-----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, Oq6Ed0Z3s3CzPel70xvlrufC0OqmrDA/8QRXOJj4lzFkcpvdjB7/i33A6XH0aFPv Z8fmTVki/hu3UkJP/mOrWA== 0001019687-07-000514.txt : 20070220 0001019687-07-000514.hdr.sgml : 20070219 20070220150514 ACCESSION NUMBER: 0001019687-07-000514 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070220 DATE AS OF CHANGE: 20070220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEAMLESS WI-FI, INC. CENTRAL INDEX KEY: 0000880584 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 330845463 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-20259 FILM NUMBER: 07635244 BUSINESS ADDRESS: STREET 1: 800 N. RAINBOW BLVD. SUITE 208 CITY: LAS VEGAS STATE: NV ZIP: 89107 BUSINESS PHONE: 775-588-2387 MAIL ADDRESS: STREET 1: 800 N. RAINBOW BLVD. SUITE 208 CITY: LAS VEGAS STATE: NV ZIP: 89107 FORMER COMPANY: FORMER CONFORMED NAME: INTERNET BUSINESS INTERNATIONAL INC DATE OF NAME CHANGE: 19990430 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL FOOD & BEVERAGE INC /DE/ DATE OF NAME CHANGE: 19930328 10QSB 1 seamless_10q-123106.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2006 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 000-20259 SEAMLESS WI-FI, INC. -------------------- (Exact name of small business issuer as specified in its charter) Nevada 33-0845463 ------ ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 800 N. Rainbow Blvd., Ste. 200, Las Vegas, NV 89109 --------------------------------------------------- (Address of principal executive offices) (775) 588-2387 -------------- (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 [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of February 19, 2007, the number of shares of Common Stock issued and outstanding was 2,322,402,154 Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] 1 DOCUMENTS TO BE INCORPORATED BY REFERENCE The following reports as filed by Seamless Wi-Fi, Inc. or its predecessors are incorporated by reference herein: (i) Form 8-K/A filed on November 22, 1999; and (ii) Form 10-Q filed on December 1, 1999 Form 10-Q filed May 22, 2000. INDEX Page Number ------ PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 3 Balance Sheet - December 31, 2006 3 Statements of Operations - For the three and six months ended December 31, 2006 and 2005 4 Statements of Cash Flow - For the six months ended December 31, 2006 and 2005 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Controls and Procedures 20 PART II - OTHER INFORMATION Item 1. Legal Proceedings 21 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21 Item 3. Defaults Upon Senior Securities 21 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 5. Other Information 21 Item 6. Exhibits 22 SIGNATURES 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, 2006 ----------------- ASSETS Current assets Cash $ 182,136 Notes receivable-related parties, current portion 502,036 Accrued interest receivable 144,114 ------------ Total current assets 828,286 Property and equipment (net of accumulated depreciation $28,218) 67,033 Technology 1,207,071 Notes receivable - related parties (net of allowance $287,675) 1,354,948 Prepaid legal 5,000 Employee Advance 932 Restricted cash 75,000 Security deposit 6,600 ------------ TOTAL ASSETS $ 3,544,870 ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities Accounts payable $ 723,353 Accrued expenses 261,959 Payroll taxes 131,050 Judgments payable 361,054 Other current liabilities 862,995 Payable to officer 9,855 Investment payable 100,000 Note payable related party 5,468 Interest payable on long term debt 143,604 ------------ Total current liabilities 2,599,338 Long term debt 3,400,000 ------------ TOTAL LIABILITIES 5,999,338 Stockholders' deficiency Preferred A stock, par value $0.001, 10,000,000 shares authorized, 781,414 shares issued and outstanding 781 Preferred B stock, par value $0.001, 10,000,000 shares authorized, 0 shares issued and outstanding -- Preferred C stock, par value $1.00, 5,000,000 shares authorized, 300,000 shares issued and outstanding 300,000 Common stock, par value $0.001, 11,000,000,000 shares authorized, 2,192,202,154 shares issued and outstanding 2,192,201 Additional paid-in capital 18,314,871 Accumulated other comprehensive loss (23,162,321) ------------ Total stockholders' deficiency (2,354,468) Less: Treasury stock at cost 100,000 ------------ Adjusted stockholders' deficiency (2,454,468) ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 3,544,870 ============ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 3 SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2006 2005 2006 2005 ---- ---- ---- ---- Revenues $ 10,894 $ 3,546 $ 21,640 $ 9,954 Cost of revenues 20,946 1,120 60,584 34,443 ------------- ------------- ------------- ------------- Gross Income (Loss) (10,052) 2,426 (38,944) (24,489) ------------- ------------- ------------- ------------- Expenses: Selling, general and admin 150,978 200,076 295,440 296,636 Software development costs -- 1,500,570 -- 1,500,570 Technology development costs -- -- -- -- Consulting 113,937 233,730 356,851 774,388 Interest 80,616 -- 204,137 984,000 Legal 166,724 69,437 176,293 106,971 Officer Payroll 136,531 111,550 277,531 291,450 Finance 90,000 -- 90,000 -- Bad Debt 41,410 -- 58,410 -- Depreciation and amortization 7,938 1,828 15,875 1,828 ------------- ------------- ------------- ------------- Total Expenses 788,134 2,117,191 1,474,537 3,955,843 ------------- ------------- ------------- ------------- Net loss from operations (798,186) (2,114,765) (1,513,481) (3,980,332) Other income (expense) Cancellation of indebtedness 215,283 590,253 215,283 590,253 Gain on disposal of equipment -- 3,284 -- 3,284 Interest 5,506 (118,839) 33,073 (227,546) Other (6,500) -- -- 33,670 ------------- ------------- ------------- ------------- Loss before income taxes (583,897) (1,640,067) (1,265,125) (3,580,671) ------------- ------------- ------------- ------------- Minority interest -- 322,666 -- 356,193 Income taxes (benefit) (note 8) -- -- -- -- ------------- ------------- ------------- ------------- Net Loss (583,897) (1,317,401) (1,265,125) (3,224,478) ============= ============= ============= ============= Basic and Diluted loss per common shares $ (0.00) $ (0.02) $ (0.01) $ (0.04) ============= ============= ============= ============= Weighted average basic and diluted common shares 133,750,923 101,517,955 133,750,923 101,517,955 ============= ============= ============= ============= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4 SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended December 31, 2006 2005 ---- ---- Cash flows used in operating activities Net loss from continuing operations $(1,265,125) $(3,224,478) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 15,874 1,828 Issuance of common stock for services 184,050 648,775 Issuance of common stock for payment of financing costs 90,000 984,000 Write-down of capitalized software costs -- 1,500,570 Cancellation of indebtedness (215,283) (590,253) Minority interest -- (339,693) Bad debt expense 58,410 -- Prepaid legal (5,000) -- Payable to officer -- -- Changes in operating assets and liabilities Accrued interest receivable (33,021) -- Accrued expense 261,959 -- Accounts payable (213,697) 132,420 Other current liabilities 45,374 41,985 Payroll taxes payable (62,826) 16,927 Judgements payable (55,237) Interest payable 132,598 -- Payable to officer (19,491) 120,000 ----------- ----------- Net cash used by operating activities (1,026,178) (763,156) Cash flows used in investing activities: Intangible assets (559,125) (85,000) Equipment -- (33,007) Employee advance (932) -- Investments 88 (112,195) Advances to related party (802,059) (132,099) ----------- ----------- Net cash used in investing activities (1,362,028) (362,301) Cash flows from financing activities Net proceeds from debt issuance -- 1,452,471 Increase in long term debt 2,540,000 -- Repayment of notes payable -- (79,500) Repayment of investment payable (50,000) -- Repayment of advances from officer -- (167,384) Repayment of related party advances (14,000) (14,265) ----------- ----------- Net cash provided by financing activities 2,476,000 1,191,322 Increase (decrease) in cash 87,794 65,865 Cash at beginning of period 94,342 270 ----------- ----------- Cash at end of period $ 182,136 $ 66,135 =========== =========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 5 SEAMLESS WI-FI, INC. f/k/a ALPHA WIRELESS BROADBAND, INC SUPPLEMENTAL DISCLOSURES OF CASH FLOWS (Unaudited) Six Months Ended December 31, 2006 2005 ---- ---- Cash paid for: Interest $ -- $ -- Taxes $ -- $ -- Noncash investing and financing activities Common stock issued for services $ 160,050 $ 648,775 Common stock issued for payment of financing costs $ -- $ 984,000 Common stock issued for officer's compensation $ -- $ -- Common stock issued for conversion of preferred A stock and settle operating expenses $ 24,000 $4,030,217 Common stock issued for conversion of preferred A stock by Ayuda Funding, LLC $2,392,991 $ -- Common stock issued for conversion of preferred C stock $ -- $ 200,000 Common stock and preferred stock issued for acquisition of assets $ -- $ -- Common stock issued for investment $ -- $ -- Subsidiary common stock issued for investment $ -- $ -- SEE NOTES TO FINANCIAL STATEMENTS.
6 SEAMLESS WI-FI, INC. F/K/A ALPHA WIRELESS BROADBAND, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: ORGANIZATION AND OPERATIONS The accompanying unaudited financial statements of Seamless Wi-Fi, Inc. have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with item 310(b) of Regulation SB. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended December 31, 2006 are not necessarily indicative of the results that may be expected for the year ended June 30, 2007. These unaudited financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended June 30, 2006, as filed with the Securities and Exchange Commission. Prior to December 31, 1997, Seamless Wi-Fi, Inc ("The Company") formerly known as Alpha Wireless Broadband, Inc. "the Company" was in the food product manufacturing business and formerly known as International Food and Beverage, Inc. In November 1998, new stockholders bought majority control from the previous Chief Executive Officer through a private transaction. Immediately thereafter, the former CEO resigned and the new stockholders assumed the executive management positions. In December 1998, after new management was in place, a decision was made to change the Company's principal line of business from manufacturing to high technology. The Company changed its name from International Food & Beverage, Inc. to Internet Business's International, Inc., and reincorporated the Company on December 8, 1998 in the state of Nevada. During April of 1999, the Company announced the opening of its first e-commerce site and engaged in the development, operation and marketing of a number of commercial web sites. The Company's subsidiaries consisted of: Lending on Line (providing real estate loans and equipment leasing), Internet Service Provider (providing national Internet access dial-up service, wireless high speed Internet, and Internet web design and hosting), E. Commerce (providing Auction sites), and Direct Marketing (providing direct marketing of long distance phone service, computers with Internet access, and Internet web design hosting). The Company ceased operations during the fiscal year ended June 30, 2003. During the fiscal year ended June 30, 2004, the Company changed its name to Alpha Wireless Broadband, Inc, and started a new wireless operation through it's wholly owned subsidiary Skyy-Fi, Inc a Nevada Corporation. Skyy-Fi began providing access to the Internet, by installing equipment in locations such as hotels and coffee shops for use by their patrons for a fee or free basis. These locations are commonly known as Wi-Fi Hotspots. The Company has 36 Wi-Fi locations. In January 2005, the Company acquired the assets of Seamless P2P, LLC and contributed these assets to its 80% owned subsidiary Seamless Peer to Peer, Inc., which is a developer and provider of a patent pending software program Phenom Encryption Software that encrypts Wi-Fi transmissions based upon RSA's government certified 256 bit AES encryption coupled with RSA's Public Key Infrastracture flexible telecom data and voice transport solutions. In May 2005, the Company changed its name from Alpha Wireless Broadband, Inc. to Seamless Wi-Fi, Inc, which was approved by the Board of Directors and its subsidiary from Skyy-Fi, Inc. to Seamless Skyy-Fi, Inc. 7 In December 2005, the Company started a hosting company Alpha Internet offering Seamless clients a high-security hosting facility. PRINCIPLES OF CONSOLIDATION The financial statements include the accounts of the Company and its wholly owned subsidiaries and majority-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include allowances for doubtful accounts and notes and mortgage loans receivable. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all short-term, highly liquid investments with an original maturity date of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT Property and equipment is state at cost and depreciated using the straight-line method over the estimated useful life of the assets, which is generally three to five years for computers and computer related equipment and five to seven years for furniture and other non-computer equipment. Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the term of the lease, ranging from one to five years. INVESTMENTS Investments are stated at the lower of cost or market value. PROPRIETARY SOFTWARE IN DEVELOPMENT In accordance with SFAS No. 86, accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed Software ("FAS 86"), the Company has capitalized certain computer software development costs upon the establishment of technological feasibility. Technological feasibility is considered to have occurred upon completion of a detailed program design which has been confirmed by documenting and tracing the detailed program design is not pursued, upon completion of a working model that has been confirmed by testing to be consistent with the product design. Amortization is provided based on the greater of the ratios that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. The estimated useful life for the straight-line method is determined to be 2 to 5 years. The unamortized computer software and computer software development costs were $1,570,000 at September 30, 2005. During the quarter ended December 31, 2005 the computer software development team failed to deliver the completed software program as per agreement. The unamortized development cost was expensed and on January 2006, a new computer software development team was contracted and the costs related to the development will be expensed until the development of the computer software program is completed. As of the first quarter ended September 30, 2006 for the fiscal year end June 30, 2007, there were no software development expenses. 8 REVENUE RECOGNITION For current Company operations, providing wireless Internet access, fees are charged either to the proprietor of the WI-Fi hotspot location or the customer using the services. The fees paid by a proprietor for services provided on a month-to-month basis are billed at the end of each month for which the service is contracted. The fees paid by customers using the wireless Internet access are paid at the time service is provided and therefore recorded as revenue at that time. ADVERTISING EXPENSE All advertising costs are expensed when incurred. CONCENTRATION OF CREDIT RISK The Company is subject to credit risk through trade receivables. Monthly Internet access fees and web hosting are generally billed to the customer's credit card, thus reducing the credit risk. The Company routinely assesses the financial strength of significant customers and this assessment, combined with the large number and geographic diversity of its customers, limits the Company's concentration of risk with respect to trade accounts receivable. INCOME TAXES The Company accounts for income taxes under the asset and liability approach of reporting for income taxes. Deferred taxes are recorded based upon the tax impact of items affecting financial reporting and tax filings in different periods. A valuation allowance is provided against net deferred tax assets where the Company determines realization is not currently judged to be more likely than not. The Company and its 80% of more owned U.S. subsidiaries file a consolidated federal income tax return. Although income tax returns have not been filed since 1999, the Company has no material tax liability due to its losses during these periods. The Company is currently having these income tax returns prepared. EARNINGS (LOSS) PER SHARE ("EPS") Basic EPS is computed by dividing income (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon conversion of preferred stock outstanding. STOCK BASED COMPENSATION The Company has elected to early adoption of SFAS 123R which requires all share based payments to officers, directors, and employees, including stock options to be recognized as a cost in the financial statements based on their fair values. The Company accounts for stock based grants issued to non-employees at fair value in accordance with SFAS 123 and ETIF 96-18 "Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or In Conjunction with Selling, Goods, or Services". 9 REVERSE STOCK SPLIT The Company's Board of Directors effected a 1 for 1,000 reverse stock split of its common stock $.001 par value on June 3, 2005. Accordingly all shares information included in the consolidated financial statements has been adjusted to reflect the reverse stock split. The reverse stock split did not change the ratio for the conversion of the preferred stock which remained at 1 share of Series A preferred stock converts into 10,000 shares of common stock. NEW ACCOUNTING PRONOUNCEMENTS In July 2006, the FASB issued FASB Interpretation ("FIN") No. 48, "Accounting for Uncertainty in Income Taxes," which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). The accounting provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The Company is currently assessing whether adoption of this Interpretation will have an impact on our financial position or results of operations. In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements", which establishes a framework for reporting fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this standard on its financial statements. NOTE 2: GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the company as a going concern. The Company has experienced significant losses in recent years, as of the second quarter ended December 31, 2006 for fiscal year end June 30, 2007 the stockholders' deficiency is $2,454,468 and working capital deficiency is $1,771,052. The Company is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance the Company will be successful in its effort to secure additional equity financing. The Company's ability to continue as a going concern is contingent upon its ability to secure financing and attain profitable operations. The financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. NOTE 3: LONG TERM DEBT During the fiscal year end of June 30, 2006, the Company borrowed $4,600,000 under three loan agreements with Ayuda Funding LLC of which 184,000 of previously issued Series A convertible preferred shares are held as collateral. An additional loan was acquired during the second quarter in the amount of $1,400,000. These notes are in default which allows the note holder to convert the preferred stock to common stock. Proceeds from the converted stock paid off some of the notes. Interest on the unpaid principal amount is 6.5% per annum due and payable quarterly commencing June 21, August 1, August 15, 2006, and January 6, 2007 until such loan is paid in full. The total loan balance of $3,400,000 at December 31, 2006 is due and payable on October 6, 2009 with an accrued interest of $143,604. 10 NOTE 4: OTHER CURRENT LIABILITIES Other current liabilities consist of the following: Credit cards payable $ 364,991 (1) Payable to Integrated Communication 221,817 (2) Various liabilities assumed from Alpha Tooling acquisition 276,187 --------- $ 862,995 ========= (1) Payments in varying amounts are due monthly with interest at 18% per annum. (2) Results from contract cancellation. NOTE 5: RELATED PARTY TRANSACTIONS The Company has made the following loans and advances to related parties as of December 31, 2006: Allowance for Loan/Advance for uncollectible Balance Balance loans/advances Net ----------------- ------------------- ---------------- Accepted Sales (A) $ 311,329 $ 311,329 Carbon Jungle, Inc. (B) 189,515 $ 189,515 - DK Corp. (C) 98,160 98,160 - DLR Funding (D) 250,987 250,987 1st Global Financial Service (E,F) 1,294,668 1,294,668 ----------------- ------------------- ---------------- Total: $ 2,144,659 $ 287,675 $ 1,856,984 ================= =================== ================
The above interest at annual rates ranges from 6% to 12%. The net balance at December 31, 2006 of the fiscal year end of June 30, 2007 in the amount of $1,856,984 matures in the fiscal years ended June 30 as follows: 2007 $ 400,877 2008 406,110 2009 1,049,997 ------------ $ 1,856,984 ============ (A) Accepted Sales is a division of 1st Global Financial Services noted below. (B) The President of the Company is a Director of the Company; the Secretary of the Company is an officer of this Company. During the subsequent six months ended December 31, 2006, the Company has lent Carbon Jungle an additional $ 58,410. (C) DK Corp is a business held by David Karst. See Creditor Trust below. (D) The President of the Company is a stockholder and director of this Company. The Secretary of the Company is an officer and stockholder of this Company. During the subsequent six months ended December 31, 2006, the Company has lent DLR Funding an additional $185,425 and received $60,537. (E) The President of the Company is a stockholder and director of this Company. The Secretary of the Company is an officer and stockholder of this Company. A director of 1st Global is paid $10,000 per month by the Company, which is recorded as a loan receivable by the Company. During the subsequent six months ended December 31, 2006, the Company has lent 1st Global an additional $816,418. (F) The President of the Company is an officer of this Company. 11 The Company has recorded interest income on the above for the quarter ended December 31, 2006 of fiscal year end June 30, 2007 in the amount of $ 144,114. The Company owns 19% of the common stock of 1st Global Financial Services, Inc. (1st Global). Accepted Sales is a wholly owned subsidiary of 1st Global. Alfred Reda, our CEO, is a director of 1st Global. 1st Global are in debit/credit carding processing business and are in the process of becoming a credit card processor. The will also collaborate with us to market Seamless Skyy-Fi services to its merchants. Accordingly, the Company has made advances to 1st Global until they can obtain permanent financing from other sources. Creditor Trust As of September 30, 2005, the Company appointed Financial Services LLC as the Trust Protector for the Creditor Trust. The Trust is currently managed by Mildred Carroll who is also the Trustee and is also the Company's Secretary. The Company's previous Creditor Trust had appointed KFG LLC as Trust Protector which was managed by David Karst as the Trustee for the Creditor Trust. The Company established a creditor trust pursuant to the terms and conditions of the trust agreement, shares of the Company's common stock were to be transferred in trust to KFG LLC, which has accepted the appointment as trustee. The Company's creditor trust had been established to return the maximum amount to beneficiaries and to allow the Company to continue to operate without interruption. Following the submission of claims and validation of such claims, the trustee was to liquidate the trust property and distribute the proceeds to the trust beneficiaries in a manner the trustee deems most beneficial. NOTE 6: STOCKHOLDER'S EQUITY ISSUANCE OF COMMON STOCK AND PREFERRED STOCK The Board of Directors of the Corporation may from time to time authorize by resolution the issuance of any or all shares of the Common Stock and the Preferred Stock herein authorized in accordance with the terms and conditions set forth in the Articles of Incorporation for such purposes, in such amounts to such persons, corporations, or entities, for such consideration and in the case of the Preferred Stock, in one or more series, all as the Board of Directors in its discretion may determine and without any vote or either action by the stockholders, except as otherwise required by law. The Board of Directors, from time to time also may authorize by resolution, options, warrants and other rights convertible into Common or Preferred stock (collectively "securities". The securities must be issued for such consideration, including cash, property, or services, as the Board of Directors may deem appropriate, subject to the requirement that the value of such consideration be less than the par value of the shares issued. Any shares issued for which the consideration so fixed paid or delivered shall be fully paid stock and the holder of such shares shall not be liable for any further call assessment or any other payment thereon, provided that the actual value of such consideration is not less than the par value of the shares so issued. The Board of Directors may issue shares of Common Stock in the form of a distribution or distributions pursuant to a stock dividend or split-up of the shares of the Common Stock only to ten holders of the outstanding shares of the Common stock. 12 Preferred A shares converts as follows: 1 share of Preferred converts into 10,000 shares of common. Preferred C shares converts as follows: one share of C which has a par value of $1.00 converts into $1.00 worth of common shares. Examples: 1. If the common stock 10 day average prior to the date of conversion, was trading at $.10 per share, one share of preferred C would convert into 10 shares of common. 2. If the common stock 10 day average prior to the date of conversion, was trading at $.001 per share, one share of preferred C would convert into 1,000 shares of common. STOCK ISSUANCE During the second quarter ended December 31, 2006 for the fiscal year end June 30, 2007: Ayuda Funding, LLC converted 87,500 shares of Series A Preferred Stock into 875,000,000 shares of common stock. 7,905,000 shares of common stock were issued for services and expensed for officer's compensation at $79,050. During the first quarter ended September 30, 2006 for the fiscal year end June 30, 2007: Ayuda Funding, LLC converted 76,027 shares of Series A Preferred Stock into 760,270,000 shares of common stock to payback Ayuda in the amount of $2,392,991. Global Debit Card Ltd. converted 100 shares of Series A Preferred Stock valued at $ 0.10 into 1,000,000 shares of common stock valued at $1,000. 500 shares of Series A Preferred Stock were converted into 5,000,000 shares of common stock for consulting services and expensed at $24,000. 8,100,000 shares of common stock were issued for services and expensed for officer's compensation at $81,000. 190,000,000 shares of common stock were issued by Ayuda Funding, LLC valued at $190,000. NOTE 7: INCOME TAXES No provision for income taxes has been recorded in the accompanying financial statements as a result of the Company's net operating losses. The Company has unused tax loss carry forwards of approximately $23,000,000 to offset future taxable income. Such carry forwards expire in the years beginning 2021. The deferred tax asset recorded by the Company as a result of these tax loss carry forwards is approximately $8,000,000 December 31, 2006. The Company has reduced the deferred tax asset resulting from its tax loss carry forwards by a valuation allowance of an equal amount as the realization of the deferred tax asset is uncertain. There is no net change in the deferred tax asset and valuation allowance from July 1, 2006 to December 31, 2006. 13 NOTE 8: COMMITMENTS AND CONTINGENCIES LEASE The Company, through its Alpha Tooling Inc. subsidiary has entered into lease agreements for an office space and an automobile which will expire on June 14, 2007 and October 8, 2007, respectively. The Company rents additional office space in Nevada, on a month to month basis. Rent expense under these leases for the six months ended December 31, 2006 and 2005 is $13,200 and $10,123, respectively. LEGAL PROCEEDINGS The Company is a party to the following legal proceedings: GLOBALIST V. INTERNET BUSINESS'S INTERNATIONAL, INC. ET AL - ---------------------------------------------------------- In July 2003, Globalist sued the Company and was awarded a judgment plus interest in the amount of approximately $301,000. The Company appealed the Court's decision and the award amount. In February 2005 the Company reached a tentative settlement with Globalist, which required the payment of $75,000 by March 2005, subject to Court approval. On March 8, 2005 the Company put $75,000 in its lawyer escrow account to satisfy the settlement. This cash is classified as restricted cash on our balance sheet. The Company is still waiting for Court approval regarding the final settlement, at which time the funds will be paid as per agreement. However Globalist is contesting the settlement agreement and further court action is contemplated. EMPLOYMENT CONTRACT The Company has an employment contract with their Chief Executive Officer, Alfred Reda that calls for a base salary of $240,000 for the year ended June 30, 2006 and an increase $1,000 a month from July, 2006 until its expiration date in January, 2007. In addition, the contract includes a performance bonus based on the Company's sales levels from $2,000,000 to $12,000,000 in sales with a bonus ranging from 500,000 to 3,000,000 shares of common stock. NOTE 9: SEGMENT INFORMATION In accordance with SFAS No. 131 "Disclosure about Segments of an Enterprise and Related Information", management has determined that there are three reportable segments based on the customers served by each segment: Such determination was based on the level at which executive management reviews the results of operations in order to make decisions regarding performance assessment and resource allocation. The Company is currently a start up business that is providing "Wireless Internet" access at business locations and a developer and provider of a patent pending software. In December 2005 the Company started a hosting company Alpha Internet offering Seamless clients a high-security hosting facility (See Note 1: Organization and Operations). Certain general expenses related to advertising and marketing, information systems, finance and administrative groups are not allocated to the operating segments and are included in "other" in the reconciliation of operating income reported below. 14 Information on reportable segments is as follows: Second quarter ended December 31, 2006 2005 ----------- ----------- Wi-Fi ISP net sales $ 21,640 $ 9,954 Cost of Wi-Fi sales (60,584) (34,443) Cost and expenses (1,474,537) (3,955,843) Other net income 248,356 399,661 Minority interest -- 356,193 ----------- ----------- Net loss $(1,265,125) $(3,224,478) =========== =========== 15 FORWARD-LOOKING STATEMENTS THE FOLLOWING INFORMATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS "MAY," "COULD," "EXPECT," "ESTIMATE," "ANTICIPATE," "PLAN," "PREDICT," "PROBABLE," "POSSIBLE," "SHOULD," "CONTINUE," OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. PREVIOUS OPERATIONS International Food and Beverage was incorporated on September 1987 in Delaware. It was listed on the Over the Counter Bulletin Board in June 1988. It operated in the food services industry until late 1997, at which time it ceased operations and remained dormant until December of 1998. At that time new management was put in place, and the Company's focus was changed to the Internet and its name was changed to Internet Business's International, Inc. In September 2004 the Company changed its name once again to Alpha Wireless Broadband, Inc. Then in May 2005 the Company changed its name again to Seamless Wi-Fi, Inc. On January 1, 1999 the newly named Company began to offer goods and services over the Internet, starting with the development of an on-line B2C (business to consumer) E-Retail site, AuctionWinner.com. The site was launched in April 1999. In July 1999, the Company expanded their service offerings by acquiring an ISP (Internet Service Provider) by the name of LA Internet. The Company changed its domicile from Delaware to Nevada in the same year. From January 2000 until April 2003 goods and services were offered by the Company over the Internet, including a national ISP and a local WISP in Las Vegas, Nevada. These operations ceased in April of 2003. From April 2003 until May 2004 the Company did not have an operating business. In May 2004, the Company opened a dating web site for seniors. This was the first business venture since the Company ceased its prior operations in April 2003. In June 2004, the Company changed focus and incorporated Skyy-Fi, Inc. a Nevada corporation, a wholly owned subsidiary, and its related web site www.skyyfy.com, which is the Company's wireless Internet Service Provider. In July 2004 the Company established the Internet Business's International, Inc. Creditor Trust to pay the Company's creditors. KFG, LLC accepted the appointment as trustee, and is vested with the authority to settle outstanding matters with the Company's creditors willing to accept shares of the Company's common stock for settlement pursuant to the terms and conditions of the trust agreement. In July of 2004, which is first quarter of fiscal year of June 2005, the Company, through its wholly owned subsidiary Skyy-Fi, Inc., began the installation of wireless Internet access equipment at businesses allowing their patron's access to the Internet for a fee. In January 2005, the Company acquired the assets of Seamless P2P, LLC for the Company's subsidiary Seamless Peer 2 Peer, Inc., a developer and provider of a software program "Phenom(TM)" that encrypts Wi-Fi transmissions based upon RSA's government certified 256 bit AES encryption coupled with RSA's Public Key Infrastructure flexible telecom data and voice transport solutions. After the acquisition, on [May 2005] the Company changed its name to Seamless Wi-Fi, Inc. and changed Skyy-Fi, Inc. to Seamless Skyy-Fi, Inc. to unify the Company and its subsidiary in its presentation as "Seamless." Current Operations Seamless Wi-Fi, Inc. (www.slwf.net) is based in Las Vegas, Nevada, with three operating subsidiaries: Seamless Skyy-Fi, Inc. (www.skyyfi.com), Seamless Peer 2 Peer, Inc. (www.seamlessp2p.net) and Seamless Internet, Inc. (www.seamlessinternet.com). Seamless Skyy-Fi is forging a network of Wi-Fi Hot Spots in targeted geographic and vertical markets across the country and has achieved initial success providing hotel and retail Wi-Fi hotspots. Seamless Skyy-Fi also provides Wi-Fi users with Secure Internet Browsing (SIB) that encrypts the user's Wi-Fi signal. Seamless Peer 2 Peer markets Phenom(TM) Virtual Internet Extranet encryption software, which provides SOX- and HIPAA-compliant secure peer mail, chat, file transfer, remote PC access, secure VoIP, video conferencing and white boarding. Seamless Internet offers high security hosting services for Seamless Peer 2 Peer and Skyy-Fi clients and is not available for general public hosting services. Seamless Internet is also marketing the S-XGen a hand held ultra mobile personal computer and communication device as known as a "UMPC". 16 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, our selected financial information: Six Months Ended Six Months Ended December 31, 2006 December 31, 2005 ----------------- ----------------- (unaudited) (unaudited) Revenues $ 21,640 $ 9,954 Cost of Revenues 60,584 34,443 ------------- ------------- (Gross Loss) (38,944) (24,489) ------------- ------------- Expenses 1,474,537 3,955,843 ------------- ------------- (Net Loss from Operations) (1,513,481) (3,980,332) ------------- ------------- Other Income 248,356 755,854 ------------- ------------- (Net Loss) (1,265,125) (3,224,478) ------------- ------------- (Net Loss) Per Share (0.01) (0.04) Weighted Average Common Shares Outstanding 133,750,923 101,517,955 SIX MONTHS ENDED DECEMBER 31, 2006 (UNAUDITED) COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED) REVENUES Revenues for the six months ended December 31, 2006 were $21,640 compared to $9,954 for the same period in 2005, an increase of 217 %. This increase in revenue was the result of increased revenue per location of the Skyy-Fi hot spots. COST OF REVENUES The cost of revenues for the six months ended December 31, 2006 was $60,584 compared to $34,443 for the six months ended December 31, 2005, an increase of 175 %. The Cost of Revenues will continue to increase as we bring new product and install new Wi-Fi locations to market OPERATING EXPENSES Operating expenses decreased by approximately 269% from $3,980,332 for the six months ended December 31, 2005 compared to $1,474,537 for the six months ended December 31, 2006. This decrease in operating expenses was a result of a reduction in the amount of write-offs that occurred during the previous corresponding period. OTHER INCOME Other income for the six months ended December 31, 2006 was $248,356 compared to $ 399,661 for the same period in 2005. Other income consists of primarily of debit forgiveness from the prior companies operation and due to the fact they have not been paid with the prescribed time as required by law we have to report that debt as income. INCOME TAX No provision for income taxes has been recorded in the accompanying financial statements as a result of the Company's net operating losses. The Company has unused tax loss carry forwards of approximately $22,000,000 to offset future taxable income. Such carry forwards expire in the years beginning 2021. 17 NET LOSS We experienced a net loss from operations of $ 1,265,125 for the six months ended December 31, 2006 which is $.01 per share on a weighted average as compared to a net loss of $ 3,224,478 for the six months ended December 31, 2005 which is $.04 loss per share. The decrease in the net loss is due to a decrease in the write-offs of investments and of the developmental cost for the Phenom software and a corresponding increase the number of the weighed average shares issued and outstanding. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $828,286 and $66,135 at December 31, 2006 and 2005, respectively. Net cash used by operations was $(1,026,178) for the period ended December 31, 2006 compared to net cash used by operations of $(763,156) for the comparable period ended December 31, 2005. As a result of our continuing losses, our working capital deficiency has increased. The Company has funded our losses through an equity line of credit secured by preferred stock. The Company has defaulted on repayment of certain loan amounts advanced from the credit line and the lender took possession of the collateral. These losses will continue through the third quarter of 2007 at which time the Company should start generating revenue. The revenue will be generated from the sales of the S-XGen, a mini computer which is produced by Seamless Internet, Inc and by the sale of Phenom software licenses. Phenom is a secure software programs developed by Seamless Peer 2 Peer, Inc. We have a working capital deficit of $(1,771,052) as of December 31, 2006 compared to a working capital deficit of $(2,826,818) as of December 31, 2005. This is a decrease in the working capital deficit from the previous year and we expect these deficits to decrease as product development cost decrease and income increases from revenue generated by sales of the Companies products. As shown in the accompanying financial statements, we have incurred an accumulated deficit of $(23,162,321) and a working capital deficit of approximately $(1,771,052) as of December 31, 2006. Our ability to continue as a going concern is dependent on obtaining additional capital and financing and operating at a profitable level. We intend to seek additional capital either through debt or equity offerings and to increase sales volume and operating margins to achieve profitability. We will consider both the public and private sale of securities and/or debt instruments for expansion of our operations if such expansion would benefit our overall growth and income objectives. Should sales growth not materialize, we may look to these public and private sources of financing. There can be no assurance, however, that we can obtain sufficient capital on acceptable terms, if at all. Under such conditions, failure to obtain such capital likely would at a minimum negatively impact our ability to timely meet our business objectives. 18 CRITICAL ACCOUNTING ESTIMATES The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As such, in accordance with the use of accounting principles generally accepted in the United States, our actual realized results may differ from management's initial estimates as reported. A summary of our significant accounting policies appears in the notes to the financial statements which are an integral component of this report. USE OF ESTIMATES The preparation of the consolidated financial statements are in conformity with United States generally accepted accounting principles which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. STOCK-BASED COMPENSATION ARRANGEMENTS The Company issues shares of common stock to various individuals and entities for certain management, legal, consulting and marketing services. These issuances are valued at the fair market value of the service provided and the number of shares issued is determined, based upon the closing price of the Company's common stock on the date of each respective transaction. These transactions are reflected as a component of general and administrative expenses in the accompanying statement of operations. INFLATION The moderate rate of inflation over the past few years has had an insignificant impact on the Company's sales and results of operations during the period. NET OPERATING LOSS CARRY FORWARDS No provision for income taxes has been recorded in the accompanying financial statements as a result of the Company's net operating losses. The Company has unused tax loss carry forwards of approximately $22,000,000 to offset future taxable income. Such carry forwards expire in the years beginning 2021. 19 The deferred tax asset recorded by the Company as a result of these tax loss carry forwards is approximately $7,000,000 as of June 30, 2006. The Company has reduced the deferred tax asset resulting from its tax loss carry forwards by a valuation allowance of an equal amount as the realization of the deferred tax asset is uncertain. The net change in the deferred tax asset and valuation allowance from July 1, 2005 to June 30, 2006 was an increase of approximately $2,000,000. OFF BALANCE SHEET ARRANGEMENTS The Company has not entered into any off balance sheet arrangements that have, or are reasonably likely to have a current or future effect on the company's financial condition, changes in financial condition, revenues or expenses, result of operations, liquidity, capital expenditure, or capital resources which would be considered material to investors. ITEM 3. CONTROLS AND PROCEDURES Our Chief Executive Officer and Chief Financial Officer (the "Certifying Officers") are responsible for establishing and maintaining disclosure controls and procedures for the Company. The Certifying Officers have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which this report was prepared. The Certifying Officers have evaluated the effectiveness of the Company's disclosure controls and procedures within 90 days of the date of this report and believe that the Company's disclosure controls and procedures are effective based on the required evaluation. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 20 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Globalist Internet Technology, Inc. v. Internet Business's International, Inc. - ------------------------------------------------------------------------------ et al - ----- In July 2003 Globalist [Internet Technology, Inc.insert full legal name] ("Globalist") filed an action against the Company and was awarded a judgment plus interest in the amount of approximately $301,000. [The Company appealed the Court's decision and the award amount. In February 2005 the Company reached a tentative settlement with Globalist which required the payment by the Company of $75,000 by March 2005, subject to Court approval. On March 8, 2005 the Company transferred $75,000 to its lawyer's escrow account to satisfy the settlement. This cash is classified as restricted cash on the Company's balance sheet. The Company is still waiting for Court approval regarding the final settlement, at which time the funds will be paid pursuant to the settlement agreement. However, Globalist is contesting the settlement agreement and further court action is contemplated. To the best knowledge of management, there are no other legal proceedings pending or threatened against the Company, its directors, officers, affiliates or any owner of record of 5% or more of the Company's voting securities. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION On July 14, 2006, the Company entered into a Promissory Note and Security Agreement with 1st Global Financial Corporation for the sum of $1.5 million dollars, accruing interest at the rate of 12% per annum. Installment payments in the amount of $36,000 are due beginning at the earliest occurrence of (a) 90 days after the commencement of a private offering by the Company or (b) 45 days after the end of any quarter that the Company earnings after taxes and interest. The note matures on July 14, 2009. The note is secured by all the Company's assets. On January 15, 2007, the Company entered into a Promissory Note and Revolving Line of Credit with DLR Funding, Inc for the aggregate sum of $700,000. Commencing April 15, 2007 and on July 15, 2007 and October 15, 2007, the Company shall be obligated to make payments of interest only. Quarterly thereafter, the payment amount will be three times the monthly payment ath would be due base don a 48 month amortization. The interest rate for this line of credit is 12%. The note matures on January 14, 2007. 21 ITEM 6. EXHIBITS The following Exhibits are filed herein: Exhibit No. Title - ----------- ----- 2. Agreement and Plan of Merger(1) 3.1 Articles of Incorporation(2) 3.2 Certificate of Amendment to Articles of Incorporation(3) 3.3 Certificate of Amendment to Articles of Incorporation(4) 3.4 Certificate of Amendment to Articles of Incorporation(5) 3.5 Bylaws(6) 10.1 Promissory Note and Security Agreement with 1st Global Financial Corporation agreement dated July 14, 2006* 10.2 Promissory Note and Revolving Line of Credit with DLR Funding, Inc. dated January 15, 2007* 10.3 DLR Funding, Inc. revised agreement dated January 15, 2007* 31.1 Certification of Chief Executive Officer Pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Certification of Chief Financial Officer Pursuant to the Securities Exchange Act of 1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* * Filed herewith. - -------- (1) Incorporated by Reference to Exhibit 2 to Form 8-K/A filed on November 22, 1999. (2) Incorporated by Reference to Exhibit 3.1 to Form 10Q filed on December 1, 1999. (3) Incorporated by Reference to Exhibit 3.2 to Form 10Q filed on December 1, 1999. (4) Incorporated by Reference to Exhibit 3.3 to Form 10-Q filed May 22, 2000. (5) Incorporated by Reference to Exhibit 3.4 to Form 10-Q filed May 22, 2000. (6) Incorporated by Reference to Exhibit 3.3 to Form 10Q filed December 1, 1999. 22 SIGNATURES In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, duly authorized. DATED: February 19, 2007 SEAMLESS WI-FI, INC. /s/ Albert Reda -------------------------------- By: Albert Reda Its: Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 23 EX-10.1 2 seamless_10qex10-1.txt EXHIBIT 10.1 PROMISSORY NOTE AND SECURITY AGREEMENT $ 1,500,000 July 14, 2006 FOR VALUE RECEIVED, the undersigned, 1st GLOBAL FINANCIAL CORPORATION, a Nevada corporation (Borrower), promises to pay to the order of Seamless Wi-Fi, Inc. (Lender) the principal sum of up to One Million Five Hundred Thousand Dollars ($1,500,000.00), together with all interest due thereon, on the following terms: 1. INTEREST RATE. The unpaid principal balance shall bear interest at the rate of Twelve percent (12%) per annum; however, in the event of Default, the interest rate shall become Eighteen percent (18%) per annum on the principal balance and accrued interest until paid in full. In no event shall Borrower ever be obligated to pay interest in excess of the highest lawful rate in the state of Nevada. 2. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall begin making monthly installment payments ("Installment Payment(s)") in the amount of Thirty Six Thousand Dollars ($36,000) beginning at the earlier occurrence of (the "Installment Start Date"), and then monthly thereafter: a) 90 days after the Borrower's Rule 504 Section D, Private Placement begins to fund; b) Forty-five (45) days after the end of any quarter (based on a calendar year) that the Borrower's operations generate an EATI (EATI is defined as earnings after taxes and interest (including then current interest due on this Promissory Note). The entire principal amount, and all interest due thereon, shall be repaid by July 14, 2009 ("Maturity Date"). At the sole discretion of Lender, the Maturity Date may be extended, with all then due principal and interest due subject to origination fees and to new terms and conditions, at Lender's sole discretion. For each Installment Payment, allocation of interest and principal shall be based on a sixty (60) month amortization ("Note Amortization Timeframe") of the amount of principal and accrued interest due at the Installment Start Date. On the Maturity Date, all then remaining principal and interest due shall be paid in one final "balloon" payment. For any additional loan proceeds received by Borrower after the Installment Start Date, the additional proceeds will be added to the then outstanding, principal and accrued interest, and the Installment Payments thereafter will have interest and principal payments apportioned based on an amortization of the principal and accrued interest, then due, over the then remaining months of the Note Amortization Timeframe. Borrower will pay Lender a late fee of ten percent (10%) of any installment payment is not paid within 10 days after it is due. All Installment Payments and other payments shall be made to Lender's address as listed in Section 9, or any other address Lender may designate by notice, pursuant to Section 9, or to any other payee as designated by Lender to Borrower. 3. EVENTS OF DEFAULT. An Event of Default ("Default"), wherever used herein, means any one of the following events: (a) The failure by Borrower to make any payment of principal or interest when either is due, and the continuance of such failure for a period of twenty (20) days; or (b) The entry of a decree or order by any court having jurisdiction adjudging Borrower bankrupt or insolvent, or approving as properly filed, any petition seeking reorganization, arrangement, adjustment, or composition of Borrower under the Federal Bankruptcy Code or any other similar federal or state law, or appointing a receiver, liquidator, assignee, or trustee, for Borrower or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order in effect for a period of sixty (60) consecutive days; or Initial___ ___ 1 (c) The institution by Borrower of proceedings to be adjudicated a bankrupt or insolvent, or the consent by Borrower to the institution of bankruptcy or insolvency proceedings against Borrower, or the filing by Borrower of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy code or any other similar federal or state law, or the consent by Borrower to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, or trustee, for Borrower or for any substantial part of Borrower's property; or the making by Borrower of an assignment for the benefit of creditors, or the admission by Borrower in writing of Borrower's inability to pay Borrower's debts generally as they become due, or the taking of corporate action by Borrower in furtherance of any such action; or (d) Borrower's default of any other Agreement between Borrower and Lender. 4. REMEDY. If any Default shall occur and is continuing, then, in every such event, Lender may, at Lender's option, and by written notice to Borrower, declare the entire unpaid principal balance and all interest accrued thereon pursuant to this Promissory Note immediately due and payable, and whereupon, such amount shall be immediately due and payable. Lender may accelerate maturity hereof during any default by the Borrower regardless of any prior forbearance by Lender. 5. PREPAYMENT. Borrower may prepay the principal amount outstanding in whole or in part without penalty at any time. Any prepayment shall apply first to accrued interest, then to principal. Prepayments, if any, shall not alter, change, amend, or modify installment payment amounts, or the due dates of any succeeding payments required by this Promissory Note. 6. WAIVER. Borrower, and each surety, endorser, guarantor, and other party now or hereafter liable for payment of this Promissory Note, severally waive demand, presentment for payment, notice of dishonor, protest, notice of protest, diligence in collecting or bringing suit against any party liable hereon, and further agree to any and all extensions, renewals, modifications, partial payments, substitutions of evidence of indebtedness, and the taking of any security or collateral with or without notice before or after maturity. 7. COSTS AND ATTORNEY'S FEES. In the event this Promissory Note is placed in the hands of an attorney for collection, or suit is filed hereon, or if proceedings for Borrower are had in bankruptcy, receivership, reorganization, and for any other legal or judicial proceedings for the collection of this Promissory Note, Borrower hereby agrees to pay to Lender all expenses and costs of collection, including but not limited to, reasonable attorney's fees incurred in connection with any such collection, suit, or proceeding, in addition to the principal and interest then due. 8. GOVERNING LAW AND JURISDICTION. This Promissory Note shall be governed by, and construed in accordance with, the substantive laws of the State of Nevada. Any action or proceeding brought by either party against the other arising out of or related to this Promissory Note shall be brought exclusively in a state or federal court in Nevada. 9. NOTICE. Any notice or demand required to be given hereunder to Borrower hereof shall be in writing and shall be deemed to have been duly given and received, if sent by United States mail, certified, return receipt requested, with postage prepaid, when deposited in the United States mail, addressed to Borrower and sent to: 1st GLOBAL FINANCIAL CORPORATION 4760 S. Pecos Road Suite 103 Las Vegas, Nevada 89121 or such other place as Borrower may designate to Lender pursuant to this section. Any correspondence or notice required to be given hereunder to Lender hereof shall be in writing and shall be deemed to have been duly given and received, if sent by United States mail, certified, return receipt requested, with postage prepaid, when deposited in the United States mail, addressed to Lender and sent to: Seamless Wi-Fi, Inc. 800 N. Rainbow Road Suite 208 Las Vegas, Nevada 89107 Initial___ ___ 2 or such other place as Lender may designate to Borrower pursuant to this section. 10. SUBSEQUENT HOLDER(S). Lender shall be and includes, any subsequent holder of this Promissory Note, and any partial assignee of Lender, holding an interest in this Promissory Note. 11. SUCCESSORS AND ASSIGNS. This Promissory Note and all of the covenants, promises and agreements contained in it shall be binding on and inure to the benefit or obligation of the respective legal and personal representatives, devisees, heirs, successors and assigns of the Borrower, or the Lender, as applicable. 12. INSURANCE. Borrower, at its own expense, will provide during the term of this Promissory Note, such insurance of the type and in an amount satisfactory to Lender as is necessary to insure Lender for and against any loss resulting from the destruction or damage to any tangible asset, real or personal, now or hereafter owned during the time any amount hereunder remains due and owing to Lender. Borrower will keep the tangible assets insured at the full insurable value amount available against loss or damage to them resulting from theft, fire or other casualty. Borrower shall deliver to Lender policies or certificate(s) of insurance naming Lender as an insured and an agreement by the insuring company not to cancel such insurance without at least a ten (10) day notice to Lender. 13. SEVERABILITY. If a court of competent jurisdiction finds and holds any provision of this Promissory Note, or any related agreements, to be illegal, unenforceable, or invalid in whole or in part for any reason, the validity and enforceability of the remaining provisions, or portions of them, will not be affected. In the event of any such finding and holding, the maker and the holder of this Promissory Note, each, agree to as nearly and closely as possible conform to the intent of the illegal, unenforceable, or invalid provision or provisions, or portion of them. 14. AUTHORIZATION TO LENDER. Borrower irrevocably authorizes Lender to exercise the following powers, with such limitations as described within this section, until all of the Obligations have been paid in full: (a) File any initial financing statements and/or amendments that: (1) Indicate the collateral as all assets of the Borrower or words of similar effect; (2) Contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether the Borrower is an organization, the type of organization, and any organization identification number issued to the Borrower; (b) File any Correction Statement in the name of Borrower under Section 9-518 of the Uniform Commercial Code that Lender reasonably deems necessary to preserve its rights hereunder; and upon any uncured Default A) receive, take, endorse, assign, deliver, accept and deposit, in the name of Borrower or Lender, any and all proceeds of any collateral securing the obligations or the proceeds thereof; B) take or bring, in the name of Borrower or Lender, all steps, actions, suits or proceedings deemed by Lender necessary or desirable to effect collection of or other realization upon Borrower's Accounts; C) Pay any sums necessary to discharge any lien or encumbrance which is senior to Lender's security interest in any assets of Borrower, which sums shall be included as Obligations hereunder, and in connection with which sums interest shall accrue and shall be due and payable; D)Notify any person obligated with respect to any obligation to Borrower, that the underlying such obligation has been assigned to Lender by Borrower and that payment thereof is to be made to the order of and directly and solely to Lender; E) Communicate directly with Borrower's obligees to verify the amount and validity of any obligation of theirs owed to Borrower; F) Change the address for delivery of mail to Borrower and to receive and open mail addressed to Borrower; G)Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all obligations to Borrower, and discharge or release any of Borrower's obligee(s) (including filing of any public record releasing any lien granted to Borrower by such obligee), without affecting any such obligations; H) In order to satisfy any of Borrower's obligations under this Promissory Note, Borrower authorizes Lender to initiate electronic debit or credit entries through the ACH system to any deposit account maintained by Borrower. Initial___ ___ 3 15. SECURITY. The indebtedness evidenced by this Promissory Note is secured by: All assets of the Borrower including chattel paper, general intangibles, including but not limited to, tax refunds, registered and unregistered patents, trademarks, service marks, copyrights, trade names, trade secrets, customer lists, licenses, documents, instruments, deposit accounts, certificates of deposit. All goods, including but not limited to the following: All inventory, wherever located; All equipment and fixtures, wherever located, and all additions, substitutions, replacements (including spare parts), and accessions thereof and thereto; and All books and records relating to all of the foregoing, including, but not limited to, all insurance proceeds, all claims against third parties for loss or destruction of or damage to any of the foregoing, and all proceeds from any of them. Notwithstanding anything else in this section, Borrower may transfer, sell, assign, or dispose of any of its assets in the ordinary course of business, as it deems, in its best business judgment, necessary and proper for the normal operation of Borrower's business, but where such action(s) is/are taken, shall not diminish Lender's position and interests. IN WITNESS THEREOF, the Borrower, by its authorized representatives, has executed this Promissory Note on the day and date first above written. BORROWER: 1st GLOBAL FINANCIAL CORPORATION, By its President, ______________________________________________ Initial___ ___ 4 EX-10.2 3 seamless_10qex10-2.txt Exhibit 10.2 SECURED PROMISSORY NOTE PAYABLE IN AGREED INSTALLMENTS SECURED TERM NOTE $200,000.00 October 1st, 2006 The undersigned, for value received, promises to pay to the order of Seamless Wi-Fi, Inc, a Nevada corporation (herein called the "PAYEE"), at the principal office of the Payee in 800 N. Rainbow Road, suite 208 Las Vegas, Nevada, 89107 the principal sum of $200,000.00, payable in eight installments plus interest of 12% per annum as follows (provided that the final installment shall be in an amount sufficient to pay in full all unpaid principal of and accrued interest on this Note): Payment Date: Amount of Installment: December 31, 2006 $31,000.00 March 31, 2007 $30,250.00 June 30, 2007 $29,500.00 September30, 2007 $28,750.00 December 31, 2007 $28,000.00 March 31, 2008 $27,250.00 June 30, 2008 $26,500.00 September30, 2008 $25,750.00 The unpaid principal amount hereof from time to time outstanding shall bear interest from the date hereof at the following rates per annum: (A) prior to maturity, at a rate equal to 12% simple interest (as hereinafter defined) from time to time in effect. Accrued interest shall be payable quarterly on the last business day of each quarter, and of each year and at maturity, beginning with the first of such dates to occur after the date hereof. After maturity of any installment, whether by acceleration or otherwise, accrued interest on such installment shall be payable on demand. a year consisting of 360 days. Payments of both principal and interest are to be made in lawful money of the United States of America in immediately available funds. This Note evidences indebtedness incurred under a Loan Agreement dated the date hereof (herein, as it may be amended from time to time, called the "LOAN AGREEMENT") between the undersigned and the Payee, and is secured by a pledge by the undersigned of the capital stock of ^ Inc. made pursuant to a Pledge Agreement between the undersigned and the Payee dated the date hereof (herein, as it may be amended from time to time, called the "PLEDGE AGREEMENT"). Reference is made to the Loan Agreement and the Pledge Agreement for the nature and extent of the security and the rights of the parties in respect of such security, and for a statement of the terms and conditions under which the due date of this Note may be accelerated. Upon the occurrence of any event of default as specified in the Loan Agreement the principal balance hereof and the interest accrued hereon may be declared to be forthwith due and payable, and any indebtedness of the holder hereof to the undersigned may be appropriated and applied hereon. In addition to and not in limitation of the foregoing and the provisions of the Loan Agreement, the undersigned further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including reasonable attorneys' fees and legal expenses, incurred by the holder of this Note in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. This Note is made under and governed by the laws of Nevada. _______________________________________ DLR Funding, Inc by Virginia L. Brinkman, CFO DLR Funding, Inc. 1230 West Ash Street #3 Windsor, Co. 80550 970-686-1196 970-686-7289 Fax EX-10.3 4 seamless_10qex10-3.txt Exhibit 10.3 REVOLVING LINE OF CREDIT AGREEMENT This Revolving Line of Credit Agreement (the "AGREEMENT") is made and entered into in this 15th day of January 2007, by and between Seamless Wi-Fi, Inc., a Nevada corporation ("LENDER"), and DLR Funding, Inc., a Nevada corporation ("BORROWER"). In consideration of the mutual covenants and agreements contained herein, the parties agree as follows: 1. LINE OF CREDIT. Lender hereby establishes for a period extending to January 14, 2010 (the "MATURITY DATE") a revolving line of credit (the "CREDIT LINE") for Borrower in the principal amount of Seven Hundred Thousand Dollars ($700,000.00) (the "CREDIT LIMIT"). In connection herewith, Borrower shall execute and deliver to Lender a Promissory Note in the amount of the Credit Limit and in form and content satisfactory to Lender. All sums advanced on the Credit Line or pursuant to the terms of this Agreement (each an "ADVANCE") shall become part of the principal of said Promissory Note. 2. ADVANCES. Any request for an Advance may be made from time to time and in such amounts as Borrower may choose; provided, however, any requested Advance will not, when added to the outstanding principal balance of all previous Advances, exceed the Credit Limit. Requests for Advances may be made orally or in writing by such officer of Borrower authorized by it to request such Advances. Until Lender may be notified otherwise, Borrower hereby authorizes its President, ARNOLD F. SOCK, and its Chief Financial Officer, Virginia Brinkman, individually, to request Advances. Lender may deposit or credit the amount of any requested Advance to Borrower's checking account. Lender may refuse to make any requested Advance if an Event of Default has occurred and is continuing hereunder either at the time the request is given or the date the Advance is to be made, or if an event has occurred or condition exists which, with the giving of notice or passing of time or both, would constitute an Event of Default hereunder as of such dates. The funds from the Advances will be used by the Borrower for general corporate purposes in connection with the operations of the Borrower. 3. INTEREST. All sums advanced pursuant to this Agreement shall bear interest from the date each Advance is made until paid in full at the rate of twelve percent (12%) per annum, simple interest (the "EFFECTIVE RATE"). 4. REPAYMENT. Borrower shall pay installments of principal and interest on the outstanding principal balance as follows. Commencing on April 15, 2007 and on July 15, 2007, and October 15, 2007, Borrower shall pay the outstanding interest only that has accrued on the then outstanding principal balance as of the day before the particular due dates just enumerated. Then quarterly thereafter, until paid, or due, in full, with the quarterly payment amounts being three (3) times the monthly payment that would be due based on a forty-eight (48) month amortization ("Quarterly Payment") of the outstanding principal balance due on the Agreement on each prior calendar quarter's last business day. The entire unpaid principal balance, together with any accrued interest and other unpaid charges or fees hereunder, shall be due and payable on the Maturity Date. All payments shall be made to Lender at such place as Lender may, from time to time, designate. All payments received hereunder shall be applied, first, to any costs or expenses incurred by Lender in collecting such payment or to any other unpaid charges or expenses due hereunder; second, to accrued interest; and third, to principal. Borrower may prepay principal at any time without penalty. 5. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into this Agreement and to make the advances provided for herein, Borrower represents and warrants to Lender as follows: a. Borrower is a duly organized, validly existing, and in good standing under the laws of the State of NEVADA with the power to own its assets and to transact business in NEVADA. b. Borrower has the authority and power to execute and deliver any document required hereunder and to perform any condition or obligation imposed under the terms of such documents. c. The execution, delivery and performance of this Agreement and each document incident hereto will not violate any provision of any applicable law, regulation, order, judgment, decree, article of incorporation, by-law, indenture, contract, agreement, or other undertaking to which Borrower is a party, or which purports to be binding on Borrower or its assets and will not result in the creation or imposition of a lien on any of its assets. d. There is no action, suit, investigation, or proceeding pending or, to the knowledge of Borrower, threatened, against or affecting Borrower or any of its assets which, if adversely determined, would have a material adverse affect on the financial condition of Borrower or the operation of its business. 6. EVENTS OF DEFAULT. An event of default ("Event of Default") will occur if any of the following events occurs: a. Failure to pay any principal or interest hereunder within ten (10) days after the same becomes due. b. Any representation or warranty made by Borrower in this Agreement or in connection with any borrowing or request for an Advance hereunder, or in any certificate, financial statement, or other statement furnished by Borrower to Lender is untrue in any material respect at the time when made. c. Default by Borrower in the observance or performance of any other covenant or agreement contained in this Agreement, other than a default constituting a separate and distinct Event of Default under this Paragraph 6. d. Filing by Borrower of a voluntary petition in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any other relief under the Bankruptcy Code as amended or under any other insolvency act or law, state or federal, now or hereafter existing. e. Filing of an involuntary petition against Borrower in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any other relief under the Bankruptcy Code as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, and the continuance thereof for sixty (60) days and not dismissed, bonded, or discharged. 7. REMEDIES. Upon the occurrence of an Event of Default as defined above, Lender may declare the entire unpaid principal balance, together with accrued interest thereon, to be immediately due and payable without presentment, demand, protest, or other notice of any kind. Lender may suspend or terminate any obligation it may have hereunder to make additional Advances. To the extent permitted by law, Borrower waives any rights to presentment, demand, protest, or notice of any kind in connection with this Agreement. No failure or delay on the part of Lender in exercising any right, power, or privilege hereunder will preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided herein are cumulative and not exclusive of any other rights or remedies provided at law or in equity. Borrower agrees to pay all costs of collection incurred due to the default, including court costs and reasonable attorney's fees. 2 8. NOTICE. Any written notice will be deemed effective on the date such notice is placed, first class, postage prepaid, in the United States mail, addressed to the party to which notice is being given as follows: Lender: Seamless Wi-Fi, Inc. Attention: Albert R. Reda 800 N. Rainbow Rd. Suite 208 Las Vegas, NV 89107 Borrower: DLR Funding, Inc. Attn.: ARNOLD F. SOCK, Esquire 1230 West Ash Avenue Suite 3 Windsor, CO 80550 9. AFFIRMATIVE COVENANTS. During the term of this Agreement, the Borrower covenants and agrees: a) CORPORATE EXISTENCE AND AUTHORIZATIONS. The Borrower shall maintain in good standing its corporate existence and its right to transact business in those jurisdictions in which it is now or hereafter doing a material amount of business, and the Borrower shall maintain all material licenses, permits and registrations necessary for the conduct of its operations. b) COMPLIANCE WITH LAWS. The Borrower shall comply with all material Laws applicable to its business operations. c) PAYMENT OF OBLIGATIONS. The Borrower shall promptly pay and discharge or cause to be paid and discharged, as and when due (or as amended or extended by the lender or creditor), any and all of its lawful debts and other obligations, including all lawful taxes, rates, levies and assessments and all claims for labor, materials or supplies; provided, however, that nothing herein contained shall be construed as prohibiting the Borrower from diligently contesting in good faith by appropriate proceedings the validity of any such debt or other obligation, provided Borrower has established adequate reserves for such debt or obligation on its books and records. d) FINANCIAL INFORMATION. The Borrower will provide the Lender with copies of its unaudited quarterly financial statements within 45 days of the end of each calendar quarter ending during prior to the Maturity Date. 10. NEGATIVE COVENANTS. During the term of this Agreement, the Borrower covenants and agrees that without the prior written consent of the Lender that: a) DIVIDENDS. The Borrower shall not declare or pay dividends or other distributions to its now existing, or new member(s), or other equity owners. b) USE OF PROCEEDS. The Borrower will not use the proceeds of the Loan to be used for any purpose other than that stated herein. c) CONFLICTING AGREEMENTS. The Borrower will not enter into any agreement, any term or condition of which would, if complied with by Borrower, result in an Event of Default. 3 10. REMEDIES NOT EXCLUSIVE. The Lender shall be entitled to enforce payment and performance of all obligations of the Borrower hereunder or under the Note and to exercise all rights and powers hereunder or under the Note, or under any Law and the pursuit of any remedy available to the Lender against the Borrower shall not prejudice or in any manner affect the Lender's right to realize upon or enforce any other remedy or security now or hereafter available to it in such order and in such manner as the Lender may determine in its sole discretion. No such right or remedy shall be exclusive, but each shall be cumulative and shall be in addition to every other remedy provided herein or in any other agreement or by Law and each such remedy may be exercised concurrently or independently. Nothing in this Agreement shall be construed as prohibiting the Lender from seeking a deficiency judgment against the Borrower. 11. GENERAL PROVISIONS. All representations and warranties made in this Agreement and the Promissory Note and in any certificate delivered pursuant thereto shall survive the execution and delivery of this Agreement and the making of any loans hereunder. This Agreement will be binding upon and inure to the benefit of Borrower and Lender, their respective successors and assigns, except that Borrower may not assign or transfer its rights or delegate its duties hereunder without the prior written consent of Lender. This Agreement, the Promissory Note, and all documents and instruments associated herewith will be governed by and construed and interpreted in accordance with the laws of the State of Nevada. Time is of the essence hereof. This Agreement will be deemed to express, embody, and supersede any previous understanding, agreements, or commitments, whether written or oral, between the parties with respect to the general subject matter hereof. This Agreement may not be amended or modified except in writing signed by the parties. EXECUTED on the day and year first written above. Borrower: DLR Funding, Inc, By its President and CEO, ---------------------------------- President and CEO Lender: Seamless Wi-Fi, Inc., By its Chief Executive Officer, --------------------------------- Albert R. Reda, CEO 4 Promissory Note $700,000.00 Las Vegas, NV January 15, 2007 This Promissory Note (the "NOTE") is made and executed as of the date above, by and between DLR Funding, Inc., a Nevada corporation ("BORROWER"), and Seamless Wi-Fi, Inc. a Nevada corporation ("LENDER"). By this Note, the Borrower promises and agrees to pay to the order of Lender, at 15421 South Carmenita Road Suite A, Santa Fe Springs, CA 90670, or at such other place as Lender may designate in writing, the principal sum of Seven Hundred Thousand and 00/100 Dollars ($700,000.00), or the aggregate unpaid principal amount of all advances made by Lender to Borrower pursuant to the terms of a Revolving Line of Credit Agreement (the "LOAN AGREEMENT") of even date herewith, whichever is less, together with interest thereon from the date each advance is made until paid in full, both before and after judgment, at the rate of Twelve percent (12%)per annum, simple interest. Borrower shall pay installments of principal and interest on the outstanding principal balance as follows. Commencing on April 15, 2007 and on July 15, 2007, and October 15, 2007, Borrower shall pay the outstanding interest only that has accrued on the then outstanding principal balance as of the day before the particular due dates just enumerated. Then quarterly thereafter, until paid, or due, in full, with the quarterly payment amounts being three (3) times the monthly payment that would be due based on a forty-eight (48) month amortization ("Quarterly Payment") of the outstanding principal balance due on the Agreement on each prior calendar quarter's last business day. The entire unpaid principal balance, together with any accrued interest and other unpaid charges or fees hereunder, shall be due and payable on the Maturity Date. All payments shall be made to Lender at such place as Lender may, from time to time, designate. All payments received hereunder shall be applied, first, to any costs or expenses incurred by Lender in collecting such payment or to any other unpaid charges or expenses due hereunder; second, to accrued interest; and third, to principal. Borrower may prepay principal at any time without penalty. The entire unpaid principal balance, together with any accrued interest and other unpaid charges or fees hereunder, shall be due and payable on January 14, 2010 ("MATURITY DATE"). Prepayment in whole or part may occur at any time hereunder without penalty; provided that the Lender shall be provided with not less than ten (10) days notice of the Borrower's intent to pre-pay; and provided further that any such partial prepayment shall not operate to postpone or suspend the obligation to make, and shall not have the effect of altering the time for payment of the remaining balance of the Note as provided for above, unless and until the entire obligation is paid in full. All payments received hereunder shall be applied, first, to any costs or expenses incurred by Lender in collecting such payment or to any other unpaid charges or expenses due hereunder; second, to accrued interest; and third, to principal. An Event of Default will occur if any of the following events occurs: (a) failure to pay any principal or interest hereunder within ten (10) days after the same becomes due; (b) if any representation or warranty made by Borrower in the Loan Agreement or in connection with any borrowing or request for an advance thereunder, or in any certificate, financial statement, or other statement furnished by Borrower to Lender is untrue in any material respect at the time when made; (c) default by Borrower in the observance or performance of any other covenant or agreement contained in the Loan Agreement, other than a default constituting a separate and distinct Event of Default under Paragraph 7 of the Loan Agreement; (d) filing by Borrower of a voluntary petition in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any 5 other relief under the Bankruptcy Code as amended or under any other insolvency act or law, state or federal, now or hereafter existing; or (e) filing of an involuntary petition against Borrower in bankruptcy seeking reorganization, arrangement or readjustment of debts, or any other relief under the Bankruptcy Code as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, and the continuance thereof for sixty (60) days that is not dismissed, bonded, or discharged. Any notice or demand to be given to the parties hereunder shall be deemed to have been given to and received by them and shall be effective when personally delivered or when deposited in the U.S. mail, certified or registered mail, return receipt requested, postage prepaid, and addressed to the party at his or its last known address, or at such other address as the one of the parties may hereafter designate in writing to the other party. The Borrower hereof waives presentment for payment, protest, demand, notice of protest, notice of dishonor, and notice of nonpayment, and expressly agrees that this Note, or any payment hereunder, may be extended from time to time by the Lender without in any way affecting its liability hereunder. In the event any payment under this Note is not made at the time and in the manner required, the Borrower agrees to pay any and all costs and expenses which may be incurred by the Lender hereof in connection with the enforcement of any of its rights under this Note or under any such other instrument, including court costs and reasonable attorneys' fees. This Note shall be governed by, construed under, and enforced in accordance with the laws of the State of Nevada. The Borrower: DLR Funding, Inc., By its President and CEO, _________________________________________ 6 EX-31.1 5 seamless_10qex31-1.txt Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Seamless Wi-Fi, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert Reda, Chief Executive Officer of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934, as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed the Report; 2. Based upon my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading; 3. Based upon my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition and results of operations of the Company, as of, and for, the periods presented in the Report; 4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company 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 Company, 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 Company'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 Company's internal control over financial reporting that occurred during the Company's fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company'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 Company'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 Company's internal control over financial reporting. /s/ Albert Reda - -------------------------------- Albert Reda, Chief Executive Officer February 19, 2007 EX-31.2 6 seamless_10qex31-2.txt Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Seamless Wi-Fi, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert Reda, Chief Financial Officer of the Company, certify, pursuant to Rules 13a-14 and 15-d14 of the Securities Exchange Act of 1934, as adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002, that: 1. I have reviewed the Report; 2. Based upon my knowledge, the Report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order 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; 1. Based upon my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition and results of operations and cash flows of the Company, as of, and for, the periods presented in the Report; 3. 4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company 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 Company, 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 Company'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 Company's internal control over financial reporting that occurred during the Company's fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company'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 Company'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 Company's internal control over financial reporting. /s/ Albert Reda - ------------------------------ Albert Reda, Chief Financial Officer February 19, 2007 EX-32 7 seamless_10qex-32.txt Exhibit 32 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 Seamless Wi-Fi, Inc. (the "Company") on Form 10-QSB for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Albert Reda, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: 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/ Albert Reda - ---------------------------- Albert Reda, Chief Executive Officer and Chief Financial Officer February 19, 2007 -----END PRIVACY-ENHANCED MESSAGE-----