SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 001-16381
CERISTAR, INC.
(Exact name of the registrant as specified in its charter)
DELAWARE 87-0642448
(State or other jurisdiction (IRS employer identification number)
of incorporation or organization)
50 WEST BROADWAY, SUITE 1100
SALT LAKE CITY, UTAH 84101
(Address of principal executive officers)
801-350-2017
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No__
State the number of shares outstanding of each of the issuer classes of
common equity as of May 10, 2004.
Common Stock, par value $.001 8,065,720
(Title of each class) (Number of shares)
CERISTAR CORPORATION
TABLE OF CONTENTS
Special Note Regarding Forward Looking Statements
PART I - FINANCIAL STATEMENT
Item 1. Financial Statements
Condensed Consolidated Unaudited Balance Sheet at March 31, 2004
Condensed Consolidated Unaudited Statements of Operations for the
three months ended March 31, 2004 and 2003
Condensed Consolidated Unaudited Statements of Cash Flows for
the three months ended March 31, 2004 and 2003
Notes to Condensed Consolidated Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Controls and Procedures
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Signatures
Exhibits
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements in the Form 10-QSB are
forward looking statements that involve risks and uncertainties. Words, such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates"
and "views" are intended to identify forward-looking statements. Such statements
are based on current expectations and projections about our business and
assumptions made by the management and are no guarantee of future performance.
Therefore, actual events and results may differ materially from those expressed
or forecasted in the forward looking statements due to risk factors identified
in the Management's Discussion and Analysis of Financial Condition and Results
of Operations.
1
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEET
March 31, 2004
Assets
------
Current assets:
Cash $ 6,338
Accounts receivable, net of allowance for
doubtful accounts of $142,242 146,852
Prepaid expenses 33,179
Deposits 21,379
------------------
Total current assets 207,748
Property and equipment, net 548,068
------------------
$ 755,816
------------------
--------------------------------------------------------------------------------
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Accounts payable $ 439,243
Accrued payroll and other liabilities 321,327
Deferred revenue 259,449
Notes payable including related parties 1,506,383
------------------
Total current liabilities 2,526,402
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.001 par value; 1,000,000 shares
authorized, no shares issued and outstanding -
Common stock, $.001 par value, voting, 25,000,000 shares
authorized, 8,004,450 shares issued and outstanding 8,004
Additional paid-in capital 10,660,960
Deferred compensation (76,162)
Subscriptions receivable (28,430)
Accumulated deficit (12,334,958)
------------------
Total stockholders' deficit: (1,770,586)
------------------
Total liabilities and stockholders'deficit $ 755,816
------------------
See accompanying notes to condensed consolidated financial statements
2
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF
OPERATIONS For The Periods Ended March 31,
2004 2003
--------------------------------
Service revenue $ 67,011 $ 106,222
Cost of sales 99,743 124,168
Selling, general, and administrative expense 482,331 1,103,693
--------------------------------
Loss from operations (515,063) (1,121,639)
Other income (expense) - 358
Interest expense (343,797) (2,574)
--------------------------------
Loss before benefit for income taxes (858,860) (1,123,855)
Benefit for income taxes - -
--------------------------------
Net loss $ (858,860) $ (1,123,855)
--------------------------------
Loss per common share - basic and diluted $ (0.11) $ (0.19)
--------------------------------
Weighted average shares - basic and diluted 7,915,000 5,861,000
--------------------------------
See accompanying notes to condensed consolidated financial statements
3
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED STATEMENT OF CASHFLOWS
For The Three Months Ended March 31,
2004 2003
-----------------------------
Cash flows from operating activities:
Net loss $ (858,860) $ (1,123,855)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 38,345 4,304
Stock issued for services 33,382 34,988
Amortization of deferred compensation 20,681 76,667
Amortization of deferred revenue (8,760) -
Stock subscription satisfied with services - 670,158
Amortization of discount on long-term debt 256,479 220
Decrease (increase) in:
Accounts receivable (78,282) (24,090)
Deposits (13,000) -
Increase (decrease) in:
Accounts payable (26,506) 22,306
Accrued liabilities 17,456 65,243
Deferred revenue 31,700 3,500
------------------------------
Net cash used in operating activities (587,365) (270,559)
------------------------------
Cash flows used in investing activities-
purchase of property and equipment (37,494) (5,265)
------------------------------
Cash flows from financing activities:
Cash overdraft - 2,668
Proceeds from issuance of common stock - 239,874
Proceeds from related party note 3,000 8,000
Proceeds from convertible short-term debt 475,000 -
Payments on note payable (3,537) -
Payments on related party notes payable (4,108) -
Payments on convertible long-term debt (3,341) (2,928)
------------------------------
Net cash provided by financing activities 467,014 247,614
------------------------------
Net decrease in cash
and cash equivalents (157,845) (28,210)
Cash and cash equivalents at beginning of period 164,183 28,210
------------------------------
Cash and cash equivalents at end of period $ 6,338 $ -
------------------------------
See accompanying notes to condensed consolidated financial statements
4
CERISTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2004
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation-- The accompanying condensed financial statements are
unaudited. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. CeriStar Inc.,
(the "Company") believes that the following disclosures are adequate to make the
information presented not misleading.
These condensed financial statements reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are necessary
to present fairly the financial position and results of operations for the
periods presented.
Interim results are not necessarily indicative of the operating results to be
expected for the full year. These financial statements should be read in
conjunction with the CeriStar's financial statements and notes thereto for the
year ended December 31, 2003 included in the Company's annual report on Form
10-KSB.
Net Loss Per Common Share-- Basic earnings per share is computed on the basis of
the weighted average number of common shares outstanding. Diluted earnings per
share is computed on the basis of the weighted average number of common shares
outstanding plus the effect of outstanding stock options using the "treasury
stock" method.
The components of basic and diluted earnings per share were as follows:
EARNINGS PER SHARE
Three Months Ended
Mar. 31
2004 2003
--------------------------------------------------------------------------------
Net loss ( A ) ($858,860) ($1,123,855)
Weighted average outstanding common shares ( B ) 7,915,000 5,861,000
Dilutive effect of outstanding warrants -0- -0-
--------------------------------------------------------------------------------
Common stock and common stock equivalents ( C ) 7,915,000 5,861,000
--------------------------------------------------------------------------------
Earnings per share:
Basic (A/B) ($0.11) ($0.19)
--------------------------------------------------------------------------------
Diluted (A/C) ($0.11) ($0.19)
--------------------------------------------------------------------------------
5
At March 31, 2004, and March 31, 2003 there were outstanding options and
warrants to purchase 4,485,226 and 427,677 shares of common stock and debt
conversion features to purchase 9,385,407 and -0- shares of common stock that
were not included in the computation of diluted net loss per common share as
their effect would have been anti-dilutive, thereby decreasing the net loss per
common share.
Revenue Recognition- Revenue is recognized when a valid contract or purchase
order has been executed or received, services have been performed or product has
been delivered, the selling price is fixed or determinable, and collectibility
is reasonably assured. Sales related to long-term service contracts, which do
not meet this criteria, are deferred and recognized ratably over the period of
the contract and are recorded as unearned revenue.
Stock-Based Compensation- The Company accounts for stock options granted to
employees under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees, and related Interpretations, and
has adopted the disclosure-only provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation expense is recognized in the financial statements
when options granted under those plans have an exercise price equal to or
greater than the market value of the underlying common stock on the date of
grant. The Company granted no options during the periods ending March 31, 2004
and 2003 to employees.
NOTE 2--GOING CONCERN
The Company has a working capital deficit, a stockholders' deficit, and
recurring net losses. These factors create substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustment that might be necessary if the Company is unable to continue as a
going concern.
The ability of the Company to continue as a going concern is dependent on the
Company generating cash from the sale of its common stock or obtaining debt
financing and attaining future profitable operations. Management's plans include
selling its equity securities and obtaining debt financing to fund its capital
requirements and ongoing operations; however, there can be no assurance the
Company will be successful in these efforts.
NOTE 3 - SHORT-TERM NOTES PAYABLE
Notes payable and convertible notes payable issued during the three months ended
March 31, 2004 consisted of the following:
Convertible notes payable to a funding group totaled $475,000 for the three
months ended March 31, 2004 for total debt to the group of $1,339,000. The notes
are due on demand after 121 days past issuance and bear interest at 12% per
year. The notes are convertible into the Company's common stock under a
beneficial conversion rate that results in the notes being discounted at an
initial value of $150,625, of which $100,000 is unamortized at March 31, 2004.
The total discount amortized during the three months ended March 31, 2004 was
$228,629.
6
NOTE 4-- COMMON STOCK TRANSACTIONS
The Company issued 145,140 shares for services valued at $33,382.
NOTE 5 - RECEIVABLE REPURCHASE OBLIGATION
The Company sold a receivable with recourse. Since the Company does not have
sufficient experience to estimate the ultimate amount to be realized, the net
proceeds that are subject to recourse are presented as a liability in the
financial statements.
NOTE 6-- CASH FLOW INFORMATION
Actual amounts paid for interest for the three months ended March 31, 2004 and
2003, were $3,859 and $2,574 respectively. No income taxes were paid for the
respective periods.
During the three months ended March 31, 2004, the Company purchased $37,494 of
equipment to service our customer base.
During the three months ended March 31, 2004, the Company issued $475,000 of
convertible short-term debt with a beneficial conversion feature discussed in
Note 3.
During the three months ended March 31, 2003, the Company received a commission,
which reduced its deferred purchase obligation and was recorded as an increase
of $9,000 to deferred revenue.
During the three months ended March 31, 2003, the Company reacquired 96,000
shares of its common stock for a reduction in deferred compensation of $149,333
and subscriptions receivable of $9,317. During the three months ended March 31,
2004, the Company amortized $20,681 of deferred compensation into selling,
general and administrative expense.
During the three months ended March 31, 2003, the Company disposed of equipment
in exchange for accrued a liability of $12,540.
During August 2003, the Company obtained a note payable to a funding group for
$182,000 bearing interest at 15% pre annum. The note is payable in monthly
installments of $5,500 beginning February 1, 2004 through August 1, 2004 at
which time the remaining unpaid principal and interest balance is due. The note
includes 100,000 warrants. The total discount related to these warrants is
$63,000, of which $21,000 is unamortized at March 31, 2004. A total of $24,509
of the discount was amortized to interest expense during the three months ended
March 31, 2004. The note is guaranteed by the former Chairman of the Board of
Directors and is secured by equipment of the Company.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results for Operations
Critical Accounting Policies
In Note 1 to the financial statements for the fiscal year ended December 31,
2003 included in our 10-KSB discuss those accounting policies that are
considered to be significant in determining the results of operations and our
financial position. We believe that the accounting principles utilized by us
conform to generally accepted accounting principles in the United States of
America.
The preparation of consolidated financial statements requires management to make
significant estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses. By their nature, these judgments are subject
to an inherent degree of uncertainty. On an on-going basis, we evaluate our
estimates, including those related to bad debts, inventories, intangible assets,
warranty obligations, product liability, revenue, and income taxes. We base our
estimates on historical experience and other facts and circumstances that are
believed to be reasonable, and the results form the basis for making judgments
about the carrying value of assets and liabilities. The actual result may differ
from these estimates under different assumptions or conditions.
With respect to revenue recognition, stock based compensation, and allowance for
doubtful accounts we apply the following critical accounting policies in the
preparation of our financial statements:
Revenue Recognition
We derive revenue primarily from the sale of communications services and sales
of related communication equipment. Revenue is recognized when a valid contract
or purchase order has been executed or received, services have been performed or
product has been delivered, the selling price is fixed or determinable, and
collectibility is reasonably assured. Sales related to long-term service
contracts, which do not meet this criteria, are deferred and recognized ratably
over the period of the contract and are recorded as unearned revenue.
Accounting for Stock-based Compensation
We account for stock-based compensation issued to employees and directors under
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to Employees," and related interpretations. Under APB No. 25, compensation
related to stock options, if any, is recorded if an option's exercise price on
the measurement date is below the fair value of the company's common stock and
amortized to expense over the vesting period. Compensation expense for stock
awards or purchases, if any, is recognized if the award or purchase price on the
measurement date is below the fair value of the common stock and is recognized
on the date of award or purchase. Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock Based Compensation," requires pro forma
information regarding net loss and net loss per common share as if the company
had accounted for its stock options granted under the fair value method.
We account for stock-based compensation issued to persons other than employees
using the fair value method in accordance with SFAS No. 123 and related
interpretations. Under SFAS No. 123, stock-based compensation is determined as
either the fair value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable. The
measurement date for these issuances is the earlier of either the date at which
a commitment for performance by the recipient to earn the equity instruments is
reached or the date at which the recipient's performance is complete.
8
Allowance for Doubtful Accounts
We must make estimates of the collectibility of accounts receivables. In doing
so, we analyze accounts receivable and historical bad debts, customer
credit-worthiness, current economic trends and changes in customer payment
patterns when evaluating the adequacy of the allowance for doubtful accounts.
Forward-Looking Statements
The following discussion of our financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
related notes included in Item 1 of this Form 10-QSB. This discussion contains
forward-looking statements. These statements are based on our current
expectations, assumptions, estimates and projections about our business and our
industry, and involve known and unknown risks, uncertainties and other factors
that may cause our or our industry's results, levels of activity, performance or
achievement to be materially different from any future results, levels of
activity, performance or achievements expressed or implied in or contemplated by
the forward-looking statements. Our actual results and the timing of selected
events could differ materially from those anticipated in these forward-looking
statements as a result of selected factors identified in the Item 2 and Form
10-QSB.
CeriStar, Inc. undertakes no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this Form 10-QSB.
Company and Industry Overview
CeriStar, Incorporated in December of 1999 in Delaware, provides converged
voice, video and data services - the "Triple Play" - to residential, commercial
and municipal concerns through reliable, fast and intelligent IP networks. The
Company's current principal offering is to provide residential subscribers with
integrated voice, video and data communications services over
Fiber-to-the-Premise (FTTP). These communications services include a robust IP
telephony package (VoIP), high-speed Internet connectivity, broadcast and IP
entertainment services such as HDTV, video-on-demand, games-on-demand, as well
as security services. CeriStar also manages the quality of service (QoS) and
provides customer service and billing, as well as integration, engineering and
management support for its customer base and for its network.
On September 10, 2002, CeriStar merged with a wholly owned subsidiary of Planet
Resources Inc., a non-operating publicly held company, together referred to as
Planet, in which all of the issued and outstanding stock of CeriStar, including
Convertible Preferred Series A shares and the Convertible Preferred Series B
shares, were exchanged for shares of Planet Common Stock. Series A and B
preferred shares of CeriStar were exchanged at a rate of .757 shares for every
common share of Planet and the common stock of CeriStar were exchanged into .322
shares of Common Stock of Planet. Just prior to the merger, Planet authorized a
1 for 5.23 reverse stock split. The merger was accounted for as a reverse merger
with CeriStar being the accounting acquirer. On October 15, 2002, Planet
Resources Inc. was renamed CeriStar, Inc. Since Planet had no operations for the
two years prior to the merger, only CeriStar's financial condition and results
or operations will be discussed.
9
Until we achieve profitability over several quarters, we must be considered as a
start-up entity. Until that time, we remain dependent on financing resources for
cash flows to meet certain operating expenses and offer no assurance of our
financial success or economic survival.
Results of Operations
FOR THE COMPARATIVE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
Total revenue declined in the first quarter of fiscal 2004 to $67,011 from
$106,222 in the first quarter of fiscal 2003. The overall decrease is primarily
due to the Company's transition to residential services and the loss of two
significant commercial customers from which revenues of $67,000 were recognized
in the first quarter of 2003. For the three months ended March 31, 2004 revenue
was primarily generated from sale of communications services with existing
equipment owned by the Company.
CeriStar had a net loss in the first quarter of 2004 of $858,860 compared with a
net loss in the first quarter of 2003 of $1,123,855. The $265,000 decline in the
net loss was primarily due to a $674,000 non-cash decrease in professional and
consulting expense partially offset by a $341,000 non-cash increase in interest
expense.
Cost of revenue was $99,743 in the first quarter of 2004, compared to $124,168
in the first quarter of the prior year. This decrease in cost of sales in 2004
is due to decreased sales labor costs as we move away from engineering labor and
design sales to residential service sales.
Gross margins in the first quarter of 2004 were a negative $32,700 compared to a
negative $17,900 in 2003. Thus far, CeriStar has not generated a large enough
customer base to cover its fixed bandwidth and service costs in 2004. As
CeriStar transitions to an operating company, additional labor, engineering and
bandwidth costs have been necessary to meet the needs of customers in a variety
of locations. New customers coming on line in those locations can be added to
the existing network with little additional cost.
Selling, general and administrative expenses decreased by $621,000 to $482,000
in the first quarter of 2004 compared to $1,104,000 in 2003 primarily due to the
decrease in fees paid to consultants incurred in 2003.
Interest expense increased to $343,800 in the first quarter of 2004 from $2,600
in 2003 as a significant amount of debt was add in late 2003 and early 2004. A
majority of the increase in 2004, $256,500, was the amortization of debt
discount during 2004.
Liquidity and Capital Resources
CeriStar's revenues are not capable of supporting its current operations.
CeriStar will be dependent on the capital markets for funding its current
operations. At March 31, 2004 the Company has a working capital deficit of
$2,320,000. To meet its continuing funding needs, CeriStar actively seeks
funding through the sale of its common stock and issuance of debt securities. No
assurance can be made that the Company will be successful in raising sufficient
capital.
10
CeriStar believes it has proven its technology through its current customer base
and can now efficiently deliver a technically advanced product to a wide range
of residential, commercial, educational and governmental customers. In the past,
CeriStar has been focused on development and testing of its technology, whereas
now the focus is on marketing and supporting this technology. Expansion into new
market areas will be limited by the amount of investment capital and equipment
financing that can be acquired. CeriStar's current plan will require additional
equity and debt capital to fund operations. A majority of this funding will need
to be raised in the equity markets. It is anticipated that debt financing of
equipment will become increasingly available as the Company's service offerings
gain acceptance and our markets expand, thus leveraging our investment capital.
In the short term, CeriStar will remain dependent on new equity capital. No
assurance can be made that the Company will be successful in raising sufficient
capital.
The Company's long-term liquidity and capital requirements will depend upon
numerous factors, including the Company's ability to achieve a level of demand
for its services that supports its business model and its cost structure,
securing significant long-term funding for expansion efforts, and the Company's
ability to find suitable funding sources to improve its capital structure. The
Company may require additional financing or seek to raise additional funds
through bank facilities, debt or equity offerings, or other sources of capital
to meet liquidity and capital requirements. Additional funds may not be
available when needed or on terms acceptable to the Company, which could have a
material adverse effect on the Company's business, financial condition, results
of operations, and cash flows. These are factors that indicate that the Company
may be unable to continue operations.
Risks Related to Our Business
Certain statements contained in this Form 10-QSB, and other written and oral
statements made from time to time by us, do not relate strictly to historical
facts. These statements are considered "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Words such as "anticipate," "believe," "could,"
"estimate," "expect," "forecast," "intend," "may," "plan," "possible,"
"project," and "should," or similar words or expressions, are intended to
identify forward looking statements. This forward looking information involves
important risks and uncertainties that could materially alter results in the
future from those expressed in any forward looking statements made by, or on
behalf of, us. We caution you that such forward-looking statements are only
predictions and actual events or results may differ materially. In evaluating
such statements, you should specifically consider the various factors that could
cause actual events or results to differ materially, including those factors
described below. It is not possible to foresee or identify all factors affecting
our forward-looking statements and you should not consider any list of such
factors to be exhaustive. We are under no duty to update any forward-looking
statements.
We have substantial losses and negative cash flow.
Since our inception in 1999, we have had substantial and recurring losses and
negative cash flow. We are at risk of continued losses until our revenues
increase. There is no assurance that we can increase our revenue sources and it
is unlikely that we can lower our expenses in our present mode of operations. We
may never earn profits. If we continue to lose money over a period of time, we
may be forced to discontinue our operations.
11
We required substantial capital to grow our business and sustain current
operations.
Since our inception, we have required substantial capital to fund our business
operations. Our future capital requirements will depend upon many factors,
including the adoption of converged, Triple Play services, requirements to
maintain adequate telecommunications capabilities, expansion of our marketing
and sales efforts and the status of competitive products and services.
Our business operates at a loss and we require additional capital to fund
current operations.
Historically, our revenues have been less than our expenses and we have financed
our operations primarily through sales of equity and debt securities. We expect
to enter into additional financial transactions, which could result in
significant dilution or substantial indebtedness.
Our access to capital is uncertain.
We have no commitments, agreements or understandings regarding additional
financing and we may be unable to obtain additional financing on satisfactory
terms or at all. We expect to pursue additional financing through the private
placement of debt or equity. If additional funds are raised or acquisitions made
by issuing equity securities, further dilution to the existing stockholders will
result. We may also incur or assume substantial indebtedness. These arrangements
may require us to relinquish rights to certain of our existing or potential
products or other assets. Accordingly, the inability to obtain such financing
could have a material adverse affect on our business, financial condition and
results of operations. Our future revenue and operating results depend on a
number of factors.
We are in a rapidly changing industry, which affects our ability to forecast
growth and revenues.
Our short operating history and the rapidly changing nature of the markets in
which we compete make it difficult to accurately forecast our revenues and
operating results. Our quarterly operating results are unpredictable and we
expect them to fluctuate in the future due to a number of factors. These factors
may include, among others things:
o The amount and timing of operating costs and capital expenditures
relating to the growth of our business;
o The costs to develop and introduce new products and services in
response to changing market conditions and customer preferences:
o The announcement or introduction of new or enhanced products or
services by our competitors; and
o The entrance of a large, better capitalized competitor into our
markets.
In view of such fluctuations, we believe that quarterly comparisons of our
financial results are not necessarily meaningful and should not be relied upon
as a measure of future performance.
We may not be able to attract customers for our services.
12
There is no assurance that we will be able to obtain adequate distribution of
our services to a large number of subscribers. We believe that our ability to
achieve revenues in the future will depend in significant part upon our ability
to build upon existing relationships with, and provide support to, large,
residential developers. As a result, any cancellation, reduction or delay may
materially adversely affect our business, financial condition and results of
operations.
If we make any acquisitions, we will incur a variety of costs and may never
realize the anticipated benefits.
We may attempt to acquire businesses, technologies or products that we believe
are a strategic fit with our business. If we undertake any transaction of this
sort, the process of integrating a business, technology or product may result in
operating difficulties and expenditures, which may absorb significant management
attention that would otherwise be available for ongoing development of our
business. Moreover, we may never realize the anticipated benefits of any
acquisition. Future acquisitions could result in potentially dilutive issuances
of equity securities, the incurrence of debt, contingent liabilities and/or
amortization expenses related to goodwill and other intangibles and the
incurrence of large immediate write-offs.
Our ability to attract and retain key management, employees and consultants is
uncertain.
We are dependent on our management staff. The loss of services of any of these
personnel could impede the achievement of our corporate goals and development
objectives. There can be no assurance that we will be able to attract and retain
personnel on acceptable terms given the competition among telecommunications
companies for experienced personnel. In addition, we do not maintain "key-man"
life insurance policies on any member of our management staff and do not expect
to obtain such policies in the near future.
ITEM 3. Controls and Procedures
As of March 31, 2004 (the "Evaluation Date"), our current Chief Executive
Officer and Chief Financial Officer respectively evaluated our disclosure
controls and procedures. Based on that evaluation, these officers concluded that
as of the Evaluation Date, our disclosure controls and procedures were effective
in timely alerting them to material information relating to our company required
to be included in our reports filed or submitted by us under the Exchange Act.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
The following exhibits are included as part of this report:
13
EXHIBITS AND REPORTS ON FORM 8-K
A) Exhibits:
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
B) Reports on Form 8-K
1. The Company filed a Current Report on Form 8-K, dated January 13, 2004
announcing the resignation of David L. Bailey as Chairman of the Board
and member of our Board of Directors for personal reasons.
2. The Company filed a Current Report on Form 8-K, dated January 21, 2004
announcing the resignation of Dane Goodfellow as a member of our Board
of Directors to pursue other endeavors.
3. The Company filed a Current Report on Form 8-K, dated March 5, 2004 as
a shareholder update on progress in 2003 and Strategic Plans.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CERISTAR, INC.
Dated: May 17, 2004 /s/ Frederick A. Weismiller
---------------------------
Frederick A. Weismiller
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Dated: May 17, 2004 /s/ Frederick A. Weismiller
-----------------------------------
Frederick A. Weismiller
Chairman of the Board, Chief
Executive Officer and President
Dated: May 17, 2004 /s/ Michael B. Miller
-----------------------------------
Michael B. Miller
Chief Operations Officer
Dated: May 17, 2004 /s/ Robert E. Lester
-----------------------------------
Robert E. Lester
Chief Financial Officer (Principal
Financial Officer)
Dated: May 17, 2004 /s/ Mark S. Hewitt
-----------------------------------
Mark S. Hewitt
Director
..
14