent. These accounting principles are applicable to a
going concern, which contemplates the realization and liquidation of liabilities
in the normal course of business. Current business activities have just begun
and insufficient revenue has been generated to sustain the company as a going
concern without the infusion of additional capital.
Assets and liabilities of operations in foreign countries are translated into
United States dollars using the exchange rate at the statement of financial
position date for monetory assets and liabilities or the historical exchange
rates for the nonmonetory assets. Accordingly, the company's primary functional
currency is the Canadian dollar and as a result the company operates a Canadian
dollar bank account which was translated into United States of America dollars
at the exchange rate at the statement of financial position date. Transactions
made in Canadian dollars or other foreign currencies were translated at the
average exchange rates prevailing throughout the year. The effects of exchange
rate fluctuations on translating foreign currency assets and liabilities into
United States dollars are included in stockholders' equity, while gains and
losses resulting from foreign currency transactions are included in operations.
The company's financial instruments consist of accounts payable and loans
payable. It is managements opinion that the company is not exposed to
significant interest or currency risks arising from these financial instruments.
Revenue is recorded as a sale at the time the services contracted for have been
completed. Costs are recorded at the time an obligation to pay occurs and are
expensed at the time the benefit to the company is matched to revenue or, if
there is no matching revenue, to the period in which the benefit is realized.
Equipment and software costs are all amortized annually at 20% on their
declining balance.
Note 3 EQUIPMENT AND COMPUTER SOFTWARE
ACCUMULATED UNAMORTIZED UNAMORTIZED
AT COST AMORTIZATION COST COST
30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 31 DECEMBER
COMPRISED OF: 2003 2003 2003 2002
- ------------- ---------- ----------- ---------- ----------
Office furniture $1,982 $943 $1,039 $1,174
Computer
equipment 2,828 2,259 569 783
Computer
software 5,616 2,513 3,103 3,528
Leasehold
improvements 4,134 1,920 2,214 2,518
---------- ----------- ---------- ----------
$14,560 $7,635 $6,925 $8,003
========== =========== ========== ==========
F-8
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
N O T E S T O T H E I N T E R I M F I N A N C I A L S T A T E M E N T S
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report Page 7 of 8
- --------------------------------------------------------------------------------
Note 4 LOANS PAYABLE
Originally the loans payable were repayable on August 12, 2001 and interest at
the rate of 15% per annum could have been charged after the loans maturity at
the option of the holder. Payment not paid within 30 days of the due date could
have resulted in liquidation damages equal to 5% of the overdue amount. The
interest to 30 September 2003 and the liquidation damages have been waived and
the loans repayment terms have been extended indefinitely, with a provision that
the notes cannot be demanded.
NOTE 5 SHARE CAPITAL
The authorized share capital is 100,000,000 shares with a par value of $0.001.
4,000,000 common share have been issued as follows:
ADDITIONAL
SHARE PAID IN
CONSIDERATION DATE ISSUED CAPITAL CAPITAL TOTAL
- --------------------------------------------------------------------------------
Private placement for cash 10 April 2000 3,000,000 $3,000 $0 $3,000
Private placement for cash 20 September 2001 1,000,000 1,000 49,000 50,000
Balance as at 30 September 2003 4,000,000 $4,000 $49,000 $53,000
===================================
Note 6 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On 12 August 2000, an officer and director, loaned the company $75,000,
repayable on 12 August 2001 at an interest rate of 15% per annum, at the option
of the holder. The terms of the loan payable provide that if payment was not
made within 30 days of the due date, then liquidation damages equal to 5% of the
overdue amount could be added to the balance owing. The interest to and
including 30 September 2003 and the liquidation damages have been waived by the
officer and director and the loan repayment has been extended indefinitely, with
a provision that the note cannot be demanded.
The company is currently using the business offices of Robert Gardner, an
officer and director, at 999 West Hastings Street, Suite 550, Vancouver, B.C.
Canada, on a rent-free basis. There is no written lease agreement or other
material terms or arrangements relating to the company's agreement with Mr.
Gardner to use his office space. The premises consist of approximately 1000
square feet, including office space, reception area and meeting facilities.
F-9
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Parker & Co., Chartered Accountants
eXmailit.com
A DEVELOPMENT STAGE COMPANY
N O T E S T O T H E I N T E R I M F I N A N C I A L S T A T E M E N T S
FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 SEPTEMBER 2003 AND 2002
Unaudited - see the Review Engagement Report Page 8 of 8
- --------------------------------------------------------------------------------
Note 6 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (CONTINUED)
The officers and directors of the company are involved in other business
activities, and may, in the future become active in additional other business
activities. If a specific business opportunity becomes available, such persons
may face a conflict in selecting between the company and their own business
interests. The company has not formulated a policy for the resolution of such a
conflict.
Note 7 INCOME TAXES
Income taxes on the loss has not been reflected in these financial statements as
it is not virtually certain that this loss will be recovered before the expiry
period of the loss carry forwards which are as follows:
YEAR TAXABLE EXPIRY
INCURRED LOSS YEAR
-------- -------- ------
2000 $28,224 2007
2001 43,308 2008
2002 27,393 2009
2003 13,269 2010
--------
$112,194
========
Note 8 LOSS PER SHARE
Basic loss per share is computed by dividing losses available to common
stockholders by the weighted average number of common shares during the period.
Diluted loss per share is calculated on the weighted average number of common
shares that would have resulted if dilutive common stock equivalents had been
converted to common stock. No stock options or similar rights were available or
granted during the period presented. Accordingly, basic and diluted loss per
share are the same.
F-10
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Parker & Co., Chartered Accountants
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
Forward-looking Information.
This quarterly report contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. These statements relate to
future events or to our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially. There are a number of factors that could cause our actual
results to differ materially from those indicated by such forward-looking
statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance, or achievements. Although all such
forward-looking statements are accurate and complete as of this filing, we
cannot predict whether the statements will ultimately be accurate and
consequently do not assume responsibility for the ultimate accuracy and
completeness of such forward-looking statements. We are under no duty to update
any of the forward-looking statements after the date of this report to conform
such statements to actual results. The management's discussion and analysis
should be read in conjunction with the Company's financial statements and the
notes herein.
Overview
We were incorporated as eXmailit.com to engage in the business of
providing Internet-based email-to-mail printing and delivery services. We
established the eXmailit.com website which has not yet commenced providing an
Internet-based email-to-mail service. The network, which is still under
construction, was intended to consist of a consumer-based, software product that
would have a number of strategically located international distribution centers
enabling users to send email as standard mail. We have not generated any revenue
and therefore have only sustained losses.
As a result of our lack of profitability and the receipt of numerous
inquires from entities seeking to merge with us, our operational focus expanded
beyond our email-to-mail service to include reviewing potential merger or
acquisition candidates. Our review of candidates concluded on August 29, 2003
when we executed a Stock Exchange Agreement ("Agreement") with Cirond
Technologies Inc., a Colorado corporation ("Cirond"). Pursuant to the Agreement,
we agreed to acquire all of the issued and outstanding capital stock of Cirond's
wholly owned subsidiary, Cirond Networks Inc., a Nevada corporation ("CNI"), in
exchange for Four Million (4,000,000) post-Forward Split shares ("Shares") of
our common stock, par value $0.001 ("Common Stock"). The Forward Split is
discussed more fully below. In anticipation of the Closing of the Agreement and
the acquisition of CNI, we changed our name to Cirond Corporation and executed a
16-for-1 forward stock split ("Forward Split") of our issued and outstanding
Common Stock on October 17, 2003.
The Agreement was expected to close on or about October 7, 2003
("Closing"), but there was a dispute between the parties regarding the valuation
of CNI and whether or not Closing actually occurred. In an effort to resolve
this dispute, the parties executed an amendment to the Agreement ("Amendment")
on November 13, 2003. The Amendment includes, but is not limited to, modified
terms and terminology, including an increase in the total number of our Shares
to be issued to 18,300,000. Of the Shares to be issued, 1,300,000 will be issued
to CNI in exchange for outstanding indebtedness of Cirond and/or CNI in the
aggregate amount of $650,000, with the remaining 17,000,000 Shares being
exchanged for all of CNI's outstanding equity.
4
The Company conducted a private placement offering (the "Private Placement") of
up to 2,000,000 of its post-Forward Split shares of Common Stock at a price of
$0.50 per share, pursuant to which it sold a total of 750,000 shares of Common
Stock for gross proceeds totaling $375,000. The Company has agreed to loan the
$375,000 to CNI in exchange for the representation, warranty and covenant of
Nicholas Miller ("Miller") and Kevin O'Neill ("O'Neill"), as respective owners
of 43.5% and 9.5% of CTI, to vote the shares they own in CTI in favor of all
transactions contemplated by the Agreement and the Amendment thereto. The loan
was evidenced by the execution of a promissory note ("Note") on November 14,
2003 by CNI, Miller and O'Neill, and the funds were so loaned on November 17,
2003. Upon successful consummation of the transactions contemplated by the
Agreement and the acquisition contemplated thereunder, it is envisioned that
this obligation will be discharged in an intercompany manner.
In the event the Agreement, and the Amendment thereto, are consummated,
CNI will become our wholly-owned subsidiary. Our operational focus would change
to CNI's development of technologies designed to enhance the performance and
security of wireless networking technologies, with an initial specific focus on
802.11b Wireless Local Area Network ("WLAN") technology. WLAN is one in which a
mobile user can connect to a local area network (LAN) through a wireless (radio)
connection. The 802.11b standard for WLANs - often called Wi-Fi - is part of the
802.11 series of WLAN standards from the Institute of Electrical and Electronics
Engineers (IEEE).
In connection with both the Agreement and the Amendment thereto, our
founders and current directors agreed, prior to Closing, to cancel 47,840,000
post-Forward Split shares of Common Stock (the "Share Cancellation") to allow
for a more appropriate capitalization of the Company.
Closing on the Company's acquisition of CNI is expected to occur not
later than November 25, 2003, as CTI's shareholder meeting is scheduled for
November 24, 2003.
PLAN OF OPERATION
As there were no revenues for the fiscal year ended December 31, 2002 or
the quarter ended September 30, 2003, we anticipate that the commencement of
business operations in the area of wireless networking technologies will
increase expenses and if such operations are successful, revenues.
It is anticipated that the pursuit of our new operations will require
additional, and possibly substantial, capital expenditures in excess of the
$375,000 recently raised. We believe we have sufficient cash to satisfy our
operating requirements and those of CNI for in excess of six (6) months. If the
cash reserves are not enough to satisfy our operating needs and we are unable to
generate revenues and/or obtain bank loans on favorable terms and/or sell
additional shares of our equity securities to secure the cash required to
conduct our business operations for the next twelve (12) months, we could fail.
As a result of the acquisition of CNI, we will be conducting ongoing
research and development to refine and improve CNI's existing product line and
to develop new products. During the next twelve months, we plan to hire a Chief
Executive Officer, sales and marketing personnel, and product support staff.
ITEM 3. CONTROLS AND PROCEDURES
As of September 30, 2003, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief
Executive Officer and Principal Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon the evaluation, our Chief Executive Officer
and Principal Financial Officer concluded that our disclosure controls are
effective in timely alerting them to material information relating to us
(including our consolidated subsidiaries) required to be included in our
periodic SEC filings as of September 30, 2003. There have been no significant
changes in our internal controls or in other factors that could significantly
affect internal controls since September 30, 2003 subsequent to the date we
conducted our evaluation.
5
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Beginning on approximately September 18, 2003 and ending on approximately
November 14, 2003, we conducted a private placement offering (the "Private
Placement") of up to 2,000,000 shares of our post-forward stock split shares of
Common Stock at a price of $0.50 per share, which Private Placement was made
pursuant to exemptions from registration under the Securities Act of 1933 (the
"Act"), including but not limited to Sections 3(b) or 4(2). Pursuant to Rule 506
of the Act, we sold, without general solicitation, 750,000 shares of Common
Stock at $0.50 per share to six (6) accredited investors for a total offering
price of $375,000. Although all investors in this Private Placement had prior
business relationships with the brokers who assisted in the financing, no
commissions were paid to these brokers.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's October 3, 2003 Annual Meeting of shareholders,
3,170,000 pre-Forward Split (50,720,000 post-Forward Split) shares, or 79.25% of
the issued and outstanding shares of Common Stock, were present and voted in
favor of each of the following proposals. Furthermore, no shares were voted
against any proposal, nor were any abstentions or broker non-votes cast.
Accordingly, all of the following proposals were approved.
PROPOSAL NO. 1: To elect Nicholas Miller to the Board of Directors to
serve until the next Annual Meeting of the Shareholders
or until his respective successor is elected and
qualifies;
PROPOSAL NO. 2: To ratify and approve the selection by the Board of
Directors of KPMG, LLP as the Company's independent
accountants for the fiscal year ending December 31,
2003;
PROPOSAL NO. 3: To approve an amendment to the Company's articles of
incorporation to change the Company's name to Cirond
Corporation;
PROPOSAL NO. 4: To approve an amendment to the Company's articles of
incorporation to create a class of 25,000,000 shares of
preferred stock;
PROPOSAL NO. 5: To ratify a 16-for-1 forward stock split of the
Company's issued and outstanding common stock; and
PROPOSAL NO. 6: To ratify a bylaw amendment changing the quorum
requirement for shareholder Meetings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits beginning on page 8 of this Form 10-QSB,
which is incorporated herein by reference.
(b) A Form 8-K was filed on September 11, 2003 disclosing the
anticipated change in control and pending acquisition of all of the outstanding
assets of CNI.
(c) A Form 8-K was filed on October 10, 2003 disclosing the anticipated
change in our certifying accountant.
6
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 this 19th day of November, 2003.
Cirond Corporation
/s/ Kevin Ryan
-------------------------------
Kevin Ryan
Principal Executive Officer and
Principal Financial Officer
7
INDEX TO EXHIBITS
Exhibits marked with an asterisk have been filed previously with the
Commission and are incorporated herein by reference.
EXHIBIT NO. PAGE NO. DESCRIPTION
- ----------- -------- ------------
3(i) * Articles of Incorporation
3(ii) * Bylaws
10(i) * August 29, 2003 Stock Exchange Agreement by and
between the Company and Cirond Technologies Inc.
10(ii) 9 November 13, 2003 First Amendment to the Stock
Exchange Agreement by and between the Company
and Cirond Technologies Inc.
31 13 302 Certification of Chief Executive Officer and
Principal Financial Officer
32 14 906 Certification of Chief Executive Officer and
Principal Financial Officer
8
EXHIBIT 10
FIRST AMENDMENT
TO
STOCK EXCHANGE AGREEMENT
THIS FIRSTAMENDMENT TO STOCK EXCHANGE AGREEMENT (this "First Amendment")
is executed this 13th day of November, 2003, by and among Cirond Corporation
f/k/a eXmailit.com, a Nevada corporation with offices at 530- 999 West Hastings
Street, Vancouver, B.C., Canada V6C 2W2 ("ExMail"), and Cirond Technologies
Inc., a Colorado corporation with offices at 4185 Still Creek Drive, Burnaby,
B.C. Canada V5C 6C6 ("Cirond"). (ExMail and Cirond may hereinafter be referred
to individually as a "Party" or collectively as the "Parties").
RECITALS
1. The Parties hereto have entered into a Stock Exchange Agreement,
dated August 29, 2003 (the "Stock Exchange Agreement"); and
2. A dispute currently exists between the Parties regarding the
valuation of Cirond Networks, Inc. ("CNI") and whether closing of the Stock
Exchange Agreement actually occurred; and
3. Cirond has made certain attempts to terminate the Stock Exchange
Agreement, but, as set forth herein, has rescinded any and all such attempts;
and
4. In an effort to resolve this dispute, the Parties have agreed to
amend the Stock Exchange Agreement with respect to the number of shares of
common stock which ExMail will tender to Cirond in exchange for all of the
issued and outstanding capital stock of CNI, the date of closing of the Stock
Exchange Agreement, the issuance of shares by ExMail in exchange for outstanding
indebtedness of Cirond and/or CNI, and the amount of common stock which ExMail
is authorized to sell in a private placement;
NOW, THEREFORE, the Stock Exchange Agreement is hereby amended as
follows:
1. Definitions. All capitalized terms used but not defined herein
shall have the meanings set forth in the Stock Exchange Agreement. All
references to the "Agreement" in the Stock Exchange Agreement or this First
Amendment shall refer to the Stock Exchange Agreement, as amended hereby.
Notwithstanding the foregoing, all references to the "Shares" shall refer to the
new amount of 18,300,000 shares, in aggregate, of ExMail's Common Stock.
2. Amendments. The following provisions of the Stock Exchange
Agreement are hereby amended as follows:
(a) The fifth paragraph of the Premises is hereby amended by
replacing such paragraph in its entirety with the following:
"Whereas, ExMail is in the process of (i) canceling 47,840,000 shares of
Common Stock held by founders of ExMail (the "Share Cancellation"), (ii)
and has amended its Articles of Incorporation, (iii) amended its Bylaws;
(iv) effected a 16-for-1 forward stock split of the 4,000,000 shares of
outstanding stock (the "Forward Stock Split"); and (v) adopted a stock
option plan (the "Stock Option Plan"); and"
9
(b) The sixth paragraph of the Premises is hereby amended by
replacing such paragraph in its entirety with the following:
"Whereas, Cirond desires to exchange and transfer (the "Exchange") all
of the capital stock of CNI to ExMail, and ExMail desires to acquire any
and all rights and interests in and to all of the issued and outstanding
capital stock of CNI in exchange for 17,000,000 post-Forward Stock Split
shares of ExMail's Common Stock, as described below, which shall equal
approximately 51% of ExMail's then issued and outstanding post-Forward
Stock Split shares (giving effect to the Share Cancellation, but without
giving effect to the Private Placement or the Debt Conversion, as those
terms are defined below); and"
(c) The seventh paragraph of the Premises is hereby amended
by replacing such paragraph in its entirety with the following:
"Whereas, ExMail has conducted a private placement offering of up to
2,000,000 shares of its post-Forward Stock Split shares of Common Stock
at a price of $0.50 per share (the "Private Placement"). ExMail sold a
total of 750,000 shares in the Private Placement, for gross proceeds of
$375,000, which ExMail is holding in escrow and will fund CNI's
operations; and"
(d) The following new paragraph is hereby inserted between
the seventh and eighth paragraphs of the Premises:
"Whereas, ExMail has agreed to issue 1,300,000 shares of post-Forward
Stock Split shares of ExMail's Common Stock in exchange for outstanding
indebtedness of Cirond and/or CNI in the aggregate amount of $650,000,
which indebtedness shall be cancelled after such exchange (the "Debt
Conversion") with the holders of such debt receiving approximately 3.7%
of ExMail's then issued and outstanding post-Forward Stock Split shares
(taking into account the Share Cancellation, the issuance of 17,000,000
post-Forward Stock Split shares of Common Stock to Cirond and the
issuance of 750,000 post-Forward Stock Split shares in the Private
Placement); and"
(e) The second paragraph of the Section 1 is hereby amended
by replacing such paragraph in its entirety with the following:
"At Closing, ExMail will tender 18,300,000 post-Forward Stock Split
shares of its Common Stock (the "Shares") to Cirond in exchange for the
CNI Shares with 17,000,000 post-Forward Stock Split shares being issued
to Cirond and 1,300,000 post-Forward Stock Split Shares being issued to
the holders of certain outstanding indebtedness of Cirond and/or CNI in
exchange for indebtedness in the aggregate amount of $650,000 (the
"Indebtedness"). The Indebtedness shall be cancelled by ExMail
immediately after Closing. The Shares will be issued pursuant to
exemptions from registration under the Securities Act of 1933, as
amended (the "Act"), and consequently restricted as to resale under
Rule 144 ("Rule 144")."
(f) Subparagraph (f) of Section 4 is hereby amended by
replacing such paragraph in its entirety with the following:
"ExMail agrees to not to engage in any transactions outside the normal
and ordinary course of business including, but not limited to, incurring
any debt, procuring any financing and/or loans, issuing any of its
Common Stock and executing any material contracts through Closing,
unless Cirond provides prior written consent to any such action.
Notwithstanding the foregoing, ExMail is authorized and allowed to
conduct a Private Placement financing for up to 2,000,000 shares of
post-Forward Stock Split shares of Common Stock at a price of $0.50 per
share and on such other terms to be agreed to in writing by Cirond prior
to the Private Placement. "
10
(g) Subparagraph (h) of Section 4 is hereby amended by
replacing such paragraph in its entirety with the following:
"As of November 13, 2003, ExMail has completed the Forward Stock Split
and has 64,000,000 post-Forward Stock Split shares of Common Stock
issued and outstanding (not including the 750,000 post-Forward Stock
Split shares of Common Stock to be issued in the Private Placement).
ExMail will attempt, in good faith and on a timely basis, to effect the
Share Cancellation prior to Closing, and as such will have 16,160,000
post-Forward Stock Split shares of Common Stock issued and outstanding
at Closing (not including the 750,000 post-Forward Stock Split shares of
Common Stock to be issued in the Private Placement or the 1,300,000
post-Forward Stock Split shares of Common Stock to be issued as a result
of the Debt Conversion)."
(h) Subparagraph (l) of Section 4 is hereby amended by
replacing such paragraph in its entirety with the following:
"Except for the 2003 Stock Option Plan, ExMail has no stock option plans
or other incentive compensation programs."
(i) Subparagraph (a) of Section 7 is hereby amended by
replacing such paragraph in its entirety with the following:
"The Closing hereunder shall take place within five (5) business days
after the First Amendment is approved by the shareholders of Cirond, on
a date mutually agreed upon by the Parties. Closing shall consist of:
(i) the Parties delivering the securities, (ii) delivery to ExMail of
the Cirond shareholders' approval of all of the transactions
contemplated by this Agreement and all amendments hereto, (iii) the
tender by ExMail to Cirond of at least $375,000 from Woltjen Law Firm's
escrow account, or if the proceeds have been loaned to CNI pursuant to
Section 9(n), the tender of the promissory note or other evidence of
indebtedness to CNI, or its counsel, for cancellation, (iv) other
consideration contemplated hereunder, and (v) any documents necessary to
effect this Agreement, including the documents required by Section 9,
unless the Parties waive any such requirement in writing. In the event
the Share Cancellation has not be completed prior to Closing, Cirond may
terminate this Agreement without any further obligation or liability,
provided that Cirond has given at least ten (10) days written notice to
ExMail prior to such termination and ExMail, after receipt of such
notice, has failed to effect the Share Cancellation."
(j) Subparagraph (b)(ii) of Section 7 is hereby amended by
replacing such paragraph in its entirety with the following:
"By either Party, by written notice to the other Party, if Closing does
not occur on or prior to five (5) days following the receipt of approval
by the Cirond shareholders (unless such event has been caused by a
breach of this Agreement by the party seeking such termination); and"
(k) Subparagraph (c) of Section 9 is hereby amended by
replacing such paragraph in its entirety with the following:
"Approval by Cirond's shareholders of this Agreement and the
transactions contemplated hereby, and approval by the holders of the
Indebtedness to convert the Indebtedness into shares of ExMail Common
Stock, in accordance with the terms of this Agreement."
11
(l) Subparagraph (i) of Section 9 is hereby amended by
replacing such paragraph in its entirety with the following:
"Cirond and the holders of the Indebtedness shall have received an
opinion of counsel from Woltjen Law Firm, Dallas, Texas, or other
counsel for ExMail, in form and substance satisfactory to Cirond, the
holders of the Indebtedness and their counsel;"
(m) Subparagraph (n) of Section 9 is hereby amended by
replacing such paragraph in its entirety with the following:
"Woltjen Law Firm, as counsel for ExMail, shall be holding in escrow
$375,000 in proceeds from the Private Placement for delivery to ExMail
after Closing. The Parties agree that ExMail shall loan the net proceeds
from the Private Placement to CNI as soon as practicable after the
execution of the First Amendment. An essential term to this loan is the
representation, warranty and covenant of Nicholas Miller and Kevin
O'Neill as respective owners of 43.5% and 9.5% of Cirond to vote all of
their shares in favor of all transactions contemplated by this Agreement
and the First Amendment. It is envisioned that this loan will be
structured in a manner that allows for intercompany forgiveness after
the effectiveness of the transactions set forth herein, and in all
amendments hereto;"
(n) The following new paragraph is hereby inserted as
subparagraph (j) of Section 10:
"The Parties agree that this Agreement imposes an implied duty of good
faith and fair dealing on all the respective obligations of the
parties."
(o) Subparagraphs (d) and (e) of Section 9 are hereby
deleted.
3. No Further Amendments. Except as expressly amended hereby, the
Stock Exchange Agreement shall continue in full force and effect. Each Party
hereto, by their signature hereto, agrees to be bound by all of the terms of the
Stock Exchange Agreement, as amended hereby.
4. Miscellaneous. The provisions of Article 10 of the Stock
Exchange Agreement shall apply equally with respect to this First Amendment.
5. Rescission of Termination. By executing this First Amendment,
Cirond hereby rescinds the prior termination of the Stock Exchange Agreement and
acknowledges that the Stock Exchange Agreement, as amended hereby, is in full
force and effect as of the date of this First Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as of the date first written above.
"ExMail" - Cirond Corporation "Cirond" - CIROND TECHNOLOGIES INC.
/s/ Robert Gardner /s/ Nicholas Miller
- ------------------------------- ----------------------------------
By: Robert Gardner, Treasurer By: Nicholas Miller, President
12
EXHIBIT 31
I, Kevin Ryan, as Chief Executive Officer and the person performing
functions similar to that of a Principal Financial Officer of Cirond
Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Cirond
Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated
in this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 19, 2003
/s/ Kevin Ryan
- --------------------------------
Kevin Ryan
Chief Executive Officer and
Principal Financial Officer
13
EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report on Form 10-QSB of Cirond
Corporation (the "Company") for the period ended September 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
the undersigned, Kevin Ryan, the Chief Executive Officer and the person
performing functions similar to that of a Principal Financial Officer of the
Company, hereby certifies, pursuant to 18 U.S.C. section 1350, that:
(1) the Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Dated: November 19, 2003
/s/ Kevin Ryan
- ----------------------------------
Kevin Ryan, Chief Executive Officer and
Principal Financial Officer
14