-----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, Te0JiY4lFqIUZyD6ljlDPx9lLj1Z02qo5uG27z0dNHO+fEPbnELREEFrx+UKHqTZ CD7BPTK4FyJ3FwIGtz4ncQ== 0001038838-04-000126.txt : 20040223 0001038838-04-000126.hdr.sgml : 20040223 20040223162400 ACCESSION NUMBER: 0001038838-04-000126 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARADYME CORP CENTRAL INDEX KEY: 0001123580 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 330619254 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-50038 FILM NUMBER: 04622283 BUSINESS ADDRESS: STREET 1: 677 EAST 700 SOUTH STREET 2: STE 201 CITY: AMERICAN FORK STATE: UT ZIP: 84003 BUSINESS PHONE: 8017569585 MAIL ADDRESS: STREET 1: 677 EAST 700 SOUTH STREET 2: SUITE 201 CITY: AMERICAN FORK STATE: UT ZIP: 84003 FORMER COMPANY: FORMER CONFORMED NAME: ALBION AVIATION INC DATE OF NAME CHANGE: 20000912 10QSB 1 q123103.txt 10-QSB ENDED DECEMBER 31, 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED December 31, 2003 Commission File No. 000-50038 ARADYME CORPORATION ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware -------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 33-0619254 --------------------------------- (IRS Employer Identification No.) 677 East 700 South, Suite 201 American Fork, Utah 84003 ---------------------------------------- (Address of principal executive offices) (801) 756-9585 -------------------------- (Issuer's telephone number) n/a --------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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[ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. The number of shares of $0.001 par value common stock outstanding as of February 20, 2004, was 18,765,110. Transitional Small Business Disclosure Format (Check one): Yes[X] No[ ] PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders' deficit in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Our unaudited consolidated balance sheet at December 31, 2003, and our audited consolidated balance sheet at September 30, 2003, and the related unaudited consolidated statements of operations and cash flows for the three-month periods ended December 31, 2003 and 2002, are attached hereto. 2
ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Balance Sheets ASSETS December 31, September 30, 2003 2003 --------------- -------------- (Unaudited) CURRENT ASSETS Cash $ 89,260 $ 55,296 Accounts receivable 9,625 - --------------- -------------- Total Current Assets 98,885 55,296 --------------- -------------- PROPERTY AND EQUIPMENT, NET 109,354 121,574 --------------- -------------- OTHER ASSETS Other assets - 259 Deposits and prepaid expenses 3,958 3,958 --------------- -------------- Total Other Assets 3,958 4,217 --------------- -------------- TOTAL ASSETS $ 212,197 $ 181,087 =============== ============== The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' DEFICIT December 31, September 30, 2003 2003 --------------- -------------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 144,868 $ 169,782 Accounts payable - related party 62,500 80,300 Accrued expenses 168,981 146,285 Notes payable - related party 358,840 358,840 Notes payable 215,000 135,000 --------------- -------------- Total Current Liabilities 950,189 890,207 --------------- -------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Preferred stock: 1,000,000 shares authorized of $0.001 par value, 12,000 and 12,000 shares issued and outstanding, respectively 12 12 Common stock: 50,000,000 shares authorized of $0.001 par value, 15,642,425 and 15,135,501 shares issued and outstanding, respectively 15,642 15,135 Additional paid-in capital 1,971,655 1,733,392 Deficit accumulated during the development stage (2,725,301) (2,457,659) --------------- -------------- Total Stockholders' Deficit (737,992) (709,120) --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 212,197 $ 181,087 =============== ============== The accompanying notes are an integral part of these unaudited consolidated financial statements. 4
ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited) From Inception February 13, For the Three Months Ended 2001, Through December 31, December 31, 2003 2002 2003 -------------- --------------- ----------------- REVENUES $ 17,000 $ 15,995 $ 86,731 -------------- --------------- ----------------- OPERATING EXPENSES Depreciation and Amortization 12,220 7,668 100,797 Rent 12,270 15,474 127,022 Contract services 160,428 152,387 1,864,405 General and administrative 75,263 34,300 613,324 -------------- --------------- ----------------- Total Operating Expenses 260,181 209,829 2,705,548 -------------- --------------- ----------------- LOSS FROM OPERATIONS (243,181) (193,834) (2,618,817) -------------- --------------- ----------------- OTHER INCOME (EXPENSE) Loss on sale of marketable securities - - (6,804) Gain on sale of assets - - 10,342 Interest expense (24,461) (103) (110,022) -------------- --------------- ----------------- Total Other Income (Expense) (24,461) (103) (106,484) -------------- --------------- ----------------- NET LOSS (267,642) (193,937) (2,725,301) -------------- --------------- ----------------- OTHER COMPREHENSIVE LOSS Unrealized loss on available-for-sale securities - 22,000 - TOTAL COMPREHENSIVE LOSS $ (267,642) $ (215,937) $ (2,725,301) ============== =============== ================= BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.02) ============== =============== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 15,386,312 12,605,674 -------------- --------------- The accompanying notes are an integral part of these unaudited consolidated financial statements. 5
ARADYME CORPORATION AND SUBSIDIARY) (A Development Stage Company) Consolidated Statements of Cash Flows (Unaudited) From Inception on February 13, For the Three Months Ended 2001, Through December 31, December 31, 2003 2002 2003 ---------------- ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES $ (267,642) $ (193,937) $ (2,725,301) Net loss Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 12,220 7,668 100,797 Bad debt - - 15,247 Loss on sale of marketable securities - - 6,804 Gain on disposal of assets - - (10,342) Warrants and options issued below market value 17,425 - 190,526 Common stock issued for services 16,625 - 50,350 Changes in assets and liabilities: (Increase) in accounts receivable (9,625) (4,100) (9,625) Decrease in employee advances - 100 - Decrease in deposits and prepaids 340 - 3,877 Increase (decrease) in accounts payable and related party payables (42,795) (13,056) 269,228 Increase in accrued expenses 22,696 14,316 168,981 (Decrease) in deferred revenue - (5,400) - ---------------- ---------------- ---------------- Net Cash Used by Operating Activities (250,756) (194,409) (1,939,458) ---------------- ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of marketable securities - - 50,196 Purchase of fixed assets - (8,250) (30,407) ---------------- ---------------- ---------------- Net Cash Used by Investing Activities - (8,250) 19,789 ---------------- ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable 80,000 - 220,000 Payments on notes payable - - (5,000) Proceeds from related party notes payable - - 358,738 Payments on related party notes payable - - (157,897) Preferred stock issued for cash - - 60,000 Common stock issued for cash 204,720 199,450 1,571,079 Payments on leases payable - (525) (27,643) Stock offering costs - - (10,348) ---------------- ---------------- ---------------- Net Cash Provided by Financing Activities 284,720 198,925 2,008,929 ---------------- ---------------- ---------------- NET INCREASE (DECREASE) IN CASH 33,964 (3,734) 89,260 CASH AT BEGINNING OF PERIOD 55,296 47,032 - ---------------- ---------------- ---------------- CASH AT END OF PERIOD $ 89,260 $ 43,298 $ 89,260 ================ ================ ================ The accompanying notes are an integral part of these unaudited consolidated financial statements. 6
ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Cash Flows (Continued) (Unaudited) From Inception on February 13, For the Three Months Ended 2001, Through December 31, December 31, 2003 2002 2003 ---------------- --------------- ---------------- CASH PAID FOR: Interest $ - $ - $ 30,755 Income taxes $ - $ - $ - NON-CASH TRANSACTIONS: Fixed assets acquired under a note payable $ - $ - $ 186,658 Common stock issued for investment $ - $ - $ 57,000 Common stock issued for services $ 16,625 $ - $ 50,350 Warrants and options granted below market value $ 17,425 $ - $ 190,526 The accompanying notes are an integral part of these unaudited consolidated financial statements. 7
ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Notes to the Financial Statements December 31, 2003 and September 30, 2003 NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements of Aradyme Corporation and Subsidiary (the Company) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's most recent audited consolidated financial statements and notes included in its annual report on Form 10-KSB for the fiscal year ended September 30, 2003, filed January 14, 2004. Operating results for the three months ended December 31, 2003, are not necessarily indicative of the results that may be expected for the year ending September 30, 2004. NOTE 2 - GOING CONCERN The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management is in the process of negotiating additional contracts to increase revenues. Management estimates that the Company will require approximately $1,000,000 in cash to fund its activities through September 30, 2004, which it will seek to obtain principally through the sale of securities. The Company expects that additional capital will be required in future fiscal years if it is unable to generate sufficient revenues from commercialization of its products. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 8 ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Notes to the Financial Statements December 31, 2003 and September 30, 2003 NOTE 3 - MATERIAL EVENTS In October through December 2003, the Company issued 371,924 shares of common stock for cash of approximately $154,720, or $0.416 per share. In December 2003, the Company issued 100,000 shares of common stock for cash of $50,000, or $0.50 per share. The Company granted one-year warrants to purchase 240,384 shares at $1.00 per share to an investor associated with the issuance of 240,384 shares of common stock for cash in October 2003 at $0.416 per share. In conjunction with an agreement with an independent contractor to provide executive services, on December 2, 2003, the Company agreed to issue such contractor 35,000 shares of common stock and granted him options to purchase 150,000 shares of common stock at $0.50 per share, vesting over three years with 25% vested upon issue and 25% vesting on each of the first three anniversaries, exercisable on or before December 2, 2009. The Company recorded $16,625 in expense associated with the issuance of stock and $17,425 associated with the issuance of options. NOTE 4 - STOCK OPTIONS AND WARRANTS In conjunction with an independent contractor agreement, the Company granted options to purchase 150,000 shares of common stock at $0.50 per share, vesting over three years with 25% vested upon issue and 25% vesting on each of the first three anniversaries, exercisable on or before December 2, 2009. In conjunction with the sale of stock for cash, the Company issued warrants to purchase 240,384 shares of common stock at $1.00 per share. The warrants vested immediately and expire on October 17, 2004. The Company estimated the fair value of the stock option at the date of grant by using the Black-Scholes option pricing model based on the following assumptions: Risk-free interest rate of 1.53%; expected life of six years; expected volatility of 203%; and dividend yield of 0.00%. All of the options issued to employees for services were issued either at or above the fair value of the Company's common stock on the date of issue, and no compensation expense was recognized. No options were issued to employees during the periods ended December 31, 2003 and 2002. 9 ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Notes to the Financial Statements December 31, 2003 and September 30, 2003 NOTE 4 - STOCK OPTIONS AND WARRANTS (Continued) A summary of the status of the Company's stock options and warrants as of December 31, 2003 and 2002, and changes during the periods ending on those dates is presented below:
2003 2002 ---------------------- ------------------------- Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price --------- ---------- --------- ----------- Outstanding, beginning of period 4,305,000 $ 0.42 1,000,000 $ 0.42 Granted 390,384 0.53 - - Canceled - - - - Exercised - - - - --------- ---------- --------- ----------- Outstanding, end of year 4,695,384 $ 0.45 1,000,000 $ 0.42 --------- ---------- --------- ----------- Exercisable, end of year 3,922,884 $ 0.46 1,000,000 $ 0.42 --------- ---------- --------- ----------- Outstanding Exercisable ----------------------------------------- ------------------------- Weighted Average Weighted Weighted Number Remaining Average Number Average Outstanding Contractual Exercise Exercisable Exercise Option Grants at 12/31/03 Life Price at 12/31/03 Price ------------- ----------- ----------- --------- ----------- ---------- Employee (5/1/02) 1,000,000 3.42 $ 0.42 1,000,000 $ 0.42 Consultant (2/6/03) 325,000 3.42 0.50 325,000 0.50 Officers (9/30/03) 2,100,000 9.74 0.42 2,100,000 0.42 Consultant (9/30/03) 880,000 5.73 0.42 220,000 0.42 Investor warrants (10/17/03) 240,384 0.79 1.00 240,384 1.00 Consultant (12/2/03) 150,000 5.93 0.50 37,500 0.50 --------- --------- ---------- --------- ----------- 4,695,384 6.60 $ 0.45 3,922,884 $ 0.46 ========= ========= ========== ========= ===========
10 ARADYME CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Notes to the Financial Statements December 31, 2003 and September 30, 2003 NOTE 5 - SUBSEQUENT EVENTS In January 2004, an officer of the Company converted $200,000 of debt, plus accrued interest, into 1,731,429 shares of common stock in accordance with the terms of a convertible note. In February 2004, the Company issued 1,391,256 shares of common stock for cash of $695,628, or $0.50 per share. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS General The Company develops, manufactures, markets and distributes computer database management software based on proprietary technology that is being acquired. Because of the relatively short period, results for any given interim period may not be indicative of comparative results for longer periods or for the year as a whole. Liquidity and Capital Resources As of December 31, 2003, we had negative working capital of $851,304, as compared to negative working capital of $834,911 as of September 30, 2003. As of December 31, 2003, we had a deficit accumulated during the development stage of $2,725,301 and a total stockholders' deficit of $737,992, as compared to a stockholders' deficit of $709,120 as of September 30, 2003. The auditors' report for the year ended September 30, 2003, as with previous years, contained an explanatory paragraph regarding our ability to continue as a going concern. Since inception, we have relied principally on proceeds from the sale of securities and advances from related parties to fund our activities. During the three months ended December 31, 2003, we used $250,756 in cash for operating activities, which was provided by net cash of $284,720 provided by financing activities resulting in a $33,964 increase in cash during the period. Financing activities provided cash of $204,720 from the sale of common stock and $80,000 from proceeds from a note payable. From inception through December 31, 2003, we required an aggregate of $1,939,458 in cash to fund our operating activities, provided by $19,789 from investing activities and $2,008,929 from financing activities, consisting of $1,620,731 in net proceeds from the sale of common and preferred stock and $578,738 in advances from related parties and others. We estimate that we will require approximately $1,000,000 in cash to fund our activities through September 30, 2004, which we will seek to obtain principally through the sale of securities. We have no commitment from any person to acquire all or any of such securities or to provide funding through any other mechanism. We expect that additional capital will be required in future fiscal years if we are unable to generate sufficient revenues from commercialization of our database management systems. Results of Operations Our revenues from the commercialization of our database management system were relatively immaterial in amount at $17,000 or less during both the three months ended December 31, 2003 and 2002, as compared to our ongoing substantial operating expenses. Our principal operating expense is for employee and consultant contract services with those providing principal technical and other services. We obtain required technical and other services under independent contractor relationships accounted for as consulting services, but intend to convert some of these independent contractors to employees, which could increase our costs for payroll burdens and employee benefits. Contract services increased 5.3% for the three months ended December 31, 2003, as compared to the same quarter a year earlier, as we increased our efforts to bring our initial products to market. General and administrative costs increased 119.4% during the three months ended December 31, 2003, as compared to the previous fiscal year, reflecting increased product development activity. 12 As noted above, we obtain most of our technical services under independent contractor agreements with consultants and record the related costs as contract services separate from general and administrative expenses. If contract services and general and administrative services were reported together, the combined amount of $235,691 for the quarter ended December 31, 2003, would be an increase of $49,004, or 26.2%, over the $186,687 for the same quarter in the preceding fiscal year. Other operating expenses did not vary materially in the three-month interim periods ended December 31 in the current fiscal year as compared to a year earlier. Because of this early stage of our business development, revenue and operating expense comparisons between various interim periods may not be indicative of expected future results of operations. Generally, we expect that operating expenses will continue to grow during the ongoing initial marketing efforts as anticipated increased sales will require additional expenditures for sales and marketing and implementation services. It may be some time before our sales and marketing and implementation resources are capable of supporting substantially expanded sales without corresponding increases in operating expenses. Other income and expenses during the three months ended December 31, 2003, consist principally of interest accrued on borrowings from a related party. We had insignificant interest because of an insignificant amount of borrowings during the first quarter of the preceding fiscal year. Other Items We have reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on our results of operations or financial position. Based on that review, we believe that none of these pronouncements will have a significant effect on current or future financial position or results of operations. Critical Accounting Policies Software Development Costs Development costs related to software products are expensed as incurred until technological feasibility of the product has been established. Based on our product development process, technological feasibility is established upon completion of a working model. Costs incurred by us between completion of the working model and the point at which the product is ready for general release have not been significant. Accordingly, no costs have been capitalized to date. Revenue Recognition We recognize revenue in accordance with Statement of Position ("SOP") 97-2, "Software Revenue Recognition," as amended by SOP 98-9, and generally recognize revenue when all of the following criteria are met as set forth in paragraph 8 of SOP 97-2: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectibility is probable. We define each of these four criteria as follows: Persuasive evidence of an arrangement exists. It is our customary practice to have a written contract, which is signed by both the customer and the Company, or a purchase order from those customers who have previously negotiated a standard license arrangement with us. Delivery has occurred. Our software is physically delivered to the customer. If an arrangement includes undelivered products or services that are essential to the functionality of the delivered product, delivery is not considered to have occurred until these products or services are delivered. 13 The fee is fixed or determinable. Our policy is not to provide customers the right to a refund of any portion of their license fees paid. Generally, 100% of the invoiced fees are due within 30 days. Payment terms extending beyond these customary payment terms are considered not to be fixed or determinable, and revenues from such arrangements are recognized as payments become due and payable. Collectibility is probable. Collectibility is assessed on a customer-by-customer basis. If it is determined from the outset of an arrangement that collectibility is not probable, revenues would be recognized as cash is collected. For contracts with multiple elements (e.g., license and maintenance), revenue is allocated to each component of the contract based on vendor specific objective evidence ("VSOE") of its fair value, which is the price charged when the elements are sold separately. Since VSOE has not been established for license transactions, the residual method is used to allocate revenue to the license portion of multiple-element transactions. Therefore, we recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue. We sell our products to end users under license agreements. The fee associated with such agreements is allocated between software license revenue and maintenance revenue based on the residual method. Software license revenue from these agreements is recognized upon receipt and acceptance of a signed contract and delivery of the software, provided the related fee is fixed and determinable, collectibility of the revenue is probable, and the arrangement does not involve significant customization of the software. If an acceptance period is required, revenue is recognized upon the earlier of customer acceptance or the expiration of the acceptance period, as defined in the applicable software license agreement. We recognize maintenance revenue ratably over the life of the related maintenance contract. Maintenance contracts on perpetual licenses generally renew annually. We typically invoice and collect maintenance fees on an annual basis at the anniversary date of the license. Deferred revenue represents amounts received by us in advance of performance of the maintenance obligation. Professional services revenue includes fees derived from the delivery of training, installation, and consulting services. Revenue from training, installation, and consulting services is recognized on a time and materials basis as the related services are performed. Forward-Looking Statements This report contains statements about the future, sometimes referred to as "forward-looking" statements. Forward-looking statements are typically identified by the use of the words "believe," "may," "should," "expect," "anticipate," "estimate," "project," "propose," "plan," "intend" and similar words and expressions. We intend that the forward-looking statements will be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements that describe our future strategic plans, goals or objectives are also forward-looking statements. 14 Although we have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause the forward-looking statements not to come true as described in this report. These forward-looking statements are only predictions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially. While we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, that may not occur, or that may occur with different consequences from those now assumed or anticipated. ITEM 3. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officers (whom we refer to in this periodic report as our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures as of December 31, 2003, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2003, our disclosure controls and procedures were effective. There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 15 PART II--OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES During the quarter ended December 31, 2003, we issued an aggregate of 506,924 shares of common stock in the following transactions: During the quarter ended December 31, 2003, we sold an aggregate of 371,924 shares of our restricted common stock for cash of $154,720, or $0.416 per share, and an aggregate of 100,000 shares of our common stock for cash of $50,000, or $0.50 per share, to five people, one of whom was an accredited investor and one of whom was not a U.S. citizen or resident. During such quarter, the market price for our common stock ranged from approximately $0.13 to $0.70 per share. Prior to investing, each of the foregoing investors had access to our periodic reports filed under the Securities Exchange Act and was provided with information about our business and financial condition, risks and prospects. In conjunction with the sale of shares of stock for cash to the accredited investor as described above, we issued warrants to purchase 240,384 shares of common stock at $1.00 per share. The warrants vested immediately and expire on October 17, 2004. During such quarter, the market price for our common stock ranged from approximately $0.13 to $0.70 per share. Prior to investing, the foregoing investor had access to our periodic reports filed under the Securities Exchange Act and was provided with information about our business and financial condition, risks and prospects. In conjunction with an agreement with an independent contractor to provide executive services, on December 2, 2003, we agreed to issue such contractor 35,000 shares of common stock and granted him options to purchase 150,000 shares of common stock at $0.50 per share, vesting over three years with 25% vested upon issue and 25% vesting on each of the first three anniversaries, exercisable on or before December 2, 2009. On the date this option was granted, the market price for our common stock was approximately $0.46 per share. Prior to investing, the foregoing investor had access to our periodic reports filed under the Securities Exchange Act and was provided with information about our business and financial condition, risks and prospects. All of the foregoing transactions were the result of arm's-length negotiations. Each investor was provided with our business and financial information, including access to our periodic reports as filed with the Securities and Exchange Commission, and the opportunity to ask questions directly of our executive officers. Each purchaser acknowledged in writing that the securities purchased were restricted securities taken for investment and that the certificates representing the shares would bear a restrictive legend. The certificates for the shares issued in the transactions bear a restrictive legend conspicuously on their face, and stop-transfer instructions are noted respecting the certificates on our stock transfer records. No underwriter participated in the foregoing placement of securities. The foregoing transactions were effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act of 1933 as transactions not involving any public offering and Rule 506 of Regulation D thereunder. 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following exhibits are filed as a part of this report:
SEC Exhibit Reference Number Number Title of Document Location - -------------- -------------- --------------------------------------------------------------- --------------------- Item 31 Rule 13a-14(a)/15d-14(a) Certifications - -------------- -------------- --------------------------------------------------------------- --------------------- 31.01 31 Certification of Principal Executive Officer Pursuant to Rule Attached 13a-14 31.02 31 Certification of Principal Financial Officer Pursuant to Attached Rule 13a-14 - -------------- -------------- --------------------------------------------------------------- --------------------- Item 32 Section 1350 Certifications - -------------- -------------- --------------------------------------------------------------- --------------------- 32.01 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Attached Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer) 32.02 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Attached Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
(b) Reports on Form 8-K. During the quarter ended December 31, 2003, we did not file any reports on Form 8-K. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ARADYME CORPORATION (Registrant) Date: February 23, 2004 By /s/ James R. Spencer -------------------------------- James R. Spencer, Chairman (Chief Executive Officer) Date: February 23, 2004 By /s/ Merwin D. Rasmussen -------------------------------- Merwin D. Rasmussen, Secretary (Chief Financial Officer) 17 EX-31.01 3 ex3101q123103.txt CEO CERTIFICATION REQUIRED UNDER SECTION 302 Exhibit 31.01 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14 I, James R. Spencer, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Aradyme Corporation; 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 small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) 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 small business issuer 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 small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the small business issuer'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 change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: February 23, 2004 /s/ James R. Spencer - ------------------------------- James R. Spencer Principal Executive Officer EX-31.02 4 ex3102q123103.txt CFO CERTIFICATION REQUIRED UNDER SECTION 302 Exhibit 31.02 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14 I, Merwin D. Rasmussen, certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Aradyme Corporation; 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 small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) 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 small business issuer 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 small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the small business issuer'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 change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting. Date: February 23, 2004 /s/ Merwin D. Rasmussen - --------------------------------- Merwin D. Rasmussen Principal Financial Officer EX-32.01 5 ex3201q123103.txt CEO CERTIFICATION REQUIRED UNDER SECTION 906 Exhibit 32.01 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 Aradyme Corporation (the "Company") on Form 10-QSB for the quarter ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James R. Spencer, 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, to the best of my knowledge and belief: (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/ James R. Spencer - ------------------------------- James R. Spencer Chief Executive Officer February 23, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.02 6 ex3202q123103.txt CFO CERTIFICATION REQUIRED UNDER SECTION 906 Exhibit 32.02 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 Aradyme Corporation (the "Company") on Form 10-QSB for the quarter ended December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Merwin D. Rasmussen, 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, to the best of my knowledge and belief: (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/ Merwin D. Rasmussen - ------------------------------ Merwin D. Rasmussen Chief Financial Officer February 23, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----