-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cy6+SMFevhSaZqNeA1b6NWn3qPtI00gD2PVoKTyVolKP3GFaOOSr4FpoiCekJRlt Fc6kVgoMus+ORqZmGSZFag== 0001188112-05-000310.txt : 20050218 0001188112-05-000310.hdr.sgml : 20050218 20050218112521 ACCESSION NUMBER: 0001188112-05-000310 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050218 DATE AS OF CHANGE: 20050218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAILKEY CORP CENTRAL INDEX KEY: 0001043105 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29331 FILM NUMBER: 05626231 BUSINESS ADDRESS: STREET 1: 130 SHAFTESBURY AVE. CITY: LONDON STATE: XX ZIP: W1B 5EU BUSINESS PHONE: 011-44-2070-310821 MAIL ADDRESS: STREET 1: 130 SHAFTESBURY AVE. CITY: LONDON STATE: XX ZIP: W1B 5EU FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL DIVERSIFIED ACQUISITION CORP DATE OF NAME CHANGE: 20030625 FORMER COMPANY: FORMER CONFORMED NAME: SUTTON TRADING SOLUTIONS INC DATE OF NAME CHANGE: 20020925 FORMER COMPANY: FORMER CONFORMED NAME: IKON VENTURES INC DATE OF NAME CHANGE: 20000203 10QSB 1 t10qsb-5000.txt 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended: December 31, 2004 ----------------- [ ] Transition report under Section 13 or 15(d) of the Exchange Act of 1934 For the transition period from __________ to __________ Commission File No. 000-29331 MAILKEY CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) Nevada 76-0270295 - --------------------------------------- ------------------------------------- (State or Other Jurisdiction of IRS Employer Incorporation or Organization) Identification No.) 17194 Preston Rd. Suite 102 PMB 341 Dallas, TX 75248 ----------------------------------------------------------------- (Address of Principal Executive Offices) 1-214-254-3440 ----------------------------------------------------------------- (Issuer's Telephone Number, Including Area Code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: There were 34,726,355 issued and outstanding shares of the registrant's common stock, $.001 par value per share, on February 16, 2005. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from results proposed in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to: our ability to fund future growth and implement our business strategy; our ability to integrate the operations of any businesses we may acquire; our ability to attract and retain customers and qualified personnel; customer acceptance and satisfaction with our electronic messaging security solutions; anticipated product enhancements and releases; defects in our products and services; legal claims against us, including, but not limited to, intellectual property infringement claims; our ability to protect our intellectual property; forecasts of Internet usage and the growth and acceptance of the messaging security solutions industry; rapid technological changes in the messaging security solutions industry; competition in our industry and markets; general economic and business conditions, either nationally or internationally or in the jurisdictions in which we are doing business; the condition of the securities and capital markets; legislative or regulatory changes; and statements of assumption underlying any of the foregoing, as well as any other factors set forth in our 2004 Annual Report on Form 10-KSB or under the caption "Plan of Operation" under Item 2 of this report. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise. Unless otherwise indicated or the context otherwise requires, all references to "MailKey," the "Company," "we," "us" or "our" and similar terms refer to MailKey Corporation and its subsidiaries. 3 MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TABLE OF CONTENTS Condensed Consolidated Financial Statements: Condensed Consolidated Balance Sheets as of December 31, 2004 and 2003 Condensed Consolidated Statements of Operations for the Nine Months Ended December 31, 2004 and for the period from March 11, 2003 (Inception) to December 31, 2003 (with Cumulative Totals Since Inception) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2004 and for the period from March 11, 2003 (Inception) to December 31, 2003 (with Cumulative Totals Since Inception) Notes to Condensed Consolidated Financial Statements 4
MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2004 AND 2003 ASSETS 2004 2003 -------------- -------------- Current Assets: Cash $ 2,361 $ 68,282 Prepaid expenses 102,530 13,262 -------------- -------------- Total Current Assets 104,891 81,544 -------------- -------------- Property and equipment, net - 34,816 -------------- -------------- Other Assets Loan receivable - long-term 100,000 - -------------- -------------- TOTAL ASSETS $ 204,891 $ 116,360 ============== ============== LIABILITIES AND SHAREHOLDERS' (DEFICIT) Current Liabilities: Short-term loans payable - related parties $ 333,255 $ 61,660 Short-term loans payable 70,159 - Accrued liabilities 797,020 203,728 -------------- -------------- Total Current Liabilities 1,200,434 265,388 -------------- -------------- SHAREHOLDERS' (DEFICIT) Common shares $0.001 par, 100,000,000 and 470,000,000 shares authorized; 34,726,355 and 21,895,000 issued and outstanding at 2004 and 2003, respectively 35,226 21,895 Additional paid-in capital 8,400,306 1,977,481 Accumulated foreign exchange translation adjustment 53,645 9,251 Deficit accumulated during the development stage (9,484,720) (2,157,655) -------------- -------------- Total Shareholders' (Deficit) (995,543) (149,028) -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 204,891 $ 116,360 ============== ============== The accompanying notes are an integral part of the condensed consolidated financial statements. 5
MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (WITH CUMULATIVE TOTALS SINCE INCEPTION) (UNAUDITED) March 11, 2003 Nine Months Ended Three Months Ended (Inception) December 31, December 31, to 2004 2003 2004 2003 December 31, 2004 -------------- -------------- -------------- -------------- ----------------- REVENUES $ 1,329 $ - $ 1,143 $ - $ 1,329 OPERATING EXPENSES Software development and other compensation 2,856,953 1,474,195 1,648,542 655,937 5,938,709 Consulting fees - related party 444,143 246,637 33,000 168,580 951,310 Legal and professional fees 461,022 227,446 41,956 134,772 934,805 Other selling, general and administrative 807,387 210,541 239,317 109,896 1,343,248 -------------- -------------- -------------- -------------- ----------------- Total Operating Expenses 4,569,505 2,158,819 1,962,815 1,069,185 9,168,072 -------------- -------------- -------------- -------------- ----------------- LOSS BEFORE OTHER INCOME (EXPENSE) (4,568,176) (2,158,819) (1,961,672) (1,069,185) (9,166,743 OTHER INCOME (EXPENSE) Interest expense (210,484) - (2,328) - (281,089 Interest and other income, net 1,227 753 (4,615) 434 2103 Loss on disposition of fixed assets (39,402) - (39,402) - (39,402 -------------- -------------- -------------- -------------- ----------------- Total Other Income (Expense) (248,659) 753 (46,345) 434 (318,388 -------------- -------------- -------------- -------------- ----------------- LOSS BEFORE MINORITY INTEREST (4,816,835) (2,158,066) (2,008,017) (1,068,751) (9,485,131 MINORITY INTEREST IN LOSS OF SUBSIDIARIES - 411 - 411 411 NET LOSS APPLICABLE TO COMMON SHARES ($4,816,835) ($2,157,655) ($2,008,017) ($1,068,340) ($9,484,720 NET LOSS PER BASIC AND DILUTED SHARES $ 0.16 $ 0.15 $ 0.06 $ 0.05 $ 0.45 ============== ============== ============== ============== ================= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 30,549,560 13,992,463 32,637,262 21,526,033 21,875,375 The accompanying notes are an integral part of the condensed consolidated financial statements. 6
MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (WITH CUMULATIVE TOTALS SINCE INCEPTION) (UNAUDITED) March 11, (Inception) to 2004 2003 December 31, 2004 ------------------- ----------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (4,816,835) $ (2,157,655) $ (9,484,720) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 13,184 9,785 28,096 Loss on disposal of equipment 39,402 - 39,402 Common stock issued for services 1,209,102 - 1,209,102 Fixed assets exchanged for services 17,795 - 17,795 Subscription receivable written-off 102,500 - 102,500 Deferred compensation written-off 145,389 - 145,389 Amortization of debt discount and beneficial conversion feature 184,299 - 246,727 Amortization of deferred compensation 477,382 - 641,270 Amortization of deferred compensation - related party 35,000 - 35,000 Stock-based compensation - 658,522 1,628,722 Interest expense settled by stock issuance (16,016) (16,016) Minority interest share in loss of subsidiaries - (411) (411) Changes in assets and liabilities (Increase) in prepaid assets (44,589) (13,262) (102,530) Increase in accounts payable and accrued liabilities 261,439 203,728 844,120 ------------------- ----------------- ------------------- Total adjustments 2,424,887 858,362 4,819,166 ------------------- ----------------- ------------------- Net cash (used in) operating activities (2,391,948) (1,299,293) (4,665,554) ------------------- ----------------- ------------------- CASH FLOWS FROM INVESTING ACTIVITIES Payment on loan receivable (100,000) - (100,000) Acquisition of property and equipment (7,122) (44,601) (85,293) ------------------- ----------------- ------------------- Net cash (used in) investing activities (107,122) (44,601) (185,293) ------------------- ----------------- ------------------- The accompanying notes are an integral part of these condensed consolidated financial statements. 7
MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (WITH CUMULATIVE TOTALS SINCE INCEPTION) (UNAUDITED) March 11, (Inception) to 2004 2003 December 31, 2004 ------------------- ----------------- ------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of short-term loans payable - related party 340,168 61,660 421,685 Repayment of proceeds of short-term loans payable - related party (50,000) - (88,430) Payment of short-term loans payable (109,613) (109,613) Issuance of subsidiary shares to minority interests 411 411 Issuance of common share capital 1,184,019 1,490,644 3,517,163 Collection of stock subscriptions receivable 563,000 - 563,000 Payment of offering costs (114,897) (149,790) (358,443) Proceeds from short-term debt 203,790 - 853,790 ------------------- ----------------- ------------------- Net cash provided by financing activities 2,016,467 1,402,925 4,799,563 ------------------- ----------------- ------------------- Effect of Exchange Rate Changes on Cash 47,441 9,251 53,645 ------------------- ----------------- ------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (435,162) 68,282 2,361 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 437,523 - - ------------------- ----------------- ------------------- CASH AND CASH EQUIVALENTS - END OF PERIOD 2,361 68,282 2,361 =================== ================= =================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD FOR: Interest expense $ 1,818 $ - $ 1,818 =================== ================= =================== SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES Common stock issued for services $ 1,209,102 $ - $ 1,209,102 =================== ================= =================== Fixed assets exchanged for services $ 17,795 $ - $ 17,795 =================== ================= =================== Subscription receivable written off $ 102,500 $ - $ 102,500 =================== ================= =================== Deferred compensation written off $ 145,389 $ - $ 145,389 =================== ================= =================== Revaluation of options issued to consultants $ 1,264,864 $ - $ 1,264,864 =================== ================= =================== Common stock issued in conversion of bridge loan $ 674,018 $ - $ 674,018 =================== ================= =================== The accompanying notes are an integral part of these condensed consolidated financial statements. 8
MAILKEY CORPORATION AND SUBSIDIARIES (A DEVELOPMENT STAGE ENTITY) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2004 AND 2003 NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION MailKey is a messaging security and management company. It is developing its "Envoy" technology platforms to enable scaleable filtration, control and management of messages through a central management point. MailKey anticipates acquiring additional technologies, businesses and related assets that we believe are complimentary to either our existing technologies developmental stage technologies or technologies that we may attempt to develop in the future. In addition to any potential acquisitions of complimentary technologies, we also plan to review opportunities to acquire companies, businesses and assets that may lead us into new areas of business activity. The accompanying unaudited condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, pursuant to such rules and regulations, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America as promulgated by the Public Company Accounting Oversight Board. The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of MailKey Corporation and subsidiaries, as of March 31, 2004, and the notes thereto contained in the Form 10-KSB filed by the Company. The results of operations for the nine months ended and since inception through December 31, 2004, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2005. The company's financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America, and have been presented on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. On March 25, 2004, pursuant to an Agreement and Plan of Merger, Global Diversified Acquisition Corp. ("GDAC"), acquired all of the outstanding capital stock of MK Secure Solutions Ltd ("MKSS"), a holding company incorporated on March 11, 2003, under the laws of the British Virgin Islands. The transaction was effected by the issuance of shares such that the former MKSS shareholders owned approximately 90% of the outstanding MailKey stock after the transaction. GDAC then changed its name to MailKey Corporation ("MailKey") and now MailKey, conducts its principal administrative, research and development operations in the United Kingdom through a wholly - owned subsidiary. Management has been in the process of designing and developing its products, raising 9 capital, hiring personnel and obtaining customers. Accordingly, as the Company is a development stage enterprise, as defined in Statement of Financial Accounting Standards ("SFAS") No. 7, Accounting and Reporting for Development Stage Enterprises. Under SFAS No. 7, certain additional financial information is required to be included in the financial statements for the period from inception of the company to the current balance sheet. The Company's Chairman and Chief Executive Officer resigned in September 2004 and the Company's Chief Financial Officer and member of the Board resigned in November 2004. The positions have been filled by the Company's deputy chairman and founder, respectively. On November 9, 2004, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the MailKey Corporation (the "Company"), MailKey Acquisition Corp., a Delaware corporation and our wholly-owned subsidiary ("Merger Sub"), Inc., a Nevada Corporation ("iElement") and Ivan Zweig, pursuant to which we agreed to acquire all of the issued and outstanding shares of capital stock of iElement, Inc. This transaction closed in January 2005. At the closing of the Merger, Merger Sub was merged into iElement, at which time the separate corporate existence of Merger Sub ceased and iElement now continues as the surviving company, as a wholly owned subsidiary of the Company. NOTE 2- NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. REVENUE RECOGNITION As of the balance sheet date, the Company had not delivered product or provided services to customers that provide the Company with revenue. The Company will recognize revenue in accordance with Statement of Position ("SOP") 97-2 "SOFTWARE REVENUE RECOGNITION," and SOP 98-9 - Modification Of SOP 97-2, "SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS" to its specific business. BASIS OF CONSOLIDATION The consolidated financial statements include the financial position and results of MailKey Corporation, and its 100%-owned subsidiary, MK Secure Solutions Ltd, a company incorporated under the laws of the British Virgin Islands, and its 100%-owned subsidiary, MK Secure Solutions Ltd (UK), a company incorporated under the laws of the United Kingdom. The consolidated financial statements exclude all intercompany balances and transactions. 10 PROPERTY AND EQUIPMENT Property and equipment, consisting of furniture, fixtures and equipment, are stated at cost less accumulated depreciation. Depreciation is provided by the straight-line methods over the estimated useful lives of three to five years. Each subsidiary within the Company files its own separate corporate tax returns as required by law in the jurisdiction of incorporation of each subsidiary. Income taxes are recorded in the period in which the related transactions are recognized in the financial statements, net of valuation allowances, which have been recorded against deferred tax assets. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Net deferred tax assets and liabilities are recognized for future tax benefits such as net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation reserve has been recorded against deferred tax assets because management has determined it is more likely than not that the deferred tax assets will not be realized. No provision has been made for the United States income tax effects of undistributed earnings or unrealized losses of non-US subsidiaries as management expects these earnings to be reinvested indefinitely or received substantially free of additional tax. (i) Earnings (Loss) Per Share of Common Stock Historical net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. The following is a reconciliation of the computation for basic and diluted EPS:
DECEMBER 31 2004 2003 ---- ---- Net loss $(4,816,835) $(2,157,655) Weighted-average common shares Outstanding (Basic) 30,549,560 13,992,463 Weighted-average common stock Equivalents: Stock options - - Warrants 925,500 2,085,500 Weighted-average common shares Outstanding (Diluted) 30,549,560 13,992,463 ========== ==========
11 (ii) Earnings (Loss) Per Share of Common Stock (Continued) Common stock equivalents were not included in the computation of diluted earnings per share at December 31, 2004 and 2003 when the Company reported a loss because to do so would be anti-dilutive for the periods presented. RECLASSIFICATIONS Certain amounts for the nine months ended December 31, 2004 have been reclassified to conform with the presentation of the December 31, 2003 amounts. The reclassifications have no effect on net income for the nine months ended December 31, 2004. STOCK BASED COMPENSATION The Company follows the provisions of SFAS No. 123 - "ACCOUNTING FOR STOCK BASED COMPENSATION". As permitted under SFAS No. 123, the Company has continued to utilize APB 25 "Accounting For Stock Issued To Employees", and related interpretations, in accounting for its stock-based compensation to employees and directors. Had compensation expense for the nine month period ended December 31, 2004 and the period from March 11, 2003 (inception) to December 31, 2003 been determined under the fair value provisions of SFAS No. 123, as amended by SFAS No. 148. NOTE 3- RECAPITALIZATION TRANSACTION On March 25, 2004, pursuant to an Agreement and Plan of Merger between Global Diversified Acquisition Corp ("GDAC"), G.D. Acquisition Corp ("GD Corp"), a subsidiary of GDAC, MK Secure Solutions, Ltd ("MKSS") and Westvale Consultants, Ltd. ("Westvale"), a principal shareholder of MKSS, GD Corp was merged with and into MKSS, with MKSS remaining as the surviving entity and becoming a wholly-owned subsidiary of GDAC. Pursuant to the terms of the merger agreement, (i) GDAC issued 26,246,000 shares of its common stock to the holders of MKSS's capital stock, in exchange for all of the issued and outstanding shares of MKSS's capital stock, representing approximately 90% of the then total issued and outstanding stock of GDAC. (ii) GDAC's incumbent board members agreed to resign as directors of GDAC. (iii) MKSS received the right to appoint new members of GDAC's board. (iv) All of the MKSS outstanding warrants, options and loan units, became convertible into options, warrants and loan units of GDAC adjusted at the rate of one hundred for one and the strike prices for the individual options, warrants and loan units 12 were adjusted at a rate of one hundredth of the original strike prices. As a result of the terms of the merger agreement as stated above, the merger is deemed to have involved a change in control of GDAC. The combination of MKSS and GDAC is being treated as a recapitalization of MKSS. GDAC is the legal acquirer in the merger. The Company is the accounting acquirer since their shareholders acquired a majority ownership interest in GDAC. Consequently, the financial statements of MKSS have become those of GDAC. GDAC subsequently changed its name to MailKey Corporation. NOTE 4- PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2004 and 2003: December 31 December 31 2004 2003 ----------- ----------- Office equipment $ - $13,652 Computer equipment - 30,949 ----------- ----------- - 44,601 Less: Accumulated depreciation - 9,785 ----------- ----------- $ - $34,816 =========== =========== Depreciation expense for the nine months ending December 31, 2004 and the period ended December 31, 2003 was $13,184, before disposition, and $9,785, respectively. NOTE 5- LOAN RECEIVABLE - LONG TERM The Company has a $100,000 loan receivable from iElement, a wholly-owned subsidiary of the Company effective in January 2005. The loan is non-interest bearing. NOTE 6- SHORT-TERM LOANS PAYABLE - RELATED PARTIES The short-term loans payable from related parties represent advances from both (i) a company controlled by a family member of one of the Group's directors and also (ii) a family member of one of the Group's directors. Total loans outstanding to the related parties at December 31, 2004 and 2003 were $333,255 and $61,660, respectively. The note bears interest at the base rate of Barclays bank + 1%. The due date of the note has been extended to March 31, 2005. 13 NOTE 7- SHORT-TERM LOANS PAYABLE During the nine months ended December 31, 2004, short-term loans payable with a face value of $650,000 were converted to 764,706 shares of common stock at $0.85 per share. Accrued interest of $24,018 was also converted into 28,256 shares of common stock at $0.85 per share. The remaining discount on the short-term loans was amortized during the nine months ended December 31, 2004 resulting in interest expense of $190,566. During the nine months ended December 31, 2004, the Company borrowed $200,000 pursuant to a short-term note for the purpose of financing insurance premiums. At December 31, 2004, a balance of $70,159 was due in three monthly installments of $22,610, including interest at 4.172% NOTE 8- WARRANTS Each warrant entitles the holder to purchase one common share at a stated exercise price any time through a stated expiration date. The warrants outstanding were as follows:
December 31 December 31 2004 2003 ------------ ------------ Exercise price $0.50, expiration October 2005 - 1,653,000 Exercise price $1.00, expiration October 2005 275,000 432,500 Exercise price $2.00, expiration March 2005 650,500 - ------------ ------------ Total 925,500 2,085,500
NOTE 9- STOCKHOLDERS' (DEFICIT) COMMON STOCK The Company has 100,000,000 and 470,000,000 shares of common stock authorized at December 31, 2004 and 2003, respectively, at a par value of $0.001. At December 31, 2004 and 2003 34,726,355 and 21,895,000 shares were issued and outstanding, respectively. The following details the stock transactions for the nine months ended December 31, 2004: 14 The Company issued 792,962 shares of common stock for the conversion of a bridge loan and related interest. The Company issued 1,415,019 shares of common stock due to the exercise of warrants. The Company issued 3,601,333 shares of common stock for services valued at $1,209,102. The following details the stock transactions for the nine months ended December 31, 2003: The Company issued 3,306,000 shares of common stock for cash of $826,500. The Company issued 1,230,585 shares of common stock for cash of $236,272. The Company issued 490,000 shares of common stock for cash of $245,000. The Company issued 230,000 shares of common stock for cash of $89,216. The Company issued 375,000 shares of common stock for cash of $318,750. The Company issued 7,570,515 shares of common stock for cash of $379,039. NOTE 10- PROVISION FOR INCOME TAXES Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. At December 31, 2004, deferred tax assets consist of the following: Net operating loss carryforwards $3,129,958 Less: valuation allowance (3,129,958) -------------- $ -0- ============== At December 31, 2004, the company had an accumulated deficit in the approximate amount of $9,484,720 available to offset future taxable income through 2024. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. 15 NOTE 11- GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss of $4,816,835 and had minimal revenue for the nine months ended December 31, 2004, and, as of that date, had a shareholder's deficit of $9,484,720. Those conditions raise substantial doubt about the Group's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As of the nine months ended December 31, 2004, the Company estimated its cash on hand was insufficient to cover one month of operations and has increased its borrowing on the short-term related-party loan by approximately $35,000 to finance operations. Management plans to raise additional capital during the remainder of fiscal 2004. These funds, in addition to its cash held at December 31, 2004, will be needed in order to finance the Company's currently anticipated operating and capital expenditures for the remainder of fiscal 2004. The Company's ability to continue as a going concern is dependent upon raising capital through debt and equity financing. There can be no assurance that the Company will successfully raise the required future financing on terms desirable to the Company. If the Company does not obtain the needed funds, it will likely be required to delay development of its products, alter its business plan, or in the extreme situation, cease operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 12- SUBSEQUENT EVENTS In January 2005, the Company sold its insolvent UK subsidiary, MK Secure Solutions Limited, for $1 to a UK based accounting firm, SS Khehar & Company. SS Khehar & Company have agreed to deal with the winding up of the subsidiary, and the finalization of UK filing requirements for the subsidiary, for a fee of $1,800. The merger with iElement, referred to in Note 1, became effective in January 2005. As a result of the merger, the Company will issue approximately 47,850,000 shares of its common stock to iElement stockholders. As of the date of this report, the issuance of the shares is still pending. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. This "Plan of Operation" and other parts of this report contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the caption "Disclosure Regarding Forward-Looking Statements" 16 and elsewhere in this report. The following should be read in conjunction with our unaudited financial statements and the related notes thereto contained elsewhere in this report. OUR PLAN OF OPERATION Further to the recent acquisition of iElement (see "Recent Developments" below) we intend to grow our sales of telecommunications services to small and medium sized enterprises ("SMEs"). We intend to grow the sales both organically, and also by acquisitions of other companies and/or customer bases. iElement currently provides broadband data, voice and wireless services using integrated T-1 lines with a Layer 2 Private Network solution to provide SMEs with dedicated internet access services, customizable business solutions for voice, data, wireless and internet, and secure communications channels between the SMEs' offices, partners, vendors, customers and employees without the use of a firewall or encryption devices. We intend to continue developing the Java-based Envoy platform, with the goal of becoming a leading messaging security solutions provider and communications services provider focused on the provision of business services through a number of integrated technology solutions. We anticipate achieving this objective by becoming a market driven, business solutions company focused on offering full service business solutions we are developing internally as well as solutions we may acquire through strategic acquisitions and partnerships. We intend to market our products and services through a combination of indirect sales channels, including distributors, resellers, business outsourcing and hosted service providers, large global systems integrators, original equipment manufacturers and appliance vendors, as well as through the efforts of a direct sales force. We are designing our software with the intention that it be capable of supporting numerous hardware configurations, operating systems and messaging applications and infrastructure, and to be deliverable as stand-alone software, as an integrated part of the appliance solutions of distribution partners or as a hosted service. Our research and development activities are focused on the enhancement of our current electronic messaging security solutions and the development of next-generation technologies in the messaging security solutions market. We anticipate that the majority of our research and development efforts will be devoted to the internal development of complimentary technologies that we intend to acquire from external sources, and that the remainder of such efforts will be devoted to the internal development of our own proprietary technologies. We anticipate acquiring additional technologies, businesses and related assets that we believe are complimentary to either our existing technologies or technologies that we are developing or may attempt to develop in the future. In addition to any potential acquisitions of complimentary technologies described above, we also plan to review opportunities to acquire companies and businesses located in the United States that may lead us into new areas of business activity. We anticipate that the number of people who we employ may increase substantially over the next 12 months as we continue to execute on our business plan. 17 LIQUIDITY AND CAPITAL RESOURCES Since our inception, we have funded our operations primarily through private sales of equity securities and the utilization of short-term convertible debt. As of December 31st, 2004, we had a cash balance of $2,361. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution. To date, our capital needs have been principally met through the receipt of proceeds from sales of our equity and debt securities. We believe that our current cash resources will not be sufficient to sustain our current operations for the next twelve (12) months, and that we will need to raise additional capital to execute our business plan. We intend to obtain additional cash resources within the next twelve (12) months through sales of equity or debt securities. The sale of additional equity or convertible debt securities would result in dilution to our shareholders. The issuance of debt securities could subject us to increased expenses and covenants that may have the effect of restricting our operations. We have not made arrangements to obtain additional financing and we can provide no assurance that financing will be available in amount or on terms acceptable to us, if at all. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms favorable to us, we may be required to delay or scale back our plans to develop our messaging security solutions or acquire complementary companies, businesses, assets or technologies. OFF-BALANCE SHEET ARRANGEMENTS As of September 30, 2004, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. RECENT DEVELOPMENTS On January 19th 2005, we completed the acquisition of iElement Inc. ("iElement"). iElement is now a wholly owned subsidiary of the Company. Under the terms of the Merger Agreement, the Company authorized the issuance of an aggregate of approximately 47,850,000 shares of its common stock, $.001 par vale per share, to the former shareholders of iElement in exchange for all of the issued and outstanding shares of capital stock of I-Element. A majority of iElement shareholders as of the record date of December 30, 2004, consented to the transaction as approved by the board of directors of iElement. 18 The exchange ratio setting forth the number of shares of Company common stock issued for each issued and outstanding share of capital stock of iElement was 3.52 shares of Company common stock for each issued and outstanding share of capital stock of I-Element. iElement is a facilities-based nationwide communications service provider that provides state-of-the-art telecommunications services to small and medium sized enterprises ("SMEs"). iElement provides broadband data, voice and wireless services using integrated T-1 lines with a Layer 2 Private Network solution to provide SMEs with dedicated Internet access services, customizable business solutions for voice, data and Internet, and secure communications channels between the SMEs' offices, partners, vendors, customers and employees without the use of a firewall or encryption devices. IElement has a network presence in 18 major markets in the United States, including facilities in Los Angeles, Dallas, and Chicago. On January 24th 2005, we appointed Mr. Zweig, the founder and Chief Executive Officer of iElement, to the board of the Company; and Mr. Zweig replaced Mr. Dean-Smith as the Chief Executive Officer of the Company. FACTORS THAT MAY AFFECT FUTURE RESULTS Competition: The broadband internet access industry is highly competitive and requires constant investment in research and development expenditures in order to keep pace with technology and competitors' products. The success of the Company depends upon its ability to go into markets and establish a base level of customers that will cover costs of opening and maintaining a market. If the Company is unable to compete effectively or acquire additional financing to fund future research and development and deployment expenditures, it would have a materially adverse effect on the company's business operations and the Company would not be unable to continue marketing and developing products Dependence Upon External Financing: The Company has been building its business through revenues generated from operations supplemented by the sale of its common stock. The ability of the Company to continue its growth and expand its business is dependent upon the ability of the Company to raise additional financing either through the issuance of additional stock or the incurrence of debt. RISK FACTORS The following risk factors should be considered carefully in addition to the other information presented in this report. This report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the following: IF WE CAN NOT OBTAIN ADDITIONAL FUNDS WHEN NEEDED OR ACHIEVE PROFITABILITY WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN The Company requires additional capital to execute its business plan. However, there can be no assurance that financing will be available to the Company in the future, or available on terms and conditions acceptable to the Company. It is unlikely, given the current financial 19 condition and limited operating history of the Company, that any bank or financial institution would provide a conventional loan. Additionally, if the Company is unable to obtain a written term sheet or letter of intent for $1,500,00 of equity or debt financing by March 1, 2005, the secured creditor of the Company's wholly owned subsidiary, iElement, will have the right to declare outstanding notes in default and enforce their security interests against substantially all of the assets in iElement that the Company obtained through the merger with iElement. THE RECENT MERGER OF THE COMPANY WITH IELEMENT CREATES NEW RISK Merger and integration of the Company and iElement has required, and will continue to require, significant time and expense in coordinating, among other things, research, marketing, accounting and management. This integration might prove more difficult than expected and, even if successful, does not guarantee either synergy or cost savings. WE DO NOT HAVE A LONG OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS Because limited historical information is available on our revenue trends and operations, it will be difficult for you to evaluate our business. Our prospects must be considered in light of the substantial risks, expenses, uncertainties and difficulties encountered by any emerging technology. THE COMPANY EXISTS WITHIN A HIGHLY COMPETITIVE INDUSTRY The broadband internet access industry is highly competitive and requires constant investment in research and development expenditures in order to keep pace with technology and competitors' products. The success of the Company depends upon its ability to go into markets and establish a base level of customers that will cover costs of opening and maintaining a market. Furthermore, the ability of the Company to experience growth and expand its business is dependent upon the ability of the Company to raise additional financing either through the issuance of additional stock or the incurrence of debt. WE HAVE A HISTORY OF LOSSES We have never been profitable, and we have had operating losses since our inception. To date, we have engaged primarily in research and development efforts. The further development and commercialization of our products will require substantial development, regulatory, sales and marketing, manufacturing and other expenditures. We have only generated limited revenues from product sales. Our accumulated deficit was about $995,543 at December 31, 2004. Cautionary Statement: This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding intent, belief or current expectations of 20 the Company and its management. These forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause the Company's actual results to differ materially from the results discussed in these statements. Factors that might cause such differences include, but are not limited to, those described under the heading, "Critical Accounting Policies and Estimates" herein, or and other factors described in the Company's future filings with the SEC. The above referenced sections do not apply to our company. ITEM 3. CONTROLS AND PROCEDURES An evaluation of the effectiveness of our "disclosure controls and procedures" (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) was carried out by us under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Based upon that evaluation, our CEO and CFO concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. There has been no change in our internal control over financial reporting identified in connection with that evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The company is not currently engaged in any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. On December 7th 2004 the Company issued 60,500 shares of our common stock to Donald Schwall in return for services to the Company. In connection with the Company's acquisition of I-Element, on January 19, 2005 the Company authorized the issuance of an aggregate of approximately 47,850,000 shares of common stock to the I-Element shareholders. The shares will be issued in exchange for 100% of the issued and outstanding shares of capital stock of I-Element pursuant to the Merger Agreement. The shares will be issued in a private placement to a limited number of persons without registration under the Securities Act of 1933, as amended, in reliance upon Section 4(2) of the Securities Act thereunder. ITEM 3. DEFAULTS ON SENIOR SECURITIES. 21 None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On January 19th 2005, we completed the acquisition with iElement and authorized the issuance of an aggregate of approximately 47,850,000 shares of its common stock, $.001 par vale per share, to the former shareholders of iElement in exchange for all of the issued and outstanding shares of capital stock of I-Element. A majority of iElement shareholders as of the record date of December 30, 2004, consented to the transaction as approved by the board of directors of iElement. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following documents are filed as exhibits to this report. EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 3.1.1 Articles of Incorporation of the Company (incorporated by reference to the Company's Registration Statement on Form 10-SB 12G/A filed on February 3, 2000). 3.1.2 Certificate of Amendment to Articles of Incorporation of the Company (incorporated by reference to the Company's Schedule 14A filed on October 9, 2001). 3.1.3 Certificate of Amendment to Articles of Incorporation of the Company (incorporated by reference to the Company's Schedule 14C filed on March 26, 2003). 3.2.1 Bylaws of the Company (incorporated by reference to the Company's Registration Statement on Form 10-SB 12G/A filed on February 3, 2000). 3.2.2 Amendment to Bylaws of the Company (incorporated by reference to the Company's Schedule 14A filed on February 1, 2001). 31.1 Certification of Chief Executive Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended 22 31.2 Certification of Chief Financial Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended 32.1 Certification of Chief Executive Officer and Chief Financial Officer of the Company required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (b) Reports on Form 8-K. On October 6, 2004, we filed a report on Form 8-K under Item 13 or 15(d) with the SEC disclosing that Mr Graham Norton-Standen had resigned from the board of directors of the Company and from the position of Chief Executive Officer, and that Mr Tim Dean-Smith had been appointed as Chief Executive Officer. On January 6, 2005, we filed a report on Form 8-K under Item 13 or 15(d) with the SEC disclosing the Company's entry in the First Amendment and Waiver to Agreement and Plan of Merger between the Company and iElement. On January 25, 2005, we filed a report on Form 8-K under Item 13 or 15(d) with the SEC disclosing consummation of the merger between the Company and iElement, the resignation of Tim Dean-Smithy as Chief Executive Officer of the Company, the appointment of Ivan Zweig as Chief Executive Officer of the Company, the appointment of Ivan Zweig to the Board of Directors, and the issuance of unregistered common stock in the Company in connection with the merger between the Company and iElement. On February 4, 2005, we filed a report on Form 8-K under Item 13 or 15(d) with the SEC disclosing the change in the Company's certifying accountants. 23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. MAILKEY CORPORATION Date: February 14, 2004 /s/ Ivan Zweig ------------------------ Ivan Zweig Chief Executive Officer 24 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 3.1.1 Articles of Incorporation of the Company (incorporated by reference to the Company's Registration Statement on Form 10-SB 12G/A filed on February 3, 2000). 3.1.2 Certificate of Amendment to Articles of Incorporation of the Company (incorporated by reference to the Company's Schedule 14A filed on October 9, 2001). 3.1.3 Certificate of Amendment to Articles of Incorporation of the Company (incorporated by reference to the Company's Schedule 14C filed on March 26, 2003). 3.2.1 Bylaws of the Company (incorporated by reference to the Company's Registration Statement on Form 10-SB 12G/A filed on February 3, 2000). 3.2.2 Amendment to Bylaws of the Company (incorporated by reference to the Company's Schedule 14A filed on February 1, 2001). 31.1 Certification of Chief Executive Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended 31.2 Certification of Chief Financial Officer of the Company required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended 32.1 Certification of Chief Executive Officer and Chief Financial Officer of the Company required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended EX-31.1 2 tex31_1-5000.txt EX-31.1 EXHIBIT 31.1 I, Ivan Zweig, CEO of the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Mailkey Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 1 EX-31.2 3 tex31_2-5000.txt EX-31.2 Dated: February 14, 2005 /s/ Ivan Zweig --------------------------------------- By: Ivan Zweig Its: Chief Executive Officer, Director EXHIBIT 31.2 I, Tim Dean-Smith, principal financial officer for the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Mailkey Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: February 17, 2005 /s/ Tim Dean-smith ----------------------------------- By: Tim Dean-Smith Its: Principal Financial, Director 2 EX-32 4 tex32-5000.txt EX-32 CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Exhibit 32 CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with the Quarterly Report of Mailkey Corporation, a Nevada corporation (the "Company"), on Form 10-QSB for the period ended December 31, 2004, as filed with the Securities and Exchange Commission (the "Report"), Ivan Zweig, Chief Executive Officer of the Company and Tim Dean-Smith, Chief Financial Officer of the Company, do hereby certify, pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), that to their knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Ivan Zweig - --------------------------------------- By: Ivan Zweig Its: Chief Executive Officer, Director By: Ivan Zweig - --------------------------------------- Its: Chief Executive Officer, Director February 17, 2005 /s/ Tim Dean-Smith - --------------------------------------- By: Tim Dean-Smith Its: Chief Financial Officer, Director February 17, 2005 [A signed original of this written statement required by Section 906 has been provided to Mailkey Corporation and will be retained by Mailkey Corporation and furnished to the Securities and Exchange Commission or its staff upon request.] 3 -----END PRIVACY-ENHANCED MESSAGE-----