U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
Commission File No. 000-26213
ROOMLINX, INC.
(Formerly Arc Communications, Inc.)
(Exact name of small business issuer as specified in its charter)
A Nevada Corporation 83-0401552 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) |
401 Hackensack Avenue, 3rd Floor, Hackensack, New Jersey 07601
(Address of principal executive offices)
(201) 525-1777
(Issuer's telephone number)
788 Shrewsbury Avenue
Tinton Falls, New Jersey 07724
(Former address of principal executive offices)
Check whether the issuer (1) 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 |_|
The number of shares outstanding of the Issuer's common stock as of August 13, 2004 was 102,504,456.
ROOMLINX, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
a) Condensed Balance Sheet as of June 30, 2004
b) Condensed Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003
c) Condensed Statements of Cash Flows for the Three and Six Months Ended June 30, 2004 and 2003
d) Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations General Critical Accounting Policies and Estimates Results
of Operations Liquidity and Capital Resources
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROOMLINX, INC.
CONDENSED BALANCE SHEET
(Unaudited)
June 30
2004
------------
ASSETS
Current assets:
Cash $ 587,612
Accounts receivable and other 266,194
Inventory 37,726
Work in progress 179,187
Due from sale of the continuing professional education segment 75,000
Prepaid and other current assets Total current assets 15,156
------------
1,160,875
Property and equipment, net 237,882
Other assets 7,878
------------
Total assets $ 1,406,635
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 590,632
Deferred revenue 274,969
Current portion of obligations under capital lease 217,685
Other current liabilities 14,463
------------
Total current liabilities 1,097,749
Convertible debenture 10,000
------------
Total liabilities 1,107,749
Commitments and contingencies
Stockholders' equity:
Preferred stock, stated value $.20, 5,000,000 shares authorized; 720,000 shares
issued and outstanding 144,000
Common stock, $.001 par value, authorized 250,000,000 shares; issued and
outstanding 102,504,456 102,504
Additional paid-in capital 14,531,983
Deferred compensation (1,740,000)
Warrants 495,550
Accumulated deficit (13,235,151)
------------
Total stockholders' equityTotal liabilities and stockholders' equity 298,886
------------
$ 1,406,635
============
|
ROOMLINX, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three months ended June 30, Six months ended June 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues
System sales and installation $ 240,347 $ 260,954 $ 528,043 $ 683,357
Service, maintenance and usage 175,221 123,493 323,880 216,570
------------ ------------ ------------ ------------
415,568 384,447 851,923 899,927
Cost of revenue
System sales and installation 209,430 199,673 460,492 492,477
Service, maintenance and usage 90,016 48,544 141,023 86,175
------------ ------------ ------------ ------------
299,446 248,217 601,515 78,652
------------ ------------ ------------ ------------
Gross profit
116,122 136,230 250,408 321,275
------------ ------------ ------------ ------------
Operating expenses
Sales and marketing 209,484 110,267 512,950 204,330
General and administrative 227,405 144,034 469,397 262,368
Depreciation of property and equipment 20,760 27,545 40,618 54,170
------------ ------------ ------------ ------------
457,649 281,846 1,022,965 520,868
------------ ------------ ------------ ------------
Loss from operations
(341,527) (145,616) (772,557) (199,593)
Other income (expense)
Interest expense (10,337) (9,999) (25,437) (18,363)
Reorganization Costs (6,364,996) -- (6,364,996) --
Foreign exchange 1,074 (33,274) 8,159 (57,236)
Financing costs -- (8,967) -- (29,280)
Non-cash financing costs (3,000) (10,500) (478,850) (18,000)
------------ ------------ ------------ ------------
Total other income (expense) (6,377,259) (62,740) (6,861,124) (122,879)
------------ ------------ ------------ ------------
Net loss $ (6,718,786) $ (208,356) $ (7,633,681) $ (322,472)
============ ============ ============ ============
Basic net loss per share $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============ ============ ============ ============
Diluted net loss per share $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============ ============ ============ ============
Weighted average shares used in computation of
basic net loss per share 65,913,288 14,426,963 60,206,917 14,426,963
Weighted average shares used in computation of
diluted net loss per share 65,913,288 14,426,963 60,206,917 14,426,963
|
ROOMLINX, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
2004 2003
----------- -----------
Operating activities
Loss for the period ................................. $(7,633,681) $ (322,472)
Items not affecting cash:
Amortization of property and equipment .......... 40,618 54,170
Amortization of capital lease obligation ........ (7,689) 31,390
Non-cash operating costs ........................ 169,600 --
Non-cash reorganization costs ................... 6,364,996
Non-cash financing costs ........................ 478,850 18,000
Change in operating assets and
liabilities .......................................... (22,411) 67,864
----------- -----------
Cash used in operating activities .................... (609,717) (151,048)
----------- -----------
Investing activities
Purchase of property and equipment ................ (8,692) (10,513)
Proceeds from merger .............................. 711,117
----------- -----------
Cash provided by (used in) investing activities ...... 702,425 (10,513)
----------- -----------
Financing activities
Due to related parties ............................ (72,009) 6,635
Loans payable ..................................... (23,139) 80,000
Convertible debenture ............................. -- 60,000
Issuance of common shares - cash .................. 582,800 --
----------- -----------
Cash provided by financing activities ................ 487,652 146,635
----------- -----------
Net (decrease) increase in cash and
cash equivalents .................................. 580,360 (14,926)
Cash and cash equivalents
(Bank overdraft), beginning of period ............. 7,252 (8,182)
----------- -----------
Cash and cash equivalents
(Bank overdraft), end of period ................... $ 587,612 $ (23,108)
=========== ===========
Supplement Disclosures of Cash Flow Information:
Cash paid for interest ............................ $ 10,000 $ 10,000
Satisfaction of liability to consultants through the
issuance of common stock ......................... $ 384,000
|
ROOMLINX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of Regulation S-B and include the results of RoomLinX, Inc. (the "Company"). Accordingly, certain information and footnote disclosures required in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. In the opinion of the Company's management, the accompanying unaudited condensed financial statements contain all adjustments (consisting only of normal recurring adjustments except as otherwise disclosed herein) that the Company considers necessary for the fair presentation of its financial position as of June 30, 2004 and the results of its operations and its cash flows for the six month period ended June 30, 2004 and 2003. These financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2003 included in the Definitive 14A Statement filed with the Securities and Exchange Commission on June 15, 2004.
The Company provides wired networking solutions and Wireless Fidelity networking solutions, also known as Wi-Fi, for high speed internet access to hotels, convention centers, corporate apartments and special events locations. The Company installs and creates services that address the productivity and communications needs of hotel guests, convention center exhibitors, corporate apartment customers and individual consumers. The Company specializes in providing advanced Wi-Fi wireless services such as the wireless standards known as 802.11a/b/g.
The accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company has incurred significant operating losses since its inception and, as of June 30, 2004, has an accumulated deficit of $13,235,000 as of June 30, 2004, the Company had $588,000 in cash and cash equivalents ($522,000 as of July 31, 2004). Management has evaluated the Company's alternatives to enable it to pay its liabilities as they become due and payable in the current year, reduce operating losses and obtain additional or new financing in order to advance its business plan. As a result, the Company completed the merger with Arc Communications Inc. ("Arc"), on June 28, 2004. Additional alternatives being considered by management include, obtaining financing from new lenders and the issuance of additional equity or debt. The Company believes these measures will provide liquidity for it to continue as a going concern throughout fiscal 2004, however, management can provide no assurance with respect to their success in affecting one or more of these measures, or whether, if affected, such measures will provide sufficient financing to sustain operations.
These unaudited condensed financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate because management believes that the actions already taken or planned will mitigate the adverse conditions and events that raise doubts about the validity of the going concern assumption used in preparing these financial statements.
Results for the interim period are not necessarily indicative of results that may be expected for the entire year.
On June 28, 2004, the Company completed its merger with Arc Communications Inc. formerly a full service marketing consulting and New Media design firm. As a result of the merger, the stockholders of RoomLinX before the merger received 68,378,346 shares of common stock of the Company and at the effective time of the merger, owned approximately 62% of the outstanding shares of the Company. The stockholders of RoomLinX before the merger also received warrants to purchase an additional 11,465,001 shares of common stock of the Company. The transaction has been accounted for as a recapitalization, which is accounted for similar to the issuance of stock by RoomLinX for the net assets of Arc with no goodwill or other intangibles being recorded. Concurrent with the closing, Arc changed its name to RoomLinX, Inc.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory, principally wireless devices related to Wi-Fi installations, are stated at the lower of cost (first-in, first-out) basis or market. Inventories are recorded net of any reserve for excess and obsolescence.
RECLASSIFICATIONS
Certain items have been reclassified to conform with the presentation adopted in the current period.
NOTE 3 - EARNINGS PER SHARE
The Company computes net loss per share under the provisions of SFAS No. 128, "Earnings per Share" (SFAS 128), and SEC Staff Accounting Bulletin No. 98 (SAB 98).
Under the provisions of SFAS 128 and SAB 98, basic loss per share is computed by dividing the Company's net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share excludes potential common shares if the effect is anti-dilutive. Diluted loss per share is determined in the same manner as basic loss per share except that the number of shares is increased assuming exercise of dilutive stock options and warrants using the treasury stock method. As the Company had a net loss, the impact of the assumed exercise of the stock options and warrants is anti-dilutive and as such, these amounts have been excluded from the calculation of diluted loss per share.
NOTE 4 - STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees", using the intrinsic value approach to measure compensation expense, if any. Under this method, compensation expense is recorded on the date of the grant only if the current market price of the underlying stock exceeds the exercise price. Options issued to non-employees are accounted for in accordance with SFAS 123, "Accounting for Stock-Based Compensation", and Emerging Issues Task Force ("EITF") Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods and Services", using a fair value approach.
SFAS No.123 established accounting and disclosure requirements using a fair value-basis method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123. Had the Company elected to recognize compensation cost based on fair value of the stock options at the date of grant under SFAS 123, such costs would have been recognized ratably over the vesting period of the underlying instruments and the Company' net loss and net loss per common share would have increased to the pro forma amounts indicated in the table below.
Three months ended June 30 Six months ended June 30
2004 2003 2004 2003
------------- ------------- ------------- -------------
Net loss, as reported $ (6,718,786) $ (208,356) $ (7,633,681) $ (322,472)
Deduct: Stock-based employee compensation
expense included in reported net loss -- -- -- --
Add: Total stock-based employee compensation
expense determined under fair value based
method for all awards -- -- -- --
------------- ------------- ------------- -------------
Pro forma net loss $ (6,718,786) $ (208,356) $ (7,633,681) $ (322,472)
============= ============= ============= =============
Loss per share - basic, as reported $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============= ============= ============= =============
Loss per share - diluted, as reported $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============= ============= ============= =============
Pro forma loss per share - basic $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============= ============= ============= =============
Pro forma loss per share - diluted $ (0.10) $ (0.01) $ (0.13) $ (0.02)
============= ============= ============= =============
|
NOTE 5 - MERGER WITH ARC COMMUNICATIONS INC.
On June 28, 2004, the Company completed its merger with Arc Communications, Inc. As a result of the merger, the stockholders of RoomLinX before the merger received 68,378,346 shares of common stock of the Company and at the effective time of the merger, owned approximately 62% of the outstanding shares of the Company. The stockholders of RoomLinX before the merger also received warrants to purchase an additional 11,465,001 shares of common stock of the Company. The transaction has been accounted for as a recapitalization, which is accounted for similar to the issuance of stock by RoomLinX for the net assets of Arc with no goodwill or other intangibles being recorded. Concurrent with the closing, Arc changed its name to RoomLinX, Inc.
Pursuant to the Merger Agreement with Arc, the Company was required to raise a minimum of $400,000 in additional capital prior to the closing of the merger. During the six months ended June 30, 2004, the Company issued and sold 5,738,510 shares of common stock at a price of $0.11 per share including 2,869,255 two year warrants to purchase common stock at an exercise price of $0.22 per share for gross proceeds of approximately $624,000(issue costs of approximately $53,000). The total fair value of the warrants issued during the quarter was determined to be $335,800 and was recorded as a non-cash financing cost in the statement of operations. Net proceeds from the sale of common stock were used to eliminate certain of the Company's existing liabilities approximating $205,000, reduce accounts payable and accrued expenses by approximately $261,000 and general working capital purposes.
In order to reduce the Company's existing debt prior to the closing of the merger, the Company issued 2,002,640 shares of common stock and 1,001,320 two year warrants to purchase common stock at an exercise price of $0.22 per share in settlement of approximately $217,800 of debt and liabilities. Furthermore, the Company issued 1,315,784 shares of common stock and 657,892 two year warrants to purchase common stock at an exercise price of $0.22 per share to unrelated parties as a fee related to the private placement. In lieu of cash compensation to certain employees and unrelated vendors, the Company issued 1,535,541 shares of common stock and 767,770 two year warrants to purchase common stock at an exercise price of $0.22 per share.
Additionally, during February 2004, Arc closed a private placement of its securities in reliance upon Rule 506 of Regulation D under the Securities Act. In the private placement, the Company sold 16,666,666 shares of common stock at a price of $.075 per share including 8,333,333 three-year warrants to purchase common stock at an exercise price of $.015 per share. Gross proceeds from the private placement were $1,250,000 before direct issuance costs of approximately $54,000. The proceeds of the private placement were used to eliminate certain of the Company's existing liabilities approximating $175,000, pay professional fees associated with the merger of approximately $50,000 and working capital for the surviving corporation after the merger is complete.
The following related parties participated in Arc's private placement:
Peter A. Bordes, Jr., chairman and then chief executive officer of the Company
purchased $75,000 of common stock and warrants; Arla Sheinwald, the wife of Alan
Sheinwald, the principal of Alliance Advisors, purchased $100,000 of common
stock and warrants; Deborah Berkley, the wife of Richard Berkley, a principal of
Roccus Capital, purchased $10,000 of common stock and warrants; Aaron Dobrinsky,
appointed Chief Executive Officer of the Company on April 27, 2004, purchased
$70,000 of common stock and warrants, and Frank Elenio, appointed Chief
Financial Officer of the Company on April 27, 2004, purchased $10,000 of common
stock and warrants.
NOTE 6 - CONSULTING ARRANGEMENT
In consideration for providing general consulting services to the Company in the areas of operations, finance, recruitment of officers and directors and sales and marketing for the twelve month period ended December 31, 2003, in which the Company had recorded a liability of $384,000, the Arc Communications, Inc. issued, during the first quarter 2004 an aggregate of 1,600,000 shares to Alliance Advisors and Roccus Capital Partners, L.L.C. in satisfaction of the liability.
NOTE 7 - CONVERTIBLE DEBENTURE
The debenture balance of $10,000 is the remaining balance of a private placement of debentures having an aggregate subscription level of $500,000 of which $370,000 was converted into common stock at $0.40 immediately prior to the closing of the merger of the Company with Arc. Each debenture has a face value of $10,000 and has a term of two years, expiring at various dates beginning November 1, 2004. All or any portion of the outstanding principal sum and accrued interest of each debenture is convertible at the option of the subscriber into common shares of the Company at a price of $0.50 per share if converted on or before the due date. The debentures are due and payable on the due date, if not converted prior to the due date. As security for the payment of the principal and interest, the Company has granted a general security interest on all of its present and after-acquired personal property and a floating chare over all of its present and after-acquired real property. Each debenture carries interest at the rate of 12% per annum, payable quarterly.
For each $1.00 invested, each debenture holder was also granted two share purchase warrants, entitling the holder to purchase one share of common stock at a price of $0.75. The warrants have a two-year term. The total fair value of the warrants issued during the year was determined to be $54,000 and was recorded as a non-cash financing cost in the statement of operations.
NOTE 8 - SEGMENTED DISCLOSURES
The Company manages it operations in one business segment, the provision of wireless high-speed Internet network solutions to hotel, conference centers and commercial buildings. The Company attributes revenue among geographical areas based on location of the customers involved. The following table presents a summary of total revenues by geographical region:
Three Months Ended Six Months Ended
June 30,
2004 2003 2004 2003
-------- -------- -------- --------
United States $359,115 $330,869 $752,526 $826,877
Canada 56,453 53,578 99,397 73,050
-------- -------- -------- --------
$415,568 $384,447 $851,923 $899,927
======== ======== ======== ========
|
The following table presents a summary of property and equipment by geographical region:
June 30,
2004 2003
United States $162,692 $219,382
Canada 75,190 95,105
-------- --------
$237,882 $314,487
======== ========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
GENERAL
RoomLinX, Inc., a Nevada corporation ("We," "Us" or the "Company"), provides wired networking solutions and Wireless Fidelity networking solutions, also known as Wi-Fi, for high speed internet access to hotels, convention centers, corporate apartments and special events locations. The company installs and creates services that address the productivity and communications needs of hotel guests, convention center exhibitors and corporate apartment customers. We specialize in providing advanced Wi-Fi wireless services such as the wireless standards known as 802.11a/b/g.
Hotel customers sign long-term service agreements, where we provide the maintenance for the networks, as well as the right to provide value added services over the network.
We derive our revenues primarily from the installation of the wired and wireless networks we provide to hotels, convention centers and apartment buildings. We derive additional revenue from the maintenance of these networks. Customers typically pay a one-time fee for the installation of the network and then pay monthly maintenance fees for the upkeep and support of the network. During March 1999, we commenced offering our services commercially. Since our inception, we have invested significant capital to build our technical infrastructure and network operations. We have incurred operating losses since our inception and expect to incur operating losses for at least the next 3 fiscal quarters. We will need to increase our installation and maintenance revenues and improve our gross margins to become profitable and sustain profitability on a quarterly and annual basis.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts and property and equipment valuation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.
Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. Our system sales and installation revenue primarily consists of wired and wireless network equipment and installation fees associated with the network and is recognized as revenue when the installation is completed and the customer has accepted such installation. Our service, maintenance and usage revenue, which primarily consists of monthly maintenance fees related to the upkeep of the network is recognized on a monthly basis as services are provided. We estimate the collectibility of our trade receivables. A considerable amount of judgment is required in assessing the ultimate realization of these receivables including analysis of historical collection rates and the current credit-worthiness of significant customers. We capitalize and subsequently depreciate our property and equipment over the estimated useful life of the asset. In assessing the recoverability of our long-lived assets, we must make certain assumptions regarding the useful life and contribution to the estimated future cash flows. If such assumptions change in the future, we may be required to record impairment charges for these assets not previously recorded. We have incurred substantial operating losses since our inception. As a result of such operating losses, we have recorded a substantial net operating loss for tax purposes. In light of our historical operating results, we have not recorded a deferred tax asset due to the uncertainty surrounding future income.
RESULTS OF OPERATIONS
Three months ended June 30, 2004 Compared to Three months ended June 30, 2003
System sales and installation revenue. System sales and installation revenue decreased to $240,000 for the quarter ended June 30, 2004 from $261,000 for the quarter ended June 30, 2003. While during the quarter ended June 30, 2004, we obtained 8 new customers as compared to 4 in the same period last year, revenue decreased due to the size of the customers added. During the quarter ended June 30, 2004, the average revenue per customer was approximately $30,000 as compared to $65,000 during the same period last year. Due to the nature of our business, such fluctuations may occur from time to time based off the size of the new customer contracts during the period. We expect the system sales and installation revenue to increase during remainder of 2004 as we continue to expand our customer base.
Service, maintenance and usage revenue. Service, maintenance and usage revenue increased to $175,000 for the quarter ended June 30, 2004 from $123,000 for the quarter ended June 30, 2003. The increase was due an increase in the number of customers we service on a recurring basis to 67, or 17,999 rooms as of June 30, 2004 as compared to 29 or 7,383 rooms as of June 30, 2003. We anticipate that service, maintenance and usage revenue will increase as we continue to increase our customer base.
Cost of system sales and installation revenue. Cost of system sales and installation revenue increased to $209,000 for the quarter ended June 30, 2004 from $200,000 for the quarter ended June 30, 2003. The increase was primarily attributable to unexpected cost overruns on two projects. . We anticipate that cost of system sales and installation revenue will increase during the remainder 2004 as we continue to expand our customer base.
Cost of service, maintenance and usage revenue. Cost of service, maintenance and usage revenue increased to $90,000 for the quarter ended June 30, 2004 from $49,000 for the quarter ended June 30, 2003. Such increase is directly attributable to the increased corresponding revenue. We anticipate that cost of service, maintenance and usage revenue will increase during the remainder of 2004 as we continue to increase Service, maintenance and usage revenues.
Sales and marketing. Sales and marketing expense increased by $99,000 to $209,000 during the quarter ended June 30, 2004 from $110,000 for the quarter ended June 30, 2003. Such increase is attributable to increased personnel and personnel levels and related personnel costs of $56,000, as well as more aggressive sales initiatives such as travel related costs of $43,000. During the remainder of 2004, we anticipate sales and marketing expense to increase as we will continue with our aggressive sales and marketing initiatives.
General and administrative. General and administrative expense increased by $83,000 to $227,000 for the quarter ended June 30, 2004 from $144,000 for the quarter ended June 30, 2003. The increase is attributable to increased personnel and personnel related costs of $10,000, office related expenses such as rent, telephone and supplies of $23,000, travel and professional fees of $50,000. During the remainder of 2004 we anticipate general and administrative costs to increase since the Company became a publicly traded entity pursuant to its merger with Arc, which will further increase personnel costs as well as professional fees.
Depreciation of property and equipment. Depreciation of property and equipment decreased 25% or $7,000 to $21,000 for the quarter ended June 30, 2004 as compared to $28,000 for the quarter ended June 30, 2003. The decrease is primarily related to assets that were fully depreciated during 2003 and smaller capital expenditures during 2003 and the quarter ended June 30, 2004. We anticipate amortization of property and equipment will decrease as a percentage of total revenue as we are do not expect major capital expenditures during the remainder of 2004.
Interest expense. Interest expense remained constant at $10,000 for the quarters ended June 30, 2004 and 2003. Such relative consistency primarily relates our convertible debt, which remained constant during the periods. We anticipate that interest expense will decrease during the remainder of 2004 as we have renegotiating all, except for $10,000, of our convertible notes and loans into equity as part of our merger with Arc Communications, Inc.
Reorganization costs. In connection with the merger with Arc, the transaction was accounted for as a recapitalization of RoomLinX. Under recapitalization accounting, RoomLinX effectively issued its stock in exchange for the net monetary liabilities of Arc. Accordingly RoomLinX has recorded a one-time, non-cash reorganization cost, related to the difference between the fair value of Arc's common stock on the date of the merger agreement and the net assets of Arc.
Foreign exchange. Foreign exchange income/expense decreased $34,000 to $1,000 of income for the quarter ended June 30, 2004 from expense of $33,000 for the quarter ended June 30, 2003. The decreased expense primarily relates to the exchange rate fluctuations between the U.S. Dollar and the Canadian Dollar. We currently incur operating expenses in Canadian dollars but derive a large portion of revenue and cost of revenue from U.S. sources denominated in U.S. dollars. Due to daily fluctuations in the foreign exchange rates between the U.S and Canada, as well as the increasing business we are recording in the United States, we are not in the position to estimate what such expense or income will be during the remainder of 2004. (See - Foreign Currency Exchange Rate Risk)
Non-cash financing costs. Non-cash financing costs decreased $8,000 to $3,000 for the quarter ended June 30, 2004 as compared to $11,000 for the quarter ended June 30, 2003. The decrease relates to the completion of financing during the first quarter 2004 and the portion expensed during the current quarter relates to issuance of warrants for financing received at the close of the first quarter. We anticipate Non-cash financing costs will decrease during the remainder of 2004 as we do not plan to enter into transactions that will give rise to such costs.
Six months ended June 30, 2004 Compared to Six months ended June 30, 2003
System sales and installation revenue. System sales and installation revenue decreased to $528,000 during the six months ended June 30, 2004 from $683,000 for the six months ended June 30, 2003. While during the six months ended June 30, 2004, we obtained 17 new customers as compared to 12 in the same period last year, revenue decreased due to the size of the customers added. During the six months ended June 30, 2004, the average revenue per customer was approximately $31,000 as compared to $57,000 during the same period last year. Due to the nature of our business, such fluctuations may occur from time to time based off the size of the new customer contracts during the period.
Service, maintenance and usage revenue. Service, maintenance and usage revenue increased to $324,000 for the six months ended June 30, 2004 from $217,000 for the six months ended June 30, 2003. The increase was due an increase in the number of customers we service on a recurring basis to 67 or 17,999 rooms as of June 30, 2004, an increase of 5,518 rooms during the six months ended June 30, 2004 as compared to 29 or 7,383 rooms as of June 30, 2003, an increase of 2,079 rooms during the six months ended June 30, 2003.
Cost of system sales and installation revenue. Cost of system sales and installation revenue decreased to $460,000 for the six months ended June 30, 2004 from $492,000 for the six months ended June 30, 2003. The decrease was directly attributable to the decreased corresponding revenue during the same period. Such costs increased during six months ended June 30, 2004 as a larger percentage of revenue as compared to the same period last year due to the scale of each project and our inability to obtain more favorable pricing due to smaller size of each project.
Cost of service, maintenance and usage revenue. Cost of service, maintenance and usage revenue increased to $141,000 for the six months ended June 30, 2004 from $86,000 for the six months ended June 30, 2003.
Sales and marketing. Sales and marketing expense increased by $309,000 to $513,000 during the six months ended June 30, 2004 from $204,000 for the six months ended June 30, 2003. Such increase is attributable to increased personnel and personnel levels and related personnel costs of $229,000, which includes non-cash share based compensation of $120,000 paid to certain employees , increased advertising costs of $23,000, as well as more aggressive sales initiatives such as travel related costs of $57,000.
General and administrative. General and administrative expense increased by $207,000 to $469,000 for the six months ended June 30, 2004 from $262,000 for the six months ended June 30, 2003. The increase is attributable to increased personnel and personnel related costs of $90,000, which includes non-cash share based compensation of $20,000 paid to certain employees, office related expenses such as rent, telephone and supplies of $38,000, travel and professional fees of $79,000.
Depreciation of property and equipment. Depreciation of property and equipment decreased 25% or $13,000 to $41,000 for the six months ended June 30, 2004 as compared to $54,000 for the six months ended June 30, 2003. The decrease is primarily related to assets that were fully depreciated during 2003 and smaller capital expenditures during 2003 and the six months ended June 30, 2004.
Interest expense. Interest expense increased 39% or $7,000 to $25,000 for the six months ended June 30, 2004 as compared to $18,000 for the six months ended June 30, 2003. The increase is primarily due to an increase in our convertible debt and loans payable during 2003. Inc.
Reorganization costs. In connection with the merger with Arc, the transaction was accounted for as a recapitalization of RoomLinX. Under recapitalization accounting, RoomLinX effectively issued its stock in exchange for the net monetary liabilities of Arc. Accordingly RoomLinX has recorded a one-time, non-cash reorganization cost, related to the difference between the fair value of Arc's common stock on the date of the merger agreement and the net assets of Arc.
Foreign exchange. Foreign exchange income/expense decreased $65,000 to $8,000 of income for the six months ended June 30, 2004 from expense of $57,000 for the six months ended June 30, 2003. The decreased expense primarily relates to the exchange rate fluctuations between the U.S. Dollar and the Canadian Dollar. We currently incur operating expenses in Canadian dollars but derive a large portion of revenue and cost of revenue from U.S. sources denominated in U.S. dollars. Due to daily fluctuations in the foreign exchange rates between the U.S and Canada, as well as the increasing business we are recording in the United States, we are not in the position to estimate what such expense or income will be during the remainder of 2004. (See - Foreign Currency Exchange Rate Risk)
Non-cash financing costs. Non-cash financing costs increased $461,000 to $479,000 for the six months ended June 30, 2004 as compared to $18,000 for the six months ended June 30, 2003. The increase is primarily due to expenses recorded with respect to the issuance of warrants in connection with certain equity and debt financings during the period.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we financed our operations through private placements of our equity securities, our convertible debentures and shareholder loans, which resulted in aggregate net proceeds of approximately $6.4 million through June 30, 2004. During the quarter ended June 30, 2004, we completed our merger with Arc which resulted in cash contributed from Arc of approximately $711,000, the net proceeds of which were used to extinguish certain short term liabilities, accounts payable, accrued expenses and working capital.
We have incurred significant operating losses since our inception and as of June 30, 2004 have an accumulated deficit of $13.2 million. During six months ended June 30, 2004, we incurred a net loss of $7,634,000 and used $610,000 of cash to fund operating activities. As of June 30, 2004 we had $588,000 in cash and cash equivalents ($522,000 at July 31, 2004). Management has evaluated the Company's alternatives to enable it to pay its liabilities as they become due and payable in the current year, reduce operating losses and obtain additional or new financing in order to advance its business plan. As a result, the Company completed the merger with Arc on June 28, 2004. Additional alternatives being considered by management include, among other things obtaining financing from new lenders and the issuance of additional equity. The Company believes these measures will provide liquidity for it to continue as a going concern throughout fiscal 2004, however, management can provide no assurance with respect to their success in affecting one or more of these measures, or whether, if affected, such measures will provide sufficient financing to sustain operations. At this time, we do not have any bank credit facility or other working capital credit line under which we may borrow funds for working capital or other general corporate purposes.
Net cash used in operating activities was $610,000 for the six month ended June 30, 2004. The principal use of cash in each of these periods was to fund our losses from operations. During the period, cash used for operating activities included a decrease of $195,000 in accounts payable and accrued liabilities, an increase in accounts receivable of $47,000 and an increase of work in progress of $179,000. The decrease in accounts payable and accrued liabilities is a result of the payment of accrued liabilities from proceeds of the private placement, which was completed during the quarter.
Net cash provided by investing activities was $702,000 for the six months ended June 30, 2004. The cash provided by investing activities was principally from the net proceeds from the merger of Arc in the amount of $711,000, which was offset from the purchase of property and equipment in the amount of $9,000. During 2004, we expect to use approximately $25,000 of cash in investing activities through capital expenditures to fund the opening of our east coast office, which includes offices and computer equipment..
Net cash provided by financing activities was $488,000 for the six months ended June 30, 2004. The cash provided by financing activities primarily resulted from the issuance of common shares, which was partially offset by the extinguishment of certain liabilities. During the remainder of 2004, we expect to provide cash in financing activities through the sale of additional debt and equity securities.
As of June 30, 2004, our principal commitments consisted of obligations outstanding under capital and operating leases and convertible debt, which total $493,000. As of June 30, 2004, future minimum payments for capital leases and non-cancelable operating leases having terms in excess of one year amounted to $0 and $258,000, of which $38,000 is payable in the remainder of 2004.
We have evaluated our alternatives to enable us to pay our liabilities as they become due and payable in the current year, reduce operating losses and obtain additional or new financing in order to advance its business plan. Alternatives being considered by us include, among others, completing a merger/public financing, obtaining financing from new lenders and the issuance of additional equity. We believe these measures will provide liquidity for us to continue as a going concern throughout fiscal 2004, however, we can provide no assurance with regard thereto. Our failure to raise financing or reduce operating losses may result in our need to reduce operations.
The following table summarizes our contractual obligations at June 30, 2004, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.
Less than After 5
June 30, (in thousands) Total 1 Year 1 - 3 Years 4 - 5 Years Years
-------------- --------------- -------------- --------------- ---------------
Contractual Obligations:
Capital lease obligations $ 225 $ 225 $ -- $ -- $ --
Convertible debentures 10 -- 10 --
Operating lease obligations 258 38 153 67 --
------ ------ ------ ------ ------
Total contractual cash obligations $ 493 $ 263 $ 163 $ 67 --
====== ====== ====== ====== ======
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FOREIGN CURRENCY EXCHANGE RATE RISK
A portion of our expenses, primarily general and administrative expenses relate to our Vancouver, British Columbia, Canada office are denominated in Canadian dollars while our functional currency is the U.S. dollar. During the quarter ended June 30, 2004, as a result of depreciation of the Canadian dollar relative to the U.S. dollar, we realized foreign currency income of approximately $1,000. In the event the Canadian dollar continues to decline in 2004 we will experience additional foreign currency income. Holding all other variables constant and on a hypothetical basis, a further 10% decrease in the value of the Canadian dollar against the U.S. dollar over 2004 would result in approximately $27,000 in foreign currency gains for the year. Conversely, a 10% increase over 2004 would result in approximately $51,000 in foreign currency losses for the year.
We will continue to monitor our exposure to foreign currency fluctuations and although we have never used financial hedging techniques to date, we may use them in the future to minimize the effect of these fluctuations. Nevertheless, we cannot assure you that these fluctuations will not adversely affect our results of operations in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
On January 1, 2002, we adopted Statement of Financial Accounting Standards ("SFAS") No. 144. SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of, and elements of APB 30, Reporting the Results of Operations - Reporting the Effects on Disposal of a Segment of a Business and Extraordinary, Unusual or Infrequently Occurring Events and Transactions. SFAS No. 144 establishes a single-accounting model for long-lived assets to be disposed of while maintaining many of the provisions relating to impairment testing and valuation. The adoption of this statement did not have an impact on our consolidated financial position, results of operations or cash flows.
In April 2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, was issued. This statement provides guidance on the classification of gains and losses from the extinguishment of debt and on the accounting for certain specified lease transactions. The adoption of this statement did not have an impact on our consolidated financial position, results of operations or cash flows.
In June 2002, SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, was issued. This statement provides guidance on the recognition and measurement of liabilities associated with disposal activities and is effective on January 1, 2003. Under SFAS No. 146, companies will record the fair value of exit or disposal costs when they are incurred rather than at the date of a commitment to an exit or disposal plan. The adoption of SFAS No. 146 may result in our recognizing the cost of future restructuring activities, if any, over a period of time rather than in one reporting period.
In November 2002, the EITF reached a consensus on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables ("Issue 00-21"). Issue 00-21 provides guidance on how to account for arrangements that involve the deliver or performance of multiple products, services and/or rights to use assets. The provisions of Issue 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We do not believe that the adoption of Issue 00-21 will have a material effect on our consolidated financial position, results of operations or cash flows.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others, ("FIN 45"). FIN 45 requires that we recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in the issuance of the guarantee. FIN 45 is effective for guarantees issued or modified after December 31, 2002. The disclosure requirements effective for the year ending December 31, 2002, expand the disclosures required by a guarantor about its obligations under a guarantee. The adoption of the accounting requirements of this statement did not impact our financial position, results of operations or cash flows. The adoption of the disclosure requirements of this statement did not result in additional disclosures.
In December 2002, SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, was issued. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on the reported results. The disclosure provisions of SFAS No. 148 are effective for financial statements for fiscal years ending after December 15, 2002 and interim periods beginning after December 15,2002. The adoption of this statement did not impact our financial position, results of operations or cash flows.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, ("FIN 46") that addresses the consolidation of variable interest entities. In December 2003, the FASB issued a revised Interpretation ("FIN 46R"). Under the revised Interpretation, an entity deemed to be a business, based on certain specified criteria, need not be evaluated to determine if it is a Variable Interest Entity. The Company must apply the provisions to variable interests in entities created before February 1, 2003 during the quarter ended December 31, 2003. Adoption of FIN 46 and FIN 46R did not have an impact on the Company's financial condition or results of operations.
In May 2003, the FASB issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS No. 150"). SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 represents a significant change in practice in the accounting for a number of financial instruments, including mandatorily redeemable equity instruments and certain equity derivatives. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and to other instruments as of July 1, 2003. We will adopt the provisions of SFAS No. 150 on July 1, 2003. We do not expect that the adoption of this Statement will have a material impact on its results of operations and financial position.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We believe that we have limited exposure to financial market risks, including changes in interest rates. At June 30, 2004, all of our available excess funds are cash and cash equivalents. The value of our cash and cash equivalents is not materially affected by changes in interest rates. A hypothetical change in interest rates of 1.0% would result in an annual change in net loss of approximately $6,000 based on cash and cash equivalent balances at June 30, 2004. We currently hold no derivative instruments.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
As of the end of the period covered by this report, the Company's management, with the participation of the Company's chief executive officer and chief financial officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on such evaluation, the Company's chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.
Internal Control Over Financial Reporting.
There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Recent Sales of Unregistered Securities.
On July 28, 2004, in connection with the closing of the merger among the Company, RL Acquisition Corp. and RoomLinX, Inc. pursuant to the Merger Agreement dated December 8, 2003, as amended, the Company issued 68,378,346 shares of Common Stock, par value $.001 per share, to shareholders of the former RoomLinX, Inc. as consideration for the merger in reliance on the exemption provided by Section 4(2) of the Securities Act, as amended.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special meeting of shareholders held on June 25, 2004, our shareholders voted upon the following actions:
1. The merger among RL Acquisition Corp., the Company and RoomLinX, Inc. pursuant to the Merger Agreement dated December 8, 2003, as amended.
FOR AGAINST ABSTAIN NON-VOTE --- ------- ------- -------- 21,957,840 -0- -0- -0- |
The merger was approved.
2. Our merger into our wholly-owned subsidiary RL Acquisition for the purpose of changing our state of incorporation from New Jersey to Nevada.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
21,957,840 -0- -0- -0-
The merger was approved.
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3. The amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock from 45,000,000 to 195,000,000 and to change our name to RoomLinX, Inc.
FOR AGAINST ABSTAIN NON-VOTE --- ------- ------- -------- 21,957,840 -0- -0- -0- |
The amendment was approved.
4. The approval of our Long Term Incentive Plan pursuant to which we can grant stock options and other stock-based awards to purchase an aggregate of 25,000,000 shares of Common Stock.
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
21,957,840 -0- -0- -0-
ITEM 5. OTHER INFORMATION
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None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
2.0 Amended & Restated Articles of Incorporation.
3.1 Amended & Restated Bylaws of RoomLinX, Inc.
4.0 Specimen Common Stock Certificate.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer
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) Current reports on Form 8-K.
SIGNATURES
In accordance with requirements of the Exchange Act, the Issuer caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 23, 2004
ROOMLINX, INC.
By: /s/ Aaron Dobrinsky ----------------------------------- Aaron Dobrinsky Chief Executive Officer |
AMENDED & RESTATED ARTICLES OF INCORPORATION
OF
RL ACQUISITION, INC.
Pursuant to the provisions of Nevada Revised Statutes, Title 7, Chapter 78, the undersigned officers do hereby certify:
FIRST: The name of the corporation is RL ACQUISITION, INC.
SECOND: The Board of Directors of the corporation duly adopted the following resolutions on May 5, 2003:
RESOLVED, that it is advisable in the judgment of the Board of Directors of the Corporation that the name of the Corporation be changed, the capital stock and the total number of shares with par be increased, and that the entire text of the Articles of Incorporation of the Corporation be amended and restated to read as set forth on Exhibit A-1 attached hereto and made a part hereof; and
FURTHER RESOLVED, that a special meeting of stockholders having voting power be and it is hereby called and that notice be given in the manner prescribed by the Bylaws of the Corporation and by Nevada Revised Statutes, Title 7, Chapter 78, unless the said stockholders shall waive the notice of meeting in writing or unless all of said stockholders shall dispense with the holding of a meeting and shall take action upon the proposed amendments and restatement by a consent in writing signed by them; and
FURTHER RESOLVED, that, in the event that the said stockholders shall adopt the aforesaid proposed amendments and restatement by a vote in favor thereof by at least a majority of the voting power or by a written consent in favor thereof signed by all of them without a meeting, the Corporation is hereby authorized to make by the hands of its President and by its Secretary a certificate setting forth the said amendments and restatement and to cause the same to be filed pursuant to the provisions of Nevada Revised Statutes, Title 7, Chapter 78.
THIRD: The total number of outstanding shares having voting power of the corporation is 100, and the total number of votes entitled to be cast by the holder of all of said outstanding shares is 100.
FOURTH: At a meeting of the stockholders held on June 25, 2004, notice of which was duly given, the amendments and restatement herein certified were adopted by the holders of 100 shares, which constitutes a majority of all the voting power of the holders of shares having voting power.
Executed on June 25, 2004.
RL ACQUISITION, INC.
/s/Aaron Dobrinsky ---------------------------------------- Aaron Dobrinsky Chief Executive Officer /s/ Frank Elenio ---------------------------------------- Frank Elenio Secretary |
STATE OF NEW YORK )
) SS.:
COUNTY OF NASSAU )
|
On 6/25/04, personally appeared before me, a Notary Public, for the State and County aforesaid, Aaron Dobrinsky, as Chief Executive Officer of RL Acquisition, Inc., who acknowledged that he executed the above instrument.
/s/ Ellen A. Bissett ---------------------------------------- Notary Public |
Ellen A. Bissett
Notary Public, State of New York
No. 02B15074689
Qualified in Nassau County
Commission Expires March 17, 2007
STATE OF NEW YORK )
) SS.:
COUNTY OF NASSAU )
|
On 6/25/04, personally appeared before me, a Notary Public, for the State and County aforesaid, Frank Elenio, as Secretary of RL Acquisition, Inc., who acknowledged that he executed the above instrument.
/s/ Ellen A. Bissett ---------------------------------------- Notary Public |
Ellen A. Bissett
Notary Public, State of New York
No. 02B15074689
Qualified in Nassau County
Commission Expires March 17, 2007
EXHIBIT A-1
ARTICLES OF INCORPORATION
OF
ROOMLINX, INC.
Article First of the Certificate of Incorporation is hereby amended as follows:
FIRST: The name of the corporation is ROOMLINX, INC. (the "Corporation").
SECOND: The Corporation's resident agent shall be National Registered Agents, inc, of NV at 1000 East William Street, Suite 204, Carson City, Nevada 89701.
Article Third of the Certificate of Incorporation is hereby amended as follows:
THIRD: The aggregate number of shares which the Corporation shall have authority to issue is 250,000,000 shares. These shares are divided into 245,000,000 common shares with $.001 par value and 5,000,000 preferred shares with $.20 par value.
PART I. PREFERRED STOCK TERMS
Section 1. Designation and Amount. The designation of the class of preferred shares is "Class A Preferred Stock."
Section 2. Dividends. When and as declared by the Corporation's Board of Directors and to the extent permitted under Chapter 78 of the Nevada Revised Statutes ("NRS"), the holders of the Class A Preferred Stock shall be entitled to receive, and the Corporation shall pay on those shares, fixed cumulative dividends at an annual rate of nine (9%) percent in arrears for each share and no more, payable in cash or Class A Preferred Stock at the option of the Board of Directors. Class A Preferred Stock Dividends, when and if declared, shall be paid at the rate of one (1) share of Class A Preferred Stock for each twenty (.$20) cents of dividend declared. This right to receive and obligation to pay shall arise as, if, and when declared by the Board of Directors from the funds of the Corporation properly available for the payment of dividends in any fiscal year. Dividends in arrears as of June 30, 2004 were $75,000. Commencing on July 1, 2004, these dividends shall continue to accrue annually in arrears. Dividends on the Class A Preferred Stock shall be cumulative from the original issue of each share of the Class A Preferred Stock to the extent not paid, whether earned or not earned. No dividends or other distributions in any fiscal year shall be declared or paid on, nor shall there be a redemption of, the common shares of the Corporation or any shares of the Corporation that rank lower in priority to the Class A Preferred Stock with respect to payment of dividends unless and until all accrued and unpaid dividends provided for in this Section 2 have been paid, or have been declared and funds set aside for the payment thereof.
Section 3. Participation in Assets on Dissolution. In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of the Class A Preferred Stock shall be entitled to be paid the amount of twenty ($.20) cents for each share, together with all accrued and unpaid dividends on the shares, and no more, before any distribution to the holders of common shares or any other shares of the Corporation ranking lower in priority to the Class A Preferred Stock with respect to distribution on liquidation.
Section 4. Redemption at Corporation's Option. The Corporation shall have the right, at its option, and on notice as provided for in this Section 4, to redeem at any time all or any portion of the Class A Preferred Stock at a price of twenty ($.20) cents for each share, together with all accrued and unpaid dividends on those shares. In all cases of redemption of the Class A Preferred Stock, thirty (30) days advance written notice of the redemption shall be given by the Corporation through registered mail addressed to the shareholders whose shares are to be redeemed at their respective addresses appearing in the books of the Corporation. If notice is given and if on or before the date set for redemption the Corporation shall have set aside all funds necessary for the redemption, then on and after the date set for redemption all of these shares shall no longer be outstanding, all dividends on these shares shall cease to accrue, and all rights of the holders of these shares shall terminate, except for the right to receive the amount payable on redemption of the shares, without interest, on the surrender of the certificate representing the shares. Funds necessary for redemption shall be considered to be set aside only if they are held separate and apart from other corporate funds in trust for the benefit of the holders of the shares with respect to which the notice of redemption is given. If only a portion of the Class A Preferred Stock is redeemed, the shares to be redeemed shall be selected by lot.
Section 5: Voting Rights. The holders of shares of the Class A Preferred Stock shall not be entitled to vote at, or receive notices of, any meeting of the shareholders of the Corporation, except as required under the Nevada Revised Statutes, Title 7, Chapter 78.
PART II. POWER OF BOARD OF DIRECTORS TO AMEND CERTIFICATE OF INCORPORATION
The Board of Directors may, at any time or from time to time, (a) divide any or all of the preferred shares into classes or series; (b) determine for any class or series established by the Board, its designation, number of shares, and relative rights, preferences, and limitations; (c) change the designation, number of shares, relative rights, preferences or limitations of the shares of any class or series established by the Board, no shares of which have been issued; and (d) cause to be executed and filed without further approval of the shareholders of this Corporation, any amendment or amendments to this Certificate of Incorporation as may be required to accomplish any of these amendments. In particular, but without limiting the generality of the above authority, the Board shall have authority to determine the following concerning preferred stock established by the Board:
(1) A distinctive designation for each class or series and the number of shares which shall constitute each class or series;
(2) The dividend rate or rates on shares of the series, any restrictions, limitations, or conditions on the payment of the dividends, whether dividends shall be cumulative and, if so, the date or dates from which dividends shall cumulate, and the date or dates on which dividends, if declared, shall become payable.
(3) Whether the shares of the series shall be redeemable and, if so, the time or times, the price or prices, the required notice or notices, and the other terms and conditions on which the shares may be redeemed;
(4) Whether the shares of the class or series are entitled to retirement or sinking fund for the purchase or redemption of such shares, and the amount and terms of such fund;
(5) The rights of the holders of shares of the series in the event of a liquidation, dissolution, or the winding up of the Corporation;
(6) Whether the shares of the series shall be convertible into shares of any class, classes, or series, and if convertible, the price, prices, rate, or rates of conversion, any method of adjusting these prices or rates, and any other terms and conditions on which the shares shall be convertible;
(7) The extent of any voting powers of the shares of the series;
(8) Whether the shares of the class or series are to be prior, equal or junior, to the shares of any other class or series in any respect;
(9) Any other preferences, qualifications, privileges, options, and other related or special rights and limitations of the class or series.
Article Fourth of the Certificate of Incorporation is hereby amended as follows:
FOURTH: The number of directors constituting the Board of Directors shall consist of not less than three (3) nor more than nine (9) directors. At any time during the year, at the discretion of the Board of Directors, the Board of Directors shall have the authority to increase the total number of Directors within the above range by special meeting of the Board of Directors. The Board of Directors of the Corporation as of the date of the filing of these Articles shall consist of five (5) Directors and shall be comprised of the following individuals:
Name Address
---- -------
Peter A. Bordes, Jr. 401 Hackensack Ave., 3rd Floor, Hackensack, New Jersey 07601
Aaron Dobrinsky 401 Hackensack Ave., 3rd Floor, Hackensack, New Jersey 07601
Frank Elenio 401 Hackensack Ave., 3rd Floor, Hackensack, New Jersey 07601
Herbert I. Hunt III 401 Hackensack Ave., 3rd Floor, Hackensack, New Jersey 07601
Robert P. Lunde 401 Hackensack Ave., 3rd Floor, Hackensack, New Jersey 07601
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FIFTH: No director or officer of the Corporation shall be personally
liable to the Corporation or its shareholders for damages for any breach of duty
owed to the Corporation or its shareholders, except for liability for any breach
of duty based upon an act or omission (a) in breach of such person's duty of
loyalty to the Corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt by such person
of an improper personal benefit. The Corporation shall have the authority to
indemnify any Corporate Agent against expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement, incurred in connection with
any pending or threatened action, suit, or proceeding, with respect to which the
Corporate Agent is a party, or is threatened to be made a party, to the fullest
extent permitted by the Nevada General Corporations Law. The indemnification
provided in this subparagraph shall not be deemed exclusive of any other right,
including the right to be indemnified against liabilities and expenses incurred
in proceedings by or in the right of the Corporation, to which a Corporate Agent
may be entitled under any by-law, agreement, vote of shareholders or
disinterested Directors, or otherwise, both as to action in that Corporate
Agent's official capacity and as to action in another capacity. However, no
indemnification shall be made to any Corporate Agent if a judgment or other
final adjudication establishes that the Corporate Agent engaged in conduct that
(1) breached a duty of loyalty to the Corporation or its shareholders, (2) was
not undertaken in good faith, (3) involved a knowing violation of the law, or
(4) resulted in the receipt by the Agent of an improper personal benefit.
Conduct breaching the duty of loyalty is conduct that a person knows or believes
to be contrary to the best interests of the corporation or its shareholders in
connection with a matter in which he or she has a material conflict of interest.
These indemnification rights shall inure to the benefit of the heirs, executors,
and administrators of the Corporate Agent. The Corporation shall have the power
to purchase and maintain insurance on behalf of any Corporate Agent against any
liability asserted against the Corporate Agent, whether or not the Corporation
would have the power to indemnify the Corporate Agent against the liability
under the foregoing provisions. A "Corporate Agent" of the Corporation shall be
any person who is or was a director, officer, employee or agent of this
Corporation or of any constituent Corporation absorbed by this Corporation in a
consolidation or merger, and other persons serving at the request of the
Corporation as a director, officer, trustee, employee, or agent of another
corporation, association, partnership, joint venture, trust, or other
enterprise.
IN WITNESS WHEREOF, the undersigned have signed their names to these Amended and Restated Articles of Incorporation and affirm that the statements herein are true under the penalties of perjury this 25th day of June, 2004.
/s/ Aaron Dobrinsky ---------------------------------------- Aaron Dobrinsky Chief Executive Officer /s/ Frank Elenio ---------------------------------------- Frank Elenio Secretary |
AMENDED & RESTATED
BYLAWS
OF
ROOMLINX , INC.
(Adopted: As Of_____________________)
AMENDED & RESTATED
BYLAWS
of
ROOMLINX, INC.
a Nevada corporation (the "Corporation")
ARTICLE I - OFFICES
Section 1.1. Location. The address of the registered office of the Corporation in the State of Nevada and the name of the registered agent at such address shall be as specified in the Articles of Incorporation or, if subsequently changed, as specified in the most recent certificate of change filed pursuant to law. The Corporation may also have other offices at such places within or without the State of Nevada as the Board of Directors may from time to time designate or the business of the Corporation may require.
Section 1.2. Change of Location. In the manner permitted by law, the Board of Directors or the registered agent may change the address of the Corporation's registered office in the State of Nevada and the Board of Directors may make, revoke or change the designation of the registered agent.
ARTICLE II - MEETINGS OF STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at the registered office of the Corporation, or at such other place within or without the State of Nevada as the Board of Directors may fix, or may be held by telephone conference or other similar means, or by written consent.
Section 2.2. Special Meetings. Special meetings of stockholders, unless otherwise prescribed by law, may be called at any time by the Chairman of the Board, the President, the Secretary or by order of the Board of Directors or by the holder or holders of five (5%) percent of the outstanding shares of the capital stock of the Corporation. Special meetings of stockholders shall be held at such place within or without the State of Nevada as shall be designated in the notice of meeting, or may be held by telephone conference or other similar means, or by written consent.
Section 2.3. Quorum. At any meeting of stockholders, except as otherwise expressly required by law or by the Articles of Incorporation, the holders of record of at least a majority of the outstanding shares of capital stock entitled to vote or act at such meetings shall be present or represented by proxy in order to constitute a quorum for the transaction of any business, but less than a quorum shall have power to adjourn any meeting until a quorum shall be present.
Section 2.4. Voting. At any meeting of stockholders at which a quorum shall be present, each matter shall be decided by majority vote of the shares voting on such matter, except as otherwise expressly required by law or by the Articles of Incorporation and except as otherwise expressly provided in these By-Laws.
Section 2.5. Action by Consent of Stockholders. Whenever any action by the stockholders at a meeting thereof is required or permitted by law, the Articles of Incorporation or these By-Laws, such action may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of such action without a meeting and by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE III - BOARD OF DIRECTORS
Section 3.1. General Powers. The property, business and affairs of the Corporation shall be managed by the Board of Directors. The Board of Directors may exercise all such powers of the Corporation and have such authority and do all such lawful acts and things as are permitted by law, the Articles of Incorporation or these By-Laws.
Section 3.2. Number of Directors. The Board of Directors of the Corporation shall consist of one or more members; the exact number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by resolution adopted by a majority of the whole Board of Directors.
Section 3.3. Qualification. Directors need not be stockholders of the Corporation.
Section 3.4. Election. Except as otherwise provided by law, the Articles of Incorporation or these By Laws, after the first meeting of the Corporation at which directors are elected, directors of the Corporation shall be elected in each year at the annual meeting of stockholders or at a special meeting in lieu of the annual meeting called for such purpose, by a plurality of votes cast at such meeting. The voting on directors at any such meeting need not be by written ballot unless otherwise so requested by any stockholder.
Section 3.5. Term. Each director shall hold office until his successor is duly elected and qualified, except in the event of the earlier termination of his term of office by reason of death, resignation, removal or other reason.
Section 3.6. Resignation and Removal. Any director may resign at any time upon written notice to the Board of Directors, the President or the Secretary. Any director may be removed at any time for cause.
Section 3.7. Vacancies. Vacancies occurring by reason of death, resignation, removal or otherwise shall be filled by the majority of the remaining directors. Each director chosen to fill a vacancy on the Board of Directors shall hold office until the next annual election of directors and until his successor shall be elected and qualified.
Section 3.8. Quorum and Voting. Unless the Articles of Incorporation provides otherwise, at all meetings of the Board of Directors a majority of the total number of directors shall be present to constitute a quorum for the transaction of business. A director interested in a contract or transaction may be counted in determining the presence of a quorum at a meeting of the Board of Directors which authorizes the contract or transaction. In the absence of a quorum, a majority of the directors present may adjourn the meeting until a quorum shall be present.
Members of the Board of Directors or any committee designated by the Board of Directors may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting.
Except as provided in these ByLaws, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 3.9. Regulations. The Board of Directors may hold its meetings and cause the books and records of the Corporation to be kept at such place or places within or without the State of Nevada as the Board of Directors may from time to time determine. A member of the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, by an independent Certified Public Accountant or by an appraiser selected with reasonable care by the Board of Directors or any committee of the Board of Directors or in relying in good faith upon other records of the Corporation.
Section 3.10. Annual Meeting of Board of Directors. An annual meeting of the Board of Directors shall be called and held for the purpose of organization, election of officers and transaction of any other business. If such meeting is held promptly after and at the place specified for the annual meeting of stockholders, no notice of the annual meeting of the Board of Directors need be given. Otherwise such annual meeting shall be held at such time (not more than thirty days after the annual meeting of stockholders) and place as may be specified in a notice of the meeting.
Section 3.11. Regular Meetings. Regular meetings of the Board of Directors shall be held at the time and place, within or without the State of Nevada, as shall from time to time be determined by the Board of Directors. After there has been such determination and notice thereof has been given to each member of the Board of Directors, no further notice shall be required for any such regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting.
Section 3.12 Special Meetings. Special meetings of the Board of Directors may, unless otherwise prescribed by law, be called from time to time by the President, and shall be called by the President or the Secretary upon the request of two directors. Except as provided below, notice of any special meeting of the Board of Directors, stating the time, place and purpose of such special meeting, shall be given to each director.
Section 3.13. Notice of Meetings; Waiver of Notice. Notice of any meeting of the Board of Directors shall be deemed to be duly given to a director (i) if mailed to such director, addressed to him at his address as it appears upon the books of the Corporation or at the address last made known in writing to the Corporation by such director as the address to which such notices are to be sent, at least two days before the day on which such meeting is to be held, (ii) if sent to him at such address by telecopier, telex or telegraph, not later than the day before the day on which such meeting is to be held or (iii) if delivered to him personally or orally, by telephone or otherwise, not later than the day before the day on which such meeting is to be held. Each such notice shall state the time and place of the meeting and the purposes thereof.
Notice of any meeting of the Board of Directors need not be given to any director if waived by him in writing (or by telecopier, telex or telegram and confirmed in writing) whether before or after the holding of such meeting or if such director is present at such meeting. Any meeting of the Board of Directors shall be a duly constituted meeting without any notice thereof having been given if all directors then in office shall be present thereat.
Section 3.14. Committees of Directors. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation.
Except as herein provided, vacancies in membership of any committee shall be filled by the vote of a majority of the whole Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Members of a committee shall hold office for such period as may be fixed by a resolution adopted by a majority of the whole Board of Directors, subject, however, to removal at any time by the vote of a majority of the whole Board of Directors.
Section 3.15. Powers and Duties of Committees. Any committee, to the extent provided in the resolution or resolutions creating such committee, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. No such committee shall have the power or authority with regard to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the By-Laws, or any other action which would require the approval of the directors. The Board of Directors may, in the resolution creating a committee, grant to such committee the power and authority to declare a dividend or authorize the issuance of stock.
Section 3.16. Compensation of Directors. The Board of Directors may from time to time, in its discretion, fix the amounts which shall be payable to directors and to members of any committee of the Board of Directors for attendance at the meetings of the Board of Directors or of such committee and for services rendered to the Corporation.
Section 3.17. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or such committee.
ARTICLE IV - OFFICERS
Section 4.1. Principal Officers. The principal officers of the Corporation shall be elected by the Board of Directors and shall include a President, a Secretary and a Treasurer and may, at the discretion of the Board of Directors, also include a Chairman of the Board, one or more Vice Presidents and a Controller. Except as otherwise provided in the Articles of Incorporation or these ByLaws, one person may hold the offices and perform the duties of any two or more of said principal offices.
Section 4.2. Election of Principal Officers; Term of Office. The principal officers of the Corporation shall be elected annually by the Board of Directors at each annual meeting of the Board of Directors. Failure to elect annually any principal officer shall not dissolve the Corporation. If the Board of Directors shall fail to fill any principal office at an annual meeting, if any vacancy in any principal office shall occur or if any principal office shall be newly created, such principal office may be filled at any regular or special meeting of the Board of Directors. Each principal officer shall hold office until his successor is duly elected and qualified, or until his earlier death, resignation or removal.
Section 4.3. Subordinate Officers, Agents and Employees. In addition to the principal officers, the Corporation may have one or more Assistant Treasurers, Assistant Secretaries, Assistant Controllers and such other subordinate officers, agents and employees as the Board of Directors may deem advisable, each of whom shall hold office for such period and have such authority and perform such duties as the Board of Directors, the President or any officer designated by the Board of Directors may from time to time determine. The Board of Directors at any time may appoint and remove, or may delegate to any principal officer the power to appoint and to remove, any subordinate officer, agent or employee of the Corporation.
Section 4.4. Delegation of Duties of Officers. The Board of Directors may delegate the duties and powers of any officer of the Corporation to any other officer or to any director for a specified period of time for any reason that the Board of Directors may deem sufficient.
Section 4.5. Removal of Officers. Any officer of the Corporation may be removed with or without cause by resolution adopted by a majority of the directors then in office at any regular or special meeting of the Board of Directors or by a written consent signed by all of the directors then in office.
Section 4.6. Resignations. Any officer may resign at any time by giving written notice of resignation to the Board of Directors, to the President or to the Secretary. Any such resignation shall take effect upon receipt of such notice or at any later time specified therein. Unless otherwise specified in the notice, the acceptance of a resignation shall not be necessary to make the resignation effective.
Section 4.7. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of stockholders and of the Board of Directors at which he is present. The Chairman of the Board shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors.
Section 4.8. President. The President shall, in the absence of the Chairman of the Board, preside at all meetings of the stockholders and of the Board of Directors at which they are present. The President shall be the chief executive officer of the Corporation and shall have general supervision over the business of the Corporation. The President shall have all powers and duties usually incident to the office of the President except as specifically limited by a resolution of the Board of Directors. The President shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors.
Section 4.9. Vice President. In the absence or disability of the President or if the office of President be vacant, the Vice Presidents in the order determined by the Board of Directors, or if no such determination has been made in the order of their seniority, shall perform the duties and exercise the powers of the President, subject to the right of the Board of Directors at any time to extend or confine such powers and duties or to assign them to others. Any Vice President may have such additional designation in his title as the Board of Directors may determine. The Vice Presidents shall generally assist the President in such manner as the President shall direct. Each Vice President shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President.
Section 4.10. Secretary. The Secretary shall act as Secretary of all meetings of stockholders and of the Board of Directors at which he is present, shall record all the proceedings of all such meetings in a book to be kept for that purpose, shall have supervision over the giving and service of notices of the Corporation and shall have super-vision over the care and custody of the records and seal of the Corporation. The Secretary shall be empowered to affix the corporate seal to documents, the execution of which on behalf of the Corporation under its seal is duly authorized, and when so affixed may attest the same. The Secretary shall have all powers and duties usually incident to the office of Secretary except as specifically limited by a resolution of the Board of Directors. The Secretary shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President.
Section 4.11. Treasurer. The Treasurer shall have general supervision over the care and custody of the funds and over the receipts and disbursements of the Corporation and shall cause the funds of the Corporation to be deposited in the name of the Corporation in such banks or other depositaries as the Board of Directors may designate. The Treasurer shall have supervision over the care and safekeeping of the securities of the Corporation. The Treasurer shall have all powers and duties usually incident to the office of Treasurer except as specifically limited by a resolution of the Board of Directors. The Treasurer shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President.
Section 4.12. Controller. The Controller shall be the chief accounting officer of the Corporation and shall have supervision over the maintenance and custody of the accounting operations of the Corporation, including the keeping of accurate accounts of all receipts and disbursements and all other financial transactions. The Controller shall have all powers and duties usually incident to the office of Controller except as specifically limited by a resolution of the Board of Directors. The Controller shall have such other powers and perform such other duties as may be assigned to him from time to time by the Board of Directors or the President.
Section 4.13. Bond. The Board of Directors shall have power, to the extent permitted by law, to require any officer, agent or employee of the Corporation to give bond for the faithful discharge of his duties in such form and with such surety or sureties as the Board of Directors may determine.
ARTICLE V - CAPITAL STOCK
Section 5.1. Issuance of Certificates for Stock. Each stockholder of the Corporation shall be entitled to a certificate or certificates in such form as shall be approved by the Board of Directors certifying the number of shares of capital stock of the Corporation owned by such stockholder.
Section 5.2. Signatures on Stock Certificates. Certificates for shares of capital stock of the Corporation shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the President or a Vice President and by the Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if such signer were such officer, transfer agent or registrar at the date of issue.
Section 5.3. Stock Ledger. A record of all certificates for capital stock issued by the Corporation shall be kept by the Secretary or any other officer or employee of the Corporation designated by the Secretary or by any transfer clerk or transfer agent appointed pursuant to Section 5.4 hereof. Such record shall show the name and address of the person, firm or corporation in which certificates for capital stock are registered, the number of shares represented by each such certificate, the date of each such certificate and in case of certificates which have been cancelled the dates of cancellation thereof.
The Corporation shall be entitled to treat the holder of record of shares of capital stock as shown on the stock ledger as the owner thereof and as the person entitled to receive dividends thereon, to vote such shares and to receive notice of meetings and for all other purposes. The Corporation shall not be bound to recognize any equitable or other claim to or interest in any share of capital stock on the Part of any other person whether or not the Corporation shall have express or other notice thereof.
Section 5.4. Regulations Relating to Transfer. The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with law, the Articles of Incorporation or these By-Laws, concerning issuance, transfer and registration of certificates for shares of capital stock of the Corporation. The Board of Directors may appoint, or authorize any principal officer to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars and may require all certificates for capital stock to bear the signature or signatures of any of them.
Transfers of capital stock shall be made in compliance with the Stockholders' Agreement.
Section 5.5. Transfers. Transfers of capital stock shall be made on the books of the Corporation only upon delivery to the Corporation or its transfer agent of (i) a written direction of the registered holder named in the certificate or such holder's attorney lawfully constituted in writing, (ii) the certificate for the shares of capital stock being transferred and (iii) a written assignment of the shares of capital stock evidenced thereby.
Section 5.6. Cancellation. Each certificate for capital stock surrendered to the Corporation for exchange or transfer shall be cancelled and no new certificate or certificates shall be issued in exchange for any existing certificate (other than pursuant to Section 5.7) until such existing certificate shall have been cancelled.
Section 5.7. Lost, Destroyed, Stolen and Mutilated Certificates. In the event that any certificate for shares of capital stock of the Corporation shall be mutilated the Corporation shall issue a new certificate in place of such mutilated certificate. In case any such certificate shall be lost, stolen or destroyed the Corporation may, in the discretion of the Board of Directors or a committee designated thereby with power so to act, issue a new certificate for capital stock in the place of any such lost, stolen or destroyed certificate. The applicant for any substituted certificate or certificates shall surrender any mutilated certificate or, in the case of any lost, stolen or destroyed certificate, furnish satisfactory proof of such loss, theft or destruction of such certificate and of the ownership thereof. The Board of Directors or such committee may, in its discretion, require the owner of a lost or destroyed certificate or his representatives to furnish to the Corporation a bond with an acceptable surety or sureties and in such sum as will be sufficient to indemnify the Corporation against any claim that may be made against it on account of the lost, stolen or destroyed certificate or the issuance of such new certificate. A new certificate may be issued without requiring a bond when, in the judgment of the Board of Directors, it is proper to do so.
Section 5.8. Fixing of Record Dates. (a) The Board of Directors may fix in advance a record date, which shall not be more than sixty nor less than ten days before the date of any meeting of stockholders nor more than sixty days prior to any other action, for the purpose of determining stockholders entitled to notice of or to vote at such meeting of stockholders or any adjournment thereof, to express consent or dissent to corporate action in writing without a meeting or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action.
(b) If no record date is fixed by the Board of Directors:
(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived at the close of business on the day next preceding the day on which the meeting is held;
(ii) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action by the Board of Directors is necessary shall be the day on which the first consent is expressed; and
(iii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may fix a new record date for the adjourned meeting.
ARTICLE VI - INDEMNIFICATION
Section 6.1. General. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding") by reason of the fact that he, or a person for whom he is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such person. The Corporation shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the corporation.
Section 6.2. Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys' fees) incurred in defending any proceeding in advance of its final disposition, provided, however, that the payment of expenses incurred by an indemnitee hereunder in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by such indemnitee to repay all amounts advanced if it should be ultimately determined that such indemnitee is not entitled to be indemnified under this Article or otherwise.
Section 6.3 Claims. If a claim for indemnification or payment of expenses under this Article is not paid in full within sixty days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim, and, if success to be paid the expenses of prosecuting such action. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
Section 6.4 Non-Exclusivity of Rights. The rights conferred on any person by this Article VI shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, these by-laws, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.5 Other Indemnification. The Corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
Section 6.6 Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VI shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
Section 6.7. Indemnification Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such whether or not the Corporation would have the power to indemnify him against such liability under applicable law.
ARTICLE VII - MISCELLANEOUS PROVISIONS
Section 7.1. Corporate Seal. The seal of the Corporation shall be circular in form with the name of the Corporation in the circumference and the words and figures "Corporate Seal - Nevada" in the center. The seal may be used by causing it to be affixed or impressed, or a facsimile thereof may be reproduced or otherwise used in such manner as the Board of Directors may determine.
Section 7.2. Fiscal Year. The fiscal year of the Corporation shall be from the 1st day of January to the 31st day of December, inclusive, in each year, or such other twelve consecutive months as the Board of Directors may designate.
Section 7.3. Waiver of Notice. Whenever any notice is required to be given under any provision of law, the Articles of Incorporation or these By Laws, a written waiver thereof, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.
Section 7.4. Execution of Instruments, Contracts, etc. (a) All checks, drafts, bills of exchange, notes or other obligations or orders for the payment of money shall be signed in the name of the Corporation by such officer or officers or person or persons as the Board of Directors may from time to time designate.
(b) Except as otherwise provided by law or these ByLaws, the Board of Directors, any committee given specific authority in the premises by the Board of Directors or any committee given authority to exercise generally the powers of the Board of Directors during the intervals between meetings of the Board of Directors may authorize any officer, employee or agent, in the name of and on behalf of the Corporation, to enter into or execute and deliver deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.
(c) All applications, written instruments and papers required by or filed with any department of the United States Government or any state, county, municipal or other governmental official or authority may if permitted by applicable law be executed in the name of the Corporation by any principal officer or subordinate officer of the Corporation or, to the extent designated for such purpose from time to time by the Board of Directors, by an employee or agent of the Corporation. Such designation may contain the power to substitute, in the discretion of the person named, one or more other persons.
ARTICLE VIII - AMENDMENTS
Section 8.1. Amendments. These ByLaws may be amended, added to, altered or repealed, or new ByLaws may be adopted, by the Board of Directors or by the holders of a majority of the outstanding shares of stock entitled to vote at any meeting of stockholders.
EXHIBIT 31.1
CERTIFICATION
I, Aaron Dobrinsky, certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of RoomLinX, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 23, 2004
/s/ Aaron Dobrinsky
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Aaron Dobrinsky
Chief Executive Officer
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EXHIBIT 31.2
CERTIFICATION
I, Frank Elenio, certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of RoomLinX, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 23, 2004
/s/ Frank Elenio
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Frank Elenio
Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of RoomLinX, Inc. (the "Company") on Form 10-QSB for the quarter ending June 30, 2004 filed with the Securities and Exchange Commission (the "Report"), I, Aaron Dobrinsky, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and results of operations of the Company for the periods presented.
Dated: August 23, 2004
/s/ Aaron Dobrinsky
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Aaron Dobrinsky
Chief Executive Officer
RoomLinX, Inc
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This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EXHIBIT 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of RoomLinX, Inc. (the "Company") on Form 10-QSB for the quarter ending June 30, 2004 filed with the Securities and Exchange Commission (the "Report"), I, Frank Elenio, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and results of operations of the Company for the periods presented.
Dated: August 23, 2004
/s/ Frank Elenio
-------------------------
Frank Elenio
Chief Financial Officer
RoomLinX, Inc
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This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
FOR IMMEDIATE RELEASE
For More Information Contact:
Ilya Welfeld
RoomLinX
201.696.9076
iwelfeld@RoomLinX.com
ROOMLINX AND ARC COMMUNICATIONS COMPLETE MERGER
RoomLinx Becomes Public Company on Nasdaq OTC Stock Exchange
Hackensack, New Jersey (June 28, 2004) - Arc Communications, Inc. (OTC:ACOC), and RoomLinX, Inc. announced today they have completed a merger between the two companies, receiving ARC shareholder approval at a meeting on Friday, June 25, 2004. The combined entity, to be called RoomLinX, Inc. will adopt and expand the RoomLinX business strategy. As a result of the transaction, RoomLinX is now listed on the Nasdaq OTC under Arc's symbol and has applied for a new ticker symbol.
With the completion of this merger, RoomLinX will move forward with its growth strategy including plans for value added services and an expansion into new markets. RoomLinX will consider strategic M & A opportunities to further industry leadership. In an earlier release about the merger, Aaron Dobrinsky, CEO of RoomLinX, outlined the corporate strategy, "We look forward to operating RoomLinX as a public company, servicing the hospitality industry... we will aggressively target new properties and will offer existing clients an expanded line of services such as IP telephony. We will also reach beyond the hotel industry to offer high-speed wireless services to ...convention centers, extended stay and time-share properties as well as schools and Universities."
As indicated previously, the merged company will be led by wireless industry veterans Aaron Dobrinsky as CEO and Frank Elenio as CFO. The two will also become Directors, joining Robert Lunde, Peter Bordes and Herb Hunt on the Company's board. Lunde was a co-founder of RoomLinX in 1999 and became a director and Chairman in February 2001. Peter Bordes, an owner of Greater Media, Inc. and Chairman of the Board of Directors of Empire Media, a diversified media group, joined the ARC board as Chairman in 2002 and will continue as such after the companies merge. Herb Hunt, who owns H.I. Hunt & Company, a leading financial services search firm, joined the RoomLinX board in 2000.
RoomLinX currently provides high-speed wireless services to hotels and conference centers throughout the US. In recent filings with the SEC, RoomLinX reported providing services to more than 14,000 rooms in more than 55 locations as of the end of March 2004. The Company conducts site surveys and custom-designs networks for each property, installing services within days. RoomLinX offers 24 X 7 customer support as well as network monitoring and troubleshooting.
About RoomLinX, Inc.
RoomLinX is a pioneer in Broadband High Speed Wireless Internet connectivity, specializing in providing the most advanced 802.11b WI-FI Wireless and Wired networking solutions for High Speed Internet access to Hotel Guests, Convention Center Exhibitors, Corporate Apartments, and Special Event participants.
The information contained in this press release, including any "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 contained herein, should be
reviewed in conjunction with the Company's Annual Report on Form 10-KSB for the
year ended December 31st, 2003 and amendments thereto, the Company's Quarterly
Report on Form 10-QSB for the fiscal quarter ended March 31st, 2004 and
amendment thereto, the Company's Proxy Statement filed with the Securities and
Exchange Commission on or about June 15, 2004, and other publicly available
information regarding the Company, copies of which are available from the
Company upon request. Such publicly available information sets forth many risks
and uncertainties related to the Company's business and such statements,
including risks and uncertainties related to that are unpredictable and outside
of the influence and/or control of the Company.