UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 21, 2002
SiriCOMM, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-18399 62-1386759
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
2900 Davis Boulevard, Suite 130, Joplin, Missouri 64804
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(417) 626-9961
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(Registrant's telephone number, including area code)
Fountain Pharmaceuticals, Inc.
505 South Westland Avenue, Suite D, Tampa, Florida 33606
(813 248-0089
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(Former name, address and telephone number)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On November 21, 2002, as a direct result of the transactions referred
to in Item 2 hereof, Henry P. (Hank) Hoffman, David N. Mendez, Kory S. Dillman
and Tom Noland, shareholders and officers and directors of SiriCOMM, Inc., a
Missouri corporation ("SiriCOMM - Missouri"), became "control persons" of the
Registrant as that term is defined in the Securities Act of 1933, as amended.
The status of Messrs. Hoffman, Mendez, Dillman and Noland arise from the
issuance of an aggregate of 9,662,562 shares of the Registrant's common stock
(approximately 99% of the total issued and outstanding shares) to the
shareholders of SiriCOMM - Missouri. Additionally, with the consummation of the
transactions referred to in Item 2, Mr. Brendon K. Rennert, the sole officer and
director of the Registrant prior to the transaction described below, resigned
his positions as an officer and director of the Registrant. Henry P. (Hank)
Hoffman, David N. Mendez, Kory S. Dillman and Tom Noland were elected directors
in his place and stead.
The new Board of Directors then appointed the following officers:
Henry P. (Hank) Hoffman - President and Chief Executive Officer
David N. Mendez - Executive Vice President - Sales
and Marketing
Kory S. Dillman - Executive Vice President - Internet
Business Development
Tom Noland - Executive Vice President -
Administration, General Counsel
and Secretary
The following sets forth certain information concerning each of the
Registrant's new directors and executive officers:
Henry P. (Hank) Hoffman, President, CEO and Chairman
Mr. Hoffman co-founded SiriCOMM in January 2000 and has been its
President, CEO and Chairman since SiriCOMM's inception. Mr. Hoffman has over
twenty years experience in the transportation industry. From September 1, 1996
to January 21, 2000 Mr. Hoffman was President and Chief Operating Officer of
Hook Up, Inc. of Joplin, MO, a small niche motor carrier. From 1990 to 1995 Mr.
Hoffman was President and COO of Tri-State Motor Transit, the nation's largest
transporter of munitions for the U.S. Government.
Prior to his term at Tri-State, he served in several
Operations/Management positions with both Schneider National, Inc. and Viking
Freight System. As an industry leader he has been a Vice President of the
American Trucking Associations, President and Chairman of the Board of the
Munitions Carriers Conference, member of the Board of Directors of the National
Automobile Transporters Association, and Forum Co-Chairman of the National
Defense Transportation Association. Prior to his trucking industry career, Mr.
Hoffman served as an officer in the United States Army Field Artillery for six
years where he completed two command assignments. Mr. Hoffman earned a Bachelor
of Science degree from the United States Military Academy, West Point, NY and a
Master of Business Administration from the University of Wisconsin, Oshkosh, WI.
2
David N. Mendez, Executive Vice President - Sales and Marketing and a Director
Mr. Mendez co-founded SiriCOMM in April 2000 and has been its Executive
Vice President Sales and Marketing and a director since SiriCOMM's inception.
Mr. Mendez has over nine years experience in telecommunications sales and
marketing. Mr. Mendez's telecommunications expertise focuses on domestic and
international data communication networks including Frame Relay and ATM
infrastructures and Internet and intranet networks. From October 1998 to
February 2000 he was National Sales Manager for DRIVERNet where he managed such
national accounts as Ford, Kenworth, Peterbilt, Paccar Corporation, and Cue
Paging. From 1995 to 1998 Mr. Mendez worked as a Major Account Manager for
Sprint. Mr. Mendez graduated with a Bachelor of Science degree from Southwest
Missouri State University, Springfield, MO.
Kory S. Dillman, Executive Vice President - Internet Business Development and a
Director
Mr. Dillman co-founded SiriCOMM in April 2000 and has been its
Executive Vice President - Internet Business Development and a director since
SiriCOMM's inception. From 1996 to 1999 Mr. Dillman was Creative Director for
DRIVERNet. In that position he produced intranet and Internet applications for
DRIVERNet and its customers. He developed specific web-based products for Ford,
Volvo Trucks North America, Kenworth, Peterbilt, Ambest, Caterpillar Engines,
Pilot, Petro Stopping Centers, and TravelCenters of America. Prior to joining
DRIVERNet Mr. Dillman was Art Director for Wendfall Productions. In this
position he managed development for Sony Music and Ardent Records. Mr. Dillman
earned a Bachelor of Fine Arts degree from the University of Tulsa, Tulsa, OK.
Tom Noland, Executive Vice President - Administration, General Counsel,
Secretary and a Director
Mr. Noland joined SiriCOMM in November 2001 as its Executive Vice
President - Administration, General Counsel and a Director. Mr. Noland was in
private practice with the law firm of Spencer, Scott & Dwyer in Joplin for
eleven years, focusing on the representation of business and banking clients in
the areas of real estate transactions, creditors' rights and workers'
compensation defense. Prior to joining SiriCOMM, he served as General Counsel to
Hook Up, Inc. from 1997 through 2000. Mr. Noland received a Bachelor of Arts
degree in history from Missouri Southern State College and a Juris Doctorate
from the University of Tulsa.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 30, 2003, information
concerning ownership of the Registrant's securities by (i) each director, (ii)
each executive officer, (iii) each person known to the Registrant to be the
beneficial owner of more than five percent, and (iv) all directors and executive
officers as a group.
Name and Address of Amount and Nature of Percentage of
Beneficial Owner (1) Beneficial Ownership Class (2)
-------------------- -------------------- -------------
Henry P. Hoffman 5,762,303 46.3%
2900 Davis Boulevard, Suite 130
Joplin, Missouri 64804
David N. Mendez
2900 Davis Boulevard, Suite 130 1,098,331 8.8%
Joplin, Missouri 64804
Kory S. Dillman 1,023,535 8.2%
2900 Davis Boulevard, Suite 130
Joplin, Missouri 64804
Tom Noland 295,250 2.4%
2900 Davis Boulevard, Suite 130
Joplin, Missouri 64804
Quest Capital Alliance, LLC 1,054,000 8.5%
3140 East Division Street
Springfield, Missouri 64804
Jeff Wasson 868,000 7.0%
1530 South Belcrest
Springfield, Missouri 65804
All Executives Officers and
Directors as a Group
(4 persons) 8,179,419 65.7%
-------------------
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act and unless otherwise indicated, represents
securities for which the beneficial owner has sole voting and
investment power.
(2) Based upon 12,449,442 shares issued and outstanding.
4
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On November 21, 2002, the Registrant completed the acquisition of all
of the issued and outstanding shares of SiriCOMM - Missouri. Pursuant to the
transaction, the Registrant issued an aggregate of 9,662,562 shares to the
sixteen (16) shareholders of SiriCOMM - Missouri. An aggregate of 8,179,419
shares were issued to Henry P. (Hank) Hoffman (5,762,303), David N. Mendez
(1,098,331), Kory S. Dillman (1,023,535) and Tom Noland (295,250), members of
the Registrant's newly elected Board of Directors.
The above described transaction was intended to qualify as a tax-free
reorganization, within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended.
In connection with this transaction, the Registrant agreed to issue
shares of its common stock to Quest Capital Alliance LLC ("Quest") and Mr. Jeff
Wasson ("Wasson") upon the conversion of an aggregate of $1,000,000 in
convertible notes issued by SiriCOMM - Missouri to Quest ($500,000) and Wasson
($500,000). Pursuant to the terms of their respective convertible notes, Quest
is entitled to 8.5% of the then outstanding shares of the Company and Wasson 7%
of the then outstanding shares of the Company. On January 7, 2003, Quest
converted its convertible notes into an aggregate of 1,054,000 shares of the
Company's common stock and Wasson converted his convertible notes into an
aggregate of 868,000 shares of the Company's common stock.
Information About SiriCOMM
SiriCOMM was organized under the laws of the State of Missouri in April
2000. SiriCOMM's principal executive office is located at 2900 Davis Boulevard,
Suite 130, Joplin, Missouri 64804. Its telephone number is (417) 626-9961.
SiriCOMM is engaged in the development of broadband wireless
applications service provider technologies serving the marine and highway
transportation industries. SiriCOMM's current development activities include
integrating multiple technologies including satellite communications, the
Internet and intranets, wireless networking, and productivity enhancing software
into commercially viable products and services for its target industries.
SiriCOMM's patent pending network architecture enables subscribers to
transmit data at speeds of 48,000 kilobits per second ("kbps") which is 20 to
100 times faster than other wireless solutions such as CDPD (19.2 kbps), GSM
(9.6 kbps), CDMA2000-1XRTT (144 kbps) or Qualcomm's point to point mobile
satellite solution(2 kbps). Moreover, SiriCOMM's unique software solutions
leverage this ultra high-speed data network to deliver significant cost
reduction and productivity improvement opportunities to users. From its central
hub server co-located at the satellite teleport SiriCOMM will receive and
transmit data on a "point to broadcast" high-speed network between multiple
wireless local area networks installed in strategic locations. For a flat, low
monthly fee subscribers will have access to a suite of productivity software,
the Internet, e-mail, proprietary company intranet information, etc. The network
will support multiple user devices to include 802.11b-compatible Palm OS(TM)
wireless hand held devices and laptop computers for the most mobile subscribers.
SiriCOMM's technologies are expected to become commercially available before the
end of the year 2003.
5
Development of SiriCOMM's Business and Products
Since SiriCOMM's inception in April of 2000, its founders have focused
their efforts principally in three key areas - product development, pre-market
demonstrations to potential customers, and the formation of critical industry
alliances. The results of this disciplined approach are significant. First, a
working prototype of the broadband wireless network and applications software
was developed and refined into a highly marketable product. Patent applications
are on file for the entire end-to-end system. Second, demonstrations of the
prototype to qualified potential customers reaffirmed the feasibility of the
network and the solid need for its unique services. SiriCOMM has made technical
presentations to more than 30 communication, automobile, trucking and mobile
technology companies during the last 24 months and has received favorable
feedback at such demonstrations. Such demonstrations have produced a letter of
intent from Christenson Transportation to utilize SiriCOMM's services and a
letter of agreement from SmartStop to evaluate SiriCOMM's technology.
The first generation of SiriCOMM products can significantly improve the
availability, timeliness, and accuracy of communications and decision support
tools for most of the nation's law enforcement agencies, yachts, and trucks that
operate in North America. Ultimately, with minor modifications, the SiriCOMM
products will be applicable in any industry requiring mobile communications from
remote locations, such as recreational vehicles and construction sites.
SiriCOMM intends to charge a monthly subscription fee of $49.95 per
user per month for its services.
The five principal components of the SiriCOMM service include:
1. An I.E.E.E. 802.11 standard compatible wireless device (PC or
Palm OS(TM)) for the users. The 802.11 is a wireless standard
governed by the Institute of Electrical and Electronics
Engineers that operates in the 2.4 Gh unregulated frequency
spectrum;
2. Wireless transmission and receiving equipment installed in
strategic locations such as marinas, truck stops, weigh
stations, and major shipper facilities;
3. Access to the AMC-6 geo-synchronous satellite;
4. Proprietary software processes and applications; and
5. Broadband wireless channels that enable transmission of
extremely large amounts of data at speeds 20 to 100 times
faster than current wireless solutions.
Users will be able to connect to the SiriCOMM network whenever they are
within range (up to approximately one-half mile) of one of several planned
access locations. SiriCOMM has test locations in Joplin, Missouri, Rock Hill,
South Carolina, and near Columbia, Missouri and plans to activate additional
locations near Oklahoma City, Oklahoma and El Paso, Texas in the near future.
While in range, the subscriber will have wireless, universal access to the
Internet and to the marina, agency, or fleet intranet, if one exists. For a low,
fixed monthly subscription fee subscribers will be able to communicate unlimited
amounts of data and messages to their homes, offices, or client support centers
using SiriCOMM's high-speed wireless network.
6
At present SiriCOMM leases transponder access to the AMC-6 satellite on
a month-to- month basis for $350 per month per ground location pursuant to an
informal agreement with Cislunar, the satellite operator. The agreement with
Cislunar is an oral agreement for month-to-month supply and purchase of
transponder usage. Cislunar has accommodated SiriCOMM by reselling a very small
amount of capacity to SiriCOMM on an as-needed basis and Cislunar is willing to
continue to do so until SiriCOMM is in a position to build out its network. At
that time, usage will likely increase substantially and both Cislunar and
SiriCOMM recognize that a written agreement will need to be in place. SiriCOMM
plans to enter into a formal agreement for monthly transponder usage when the
system is offered commercially. At each ground location, the satellite receiver
is linked to the 2.4 Ghz wireless network utilizing a local server and
SiriCOMM's technology for rapidly cache and serve network requests. There are no
limitations or special licenses required to operate local two-way data
communications at 2.4Ghz wireless frequencies.
SiriCOMM does not have a commercial network presently running
implementing its wireless data transmission technology. It plans to build a
network with the capacity to service up to 80,000 simultaneous users within 6
months of raising the needed capital. The construction of the initial network is
estimated to cost $4-6 million and is expected to be financed by the private
sale of the Company's securities following the SiriCOMM Acquisition. There are
no firm commitments on anyone's part to invest in the Company and if the Company
is unable to finance the acquisition through the private sale of its securities
or other financing, the SiriCOMM technology may never be commercially sold. In
addition, any sale of the Company's securities to finance the SiriCOMM
technology will dilute the interest of existing shareholders in the Company.
Anticipated Accounting Treatment
We expect to account for the SiriCOMM Acquisition as a recapitalization
of the equity of SiriCOMM, which in principle is equivalent to the issuance of
stock by SiriCOMM for the net monetary assets of the Company. We will apply this
accounting treatment because the Company is a non-operating public shell and
because SiriCOMM stockholders will own the majority of the outstanding common
stock of the combined company following the transaction.
Research and Development
The Company plans to finance research and development for SiriCOMM
through the possible private sale of securities following the acquisition,
although there are no present commitments or agreements concerning such
financing presently. SiriCOMM plans to spend approximately $30,000 on additional
research and development to improve and refine the previously developed suite of
wireless applications.
Distribution
SiriCOMM plans to rely on agents and value added resellers for its
sales and distribution. At present, SiriCOMM has informal agreements with
original equipment manufacturers, truck stop operators and other sales agents.
7
Competition
SiriCOMM and countless other companies have developed many data
transmission, location and network access products designed to meet the growing
demand for communications services by businesses and government organizations
that rely heavily on information technology. SiriCOMM's products will compete on
the basis of product features, price, quality, reliability, brand name
recognition, product breadth, developed sales channels, product documentation,
product warranties and technical support and service. SiriCOMM believes that it
will be generally competitive in each of these areas and that the data
transmission speed provides competitive advantages. SiriCOMM's existing and
potential competitors have significantly more financial, engineering, product
development, manufacturing and marketing resources than it has. At present,
there are no direct competitors to SiriCOMM's proposed products and services.
Various businesses currently offer certain segments of SiriCOMM's comprehensive
solution, but at much lower bandwidth, higher cost and/or with no software
applications. There can be no assurance that competitors will not introduce
comparable or superior products incorporating more advanced technology at lower
prices, or that other changes in market conditions or technology will not
adversely affect SiriCOMM's ability to compete successfully in the future.
Government Regulation and Industry Standards
SiriCOMM's planned products and services are presently not regulated by
the FCC or local governments. The regulatory process in the United States can be
time-consuming and can require the expenditure of substantial resources. There
can be no assurance that the FCC or state regulatory agencies will not seek to
regulate the use of frequencies utilized by SiriCOMM's planned services of if
such services are regulated, grant the requisite approvals for any of SiriCOMM's
products on a timely basis, or at all. The failure of SiriCOMM's products to
comply, or delays in compliance, with the various existing and evolving
standards could negatively impact SiriCOMM's ability to sell its products.
United States and state regulations regarding the manufacture and sale of modems
and other data communications devices are subject to future change. We cannot
predict what impact, if any, such changes may have on SiriCOMM's business.
The foregoing description of the transactions is qualified in its
entirety to the full text of the Securities Exchange Agreement which is being
filed herewith as an Exhibit.
ITEM 5. OTHER EVENTS
In connection with the above described transactions, the Registrant's
shareholders, by written consent, authorized and approved an amendment and
restatement of the Registrant's Certificate of Incorporation which (a) changed
the name of the Registrant to "SiriCOMM, Inc."; (b) combined the outstanding
shares of Common Stock into a single class of Common Stock; (c) reverse split
the outstanding shares of Registrant's Common Stock one-for-sixty (the "Reverse
Split"); (d) decreased the par value of the Registrant's Common Stock resulting
from the Reverse Split to $.001; (e) increased the number of shares of Common
Stock the Registrant is authorized to issue to 50,000,000; and (f) increased the
number of shares of Preferred Stock, $.001 par value, the Registrant is
authorized to issue from 2,000,000 to 5,000,000.
The shareholders also approved the adoption of the Registrant's 2002
Equity Incentive Plan.
8
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The Financial Statements required by Item 310 of Regulation S-B are
stated in U.S. dollars and are prepared in accordance with U.S. Generally
Accepted Accounting Principles. The following financial statements pertaining to
SiriCOMM, Inc. will be filed as an amendment to this filing within 60 days of
the filing date of this report.
(a) Financial statements of business acquired
The audited financial statements of SiriComm, Inc. (a Missouri
corporation) for the year ended September 30, 2002 and 2001
and the periods from inception (April 24, 2000) through
September 30, 2002 and 2001 are attached hereto.
(b) Pro forma financial information
Pro forma condensed combined financial statements of SiriCOMM,
Inc., a Delaware Corporation, formerly known as Fountain
Pharmaceuticals, Inc. have been attached hereto at the end of
this report. These pro forma financial statements have been
derived from the above referenced SiriComm, Inc. (Missouri)
financial statements and the SiriCOMM, Inc. (Delaware) audited
financial statements included in its annual filing on Form
10-KSB.
(c) Exhibits
2.1 Securities Exchange Agreement dated as of April 5,
2002 between the Company and the holders of the
common stock of SiriCOMM, Inc. (Missouri)*
2.2 Amendment to Securities Exchange Agreement dated as
of June 5, 2002 between the Company and the
shareholders of SiriCOMM, Inc. (Missouri)*
2.3 Amendment No. 2 to Securities Exchange Agreement
dated as of November 21, 2002 between the Company and
the shareholders of SiriCOMM, Inc. (Missouri)*
4.1 $250,000 - 4% Convertible Promissory Note issued by
SiriCOMM, Inc. to Quest Alliance Capital L.L.C. on
April 5, 2002*
4.2 $250,000 - 4% Convertible Promissory Note issued by
SiriCOMM, Inc. to Quest Alliance Capital L.L.C. on
November 16, 2001*
4.3 $250,000 - 4% Convertible Promissory Note issued by
SiriCOMM, Inc. to Jeff Wasson on April 5, 2002*
9
4.4 $250,000 - 4% Convertible Promissory Note issued by
SiriCOMM, Inc. to Jeff Wasson on November 16, 2001*
4.5 $121,325 - 7% Note issued by SiriCOMM, Inc. to
Southwest Missouri Bank dated July 20, 2002*
99.1 Amended and Restated Certificate of Incorporation of
Fountain Pharmaceuticals, Inc. dated November 21,
2002, as filed in the office of the Secretary of
State, State of Delaware on November 21, 2002*
*Filed with the initial Form 8-K on December 3, 2002
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
SIRICOMM, INC.
/s/ Henry P. Hoffman
---------------------------
Henry P. Hoffman
Date: January 31, 2003
11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
SiriCOMM, Inc. - a Missouri corporation
Joplin, Missouri
We have audited the accompanying balance sheet of SiriCOMM, Inc. - a Missouri
corporation (the "Company"), a development stage enterprise, as of September 30,
2002, and the related statements of operations, stockholders' deficit and cash
flows for the years ended September 30, 2002 and 2001 and for the periods from
inception (April 24, 2000) through September 30, 2002 and 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at September 30,
2002, and the results of its operations and its cash flows for the years ended
September 30, 2002 and 2001 and for the periods from inception (April 24, 2000)
through September 30, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 2, the Company is in the development stage, and has not yet
earned revenues from operations, has working capital and equity deficiencies of
$1,314,702 and $1,319,900, respectively, at September 30, 2002 and is in default
with respect to a substantial portion of its loan agreements. These conditions
raise substantial doubt regarding the Company's ability to continue as a going
concern. Management's plans related to these conditions are also discussed in
Note 2. The financial statements do not include any adjustments that may result
from the outcome of this uncertainty.
/s/ Aidman, Piser & Company, P.A.
Tampa, Florida
January 15, 2003
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
SEPTEMBER 30, 2002
ASSETS
Current assets:
Cash $ 44,304
Prepaid expenses and other current assets 26,670
Due from affiliate 15,000
----------------
Total current assets 85,974
Furniture and equipment, net of accumulated depreciation of $22,408 74,057
----------------
$ 160,031
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of notes payable and long-term debt $ 1,284,397
Accounts payable 12,436
Accrued expenses 103,843
----------------
Total current liabilities 1,400,676
Notes payable and long-term debt, less current maturities 79,255
----------------
Total liabilities 1,479,931
----------------
Commitments -
Stockholders' deficit:
Common stock, $1 par value, 10,000 shares authorized and issued 10,000
Additional paid-in capital 483,912
Deficit accumulated during the development stage (1,780,599)
Treasury stock, 222 shares at cost (33,213)
----------------
Total stockholders' deficit (1,319,900)
----------------
$ 160,031
================
See notes to financial statements.
F-2
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
From Inception (April 24, 2000) to
Years ended September 30, September 30,
------------------------------------ -------------------------------------
2002 2001 2002 2001
---------------- ----------------- ---------------- -----------------
Revenues $ - $ - $ - $ -
---------------- ----------------- ---------------- -----------------
Operating expenses:
General and administrative 128,780 160,748 363,684 234,904
Salaries and consulting fees 544,377 175,525 991,445 447,068
Research and development 134,660 73,787 258,652 123,992
Write-off of note receivable - 50,000 50,000 50,000
Depreciation 14,751 5,928 23,166 8,415
---------------- ----------------- ---------------- -----------------
Total operating expenses 822,568 465,988 1,686,947 864,379
---------------- ----------------- ---------------- -----------------
Operating loss (822,568) (465,988) (1,686,947) (864,379)
Interest expense (39,043) (4,609) (43,652) (4,609)
Loan costs (50,000) - (50,000) -
---------------- ----------------- ---------------- -----------------
Net loss $ (911,611) $ (470,597) $ (1,780,599) $ (868,988)
================ ================= ================ =================
Net loss per share, basic and diluted $ (94) $ (47) $ (205) $ (104)
================ ================= ================ =================
Weighted average shares, basic and diluted 9,654 9,945 8,680 8,396
================ ================= ================ =================
Unaudited pro forma presentation applicable
to conversion from an S Corporation to
C Corporation:
Net loss before pro forma income tax expense $ (911,611) $ (470,597) $ (1,780,599) $ (868,988)
Pro forma income tax expense - - - -
---------------- ----------------- ---------------- -----------------
Pro forma net loss $ (911,611) $ (470,597) $ (1,780,599) $ (868,988)
================ ================= ================ =================
Pro forma net loss per share $ (94) $ (47) $ (205) $ (104)
================ ================= ================ =================
See notes to financial statements.
F-3
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF STOCKHOLDERS' DEFICIT
Common Stock Additional Total
---------------------- Paid-in Accumulated Treasury Stockholders'
Shares Amount Capital Deficit Stock Deficit
--------- ---------- ------------- -------------- ------------ ---------------
Issuance of founder shares at
inception 3,333 $ 3,333 $ - $ - $ - $ 3,333
Conversion of debt to equity 6,372 6,372 379,844 386,216
Net loss for the period - - - (398,391) - (398,391)
-------- --------- ------------ ------------- ----------- --------------
Balances, September 30, 2000 9,705 9,705 379,844 (398,391) - (8,842)
Issuance of common stock 295 295 288,709 - - 289,004
Net loss for the year - - - (470,597) - (470,597)
-------- --------- ------------ ------------- ----------- --------------
Balances, September 30, 2001 10,000 10,000 668,553 (868,988) - (190,435)
Treasury stock acquisition
(1,694 shares) - - - - (253,524) (253,524)
Issuance of 1,472 treasury shares
of common stock - - (184,641) - 220,311 35,670
Net loss for the year - - - (911,611) - (911,611)
-------- --------- ------------ ------------- ----------- --------------
Balances, September 30, 2002 10,000 $ 10,000 $ 483,912 $ (1,780,599) $ (33,213) $ (1,319,900)
====== ========= ============ ============= =========== ==============
See notes to financial statements.
F-4
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
From Inception (April 24, 2000) to
Years ended September 30, September 30,
----------------------------- -----------------------------------
2002 2001 2002 2001
---------- ---------- ------------ ----------
Cash flows from operating activities:
Net loss $ (911,611) $ (470,597) $ (1,780,599) $ (868,988)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Depreciation 14,751 5,928 23,166 8,415
Amortization of loan costs 50,000 - 50,000 -
Stock-based compensation 9,000 - 9,000 -
Settlement expense funded from debt
assumption - 28,000 28,000 28,000
Write-off of note receivable - 50,000 50,000 50,000
Changes in assets and liabilities:
Current assets (15,000) - (15,000) -
Current liabilities 86,940 11,403 153,279 66,339
---------- ---------- ------------ ----------
Net cash flows from operating activities (765,920) (375,266) (1,482,154) (716,234)
---------- ---------- ------------ ----------
Cash flows from investing activities:
Acquisition of furniture and equipment (59,656) (13,999) (98,629) (38,973)
Proceeds from sale of furniture and
equipment 1,406 - 1,406 -
---------- ---------- ------------ ----------
Net cash flows from investing activities (58,250) (13,999) (97,223) (38,973)
---------- ---------- ------------ ----------
Cash flows from financing activities:
Issuance of note receivable - (50,000) (50,000) (50,000)
Borrowings under line of credit, net - 97,043 97,043 97,043
Proceeds from long-term debt 1,050,000 - 1,051,035 1,035
Payments of long-term debt (102,950) - (102,950) -
Payment of loan costs (50,000) - (50,000) -
Advances from (repayments to) officers, net (29,471) 51,853 386,216 415,687
Proceeds from sale of common stock - 289,004 292,337 292,337
---------- ---------- ------------ ----------
Net cash flows from financing activities 867,579 387,900 1,623,681 756,102
---------- ---------- ------------ ----------
Change in cash 43,409 (1,365) 44,304 895
Cash, beginning of period 895 2,260 - -
---------- ---------- ------------ ----------
Cash, end of period $ 44,304 $ 895 $ 44,304 $ 895
========== ========== ============ ==========
(Continued)
F-5
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
From Inception (April 24, 2000) to
Years ended September 30, September 30,
----------------------------- -----------------------------------
2002 2001 2002 2001
---------- ---------- ------------ ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 13,008 $ 3,464 $ 16,475 $ 3,467
========== ========== ============ ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
Conversion of debt to 6,372 shares of common
stock $ - $ - $ 386,216 $ -
========== ========== ============ ==========
Acquisition of 1,694 shares of treasury stock
for a note payable $ 253,524 $ - $ 253,524 $ -
========== ========== ============ ==========
Issuance of 1,189 shares of treasury stock
for services $ 35,670 $ - $ 35,670 $ -
========== ========== ============ ==========
See notes to financial statements.
F-6
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
1. Nature of operations and summary of significant accounting policies:
Nature of operations:
SiriCOMM, Inc. - a Missouri corporation (the "Company"), incorporated
in the State of Missouri on April 24, 2000, is engaged in the
development of broadband wireless application service technologies
intended for use in the marine and transportation industries. The
Company's development activities include integrating multiple
technologies including satellite communications, the Internet, wireless
networking, and productivity enhancing software into commercially
viable products and services. The Company expects to complete
development activities and commence revenue generating activities in
late 2003.
Reporting periods:
The Company operated under a calendar reporting year in 2000 and, in
2001, changed its fiscal year to November 30. In connection with the
acquisition discussed in Note 2, the Company has presented its
financial information on a September 30 fiscal year and anticipates the
adoption of that fiscal year for future financial reporting purposes.
Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Financial instruments:
The carrying value of the Company's financial instruments, including
cash, accounts payable, and notes payable, approximate their fair
market values.
Furniture and equipment:
Furniture and equipment is depreciated using the straight-line method
over the estimated useful life of 5 years.
F-7
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
1. Nature of operations and summary of significant accounting policies
(continued):
Stock-based compensation:
The Company accounts for compensation costs associated with stock
options issued to employees under the provisions of Accounting
Principles Board Opinion No. 25 whereby compensation is recognized to
the extent the market price of the underlying stock at the grant date
exceeds the exercise price of the option granted. Stock-based
compensation to non-employees is accounted for using the fair-value
based method prescribed by Financial Accounting Standard No. 123 -
Accounting for Stock-Based Compensation.
Research and development costs:
The Company incurs costs, principally paid to outside consultants,
associated with computer software to be marketed in the future. Costs
incurred in connection with establishing technological feasibility have
been expensed as research and development costs. Costs incurred
subsequent to establishing technological feasibility, including coding
and testing, will be capitalized.
Effect of recent accounting pronouncements:
In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146
requires that liabilities associated with an exit or disposal activity
be recognized when the liability is incurred and establishes that fair
value is the objective measurement of the liability. SFAS 146 is
effective for exit or disposal activities initiated after December 31,
2002. The adoption of this standard is not expected to have a
significant impact on the Company's financial position, results of
operations or cash flows.
F-8
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
1. Nature of operations and summary of significant accounting policies
(continued):
Pro forma income taxes:
The operations of the Company are included in the personal income tax
returns of the stockholders under Subchapter S of the Internal Revenue
Code. The unaudited pro forma income tax information assumes that the
Company was taxed as a C Corporation. For these purposes, the Company
has used the asset and liability method in accounting for income taxes,
prescribed in SFAS No. 109, "Accounting for Income Taxes." 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. The
transaction described in Note 2 will result in the revocation of the
Company's S Corporation election.
Net loss per share:
Net loss per share represents the net loss available to common
stockholders divided by the weighted average number of common shares
outstanding during the year. Diluted earnings per share reflect the
potential dilution that could occur if convertible debt was converted
into common stock. Diluted net loss per share is considered to be the
same as basic net loss per share since the effect of the issuance of
common stock associated with the convertible debt is anti-dilutive.
2. Acquisition and management's plan of operation:
On November 21, 2002, all of the issued and outstanding shares of the
Company were acquired by Fountain Pharmaceuticals, Inc. ("Fountain").
The Company's stockholders' received 9,662,562 shares of Fountain
common stock. As a result and following completion of the acquisition,
the sole director of Fountain resigned and four of the Company's
principal shareholders were elected in his place. In connection with
this transaction Fountain changed its name to SiriCOMM, Inc. - a
Delaware corporation (the "Parent").
F-9
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
2. Acquisition and management's plan of operation (continued):
Since the Company is considered the acquirer for accounting and
financial reporting purposes, the transaction will be accounted for in
accordance with reverse acquisition accounting principles as though it
were a recapitalization of the Company and an issuance of shares by the
Company in exchange for the net monetary assets of the Parent.
These financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the ordinary course of
business.
Since its inception, the Company has financed its activities primarily
from short-term loans, a substantial portion of which are in default
(Note 4). To date, the Company has not introduced its products and
services commercially, has limited assets, significant liabilities and
limited business operations. Managements' plan of operation for fiscal
2003 is for the Parent to raise additional capital ($6-$10 million) and
the Company to build a network to service up to 250,000 simultaneous
users. The construction of the initial network is estimated to cost
$4-$6 million and is expected to be financed by a private sale of
securities. At this time, there are no firm commitments on anyone's
part to invest in the Parent and if the Parent is unable to obtain such
financing, the Company's technology may never be commercially sold.
There can be no assurances that the Parent will be successful in
obtaining debt or equity financing in order to achieve its financial
objectives and continue as a going concern. The financial statements do
not include any adjustments to the carrying amount of assets and the
amounts and classifications of liabilities that might result from the
outcome of this uncertainty.
F-10
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
3. Unaudited pro forma income taxes:
Unaudited pro forma income taxes consists of the following:
Years Ended From Inception (April 24, 2000) to
September 30, September 30,
---------------------- --------------------------------
2002 2001 2002 2001
--------- --------- ------------- -----------
Current income taxes $ - $ - $ - $ -
Deferred income taxes:
Benefit of net operating loss
carryforward and start-up
costs 341,800 147,300 668,000 326,200
Other 2,300 1,200 5,000 2,700
Change in valuation allowance (344,100) (148,500) (673,000) (328,900)
--------- --------- ------------- -----------
$ - $ - $ - $ -
========= ========= ============= ===========
Unaudited pro forma deferred tax assets consist of the following at
September 30, 2002:
Net operating loss carryforward and start-up costs $ 668,000
Book depreciation in excess of tax 5,000
Less: valuation allowance (673,000)
----------
$ -
==========
4. Notes payable and long-term debt:
Notes payable and long-term debt consist of the following at September
30, 2002:
Line of credit, interest at 7%, secured by
all assets of the Company (currently
existing or thereafter acquired) and
personally guaranteed by a stockholder of
the Company, due July 20, 2003, or upon
demand by the bank. $ 117,961
Note payable, former stockholder, bearing
interest at 2.5%, unsecured, principal and
interest due in monthly installments of
$10,000 through May 2004. 195,691
F-11
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
4. Notes payable and long-term debt (continued):
Note payable, bearing interest at 4%,
unsecured, principal and interest due March
15, 2002; convertible into common shares
equaling 4.25% of the Company's outstanding
shares of stock on the date that the holder
exercises its option. (a) 250,000
Note payable, bearing interest at 4%,
unsecured, principal and interest due March
15, 2002; convertible into common shares
equaling 3.5% of the Company's outstanding
shares of stock on the date that the holder
exercises its option. (a) 250,000
Note payable, bearing interest at 4%,
unsecured, principal and interest due July
15, 2002; convertible into common shares of
stock equaling 4.25% of the Company's
outstanding shares of stock on the date that
the holder exercises its options. (a) 250,000
Note payable, bearing interest at 4%,
unsecured, principal and interest due July
15, 2002; convertible into common shares of
stock equaling 3.5% of the Company's
outstanding shares of stock on the date that
the holder exercises its options. (a) 250,000
Note payable, bearing interest at 10%,
unsecured, interest and principal due
November 1, 2002. (a) 50,000
------------
1,363,652
Less current maturities (1,284,397)
------------
$ 79,255
============
F-12
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
4. Notes payable and long-term debt (continued):
Future maturities of notes payable and long-term debt are as follows:
Year ending September 30,
2003 $ 1,284,397
2004 79,255
-----------------
$ 1,363,652
=================
(a) As of January 15, 2003, the Company was in default with respect to
notes payable covering $1,050,000 of indebtedness. The Parent
assumed $1,000,000 of these obligations and this debt is intended
to be converted into the Parent's common stock in connection with
the reverse acquisition discussed in Note 2.
5. Stockholders' deficit:
At inception 3,333 shares of stock were issued to the founding
stockholders at par value. During 2000, 6,372 additional shares of
stock were issued to these same stockholders in satisfaction of then
outstanding advances, equivalent to $60 per share.
During 2001, the Company sold an aggregate of 295 shares of stock at
prices ranging from $500 to $2,000 per share.
In December 2001, the Company repurchased 1,694 shares of stock at an
aggregate cost of $150 per share in connection with a stockholder
dispute, which is further discussed in Note 6.
During the year ended September 30, 2002, 283 Treasury shares were
reissued pursuant to an anti-dilution clause, which stated that if the
Company sells shares in the Company to an investor that represents more
than a 2.5% interest in the Company and such investor pays an amount
less than $2,000 per share, the Company shall issue additional shares
to the investor so the investor will own the number of shares that
represent the investor's total subscription amount divided by the
valuation per share of the subsequent sale of an equity interest in the
Company.
F-13
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
5. Stockholders' deficit (continued):
During the year ended September 30, 2002, 300 Treasury shares of stock
were also issued for legal services rendered which were valued at $30
per share based on the value of stock to be issued in connection with
the pending acquisition discussed in Note 2. Furthermore, 889 Treasury
shares were issued in exchange for services associated with the
aforementioned acquisition and have been reflected as prepaid expenses
in the accompanying 2002 balance sheet.
6. Related party transactions:
During 2001, the Company was a defendant in a suit filed by a founding
stockholder. This suit was settled on December 21, 2001 for an
aggregate amount of $300,524. The settlement agreement provided for
reimbursement of $22,000 in out-of-pocket expenses, $15,000 in
compensation for services previously performed and repurchase of all
shares of common stock owned by this stockholder. The Company paid
$10,000 in December 2001 in connection with the settlement and issued a
note payable in the amount of $290,524 for the remaining balance due,
payable over a 29-month period.
In addition, as part of the settlement agreement the Company assumed a
$28,000 note payable which was accrued as general and administrative
expense at September 30, 2001. On December 18, 2001, the then existing
bank line of credit agreement and the note payable of $28,000 were
consolidated into a single line of credit.
7. Commitments:
Employment agreements:
The Company has four executive employee agreements with certain
officers/directors. As part of these agreements the Company is
obligated to pay these individuals aggregate compensation of $525,000
annually through February 2005.
F-14
SIRICOMM, INC. - A MISSOURI CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO SEPTEMBER 30, 2002
8. Subsequent events
Promissory notes:
On October 31, 2002, the Company raised $50,000 in connection with a
loan agreement. The loan provides for a one year maturity, and interest
at 4 percent. In connection with the loan, the Company agreed to issue
20 shares of the Company's common stock which will be exchanged for
19,683 post-merger shares of the Parent's common stock.
In October and November 2002, the Company raised $50,000 in connection
with two loan agreements. The loans bear interest at 4 percent and are
due on demand. In connection with the loans, the Company agreed to
issue 20 shares of the Company's common stock which will be exchanged
for 19,683 post-merger shares of the Parent's common stock.
Related party promissory note:
In November 2002, the Company borrowed $30,000 from a major
stockholder. The loan bears interest at 4 percent and is due on demand.
F-15
SIRICOMM, INC - A DELAWARE CORPORATION (FORMERLY KNOWN AS
FOUNTAIN PHARMACEUTICALS, INC.)
AND SIRICOMM, INC. - A MISSOURI CORPORATION
PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited proforma consolidated combined balance sheet
aggregates the balance sheet of SiriCOMM, Inc. - a Delaware
corporation, formerly known as Fountain Pharmaceuticals, Inc. (a
Delaware corporation) ("Parent") as of September 30, 2002 and the
balance sheet of SiriComm, Inc. (a Missouri corporation) ("Subsidiary")
as of September 30, 2002, accounting for the transaction as a
recapitalization of Subsidiary with the issuance of shares by the
Subsidiary in exchange for the net monetary assets of Parent (a reverse
acquisition) and using the assumptions described in the following
notes, giving effect to the transaction, as if the transaction had
occurred as of the end of the period. The transaction was completed
subsequent to September 30, 2002.
The following unaudited proforma condensed consolidated statement of
operations combine the results of operations of Parent and Subsidiary
for the year ended September 30, 2002 as if the transaction had
occurred as of the beginning of the period.
The following unaudited proforma condensed consolidated statement of
operations combine the results of operations of Parent and Subsidiary
for the year ended September 30, 2002 as if the transaction had
occurred as of the beginning of the period.
The proforma condensed consolidated financial statements should be read
in conjunction with the separate financial statements and related notes
thereto of Parent and Subsidiary. These proforma financial statements
are not necessarily indicative of the consolidated financial position,
had the acquisition occurred on the date indicated above, or the
consolidated results of operations which might have existed for the
periods indicated or the results of operations as they may be in the
future.
SIRICOMM, INC. - A DELAWARE CORPORATION (F/K/A FOUNTAIN PHARMACEUTICALS, INC.)
AND SIRICOMM, INC.- A MISSOURI CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2002
SiriCOMM, Inc.
Delaware Missouri Pro Forma Pro Forma
corporation corporation Adjustments Consolidated
-------------------------------- --------------------------------
Assets
Current assets:
Cash and cash equivalents $ 6,738 $ 44,304 $ - $ 51,042
Prepaid expenses and other assets - 26,670 [C,E,F] (26,670) -
Due from affiliate - 15,000 [H] (15,000) -
-------------------------------- --------------------------------
Total current assets 6,738 85,974 (41,670) 51,042
-------------------------------- --------------------------------
Furniture and equipment, net of accumulated -
depreciation - 74,057 - 74,057
-------------------------------- --------------------------------
$ 6,738 $ 160,031 $ (41,670) $ 125,099
================================ ================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 36,137 $ 116,279 [E] $ 50,000 $ 202,416
Current maturities of notes payable and long- -
term debt - 1,284,397 [D] (1,000,000) 284,397
Due to affiliate 15,000 - [H] (15,000) -
6% Convertible Debenture 100,000 - [G] (100,000) -
-------------------------------- --------------------------------
Total current liabilities 151,137 1,400,676 (1,065,000) 486,813
-------------------------------- --------------------------------
Note payable and long-term debt, less current
maturities - 79,255 79,255
-------------------------------- --------------------------------
Stockholders' equity:
Common stock 5,876 10,000 [A,C,D,F] (4,196) 11,680
Class B common stock 105 - - 105
Additional paid-in capital 17,372,506 483,912 [A,B,E,F,G] (16,528,573) 1,327,845
Accumulated deficit (17,522,886) (1,780,599) [B] 17,522,886 (1,780,599)
Treasury stock, at cost - (33,213) [F] 33,213 -
-------------------------------- --------------------------------
Total stockholders' equity (144,399) (1,319,900) 1,023,330 (440,969)
-------------------------------- --------------------------------
$ 6,738 $ 160,031 $ (41,670) $ 125,099
================================ ================================
See notes to pro-forma condensed consolidated financials statements.
SIRICOMM, INC. - A DELAWARE CORPORATION (F/K/A FOUNTAIN PHARMACEUTICALS, INC.)
AND SIRICOMM, INC.- A MISSOURI CORPORATION
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2002
SiriCOMM, Inc.
Delaware Missouri Pro Forma Pro Forma
corporation corporation Adjustments Consolidated
-------------------------------- --------------------------------
Revenues $ - $ - $ - $ -
------------------------------- ------------------------------
Cost of sales - $ - - -
------------------------------- ------------------------------
Gross profit - - - -
------------------------------- ------------------------------
Operating expenses:
General and administrative 161,908 128,780 - 290,688
Salaries and consulting fees - 544,377 - 544,377
Research and Development - 134,660 - 134,660
Depreciation and amortization - 14,751 - 14,751
Selling - - - -
------------------------------- ------------------------------
Total operating expenses 161,908 822,568 - 984,476
------------------------------- ------------------------------
Loss from operations (161,908) (822,568) - (984,476)
------------------------------- ------------------------------
Other income (expense)
Interest income - -
Interest expense (126,317) (39,043) - (165,360)
Other income (expense) (50,000) - (50,000)
------------------------------- ------------------------------
(126,317) (89,043) - (215,360)
------------------------------- ------------------------------
Net income $ (288,225) $ (911,611) $ - $ (1,199,836)
=============================== ==============================
Pro forma loss per common share $ (0.10)
============
Weighted average number of shares 11,660,002
See notes to pro-forma condensed consolidated financials statements.
SIRICOMM, INC. - A DELAWARE CORPORATION (F/K/A FOUNTAIN PHARMACEUTICALS, INC.)
AND SIRICOMM, INC.- A MISSOURI CORPORATION
PROFORMA ADJUSTMENTS
AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 2002
[A] Common Stock 5,881
Additional paid-in capital 5,881
To record 1 for 60 reverse split
and change in par value
[B] Additional paid-in capital 17,522,886
Accumulated deficit 17,522,886
To eliminate accumulated deficit
of parent at date of acquisition
to reflect the recapitalization
of subsidiary
[C] Investment in subsidiary 9,663
Common stock 9,663
To record acquisition of
subsidiary through issuance of
9,623,195 post-split shares
[D] Convertible debentures 1,000,000
Common Stock 1,922
Additional Paid-in capital 998,078
To record converison of
convertible promissory notes into
1,937,136 shares
[E] Additional paid-in capital 76,670
Accounts payable 50,000
Stock offering costs 26,670
To record additional costs
associated with completing the
reorganization and reflect these
costs as a reduction of
additional paid-in capital
[F] Common stock 10,000
Treasury stock 33,213
Investment in subsidiary 9,663
Additional paid-in capital 32,876 -
To eliminate common and treasury
stock of subsidiary
[G] 6% Convertible debentures 100,000
Common Stock 100
Additional paid-in capital 99,900
To record converison of
convertible promissory notes
[H] Due to affiliate 15,000
Due from affiliate 15,000
To eliminate intercompany accounts
-------------------------
18,772,976 18,772,976
SIRICOMM, INC - A DELAWARE CORPORATION (FORMERLY KNOWN AS
FOUNTAIN PHARMACEUTICALS, INC.)
AND SIRICOMM, INC. - A MISSOURI CORPORATION
NOTES TO PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Fountain Pharmaceuticals, Inc.
Fountain Pharmaceuticals, Inc., a Delaware corporation, was
incorporated in 1989. All operations of the Fountain were suspended in
July 2001 and the Company was inactive until November 21, 2002. In
connection with the acquisition, Fountain changed its name to SiriCOMM,
Inc. ("Parent").
Note 2 - SiriCOMM, Inc.- a Missouri corporation
SiriCOMM, Inc. ("Subsidiary"), a Missouri corporation, was incorporated
on April 24, 2000. The Company is engaged in the development of a
broadband wireless application service technologies intended for use in
the marine and highway transportation industries.
During April 2002, Parent entered into an agreement and plan of
reorganization wherein Parent would acquire 100% of Subsidiary through
the issuance of an estimated 9,623,195 shares (post-split) of
restricted common stock in a transaction wherein Subsidiary will become
a wholly-owned subsidiary of Parent. The acquisition was completed on
November 21, 2002.
Proforma adjustments on the attached pro-forma consolidated financial
statements include the following:
[A] To record 1 for 60 reverse common stock split and change in
par value of common stock.
[B] [C] To record the acquisition of Subsidiary by Parent through the
issuance of 9,662,562 post-split shares of common stock. The
ownership interests of the former owners of Subsidiary in the
combined enterprise is greater than that of the ongoing
shareholders of Parent and, accordingly, the management of
Subsidiary will assume operating control of the combined
enterprise. Consequently, the acquisition is accounted for as
the recapitalization of Subsidiary, wherein Subsidiary
purchased the assets of Parent and accounted for the
transaction as a "Reverse Purchase" for accounting purposes.
[D] To record conversion of an aggregate $1,000,000 convertible
promissory notes into 1,922,000 shares of common stock.
[E] The estimated costs incurred in completing the reorganization
have been treated as stock issuance costs by Parent and,
therefore, as a reduction of additional paid-in capital. These
estimated costs of $50,000 consist primarily of legal and
accounting fees. These are in addition to $26,670 previously
incurred.
[F] To eliminate the common stock of the Subsidiary in
consolidation.
[G] To record conversion of $100,000 in Convertible debentures
issued by Parent into 100,000 shares of common stock.
(Debentures not issued in connection with acquisition.)
[H] To eliminate intercompany balances.
Note 3 - Pro forma (loss) per share
The proforma (loss) per share is computed based on the number of shares
outstanding, after adjustment for shares issued in the acquisition, as
though all shares issued in the acquisition had been outstanding from
the beginning of the periods presented.
Diluted earnings per share was not presented, as its effect was
anti-dilutive for the periods presented.